It’s common for 501(c)(6) associations to manage related nonprofits and political action committees (PACs). While these organizations maintain separate financials, a 501(c)(6) may host events or collect sponsorships on behalf of these related entities. This article outlines methods our customers use to account for such transactions.

When a member makes a purchase or donation through your 501(c)(6)’s website, the transaction is recorded in your 501(c)(6)’s QuickBooks account. Credit card purchases flow through your payment processor, and invoices appear as receivables.

Since the 501(c)(6) isn’t entitled to this revenue, the transaction should be mapped to a liability account, sometimes referred to as a “Due to” account. Mapping these transactions correctly ensures that your 501(c)(6) tracks the money it owes to related entities, like optional donations on dues invoices or event tickets where proceeds are designated for the related organization.

Regularly, you’ll need to transfer funds to the related entity. This can be done by creating a check in your 501(c)(6)’s QuickBooks that debits the liability account. In the related entity’s QuickBooks, the corresponding deposit should be recorded.

This method is straightforward and reflects the role of the 501(c)(6) in collecting money on behalf of the related 501(c)(3) or PAC.

This approach is - by far - the most common approach taken by our Novi AMS customers. Accountants have signed off on this method with the caveat that the 501(c)(6) transfer funds to the related entity at a cadence of no less than once per month to ensure that the 501(c)(6) not be unduly enriched by holding onto the related entity's funds. Your organization may be subject to different rules, so it is important to consult with your accountant to ensure proper handling.

In some cases, related organizations like a 501(c)(3) or PAC may opt for their own website, independent of the 501(c)(6). This often happens when the related entity’s revenue is significant or when there’s a need for a distinct brand. These organizations might choose to set up a separate Novi AMS instance.

When both entities use their own Novi AMS instances, the systems can be linked. The Novi AMS “data handshake” syncs member or customer records and allows for a single user account across both websites, while keeping their financials distinct. Separate websites also allow for separate credit card processors, ensuring no funds are commingled. And, of course, you would have Novi's QuickBooks sync powering both organizations.

If you are interested in exploring this option further, please reach out to us.

Novi offers an advanced feature for processing event registrations through a third-party payment processor. This is typically used for international events, where payments are managed in the event's host country, but it can also be applied domestically when a related PAC or 501(c)(3) handles the payments and fund segregation is critical.

We generally recommend using this feature only when absolutely necessary, as accounting records will only exist in the payment processor, and invoicing is not supported.

If you are interested in exploring this option further, please reach out to us.