Donation-box cash in a charity shop
How a charity shop records donation-box cash apart from till sales, from a two-person count to cash paid in at the till and banking from the safe.
By Achekam · · 4 min read · For Non-profit businesses in South Africa, Nigeria, Kenya
Next to the till in most charity shops sits a clear box with a slot and a sign: "Every coin helps." Customers drop in their change, a tourist leaves a folded note, a regular adds something every week. By Saturday afternoon it holds real money. Then the question arises: when the box is emptied, where does the cash go, and how does it end up in the books?
Too often the answer is "into the till". It is the easiest place, and it is the wrong one. Once donation money is mixed with sales cash, the shop can no longer say how much it raised in donations, the till's cash-up stops making sense, and an auditor or funder has no way to verify either figure. This article sets out how to keep the two apart, using the till's cash-handling features, with controls a board can rely on.
Why donations and sales must never be mixed in one figure
Donations and sales are different kinds of income, and they are reported differently. Many non-profits need to show donation income separately in their financial statements and funder reports, and some donors and funders ask how unrestricted public donations were used. Sales income, by contrast, may carry VAT and is part of the shop's trading result.
Mixing them causes three problems:
- Sales look higher than they were, flattering the shop's performance.
- Donations disappear from the record, understating public support.
- The cash-up becomes unreliable, because the till's expected cash is based on sales, not on unplanned donations.
The National Council of Nonprofits' page on financial management describes the board's fiduciary duty over a nonprofit's money and the financial policies, such as cash handling, that support sound financial management. A written donation-box procedure is exactly that kind of policy.
Recording the box contents as cash paid in at the till
The till already gives you the tool. Safe drops, cash paid in and cash paid out are each recorded on the server, and each posts its own journal. Recording the counted donation-box money as cash paid in at the till brings it into the till's cash in a way that is recorded separately from sales.
That also keeps the cash-up honest. At cash-up, the cashier counts the drawer by notes and coins, and the server works out the expected cash, records any difference and posts it to cash over and short. Donation money slipped into the drawer without a record would show up as an unexplained surplus; recorded as cash paid in, it has a record of its own. On the first day you use this routine, check with the manager that the cash-up's expected cash reflects the amount paid in.
The journal that cash paid in posts, apart from sales
Every till sale posts its own balanced journal, with each payment method to its own account, revenue, output VAT and cost of sales. Cash paid in posts a separate journal of its own. That separation is what keeps donations out of sales revenue.
Before you rely on it, check where it lands. After the first donation-box entry, look at the journal in the general ledger with your accountant and confirm it reaches the account you want for donation income. If your accountant wants donation-box money in a particular income account, or split by campaign, agree how that is done and test it once before making it routine.
Counting the box with two people before it reaches the drawer
Cash in a donation box has no receipt behind it, so the count is the only evidence of how much there was. Treat it with more care than till cash, not less:
- Two people empty and count the box together, at a set time, such as the end of each trading day.
- They record the count on a slip, with the date, the amount by notes and coins, and both signatures.
- The cashier records cash paid in for exactly the counted amount, quoting the slip.
- The slip is kept with the day's cash-up papers.
- Rotate the counting pairs, so the same two people do not always count together.
A sealed box with a key held by the manager adds a further control: nobody can empty it alone during the day.
Banking from the safe, which can never exceed what the safe holds
Donation money then follows the same path as other till cash. Cash moved from the drawer to the safe is recorded as a safe drop. When cash is banked, it is recorded as a deposit from the safe, and Achekam refuses a deposit larger than what the safe holds. That rule stops a banking record that cannot be true.
On the bank statement, the deposit shows as one amount, combining sales cash and donation cash. That is fine as long as the till records show how the deposit was made up. Keep the day's cash-up, the donation slips and the deposit slip together, so anyone tracing a bank line back can see what it contained. Deposits that cannot be traced to records are a separate problem, covered in untraceable bank deposits.
A Saturday's takings, in words
At closing, the shop manager and a volunteer empty the donation box and count it, filling in and signing the slip. The cashier records the amount as cash paid in, quoting the slip number, then cashes up: the drawer agrees with the expected cash, which includes the donation. The manager makes a safe drop. On Monday, the treasurer banks the week's cash as a deposit from the safe, and files the slips with the deposit record.
Writing the procedure down
Put the steps above on one page, get the board or finance committee to approve it, and train every volunteer who works the till. Donated goods sold through the same till are set up as described in setting up donated goods for the charity-shop till.
General guidance only, not advice on your own circumstances. Tax and payroll rules change: check the current position with the authority or your adviser.
