Evaluate finance and fundraising for a club or society
Compare membership income, fundraising, donations and borrowing by their reliability, restrictions, cost and effect on members.
Section 3.1 · Preparation of financial statements
Exam scope and assessment notes
Cambridge International AS & A Level Accounting 9706, 2026–2028 syllabus, Version 2. These original lessons map all five Topic 3.1 objectives: financial-statement purpose; partnership changes; clubs and societies; manufacturing accounts; and limited-company financial statements and notes. Practice is self-checked, not an official Cambridge grade. Full timed Papers 1–4 and human subject-teacher review remain outstanding.
Before you begin
- Use the Topic 1.5 adjustment and statement skills: apply accruals, distinguish capital from revenue, reconcile balances, and keep each entity's owners' funds separate from income and cash.
Work on paper. Try each question before revealing help, and explain why your method works.
Quick readiness check
A donor restricts a gift to new sports equipment. Can the committee use it to pay overdue utility bills?
What you will learn
- Compare possible club finance sources
- Evaluate fundraising methods in context
- Identify restrictions and reporting consequences of receipts
Compare the terms, not just the amount raised
Subscriptions can provide recurring income but depend on membership retention and affordability. Events may raise funds and strengthen participation, but require time, up-front spending and uncertain attendance. Donations can support a specific project, although restricted gifts may not be available for routine costs.
Borrowing may finance a long-lived facility without waiting for fundraising, but creates repayments, interest and risk if future income is uncertain. A one-off fundraising campaign may be unsuitable for ongoing wages or maintenance unless recurring income covers the continuing commitment.
Make a balanced recommendation
Compare expected net proceeds, timing, reliability, administration, member access, restrictions and long-term liabilities. Consider whether the project aligns with the club's purpose, whether the committee has capacity to deliver it and how it will report use of restricted funds.
A good recommendation names the preferred source, explains why it fits the stated need and recognises a material risk plus a mitigation. Do not call a donation income available for any use if the donor restricted it.
Pause and explain
Why may a loan be a poor way to pay permanent staff costs when club income is uncertain?
Worked example
A sports club wants a $30,000 accessible court. A donor offers $20,000 restricted to the court; an event could net about $8,000 but attendance is uncertain; a loan covers the remainder at interest. Recommend a funding mix.
Show the worked solution
- The restricted donation directly fits $20,000 of the project, subject to its terms.
- A planned event could raise much of the remaining $10,000 but the net amount and timing are uncertain.
- A small loan or staged project may bridge a verified shortfall; assess affordability and future maintenance before committing.
Answer Use the restricted donation for the court and plan a fundraising event, but make the project conditional on confirmed net proceeds or an affordable, approved loan for any remaining shortfall. Budget for maintenance and report restricted spending.
Try a topic test
Choose Easy, Normal or Difficult. Save your answers and open worked review after finishing.
Test this topic →From guided practice to a new situation
Write your answer and reasoning first. Use a hint only if you are stuck. The model solution is for self-checking; your written work is not automatically marked.
A fundraiser costs $1,500 to run and may collect $7,000. A recurring membership campaign costs $900 and is expected to add $2,000 of annual subscriptions for three years, with uncertain retention. Compare first-year net income and one key risk.
Give me a hint
Deduct each method's costs and distinguish one-off from recurring income.
Compare my reasoning
- Fundraiser first-year net proceeds = $7,000 − $1,500 = $5,500.
- Membership campaign first-year net = $2,000 − $900 = $1,100, with potential repeat income only if members remain.
- The fundraiser has higher immediate expected net proceeds; both estimates are uncertain, and membership retention drives future cash.
Expected first-year net proceeds are $5,500 for the fundraiser and $1,100 for the membership campaign. The fundraiser is stronger immediately; recurring subscriptions may help later if retention holds.
Look for these in your work
- Costs deducted
- Time horizon distinguished
- Risk stated
A society needs $12,000 for a one-time roof repair and $3,000 each year for maintenance. Compare a one-off donation, a short-term loan and a subscription increase, then recommend a mix.
Give me a hint
Match a one-time capital need and recurring maintenance to sources with suitable timing.
Compare my reasoning
- A restricted donation can suit the repair if its terms allow roof work, but it may not fund maintenance.
- A loan could bridge the repair cost but adds repayment and interest; test affordability.
- A subscription increase or recurring fundraising is more suitable for annual maintenance but may affect membership affordability.
Use a suitable donation and affordable borrowing only for the one-time repair, while securing recurring subscriptions or planned fundraising for maintenance. Confirm terms, member response and cash-flow capacity before committing.
Look for these in your work
- One-time and recurring needs separated
- Restrictions checked
- Balanced recommendation
The club receives a restricted $15,000 grant for a facility but estimates the facility will require $2,000 annual upkeep. How should the committee handle the grant and ongoing cost in its plans and reports?
Give me a hint
Separate project funding from a recurring operating commitment.
Compare my reasoning
- Apply the grant only to eligible project expenditure and keep its use traceable.
- Prepare a recurring maintenance forecast and identify dependable annual income to cover it.
- Explain the restriction, grant use and ongoing cost to members in the financial reports or notes as appropriate.
Use the grant only within its terms, and approve the facility only when a credible recurring source can cover upkeep. Report restricted spending transparently and do not present the grant as ongoing income.
Look for these in your work
- Restricted grant respected
- Recurring cost funded
- Reporting transparent
Common mistakes
- Comparing gross fundraising receipts instead of net proceeds
- Using restricted donations for unrelated operating costs
What can you explain now?
What should the committee compare when deciding between a fundraiser and a loan?
Compare with the explanation
Net proceeds, timing, uncertainty, restrictions and repayment cost
Compare money available when needed, costs and obligations rather than only the amount raised.
After trying it yourself, choose your next review. This is your self-assessment.
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Make it stick
For a club funding recommendation, name one financial factor, one risk and one member or purpose consideration.
If you needed the solution, close it and solve the problem again from a blank page. A correct answer is stronger when you can explain the reason for each step.