topic Re: Gift Card Donation in Fast Casual

Gift Card Donation

JohnnyP — Thu, 26 Sep 2024 03:17:34 GMT

Every now & then we donate gift cards to different community events. How do I activate a gift card for say $50 if I'm not collecting the $50 because its a donation. Is there a donation button anywhere so we can keep track of how many donations we are giving away each year?

Re: Gift Card Donation

nbunda — Thu, 26 Sep 2024 11:07:39 GMT

You have two options depending on how you’d like them reported:

You can make gift cards discountable and then set up a 100% discount for them (Discount Gift Card Purchases In-Store )
You can set up an alternate Payment Method for comped Gift Cards (How can I add money to a gift card for a giveaway? )

Re: Gift Card Donation

Kirsten_H — Thu, 26 Sep 2024 16:37:59 GMT

We use house accounts to close and track donations and business promotion type transactions. I expense them monthly in our accounting software. It works well for us.

Re: Gift Card Donation

AlexisR — Thu, 10 Sep 2026 13:46:25 GMT

Hi Kirsten,
I know this is an old post so I hope replying to it will get to you!
It sounds like you may have the accounting knowledge in this scenario that I am looking for.
So here come the T- accounts.....
Right now, if a manager wants to give a Gift Card to a charity they load the card and then apply a Manager Discount. No cash has changed hands. Because of this, we actually do not make an entry on the books.
The problem that I realized is that when a person returns to use that Gift Card there is no way of differentiating if that was a Gift Card that was comped or a Gift Card that was sold. Regardless of the scenario, the redeemed amount Debits the Liability. Therefore, if we were to stop selling Gift Cards today the Debits would out-weigh the Credits to the Liability and the account would never reconcile or match the reports in Toast. Do you have the same issue? If yes, how do you get around it? If not, how are you recording on your books?

Thank you!

Re: Gift Card Donation

Kirsten_H — Thu, 10 Sep 2026 14:45:57 GMT

Hi Alexis,

When you sell the gift card, but then discount it, I'm assuming the value stays on the card (I've had to void GCs on occasion, but we generally don't discount them at the POS.

When we do gift card donations (whether charity or just a business promo), we close the sale to a House Account. the gift card liability is then recorded in the GL for Gift Card liability and the House Account payment goes into a GL for that. We have a few internal expense House Accounts set up for tracking purposes. At the end of the month, I make adjusting entries in our accounting software to transfer the donated GC sale from the House Account GL to corresponding expense GL. The Gift Card sale stays put in the GC GL and is offset when the GC is used, just like any other.

We expense the GC at the time of purchase; it would be really hard to track when those cards are used unless you're recording all of the card numbers and checking them periodically.

When you discount the card, does it still show up as Deferred (gift cards) in your revenue summary?

If those GCs aren't showing in your accounting software Gift Card Liability GL, but are showing on your Toast Reports, you might just need to make adjusting entries for them, debiting the appropriate expense accounts and crediting your GC liability so you've got those outstanding cards accounted for.

I hope that makes some sense, and that I'm understanding your situation correctly. If not, let me know and I'll try to clarify. 🙂

Kirsten

Re: Gift Card Donation

AlexisR — Thu, 10 Sep 2026 18:30:48 GMT

Kirsten, you rock! Thanks so much for replying so quickly. This was such a shot in the dark. Especially considering this thread is 2 years old.
When we discount the check with the loaded Gift Card, yes, the value remains on the card and it shows up in the Deferred Summary with the Deferred type, "Deferred (Gift Cards)", and a Net amount of $0 (example below). Doing it this way, the problem is the GC Liability is never recorded on our books. I believe you’re right that the only way to capture would be to make adjusting entries. I was just grappling with the idea of whether or not it should/ could be lumped in with the other "True" Gift Card liability.

So switching gears to how you are doing it with House Accounts--- Am I correct that the credit to the Liability is recorded when the sale is closed out to the House Account and then the adjusting entry would be to credit the receivable (aka House Account) and debit an expense? And that whether cash was received for the Gift Card or not it is all one ball of wax in the same Balance Sheet Account as a liability? Also, out of curiosity, where does this expense fall on your P&L? Is it below the EBITDA line? Or is it in Direct Operating Expenses?

Really appreciate you letting me pick your brain on this!

Alexis

Re: Gift Card Donation

Kirsten_H — Thu, 10 Sep 2026 20:28:57 GMT

Happy to help. And to make the statement...I am not an accountant, so you might want to consult your own accountant to see how they want you to account for things... 😁

In my world, if a gift card is created in the POS, it should be accounted for in accounting so your records balance, whether it's paid for or donated. So the way you're doing it, you might want to make those adjusting entries. I made a chart to show our flow.

We have our business promo type expenses fall into operating expenses, below prime costs. You'd want to consult your accountant to see where they want it.

I'm a hands on/visual person, so sometimes I need to make a chart...