Is fund accounting less appropriate for businesses than for not-for-profits?

A newly formed notforprofit advocacy organization, the Center for Participatory Democracy, requests your advice on setting up its financial accounting and reporting system. Meeting with the director, you learn the following:

Member dues can be expected to account for approximately 80 percent of the organizations revenues.

The organization plans to seek grants from private foundations to carry out research projects pertaining to various political causes.

The center has already received a gift of $100,000. The donor specified that the funds are to be placed in investmentgrade securities and that only the income is to be used to support center activities.

The center leases office space but owns its furniture, fixtures, and office equipment.

The center has taken out a fiveyear term loan of $100,000. Although the loan is not due until its term expires, the organization intends to set aside $17,740 each year with the prospect that, properly invested, these payments will provide the necessary $100,000.

Do you believe that the center should establish its accounting system on a fund basis? If so, why?