Thanks for the help and insight over this thread. I'm a 20-year veteran of QuickBooks and QuckBooks Enterprise and used classes extensively, including setting them up like I tried to do in QBO (I just assumed that classes were the same in both programs). That is obviously not the case. I still can't say I fully understand what a QBO "class" is, but I've learned enough to know that it won't work for what we need.

My solution was to create child accounts under Donations (income) and Restricted (expense), with each child account the equivalent of the project for which our donors are giving money. We don't get the detail we'd like in order to see how their donation was spent because we don't want to duplicate categories for every project (Supplies, Advertising, etc.). However, we can run a P&L and filter it by the project's income and expense category to see how much of donor's funds we have left on a specific project.

Thanks again for your help. I wish the solution had been as we originally set up QBO--it was a lot of work to reclassify all of our transactions.