Accountants & Fundraisers Should Be Friends

Accountant:  Fundraisers don’t seem to care about dates.  It’s very important whether the donation came in December or January.  You can’t push next year’s donations back into this year.

Fundraiser:  Accountants can be sloppy on the details.  Getting the name right is so important.  If the donor wants to be addressed as Dr. or Prof., we need to know.

Accountant:  The fundraising reports need to agree with the cash reports.  Each donation can be counted only once.  Their statistical reports can be very confusing with their soft credits and segmentation.

Fundraiser:  Talk about confusing!  Try making sense of the accounting deferrals and accruals.  I need to show the results of each campaign without all the financial jargon.

Accountant:  The general ledger is set up with logical revenue codes for donations based on the type of funder, and Funds based on the needs of the organization.  Why can’t the fundraisers adhere to this simple structure?

Fundraiser:  The accounting structure is ancient!  We need to know so much more.  For example, it is vital to distinguish between new and returning donors.  Also, it’s not the organization’s needs that are paramount, but the donor’s wishes.

Accountant:  Charity accounting is complex.  The financial statements are the official record of the organization for legal, tax and governance purposes.  The organization cannot survive without good accounting software.

Fundraiser:  Fundraising requirements are sophisticated.  The fundraising reports support all of the revenue generation decisions.  The organization cannot survive without good fundraising software.

Obviously, in this area, both are correct.  The charity needs a detailed policy about how to handle donations around December 31, so that it conforms with Canada Revenue Agency and audit requirements, particularly when the charity has a December 31 year end.  Typically, the mailing date is used to determine if the donations received in the first few days of January are actually December donations.  Whatever policy is chosen, it needs to be documented and followed consistently, particularly when a significant volume of donations comes in early January.

In addition, as much detail as possible must be gleaned from donations in order to have as accurate a picture of the donor as possible.   Some people will question their whole commitment to a charity that misspells their name.  They question the efficiency of the whole organization based on a typographical error.  Some organizations enter the donations separately into the accounting and fundraising systems.  While this solves the immediate problem, it creates reconciliation issues between the two systems (a topic for a future article).  As a general rule, the person with the greatest interest in the data should be responsible for data entry, and the data entry needs to be done in a way that all the organization’s needs are met.

Jargonless reporting needs to be the organization’s goal.  The organization needs different reports for different purposes, but a practical tip is to make sure that ALL of the monthly / quarterly / annual reports on fundraising come to the same total.  That way the reader has some comfort that all of the donations have been included only once.

Many systems were set up in simpler times and it can be difficult to change the structure of the data, but understanding the whole organization’s needs is important to both the fundraiser and the accountant.  A good time to update that understanding is during the annual budgeting cycle.  Even if changing the system is impractical now, work arounds can be developed.

As a software implementer, I would love it if software companies built bridges between different systems instead of attempting to be all things to all people.  I have worked with an excellent fundraising package that added financials and an excellent accounting package that created a revenue generation module.  Neither worked as well as the other.  But this is one area where you can have both.  Different systems can be made to talk to one another, a topic I will explore in a future article.