Accountants and fundraisers should be friends

publication date: Oct 10, 2013
 | 
author/source: Bill Kennedy

Oh, the farmer and the cowman should be friends.
One man likes to push a plough, the other likes to chase a cow, 
But that's no reason why they cain't be friends. 

                                                  -Oscar Hammerstein (Oklahoma)

The Finance and Fundraising departments work with a lot of the same data, but their different goals can cause challenges.  Here are a few points of friction:

Donations

 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.

Bill Kennedy photoObviously, 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, or 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.

Statistics

 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.

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.

Coding

 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.

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.

Software

 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. 

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.

With planning, these different needs can be met.  Reconciliation issues and the different coding structures can be adhered to if the donations are coded for both systems and the information is passed electronically from one system to the other.  A robust system can be built by choosing financial and fundraising software separately and bridging the two systems rather than attempting to find one system that meets all needs.  Even if the organization has no plans to buy new systems, getting both sides to set out their needs clearly can lead to a system re-design suitable for both functions.

Bill Kennedy is a Toronto based Chartered Accountant with Energized Accounting, focusing on financial and reporting systems in the charitable sector. He blogs at www.EnergizedAccounting.ca/blog/. Find out more at www.EnergizedAccounting.ca; follow Bill @Energized.


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