by Kathleen M. Clayton, CPA, PSA Engagement Principal , HBK CPAs & Consultants
Development Director, “I just got this huge pledge! Closing in on my budget, maybe I’ll get a bonus. Put it in my donor data base already. I need to let accounting know.” Walking over to accounting department now.
Accounting Director, “Great news on the pledge, but do you have something more than this post it? We can’t record this based on a post it.”
Development Director, “Do I need it?” Leaving accounting with my post it.
Development Director, “Just received a wonderful piece of artwork donated for the auction. Donor says it’s worth well over $20,000. I’ll be way over my auction budget with this one. Not sure who the artist is, but the donor loves it.” I put it in my donor database and need to let accounting know.” Walking over to accounting now.
Accounting Director, “Great news! Do you have the appraisal?”
Development Director, “Do I need one?” Leaving accounting, again.
Development Director, “Hey, look out the window. We just got a boat donated. Its in our parking lot! Wonder how this goes into my donor data base? I need to let accounting know. I’m sure they know already since its in their parking space.” Walking over to accounting now.
Accounting Director, “Why is there a boat in my parking space? You’re kidding, it’s a donation? Do we even accept boats? Did you check our gift acceptance policy?”
Development Director, “Do we have one?” Leaving accounting again. Trying to figure out how to move the boat.
I really don’t mean to make development look clueless or accounting look like an ogre, but I’ve heard each of these scenarios in my career serving nonprofits, more than once, including the boat one. Every national conference has the session “How Accounting and Development Can Work Together.” Guess it will always be an issue.
In the best cases, development and accounting works as a team, raising funds, acknowledging donors, accounting for the transactions accurately and reporting to the authorities. And, of course, supporting the mission!
The trick is that each department really needs to understand how each does its job. Development is often the face of the organization with its donors. They typically have wonderful people skills and work really hard getting commitments and funds from donors. The true professionals know exactly how to make the ask, documents required and the correct way to say, “thank you.” But many development efforts are volunteer based, doing good work, but not savvy to compliance requirements. Maybe they need help understanding gift acceptance policies and how to write correct donor acknowledgment letters.
And then there’s accounting. The accounting for contributions is confusing for many, even the accountants. Many are frustrated trying to explain these rules to anyone other than another accountant, who speaks this foreign language. And the tax reporting might be different than what’s reported in the accounting ledger, as with gifts-in-kind; not to mention accounting issues like allowances, pledge discounts, valuations, or revocable or conditional gifts. No wonder accounting and development have translation issues!
So, assuming we’re all on the same team and want to work together, here are a few recommendations:
Get staff (or volunteers) educated!
There are plenty of ways to educate the team; some are more costly than others. Maybe your CPA firm, attorney or professional fundraiser can help do some training sessions. Share what you learn with others in your organization.
Join Technical Groups
Both fundraising and accounting professionals have formal membership groups to join. More importantly, make some friends. Use your friends when you encounter a new issue in your organization. Nonprofit professionals are friendly people; they share and are always happy to help others.
Spend Time each Day Reading
Every morning, spend a bit of time reading related news…there’s plenty out there. You’ll get information, and great ideas too!
Schedule a regular weekly meeting between Development and Accounting
- What’s happening this week?
- What’s coming up? Events, Audit?
- What information needs to be shared between the two departments?
- How can we make life easier for each other?
- Have we learned anything new this week, met any new information source?
Make Policies Together
Creating policies together results in buy-in, clarity to the donor and greater efficiency in both departments.
Understand the Different Technologies Used
A donor’s birthday might be useless to Accounting, but vital in donor relations. Recognize that one software system may not meet the needs of both departments. It’s ok.
Most important – Communicate
Great organizations understand that their Development and Finance Departments are both critical to the success of their nonprofit organization and working together is always the best solution.
Kathleen has over 36 years of experience in providing auditing, accounting, tax and consulting services to privately held businesses and not-for-profit organizations. She specializes in preparing tax exempt status applications, consulting on charitable regulations and providing outsourced management and accounting services to numerous organizations. She routinely consults with organizations that receive federal and state funding. Kathleen holds a BBS in Accountancy and Management and an MBA in Business Administration. She is a member of the New Jersey Society of Certified Public Accountants (NJSCPA), the American Institute of Certified Public Accountants (AICPA), and the AICPA Not-for-Profit Section.