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Not-for-Profit Contributions: Counting v. Accounting

Counting moneyWhen is a contribution to a not-for-profit really a contribution? Many would say it depends on whether you ask someone in the accounting or development department. While the accounting office recognizes contributions in accordance with generally accepted accounting principles (GAAP), there are no required standards for counting and reporting fundraising receipts by the development office. The resulting differences create perhaps the greatest source of tension between the two teams. So what can be done to bridge the gap and foster a cooperative relationship that will best benefit the not-for-profit?

First, accept that what gets reported by each group will be different. And that’s okay, as long as the differences can be explained. There’s no need to hash out who’s right or wrong; just take time to understand each other’s math. What gets included, by whom, and when? Accountants need to explain GAAP in “non-accountant” language. Similarly, the development team needs to establish and share its consistent guidelines for reporting fundraising activity. Developing this understanding will take time and patience on both sides but is essential to forming a good working relationship.

Once the groundwork has been laid out, consider taking the following steps to nurture the relationship, prevent frustration and limit surprises:

  • Promote open and ongoing communication between the accounting and development departments. Set up a regular meeting, ideally monthly but no less than quarterly, to discuss recent fundraising activity.
  • Develop a reconciliation process between the financial and fundraising systems.
  • Encourage communication between groups when large or unusual gifts are received so that both clearly understand the gift terms and how to report them properly on both sides.
  • Create written policies that outline the processes and documentation requirements for gift acceptance. The AICPA Not-for-Profit Section created a sample gift acceptance policy that you may be interested in reviewing. In addition, ensure that processes are in place to handle gifts with terms that fall outside of the normal gift acceptance policy.

For not-for-profits that have finance and development committees of their board of trustees, have someone from each group attend the other’s committee meeting. It can be confusing for board members to get seemingly different information on what appears to be the same subject. Knowing what information is being presented allows both departments to tailor their presentations, resulting in more clarity across the board.

The accounting and fundraising relationship, like any other, takes ongoing hard work to make it succeed. Remember to communicate, cooperate and collaborate!

Additional valuable resources related to gift acceptance can be found by visiting the AICPA Not-for-Profit Section website.  

Karen Craig, CPA. Karen is a consultant providing technical accounting, reporting, finance, and analytical expertise to not-for-profits with a focus on higher education. Karen served as Associate Controller at Stanford University from 2002-2009, where she was responsible for the overall operations of the university's investment accounting, financial reporting, capital accounting, payroll and disbursements departments. 

Counting money courtesy of Shutterstock.


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