The Accounting Department – Friend or Foe to Giving?

by Marcy Heim on October 9, 2019

Do you sometimes feel like the accounting folks are just trying to be difficult?

Here are a few examples about working with accounting I heard during my latest round of presentations. Be sure to hit ‘reply’ and share your accounting stories or questions.

SIX Accounting Stories – Sound familiar to you?

  1. Your volunteer speaker goes off the script at a fundraising event and promotes his favorite project. Accounting tells you the dollars that are given are designated for his project – not the annual fund – because that was the Ask they responded to.
  2. Your donor wants to pay a major gift pledge off in 5 years – giving in years 1, 3 and 5 only-  to get to the gift level needed to deduct the gift on her taxes. Accounting tells you this can’t be done.
  3. You learn that even in the annual fund donors like options. So, you create 3 options – where the need is greatest, current programs and staff professional development.  Accounting says they will note the option in the annual fund and periodically look at the expenditures to be sure dollars given were spent accordingly.
  4. Your accounting department will not support additional marketing budget to increase program enrollment because they believe that the enrollment projections are not guaranteed to be successful and that will create a budget deficit.
  5. Your major donor wants to pay a $100,000 pledge off with a $10,000 for the first two years, then $40,000 for the last two years when she is finished with a pledge to another organization. Accounting says the amounts need to be the same every year.
  6. Accounting resists spending money donors have given for use immediately to have reserves.

These are just a few relatively simple examples of many awkward, and perhaps frustrating, conversations between the number crunchers and the relationship builders.

Accounting Basics to Remember

  1. The belief that your organization is stable and ethical is one of the top reasons, according to the research, that donors invest.  This comes from accounting adhering to proper practices, even when the donor may have specific requests to do things differently.
  2. Accountants and bookkeepers are generally wired differently than fundraisers and are less flexible and understanding of the unique relationship with each donor.
  3. You ALL are important to the success of your non-profit and to the joyful giving donors experience!

Money stairs

The Stories Continue – Here’s my take

  1. Yep…the volunteer going off on a tangent about his pet project shifts the Ask. It may not be what you intended or even what is written in the program. It is still an Ask focused to a specific project. You need to put the dollars toward that project or clarify with each donor what the intention of their gift was and process, or re-process it accordingly.
  2. Every other year pledge payments is a rock-solid solution to addressing mid-level donors impacted by the new tax laws.  They can then take the new, much larger, standard deduction one year, and give basically a double pledge payment the next to have an amount larger than the new standard deduction.  AND…remember to recognize them in giving clubs EVERY year. No, you don’t issue any sort of tax-deductible receipt – this is for recognition only so they are part of your giving family every year.
  3. Doing the annual fund appeals, looking at 3-5 general yet specific designations within the annual fund throughout the year is a good way to give donors some choice without having an accounting nightmare.  The research tells us that donors who like to have a choice will DOUBLE their annual fund gift when they are given options.  However, only 20-25% of all annual fund donors want this. For those who want the options, it brings in more money.  It DOES mean you need to be doing more with the annual fund than just operations – some programming too. The optional areas to designated must typically be funded in part by the annual fund so you will generally use the money given for that use.  In my experience, the amounts given are not large…but are good ways to more effectively engage some beginning donors in the annual appeal.
  4. There are many factors that lead to increased enrollment, paid participation, whatever….not JUST marketing. Best to set big results goals, but be conservative in the budget. It’s better to get most of a larger goal than all of an insignificant increase.  We have been trained to shoot low to be sure of success. BIG visions get BIG results.  This budget decision should be part of setting reasonable giving goals – not just a budget-gap number that doesn’t make sense with where you are with your giving program.
  5. This one is just silly. Donors should be able to break down pledge payments in any size they wish. Perhaps some accounting software is easier to use with a consistent number, but clearly, this should serve the donor in giving you money! Honor your major donor’s wishes.
  6. Saving for a rainy day with outright gifts…this is just wrong. While accounting wants to have reserves for stability, it cannot be done by squirreling away money given to use NOW. Spending that money to fund scholarships, or programs, or staff NOW is honoring the donor’s wishes. It’s unethical and wrong when a donor is believing something good is going on right now with their gift.  Additionally, the stories you can share about this giving making an impact will encourage more from the original donor and others!

Fostering a great relationship with Accounting

Meeting with accounting

  1. Connect the donor directly to the accounting folks.  When they hear straight from the donor, they tend to want to help address the request.  Ask accounting folks to join in a visit. I have seen major changes when accounting hears directly from donors.
  2. Take time to learn more about how money is managed, interest is earned and spent in endowments, etc. While meeting with your donors is always number 1, a once-a-month hour to learn more will help.
  3. Treat everybody in accounting like a major donor. Cookies, appreciation, communication. It really is all about relationships – with your accounting colleagues and MONEY.

Remember we ALL bring our money mindset into this work. We are often uncomfortable talking about money and tend to come from a place of scarcity instead of abundance!  See your dollars growing! See your relationships doing your mission – then take action to connect the donors, and accounting, to the real reason for money – to create abundance and do good in the world!  Thank you for making it happen!

Invest in JOY®

  

Marcy Heim is a trusted authority in the development profession and helps organizations and educational institutions boost their major gift programs through artful, long-term relationship building that dramatically increases fundraising success while promoting increased staff job satisfaction. To receive a free chapter from Marcy’s book, Empower Your Board to Serve as Effective Development Ambassadors, click here.

Questions:  Contact KK Konicek at KK@MarcyHeim.com

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