A marketing and fundraising geek at an accounting conference? Talk about a fish out of water. My novice is showing, I am sure.
So, you can imagine my gratitude when I saw the AICPA Not-for-Profit pre-conference session titled, “Not-for-Profit Accounting for Newbies.” Sold!
The session was a perfect start to my first accounting conference. In no particular order, here are three things I learned:
- Unrestricted vs. temporarily restricted vs. permanently restricted No wonder true fund accounting™ is a different beast than corporate accounting! When contributions come from donors, their use can be restricted to a particular operational expense (temporarily restricted) or to the endowment fund, for example (permanently restricted). I’m sure I am oversimplifying this, but my takeaway was , that it’s complicated. There is a balancing act here, though, between allowing donors to restrict their gift to something they’re passionate about, versus unrestricted gifts that allow your organization flexibility to cover operational costs.
- Pledges, promises, and intentions. As a fundraiser, I’ve high-fived my cohorts when a pledge was secured. Kinda funny when you think about it, though, because I didn’t have any cash in hand, just the donor’s promise or intention. Well … was it a promise or an intention? It turns out, those are very different. A promise matters; you know how much and by when. You could hypothetically send the donor an invoice for it. An intention is just knowing you are in the running for a donation. A father might ask a boyfriend his intentions with his daughter, but when it comes to pledges, a promise is what you really want.
- Contributions are complicated. Turns out that being green isn’t the only requirement for being a charitable contribution. There’s a five to six step flowchart for determining if a “contribution” was really a contribution. The component I found most interesting was that of agency variance. If a donor gives a gift and says, “This is for Bobby’s scholarship,” then it really isn’t a charitable contribution. But, if the donor says, “This is for the boys’ scholarship fund” and your nonprofit gets to select the recipient, then it is a charitable contribution.
In 100 minutes, my mind was blown with fund accounting information. And now, this fundraiser is geeking out over accounting quagmires. What, for example, if I say, “This gift is for Fido’s dog food?” Is that still a contribution, albeit a very restricted one, because Fido is a dog and not a person? I better understand the advice I heard at our Abila users’ conference this past February, that fundraisers work with finance to review the language in solicitations. You could inadvertently restrict contributions so much they would only have minimal impact on your mission. I encourage all of my fellow fundraisers to take some time to build up your Fund Accounting 101 chops.
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