Accounting Tips and Your Christmas Wreath FundraiserTim Ahern | December 4, 2014
For a nonprofit, proper accounting procedures are vital, especially in the time surrounding a fundraiser. The funds that are raised and spent as a result of fundraising efforts will usually undergo intense scrutiny by auditors, board members, and other parties later, so it’s important that every dollar be carefully tracked.
As you finish for this year’s Christmas wreath fundraiser, there are things you can do to make the accounting process easier. Here are a few fundraising tips to ensure the financial aspects of your fundraising efforts are well tracked for later reference.
There are numerous tools that can make the job of tracking nonprofit finances easier, and many are available at affordable prices. Cloud-based software like Intacct and Financial Edge NXT can track income and expenditures, as well as generate the reports a nonprofit needs to show how much money was raised and where it was spent. Because all of this is automated, it makes a nonprofit’s job easier.
If your organization can, consider investing in software that will also help track money as it comes in. If your members can input orders into a spreadsheet on a mobile device as they get them, your back office will have a much easier time handling the bookkeeping tasks associated with their jobs. Specialized fundraising software like Neon CRM and Donor Perfect will help you manage payments and gain insight into how your activities are paying off, helping drive future fundraising planning. Some software will even allow you to scan credit cards and process payments directly into the app, keeping your accounting always up to date.
Know Your Tax Obligations
Nonprofit fundraising doesn’t have to get tricky at tax time if you know the rules. It’s important that a nonprofit’s accounting team understand the IRS rules applying to fundraising dollars to avoid paying penalties later. If a fundraiser earns more than $5,000, a nonprofit will be asked to report it and if more than $15,000 is earned, it must be reported on Form 990.
For smaller nonprofits, a qualified tax accountant may be the best way to handle fundraising reporting at the end of each year. For just a small hourly fee, these accountants can help an organization with its taxes and make sure nothing is left off.
While every organization wants to believe theft could never happen, unfortunately internal theft happens in nonprofits. According to Traveler’s Insurance, the typical organization loses five percent of its revenues to fraud each year. While this amount may be relatively small, when a nonprofit is forced to be publicly answerable to where every dollar goes, it can create an image issue, as well as the impact from the loss of funds.
To prevent internal theft, put checks and balances in place to make sure each dollar is double-checked. Instead of relying solely on one person to collect, track, and deposit the funds, have another employee sign off on each payment and expenditure. The same basic accounting control procedures used by for-profit organizations can help safeguard your organization against internal theft.
Having a successful Christmas wreath fundraiser is easy if you use the right accounting procedures. By taking steps to safeguard and track your income and expenditures, you’ll pass audits with flying colors and ensure each dollar goes where it belongs.