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Your accounting and development departments are central to the continued financial health of your not-for-profit. So what happens when communication between these two functions break down? It could result in conflict between staffers, inaccurate financial statements and, in a worst-case scenario, the forfeiture of grant funds. Here\u2019s how you can encourage collaboration.<\/p>\n
Note different accounting methods<\/strong><\/p>\n Make sure staffers understand that accounting and development typically record their financial information differently. Development may use a cash basis of accounting, while accounting records contributions, grants, donations and pledges in accordance with Generally Accepted Accounting Principles (GAAP). This means that they produce numbers that vary but that nonetheless are both correct.<\/p>\n Let\u2019s say a donor makes a payment in March 2021 on a pledge made in December 2020. The development department will enter the amount of the payment as a receipt in its donor database in March. But accounting will record the payment against the pledge receivable that was recorded as revenue when the pledge was made in December. Receipt of the check won\u2019t result in any new revenue in March because the accounting department recorded the revenue in December. Both departments\u2019 figures for March 2021 (and for December 2020) will be accurate, but they\u2019ll disagree with each other.<\/p>\n Enforce clear protocols<\/strong><\/p>\n Your nonprofit should try to reconcile its accounting and development schedules at least monthly. It also needs clear protocols for communicating important activity \u2014 or both departments, and your organization, could experience negative consequences.<\/p>\n If, for example, development fails to inform accounting about grants on a timely basis, the latter won\u2019t be aware of the grants\u2019 financial reporting requirements and could forfeit funds for noncompliance. If the accounting department doesn\u2019t record grants or pledges in the proper financial period according to GAAP, your organization could run into significant issues during an audit \u2014 which could jeopardize funding.<\/p>\n Prioritize communication<\/strong><\/p>\n Schedule meetings so that accounting representatives can educate development staff about what information it needs, when it needs it and the consequences of not receiving that information. For its part, development should provide accounting with ample notice about prospective activity such as pending grant applications and proposed capital campaigns.<\/p>\n Development should also present status reports on different types of giving \u2014 including gifts, grants and pledges. This is especially important for those items received in multiple payments, because accounting may need to discount them when recording them on financial statements.<\/p>\n Two-way road<\/strong><\/p>\n Whether your nonprofit can count its staffers on two hands or has hundreds of employees, coordination between departments can easily break down. Contact us about establishing policies and procedures that promote the efficient communication of financial information.<\/p>\n \u00a9 2021<\/em><\/p>\n <\/body> Your accounting and development departments are central to the continued financial health of your not-for-profit. So what happens when communication between these two functions break down? It could result in conflict between staffers, inaccurate financial statements and, in a worst-case scenario, the forfeiture of grant funds. Here\u2019s how you can encourage collaboration. Note different accounting […]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[7,10,15],"tags":[8,11,12],"class_list":["post-15247","post","type-post","status-publish","format-standard","hentry","category-articles","category-news","category-not-for-profit","tag-articles","tag-news","tag-updates"],"_links":{"self":[{"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/posts\/15247","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/comments?post=15247"}],"version-history":[{"count":0,"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/posts\/15247\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/media?parent=15247"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/categories?post=15247"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/tags?post=15247"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
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