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Keep the Change...  a monthly shot in the arm for your fundraising
January 2013
Hello! 

To start off 2013, we've got a topic that I've been thinking about featuring for years -- the intersections of fundraising and finance. All because the wonderful David Orlinoff, financial consultant extraordinaire, generously offered to share his expertise on the subject. 

Enjoy,

   Tina  




Tina Cincotti

Funding Change

P.S. Is there anything special you'd like me to write about this year? Any questions you'd like an expert opinion on? Let me know and I'll see what i can do!

 
 

How to align fundraising & finance, courtesy of guest writer David Orlinoff

 

 

Several years ago, my daughter played the part of Aunt Eller in her high school's production of Oklahoma. Among the many subplots in the musical is the feud between the territory's farmers and the cowboys. 

 

The farmers want their land and livestock fenced in, while the cowboys need wide-open spaces for grazing herds of cattle. In the end, with the help of Aunt Eller, the two sides resolve their differences, their mission is achieved, and they are recognized as a state.


In my work with dozens of nonprofits, I have seen many organizations where the development and finance departments could have benefitted from Aunt Eller's help. The particulars are different in each case, of course. But the conflict often begins around differing reports of fundraising results.

Take this scene from a board meeting: 

 

The financial officer is presenting the financial statements. She points out that year-to-date contributions are just over $1 million. 

 

The board chair, having heard the development report 45 minutes earlier, jumps in to ask, "Didn't [the development director] tell us that he's raised almost $1.3 million this year?" 

 

Suddenly a bunch of people are all talking at once, trying to explain themselves and make the case for the accuracy of their numbers. At worst, this devolves into questioning each other's competence or accusations of bad faith.


What just happened? Which report is correct? 

 

Did the financial officer understate the fundraising results? 

 

Did the head of development overstate his accomplishments?

Where's Aunt Eller when we need her?

One thing we can tell from this scene is that the organization does not have internal agreement on how fundraising results will be measured and reported for financial reports. 

  • The cowmen (development staff) want a "free-ranging" definition of contributed funds. 
  • The farmers (finance staff) look at the world through the "fenced in" lens of what their auditors will accept by accounting standards. 

 

Both are right. And, both are wrong.

Finance is reporting on the dollar value of contributions that can be included on the official financial statements -- cash received or a written pledge to give.

Development, on the other hand, is reporting on this as well as things like verbal pledges and other commitments that do not meet the precise accounting requirements to be recognized as pledges.

The argument didn't have to happen. 

 

The cowmen and the farmers simply needed to understand and acknowledge the other's goals and indicators of success. The two reports can say different things as long as everyone understands what each one is reporting and that each is correct.

What can you do at your organization to create mutual understanding between finance staff and development staff? 

 

Here are six tips to get you started... 

 

These suggestions will also help you keep your leadership better informed about your nonprofit's revenue reports.

  1. Understand that there isn't a natural or inevitable adversarial relationship between development and finance. Too many organizations operate as if it's finance's job to keep development from "getting away with something." There's only one mission, and it's both departments' job to work toward it.  
  2. Learn each other's systems well enough to know how information is recorded, tracked, and reported. And be sure to acknowledge the different criteria for financial transactions versus development results.
  3. Make sure everyone understands and agrees when temporarily restricted contributions will be counted for the purpose of board reports: when the money is raised, or when it is released to unrestricted status. Don't make the mistake of announcing the income twice in two different board meetings.
  4. Huddle before each board meeting to make sure there are no surprises. Understand the differences between the reports, but don't try to make them the same. They're designed to measure two different things.
  5. Together, educate the board on exactly what each department is reporting. Until the actual year-end audit when the official accounting records must be accepted as definitive, the board should also have a fuller picture that includes development's reports on fundraising results and projections.
  6. Always assume best intentions, treat each other respectfully, and never characterize a differing point of view in a disparaging way. Or, as Aunt Eller put it:

I'd like to teach you all a little sayin'

And learn the words by heart the way you should

I don't say I'm no better than anybody else,

But I'll be damned if I ain't jist as good! 

 


David Orlinoff, Principal of Concord Financial Organization, has more than 30 years experience as a financial officer and has consulted to more than 50 nonprofits in diverse sectors including arts and culture, international development, K-12 and higher education, foundations, and social services. He does frequent trainings, teaches graduate courses in nonprofit financial management at BU and Tufts, and serves on two boards and on the audit committee of the United Way. You can reach David by email at orlinoff@1cfo.com and by phone at 978-828-6100.  

 

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Did you know...?

 There are three years worth of past issues of this newsletter online.
 
improving your annual report, optimizing your website for donors, getting your message across to supporters, planned giving for small shops... and more! 
  
It's all available for you in my online archive.



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That's me! 

A fund development expert with a passion for social change, Funding Change founder Tina Cincotti gives grassroots groups the skills, tools, training, and confidence they need to raise more money from their supporters.

 

She specializes in building individual donor programs; improving donor relations and donor communications; writing newsletters, annual reports, and solicitations; coaching staff new to development; and motivating boards to be more engaged in fundraising.   

 

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