Overview of Financial Reporting
All organizations have some kind of financial report that is shared with the Board of Directors and hopefully with the leadership of the organization. Making sure these reports are useful, comprehensive, and readable can be a challenge. It is important to create templates for various reports, get feedback on those templates, implement the use of them, and then regularly review their effectiveness.
Reports for Leadership
Every organization should be using a budget, and each department director or manager should be working with finance to develop that budget. On a monthly basis, finance should be providing leadership with a budget vs actual comparison for the month and year-to-date. These reports often look like financial statements. The reports should also be easy for program staff to understand. Relate it to non-dollar items they’re familiar with in their program. Your program served 65 families last month, which is the equivalent of $2,500, for example. Also, include detail whenever it is helpful for the person reviewing the reports.
Reports for Finance Committee and Board of Directors
Your board might gloss over at detailed finance reports. In this case, it’s often helpful to provide them with visual dashboard-style reports. Dashboards give a more visual snapshot and overall picture of the financial numbers. Several finance tools, like QuickBooks, can produce reports that offer pie charts and graphs, rather than an account listing. They key is relating your dashboard reports to financial statements for easy correlation.
Communication Between Development and Program Managers
It is helpful for development and program managers to communicate needs of their program, what funding may be required and how it will be funding (private donors vs. grants). It’s also helpful for program managers to know what grants are being submitted by the development team and how it may affect their programs and spending. Also, program staff and development staff should be mindful of what is covered under an awarded grant. You don’t want to fund a program with grants and realize later that you’ve covered 125% of the program staff salary with the grant, instead of the program itself.
Reconciliation of Finance and Development Reports
Reconciliation can be an easy monthly task, or extremely difficult. Here are a few items to watch out for in gift recording to help make sure development and finance are reporting the same thing:
- Date received vs. Deposit date
- Pledges and pledge payments – especially event pledges – they’re often going into donor software, but finance isn’t booking until payment is received
- Recurring gifts – be mindful of a needed process for any received through an event
- End of year – donation date should be date envelope is postmarked
- Credit card transactions – timing and actual processing
- Gift coding in database vs. finance software – adding custom fields for the accounting codes in your donation is sometimes helpful in the reconciliation process
Make sure as a development office, you have a monthly process in place to reconcile numbers. If a lot of issues start appearing regularly in reconciliation, finance might be able to enter more detail into their transaction (donor last name, for example) to help avoid further problems.
Overview of Development Reporting
It is important for the Board and organizational leadership to regularly see a development report that includes more than just the total dollars raised. Some examples of additional data points are number of new donors, performance of a specific appeal, number of planned giving commitments, etc. Development reports provide an opportunity to connect your board to the whole development program and where they can have impact.
Development Score Card
Share a score card of some sort with your board on a monthly basis. This helps the board see number that focus on your donors, not just the dollars being raised. Include details on your individual donors. How many are new? How many new donors gave over $1,000? How many donors are not individuals? What is your donor retention rate? How do all of those numbers compare to last year at this time? Show a summary of a few appeals that are relevant that month for the board to see.
The projections are closely related to your development budget. You’re showing actual vs. projected for specific line items in your fundraising activities – events, appeals, grants, etc. If you’re showing an increase of 10% or more from one year to the next, be ready to explain how you anticipate that growth to happen.
This analysis contains in-depth detail of your appeal or event. It should show your goal, how many were solicited/received an invite, total amount received, average gift, number of donors, and response rate. It should also give detail for each “segment”. If it’s a mailed appeal, break it down by each letter sent, include email campaign response data also. If it’s an event, show each line of revenue – sponsorship, tickets, donations at the event, and live auction, for example. You should also include the expenses for the event or mailing with an overall cost per piece mailed, or per person for an event.