DAF Gifts: Budget/Financial Docs vs Fundraising Report Confusion
I work in fundraising and handle the Annual Fund and Annual Fundraiser for our organization.
While I took finance related classes in my MPA/Nonprofit Management program and did well, I do not consider myself to be super knowledgeable about finance and budgeting. I have served on boards with other organizations.
The issue I am running into is our board is struggling to understand that some gifts to our annual fund are coming in the form of DAF grants or donor-directed gifts from family foundations. (Happy to be told if I am thinking about this wrong.)
Example: We have a donor who has given us a personal check in the past, instead direct her family foundation to give us a $2,500 unrestricted grant in response to an annual fund appeal mailer. There is no additional reporting required beyond acknowledging the grant. I recognized we needed to send a thank you to both the supporter, and legally needed to send an acknowledgement to the Family Foundation. (In this case, the family has hired people to manage their family foundation for them.)
In our current chart of accounts/finance docs, DAF grants get lumped in the same account with all of our 6 figure operating grants that are handled by our Grants Manager.
This makes it hard for the board to see from the financial documents they receive each month how we are doing on our annual fund goals. In the finance docs, it looks like we only had $36,000 in income in the annual fund last year when I count more than $80,000 with DAF and donor-directed grant gifts from family foundations.
I use Salesforce to maintain my relationships with all of our donors and generate separate fundraising reports from there. Our Quickbooks and Salesforce accounts are not linked. I include DAF gifts received as part of our annual fund campaigns because that more accurately reflects our income vs. money spent fundraising. I clearly label in Salesforce what type of gift it is. We do not track our program specific, large operating grants in Salesforce.
Our board gets really confused by this. I’ve tried explaining that finance and fundraising are just categorizing income differently. My way of categorizing is focused on our relationships with donors and stewarding and upgrading donors/DAF decisionmakers strategically. The finance reports are our source of truth for ensuring we are legally meeting our obligations for each type of income.
Are there any best practices I could advocate for better aligning finance and fundraising reports? Are there ways I should be thinking differently? We are in the midst of hiring a new finance person so we are going to be revisiting our chart of accounts, budget structure, and processes as a part of onboarding the new person.