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Development and Accounting – Better Together
Jennifer Alleva, Partner, Your Part-Time Controller, LLC

Consider these ideas to promote better communication between your Development and Accounting Departments, and start getting better results for your organization.

Understand and reconcile the differences between financial reports. Often differences exist between financial information reported by the Development and Accounting Departments to management and the Board. It does not necessarily mean that one department is correct and one is wrong; there are several reasons for legitimate differences. Examples may include:

• Accounting must follow Generally Accepted Accounting Principles (GAAP) when recording contributions. This includes recording multi-year grants or pledges in the period it receives the documentation (not necessarily the money). Additionally, if the grant or pledge contains a condition (such as a matching requirement), it cannot be recorded as revenue until the condition is satisfied. However, Development may record these contributions differently.
• Accounting cannot record a grant or a pledge in the general ledger until it receives documentation. Development may record it in the donor software based on a verbal confirmation.

Before presenting information to management and the Board, Accounting and Development should meet and agree upon the form and content of the reports. This may require a reconciliation report to bridge differences. Most definitely, monthly activity recorded in the donor software and the general ledger should be reconciled.

Before completing a major grant proposal or budget or embarking on a significant campaign, meet to understand expectations. Each group should know what information is needed and how the information will be reported internally or to the grantor. Agreeing upfront on a realistic budget or the proper pledge form helps avoid problems later in the process.

Meet at least monthly. Holding monthly meetings to review financial reports and reconciliations and to discuss progress on all activities solves many communication issues.

Create a schedule of funder report due dates and responsible parties for each report. It should not be a surprise to anyone when a report to a funder is required.

Share resources. Development should immediately send the Accounting Department copies of all grant letters and significant pledges upon arrival. Additionally, PDF versions of common grant application materials (for example, the most recent audit and Form 990) should be created and stored in a shared folder on the server.

Call in a facilitator to help . If the departments experience trouble, an objective third party often proves helpful.

Since 1993, Your Part-Time Controller has been providing bookkeeping, accounting, Controllership and CFO services to nonprofit organizations. To learn more, please visit www.yptc.com.