Archive

Archive for the ‘Philanthropy’ Category

Understanding and Protecting Donor Intention and Grants

October 8th, 2014 No comments

Nonprofits and NGOs are in a delicate position because they depend on donors to uphold and support their cause and grants to fund their mission. At the same time, their donor counterparts and grantors are passionate and excited about imagesthe mission, and nonprofits need to respect the intent of the charitable donation or grant.

If donors were to find out their money was spent in a way contrary to their desire, future funding could be in jeopardy, not to mention the potential for a PR crisis. This is why clear communication with donors is extremely important for nonprofits and NGOs of any size. Adhering to donor intention doesn’t just protect your relationship with one particular donor or grantor; it also protects the overall mission of your nonprofit.

Understanding Donor Intention and Grant Restrictions

There are many layers of donor intent and three specific grant restrictions. Before setting up a grant or making a direct donation, philanthropists may have broad or very specific guidelines on how the funds should be spent. Terms and conditions of a grant or donation may include:

  • Unrestricted: without a designated use
  • Temporarily restricted: contains specific guidelines on how it will be used
  • Permanently restricted: must be held indefinitely (often with the intent to generate interest)

Even if a grant or donation is unrestricted, special care should be made to address the donor’s intent. This helps develop a relationship of trust that will hopefully extend far into the future.

How to Protect Donor Intent

The first step to protecting donor intent is to have a clear cut mission statement. You mission statement will not only help attract donors, it will help attract the right kind of donors—ones who are passionate about your cause. When you share the same goals, then most of the time donor intent will align itself naturally with your everyday processes.Capture

Along with a clear mission statement, your nonprofit or NGO should have a strong commitment to ethical behavior on all levels of the organization. Perhaps this goes without saying, but even the slightest deviation from honest business practices (intentional or not) undermines your entire organization. Even in cases where donor intent isn’t clearly defined, all funds should be allocated with complete transparency and a commitment to spend it according to your donor’s wishes.

Finally, your nonprofit or NGO needs the right accounting and reporting tools so you can actually show your donors that you’re spending their funds as intended. In Geni Whitehouse’s whitepaper for Serenic Software, Grant vs. Grantt, she states, “Grant managers have strict accountability and tracking requirements, specialized reporting and measurement needs, and complex revision tracking requirements. It should be no surprise, then, that grant managers need special tools to support them.”

Selecting the Right Grant Management Software

Haphazard grant management increases the chances of mistakes and misallocation of funds. To ensure that your nonprofit or NGO is compliant with all fund restrictions, you need dedicated grant management software that integrates with your nonprofit accounting software.

Your organization’s mission is best supported with grant managing software designed specifically for nonprofits and NGOs; learn more about Serenic Software’s grants management solution, AwardVision

How Technology Has Changed Philanthropy for the Better

October 1st, 2014 No comments

We live in a time when tech companies and computer savvy gurus have found a way to improve just about every professional field through the means of technology. Philanthropy, likewise, has changed immensely.MEGWARE.CLIC

The “old days” of philanthropy—before technology and social media had an impact on attracting donors—involved primarily the elite funding their favorite charities. Philanthropic giving was something a select few did at the end of their careers, after they were done amassing great wealth.

Now philanthropy is more egalitarian. It’s easy for nonprofits and NGOs to reach out (through tools such as smart phone apps and social media campaigns) to people from any socio-economic background, and enable them to donate easily and in small amounts. Philanthropy isn’t something you have to wait to do anymore—technology allows you to make donations in easy and often creative ways. Read more…

Transitioning a Business from For-Profit to Nonprofit

September 24th, 2014 No comments

If your business already has a philanthropic vision, then making the transition to nonprofit status may be a wise move. It’s not as simple as applying for tax-exempt status with the IRS, though. You’ll need to carefully plan your transition, taking great care to complete all the necessary federal, state, and regional requirements.

Start With Your Mission

Before you make the move, you’ll need to decide on an overall mission. A nonprofit organization doesn’t exist to generate profits for owners or shareholders—the main objective is its charitable mission.

Your business may already have certain aspects that qualify as charitable activities. Use this as a starting point, and build your new nonprofit organization around it. You may still be able to use your old company’s name, but the fundamental purpose of your new organization needs to change so that it is centered on a charitable mission.
Read more…

How to Avoid These Common Nonprofit Accounting Mistakes

September 11th, 2014 No comments

Nonprofits are dedicated to pursuing altruistic missions aimed at serving the public, but that doesn’t stop many from falling victim to common accounting mistakes. According to a 2013 study by Jeffrey J. Burks at the University of Notre Dame, nonprofit organizations make almost twice as many accounting errors as for-profit companies of similar size.medium_6757849129

Easily avoided mistakes (such as data entry errors) can derail an entire nonprofit’s mission. An improperly categorized expense or a mismanaged account may attract attention from the IRS and cause donors to lose trust in your organization.

Here’s a list of some of the most common nonprofit accounting mistakes, along with some pointers on how to avoid them.

Data Entry Errors

A misplaced zero can wreak havoc on a financial report. Small errors have a way of coming back to bite you, so make sure every entry is double checked every time. Compare accounts with bank statements and maintain the utmost attention to detail, even if you are using accounting software that does many operations automatically.

Failure to Follow Appropriate Accounting Procedures

Every nonprofit organization, big or small, should have clear and effective accounting procedures that all employees are required to follow to the letter. If any procedures are ignored or followed improperly, it can confuse the IRS and set you up for an audit.

For instance, implementing a single platform for your nonprofit accounting software with automated workflows can ensure that policies on purchasing and expense processing are enforced, while maintaining audit trails.

Lack of a Complete Review Process

Without a robust review process, it’s easier for small mistakes to fall through the cracks. Make sure every accounting transaction is reviewed by a second pair of eyes at the very least.

Relying on Volunteers and Untrained Personnel

Budgeting restrictions can make it difficult to hire professional staff for your nonprofit organization, but accounting is one of the areas where you shouldn’t rely on volunteers or untrained personnel.

Accurate and complete accounting from a professional accountant helps you avoid costly errors. It will also help your fundraising efforts, since donors will be more likely to trust you when you have professional and accurate financial reporting in place.

Improper Categorization of Revenues and Expenses

Unless you categorize every single source of revenue and every expense, it’s difficult to determine how donations and grants are being used. Many donations are restricted, which means they have to be used in for specific purposes. Categorizing all revenues and expenses allows you to show a complete paper trail for all money flowing through your organization.

Losing Track of Petty Cash

For most nonprofit organizations, having some cash on hand is necessary when small expenses pop up (such as buying office supplies as the need arises). However, a petty cash fund needs to be as meticulously monitored as any other expense.

Make sure only a few employees have access to petty cash, that it’s under lock and key at all times, and that you keep receipts for all transactions.

Avoiding These Errors Helps Your Nonprofit Achieve Its Overall Mission

When you avoid simple accounting errors, you help your nonprofit achieve these three objectives: save time and money, help build a relationship of trust with donors, and give managers and board members the information they need to make strategic decisions.

Of course, the ultimate goal is to achieve your organization’s mission, and that is what nonprofit accounting is all about.

Photo courtesy of: 401K

The Role of Nonprofit Accounting Software in Time Bound Philanthropy

September 3rd, 2014 No comments

Some philanthropies focus on long-term goals—raising money for cancer research, fostering democracy, eradicating hunger, etc. It’s not expected that the nonprofits and NGOs with these types of missions should achieve their goals right away. Their missions are not generally bound by hard deadlines or specific timeframes, as long as they continually endeavor to reach their overall tasks.

Other philanthropies are focused on giving help to those that need it now. These organizations are time bound: they have to worry about providing services quickly and effectively, because often people’s lives are at stake.

Both types of philanthropy are incredibly important, and they often complement each other. For example, a nonprofit or NGO that provides medical care to affected populations during an outbreak of a deadly disease (such as the current Ebola crisis in Africa) is reliant on the long-term focused philanthropies that work on developing better treatments and possible cures.

The Importance of Easy, Clear Reporting

A time bound organization typically has the same accounting needs as other nonprofits and NGOs. Transparency and accurate reporting are necessary for the success of any nonprofit, but time bound organizations are especially vulnerable to delays and inaccuracies in their financial information, given their need to make big decisions quickly and access funds immediately. They need any time, anywhere access to current, reliable data.

Time bound philanthropy is often incredibly stressful, especially during a crisis. Delayed access to funding or concerns about budget overruns should be the last thing on the minds of the staff on the front lines of a health disaster.Numbers And Finance

When it’s time to strategize and report, nonprofits and NGOs need accounting software that is quick and easy to use, complete with features such as:

  • Compatibility across departments and funding organizations
  • Automatic language and currency tools
  • Instant access to critical, real-time financial information
  • Accessible from anywhere on the globe

The right financial management software helps organizations have a stronger impact on their mission. Choose nonprofit accounting software that takes away from the stress of running a nonprofit, rather than adding to it.

photo credit: kenteegardin via photopin cc

Empowering Democracy Through Transparency and Accountability

August 27th, 2014 No comments

Serenic Software’s tagline is “Empower Your Mission.” We believe that our software solutions are instrumental in helping nonprofits, NGOs, and public sector organizations pursue their missions throughout the world.

And while each of the organizations Screen Shot 2014-08-27 at 2.18.53 PMwe work with has a unique mission, all share a passion for the democratic process, as exemplified by their strong desire to provide transparency and accountability to the people they serve. As Rick Cohen of Nonprofit Quarterly put it, “Nonprofits, we hope and believe, are the bedrock of democracy and mechanisms for democratic participation.”

In a world where the economic elite and special interest groups hold the greatest sway over politicians and policy decisions, nonprofits play a vital role in promoting democracy and empowering individuals to exercise their right to be heard.

Nonprofits and Philanthropies Can Exert Political Influence

The Encarta Dictionary defines a democracy as “the free and equal right of every person to participate in a system of government, often practiced by electing representatives of the people by the majority of the people.”

Even though all nonprofits and philanthropies are not politically focused or motivated, all are perfectly suited to enhance democracy, in large part because they so often encourage people to participate in government. For example, Rock the Vote does an excellent job of fostering democracy without subscribing to any single political ideology.

The structure of nonprofits, NGOs, and public sector organizations is also decidedly democratic, allowing input and direction from all levels, along with a strong commitment to transparency and accountability. And because of the grassroots nature of nonprofits and philanthropies, change can be enacted swifter than in government and the for-profit business sector.

Technology Has Revolutionized Accountability

Advances in technology have given average citizens another set of tools they can use to demand greater accountability, not just from government, but also from private businesses and nonprofit organizations, thereby increasing their individual influence on the democratic process.

“Inside every device and every piece of software is the DNA of both democracy and transparency,” wrote Chris Gates, Executive Director of Philanthropy for Active Civic Engagement (PACE), in the forward to “Philanthropy and the Limits of Accountability: A Relationship of Respect and Clarity.”

By taking full advantage of nonprofit accounting software, nonprofits, NGOs, and public sector organizations can hold themselves to a higher, more democratic standard.

Accountability to the People Nonprofits Serve

Transparent reporting is vital to fostering relationships of trust with donors, but accountability is equally important to the very people nonprofits serve. Through transparent accounting, nonprofits can make themselves accountable not only to donors, but to the communities they operate in.

Accountability is perhaps the most important factor in a democracy—without it, citizens can’t effectively exercise their voting rights to enact change within their communities.

Accountability also helps nonprofits adjust and improve their own operations, ultimately empowering them to better achieve their mission. For more information about how Serenic can help “Empower Your Mission” with transparent accounting, explore our fund accounting resources.