Accounting and Fundraising — Optimizing Both Together

Reading Time: 5 minutes

If your organization holds fundraisers, you may be able to optimize your accounting and fundraising processes so they work better together. Disconnected finance and fundraising teams may work toward the same goals but struggle to align. Improved collaboration can benefit your teams and help your organization achieve its fundraising goals.

To optimize your operations, you should know which strategies to implement. This article covers tips for fundraising and growth, accounting for fundraising expenses, best practices for optimizing your accounting and fundraising, and the fund accounting solution that can improve your accounting and fundraising efforts.

Tips for Fundraising and Growth

Accounting and fundraising reconciliation is essential. Your nonprofit needs to track the money you receive and where the money goes, so you need an effective way to connect your accounting system with your fundraising data. Try these tips:

• Use the right technology: Nonprofits have a wide range of fundraising and accounting reconciliation needs, which means your organization needs a software solution designed specifically for nonprofits like yours. For example, our software for K-12 schools and universities can automate your fund accounting processes. You can easily manage revenue from multiple sources, such as tuition, fundraising, donations, grants, and endowments. MIP® compiles and presents your funding sources in a user-friendly way.
• Look beyond your general ledger: To prepare your fundraising data for your accounting system, you need to do more than simply duplicate your general ledger in your customer relationship management (CRM) system. Some items in your general ledger may not be appropriate for your CRM system, such as office supply costs. You may also track items in your CRM system that aren’t relevant for accounting, like soft credits.
• Review the financial coding system: Review and understand your financial coding system for fundraising and finances. If you have a complex list of funds, this can become challenging. By understanding the coding for financial transactions in each of your systems, you’ll know which data from your CRM system should go into your accounting system.
• Involve your accounting department: You should involve your accounting department from the beginning. To set up your fundraising data in your accounting system, you need to understand the accounting methodology your organization uses and the requirements for tax reporting. When you involve your accounting department, you can ensure accurate details are included when you implement a fundraising and accounting solution.

Accounting for Fundraising Expenses

To make money, you may have to spend some money upfront. When trying to attract donors, you may face some necessary fundraising expenses for your event. Determining how you will account for these expenses can be challenging, especially if you are unsure how to categorize them and are unfamiliar with the process. Common fundraising expenses include: 

• Meals
• Staff training
• Printing costs
• Direct mail campaigns
• Compensation for event workers
• Event-related costs, such as those related to a fun run or silent auction

Your statement of activities, also known as your income statement, records your revenues, costs, and net assets for your fundraising efforts. Your expenses will fall under fundraising, administrative, or program expenses. Software designed for nonprofit fundraising can make this process simple.

Fundraising and Accounting Best Practices

To successfully achieve your mission as a nonprofit, you should follow best practices for fundraising and accounting. Fundraising may be a crucial aspect of your organization’s strategy. To conduct the programming that will help you achieve your goals and work toward your mission, you may need to raise money. You may be able to ensure your fundraising campaign is successful and profitable by creating a data-driven plan before you execute your campaign. The following are some best practices to follow for your fundraising and accounting:

Identify Your Audience

If you target your fundraising campaign to the wrong audience, you may not reach your goal. This is why it’s so essential to identify your audience before you kickstart your fundraising efforts. For example, suppose you want to host a fundraising gala with costly tickets. In that case, you may wish to target donors who have historically given thousands in donations rather than those who’ve donated smaller amounts. In this example, your costs may also be higher, as you want to provide an exclusive event with a top-tier venue, delicious food, and a classy atmosphere.

When determining your target audience, consider the type of fundraising campaign you’re hosting. Additionally, assess your fundraising goal and ideal turnout to identify your audience. After you evaluate these factors, you can identify the supporters that can help you achieve your goal. Once you have identified your target audience, consider the following factors to develop a successful campaign:

• Their interests
• Their demographics
• Their average donation size
• How to market to them effectively
• The events they’ve previously attended
• The fundraising ideas that best suit this audience
• How they have previously responded to your marketing efforts

Develop a Campaign Budget

Budgets are useful in any organization, helping you determine your annual and overarching goals and financial health. Your annual budget includes the revenue you expect to make and the expenses you expect to pay. Your revenue sources may consist of individual donations, grants, events, and sponsorships, while your costs may include office expenses, insurance, rent, utilities, events, and program supplies.

Similarly, you may want to develop a detailed budget that covers your expected expense and revenue sources specifically for your campaign. Your budget should cover your ultimate fundraising goal and detail how you plan to hit your goal via different fundraising sources.

A popular fundraising event is a fun run. First, you can determine your various revenue sources and estimate how much you anticipate will come from every source. Some revenue sources you may expect from a fun run include the following:

• Donations
• Merchandise sales
• Sponsorships from local businesses
• Individual registrations for participating
• Matched gifts from the employers of the participants

Of course, nearly every event also comes with some expenses. If you decide to host a fun run, you may want to anticipate the following costs:

• Insurance
• Entertainment
• Advertising costs
• Rent for the space
• Event registration software
• Merchandise for each attendee
• Labels or safety pins for participants
• Water and refreshments for participants

Request a Demo of MIP®

Streamline and elevate your existing financial operations with secure, always-available digital accounting. At MIP Fund Accounting®, we know your business backward and forward, with a legacy of decades in fund accounting optimization. We’ll take the next step with you into a cloud-based future, helping you do more with less and ensuring you make the most of every resource.

As your trusted partner, we can guide your organization’s fund accounting into a seamless, always-connected future and optimize your financial operations for both today and tomorrow. Request a demo of MIP Fund Accounting® today, or contact us to learn more about accounting for fundraising events.