Bridging the Development and Accounting Office Gap
Tuesday, March 21, 2023
Fundraising and accounting are two essential functions of any nonprofit organization, but they can often come into conflict with each other. Fundraising is focused on bringing in donations, while accounting is focused on managing and tracking the use of those funds.
During a lengthy or high-stakes fundraising project, then, it’s no surprise that conflicts may arise that jeopardize your organization’s ability to keep moving forward in an organized way. We’ll explore these common pitfalls and steps you can take to avoid them from the start.
5 Common Pitfalls to Be Aware Of
Here are 5 common conflicts between fundraising and accounting that nonprofits may encounter during major campaigns (or even just amid day-to-day operations):
Fundraising and accounting inherently work on different timelines.
Fundraising often requires quick action to respond to opportunities or donor wishes, while accounting requires careful and deliberate planning. Fundraising timelines are driven by seasonal appeals, the timing of special campaigns, and donor preferences. In a capital campaign, for example, donors’ commitments often span more than one year. Accounting prefers clear, predictable patterns that help with building budgets.
Fundraising and accounting have different priorities. Fundraising focuses on generating revenue and support for the organization, while accounting prioritizes financial reporting, compliance, and risk management.
These priorities can come into conflict when fundraising activities don’t align with the standard financial goals. For example, when a donor steps up to make an unexpectedly large gift for something that wasn’t in the budget or plan for the year, it can throw a curveball to the accounting team.
Communication between fundraising and accounting teams can be a challenge. Fundraising teams may not fully understand accounting requirements, while accounting teams may not fully understand the fundraising strategy. This can easily create cross-team misunderstandings and miscommunications, leading to mistakes and missed opportunities.
Fundraising and accounting use different metrics to measure success. Fundraising may focus on the number of donations, the size of donations, and donor engagement, while accounting focuses on revenue, expenses, and profitability.
These differences can create conflicts when fundraising activities do not generate enough revenue to cover the associated expenses, or when accounting requirements limit the effectiveness of fundraising activities.
During a capital campaign, for instance, the fundraising office will report not just current contributions, but also commitments that will be paid over time—often several years—as it works its way down the campaign’s gift range chart. Meanwhile, the accounting office reports likely won’t capture those longer-term contributions which can create confusion and misalignment about the campaign’s progress across the organization.
Fundraising and accounting require different levels of control. Fundraising often requires flexibility and creativity to respond to opportunities, while accounting requires strict controls to manage risk and ensure compliance.
This can create conflicts when fundraising activities are not properly monitored and accounted for, leading to financial and reputational risk for the organization. For example, the accounting team may overlook fundraising dollars that aren’t reported properly, opening the door for a variety of reputational and compliance issues if not caught and corrected.
How to Get Development and Accounting to Work Together
To overcome and prevent these conflicts, nonprofits must prioritize collaboration and communication between the fundraising and accounting teams.
The heads of both departments should get together to discuss the potential for difficulties and establish the best, most productive ways to work together. These might involve regular meetings and updates, shared metrics and goals, and a clear understanding of each team’s priorities and constraints. Just be sure to remind everyone of your shared goals—growing your nonprofit’s capacity and impact by operating efficiently, forging new connections, and responsibly stewarding the gifts you receive.
Nonprofits should also invest in technology and systems that can help streamline fundraising and accounting activities and improve data hygiene, thereby reducing the risk of errors and improving communication between departments.
Heads of development and accounting should also proactively meet with the executive director and board chair to discuss with them why reports from the two departments don’t always align.
Collaboration and Communication are Key
Conflicts between fundraising and accounting will always create challenges for nonprofits, but by prioritizing collaboration and communication, nonprofits can overcome these challenges and ensure that both functions work together to achieve the organization’s mission.
Work together to find the right balance between fundraising and accounting, and your nonprofit can maximize its impact and ensure that every dollar donated is used to its fullest potential.
Board Member’s Guide to Capital Campaign FundraisingIf you’re on the board of an organization that’s considering a capital campaign, there are things you need to know. This guide will help you understand your own role, and that of the entire board, during a campaign. Download this free guide today!
Amy Eisenstein, ACFRE, and Andrea Kihlstedt are co-founders of the Capital Campaign Toolkit, a virtual support system for nonprofit leaders running successful campaigns. The Toolkit provides all the tools, templates, and guidance you need — without breaking the bank.