Although fundraising is critical to nonprofits' success, many don't have the right finance infrastructure to support it. To better serve their missions, organizations of all sizes need to put efficient donor management technology and processes in place. "We've found that if you're working with donors, you need a system to track those relationships," said Armanino partner Scott Schimberg, speaking at the firm's recent Nonprofit Symposium.
For finance teams at organizations that are underinvested in technology, partnership with the development staff is a major source of pain. "You have disparate systems, they (development) are not accountants, and they think that everything that comes in is revenue," said Armanino manager Brenda Kahler.
This disconnect between development, which handles donor relations, and accounting can cause reporting errors. "You risk reporting to your board something that isn't revenue, and you risk reporting to your auditor something that had a condition or didn't meet the criteria to be recorded as a pledge," Kahler said.
Part of the remedy for this situation is having well-defined processes. "It almost doesn't matter what system you have or don't have," said Schimberg. "If you don't have good processes in place, (you're) going to have some problems."
Strong processes for tasks such as data coding also mean you don't need an expert in every finance role. "Make your processes very, very structured, so that for the basic blocking and tackling activities, you can have others in your organization (do them) at a much lower cost," Schimberg said.
The other part of the fix is, of course, technology. This can be a donor management solution or a customer relationship management (CRM) system that's leveraged for donor management. CRM is becoming increasingly popular among nonprofits, said Schimberg, and many CRM systems now offer features designed for the nonprofit world, such as nonprofit-specific nomenclature.
Either option needs to be integrated with the rest of your organization's systems. Typically, this is easier when you have an enterprise resource planning (ERP) system, versus more basic accounting software, such as Quickbooks. If your systems aren't integrated, you risk having development report one number and finance report another. Plus, it takes days to reconcile disparate systems and get everyone in agreement on the revenue number for the month, post-close.
Find the right technology
There are a lot of donor management/CRM solutions on the market. To find the one that best fits your organization, you need to have a clear picture of your goals and constraints. Ask yourself these questions:
With the right technology, plus strong processes, you can streamline your fundraising—and help your finance team stay sane.