Making Financial Reports Fundraising Friendly

Charity Accountants:  Have you ever watched potential donors read the financial statements of a charity?  Even sophisticated readers can be puzzled by things like fund accounting ("What do all these different columns mean?"), how endowments are treated ("What are all these transfers?"), or finding the answers to basic questions ("How much of the money raised goes to administration?")

It's a difficult task to stay up to date with the changing accounting rules for charities, disclosing financial results in a way that ties the revenues and expenses directly into the charity's mission and getting everything done in time for the audit.

But it's worth the struggle.  As I look back at all my accounting training, I can't remember devoting a single hour to making financial information easier to read, yet in these days of funding cuts in the charitable sector and increasing direct donor involvement, making the financial story understandable has never been more important. Imagine that each donation has a flag attached to it and the donor of that money needs to know exactly how the donation helps the charity achieve the donor's mission, as well as where the money actually went.

So, as you struggle to get the year end completed and start to think about how the audited statements should look, take a look at what Queen's University is doing about Voluntary Sector Financial Reporting Excellence.  Maybe you should consider entering it this year!

What Accountants Know

What do accountants bring to the table for charitable donations? I would like to make the case for a special kind of support, something that will help EVERY charity and something that comes naturally with accounting training and experience.

The difficult fact that each charity faces is that nobody wants to support administrative costs. Governments don't fund this area, nor do foundations or private individuals as a rule. Yet every charity spends a significant amount of time and money on administration: paying the rent, keying in the payroll, buying insurance, etc.

As accountants, we are arguably experts on administration. We track it. We analyze it. We minimize it. We research it. And we appreciate it when it's done well.

So many not-for-profit organizations I've worked with actually underspend on administration. They use obsolete computers and inadequate software, forcing them to spend too much staff and volunteer time on admin. Often staff are not sufficiently trained in standard packages like word processors and spreadsheets, so too much time gets spent on the otherwise normal processing of transactions and reports. Others are lucky enough to have an endowment cover at least part of the administrative costs, but they are a small minority.

Sometimes this skimping on administration leads to self-defeating results. It takes resources to write grant proposals, report to donors, mount events or create fundraising campaigns. As any salesperson will tell you, you have to spend money to make money.

Administration is not exciting. Most people would rather see their money go towards a scholarship, a key piece of equipment or research into curing a disease, but with our specialized training and experience, accountants are different. We know how important effective administration is, how the very success of the charity may depend on it.

So, please consider marking your next donation to your favorite charity, "For ongoing administration". Your donation will get the attention it deserves!

The Accountant's GiveList

The GiveList is a way of helping people without spending money. In their words,

Times are tight. We know, we know. We've all seen the scary headlines. Too many of the scary headlines. And we're all feeling the pressure in other ways too. But, still, we want to contribute what we can to making the world the better place. The GiveList gives you ideas and inspiration for just that: ways that you contribute without spending or buying. Or maybe giving while buying and spending a little less than usual.

What a wonderful idea. It immediately got me to thinking about how accountants can help. Please add your ideas as a comment to this blog. Let's get everyone talking about it!

Here's my list:

• Do someone's taxes,
• Volunteer at a tax clinic,
• Ask a local charity if they need a treasurer (if they don't need one, I'll bet they know two or three who do),
• Donate gently used winter clothing to a shelter (OK, you don't have to be an accountant to do that one),
• Help a charity set up / improve their accounting system (if you don't have time to be a treasurer),
• Coach a Junior Achievement team and teach some kids about business,
• Hire a temporary student from the AIESEC business student exchange at the time of year when you really need help, so that a local student can get international business experience,
• Teach someone how to balance their bankbook,
• Raise money with a marathon, bikeathon, walkathon or any type of thon involving physical activity (if you're anything like me, it will do you a lot of good!)
  

Help a Young Career

"Here is what you should know if you want to get ahead . . . "

Did anyone ever take you aside and say those words to you? Me neither. Yet it used to happen all the time, back when people stayed in one company long enough that there was time to plan for the future. The older executive would take the new recruit aside and teach them the subjects that they never got in school: how to work within the system, how to form alliances, how to help one another other climb the corporate ladder.

So, what would you advise the bright young professional accountant who has just passed the exams?

I would advise them to join the Board of Directors of a charity. Why? It's not just that there is a crying need for professional accounting in the not-for-profit sector. It's also a fast way to get practical experience working with a Board of Directors. Charity Boards are welcoming. Board members have the patience to help you along. But you need to be strategic:

1. Choose a charity you believe in. Then it won't feel like work.
2. As a professional accountant, they will want you to be Treasurer. Accept the position for one term (usually 2 or 3 years) then actively recruit a replacement so you can move to another position and learn new skills.
3. Make sure you donate money as well as time to the cause. It increases your credibility.
4. Keep moving up, recruiting a replacement as you go. Always ensure you bring fresh blood into the organization.
5. Focus on how you can help others and keep relationships active. That's called networking.

Learning New Skills

The broader your skills, the farther you can go in your career. Professional accounting skills are a great base, but if you can add revenue generating experience, such as fundraising or grant proposals, you have a dynamite combination.

Networking

Networking is more than just passing your business card around at an event. It's about establishing and maintaining relationships. The best way to build a relationship is to help someone. The second best way is to ask for someone's help. Since there's no way to predict who will be able to help you in future, try to be helpful to a wide variety of people and see what emerges.

Dive In!

Some Board members take a passive role. They read what they are sent and respond. Others take a more active role. They research the organization's needs. They participate in planning. They take an active role in furthering the organization's objectives. That's the kind of Director you need to be.

Rewards

Charitable work is often called its own reward. That's true, but there is a practical side as well. The issues you face on a charity Board, such as prioritizing resources, dealing with personality conflicts, wading through government filing requirements and forecasting the political future, are exactly the same issues you face on the Board of a for-profit corporation.

So, go get 'em, Tiger! And remember to mention me in your memoirs.

The Passionate Accountant

On Sunday I attended the annual meeting of a church in a well to do part of Toronto where I am not a member. The person in charge of fundraising got up and said that the central church had not reached its fundraising goal last year and was asking for a 3% increase in givings. A motion was immediately passed to increase the donations to the central church. Only two people voted against the motion, both (as I learned later) accountants.

The Treasurer then made a presentation about the financial statements and the budget for next year. He pointed to the large amounts transfered from the reserve fund into the operating fund. He said the church would not be receiving the investment income it was used to because the investments had been sold. He talked about the serious deficit and how the finance committee had a three year plan, which involved cutting some popular church events, to eliminate it. Suddenly I realized why the accountants voted against the increase to the central church: the local church couldn't afford it. They see this as a major issue. The church is living beyond its means. It was a call to action.

Unfortunately, as I surveyed the faces of the audience, I don't think the message got across. People are very good at tuning out the drone of accountants who talk about replacing the roof or repairs to the boiler. Accountants pride themselves on their objectivity and their lack of emotion.

This was the time to be passionate.

This was the time to say to the members that $800 per family average giving is just not good enough. The people in the room would think nothing of paying $200 per month for a family membership in a fitness centre, yet they do not give nearly that much money to the church that does so much for them. Accountants are not bible thumpers or sermonizers by nature, but the times have changed.

The church cannot cost-cut its way to prosperity.

People must be made to understand the seriousness of the situation and put all their weight behind the solution. We are like a people losing our culture and heritage in a new world. We must take extraordinary steps to maintain our way of life. The accountants in the room know the reality. They need to learn how to communicate their message effectively. They need passion.