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Can the Nonprofit Sector Survive the Upcoming Cash Crunch?

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Nonprofit L3C - Nonprofit ProfitsThe nonprofit sector is used to intermittent income. Individual donations and government grants rise and fall with the economy. Uncertainty is at heightened levels however, as crowdfunding for individual causes and impact investing compete for “giving” dollars. And above all of this looms the Tax Cut and Jobs Act (TCJA) of November 2017 that could slash individual giving. U.S. NGOs need to be pro-active in creating a form of “battle plan” to cope in adverse circumstances.

While the magnitude of the TCJA is still unclear, the sector cannot afford to wait to act. The biggest threat of the TCJA is the doubling of the standard deduction, which will reduce the number of taxpayers who itemize deductions and negate the value of a charitable tax break. Significant numbers of taxpayers relied on the break when determining both whether and how much to donate. It is estimated that the new law will cut charitable giving by about $16-$24 billion a year from a total of about $390 billion, and that the number of households claiming an itemized reduction will fall from 37 to 16 million in 2018. Individuals and households are more likely to give to smaller NGOs, who can less easily cope with funding shortfalls. This will compound the effect of the reduction in giving.

Some taxpayers may find workarounds. Some may donate larger sums once every two years, or open donor-advised funds. People may also increase IRA donations (which are not deductible but count as a required minimum distribution), charitable gift annuities and charitable remainder trusts. Despite this, the tax bill will likely wallop many nonprofits, especially smaller ones. Less certain and more “jerky” inflows can mean more closures, fewer programs and reduced ability to apply for grants and loans. The resultant increase in concentration in the NGO sector is perhaps one of the most damaging effects of the TCJA.

Back to that battle plan…

Tepid U.S. wage growth rules out relying on individual giving as a way forward, leading some to look at more unusual alternatives, like NGO-led crowdfunding campaigns (if you can’t beat them, join them). However, donor fatigue and resource intensiveness may rule out crowdfunding. A better option might be to use rebound of the real-estate market and the aging population as a platform to push legacy programs. Growing revenue from service fees, venue hire and merchandising will continue to be important, though some local markets may not be robust enough to support much growth in this area. Collaboration on grants and contracts is also a possibility, especially as a way to ensure survival of the smaller NGOs.

Obviously, a government expansion of tax relief options would also help. A possible solution may be to create something akin to Canada’s First-Time Donor’s Super Credit that was introduced in 2013 and allows new donors to claim a tax credit on donations. The Canadian legislature is also considering a “Stretch Tax Credit for Charitable Giving,” which would apply to incremental donations to prevent the cost to Treasury from donations that would have been made anyway.

L3C Nonprofits

A more extreme response would be for more charities to become low-profit limited liability companies, which are social enterprises that combine the legal and tax benefits of LLCs with the social benefits and goals of nonprofits. In the U.S., state law governs L3Cs. In particular, they are designed to allow private foundations to use tools like loans and equity instead of grants, which could increase the amount of private investment in the nonprofit sector. L3Cs themselves are not eligible for tax exemption, but are generally taxed as pass-through entities, while the for-profit investors are subject to tax on income received. This allows L3Cs to expand “commercial” offerings including things such as cause-related marketing, sponsorships and “knowledge sales.” NGOs can also opt to create L3C subsidiaries, which could combine more commercial-type activities with social welfare goals.

A potential snag may be that the IRS appears to be “resurrecting the obsolete, discredited commerciality doctrine, which says that a nonprofit cannot be charitable if it engages in activities, which are primarily commercial, even if the activity benefits only the general public or a charitable class”. This was abandoned years ago due to its dampening effect on innovation. The recent IRS approach may threaten a range of charities including community health centers, university bookstores, the NCAA. All of these offer services that could be perceived as competing with private business. NGOs might therefore be safer if they set up a wholly-owned trading subsidiary, with no limits on the type of services they can provide. They would have to pay tax on profits from these subsidiaries but after that the trading subsidiary could give all its remaining profits to the NGO as a charitable gift.

As government budgets are cut, there is a greater need than ever for nonprofits to “fill the gaps.” Sadly, their ability to fund this expansion is also being threatened and survival will depend on the availability of new structures such as L3Cs and an increase in fund-raising tools such as merchandising. What were once seen as alternative may soon become the norm…

Best Practices for Annual Reports for Nonprofits

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Annual report for nonprofitsIt’s time to think about your annual report! This is a great opportunity to highlight your nonprofit’s achievements, to report on the impact you’ve made, and build trust. As you start, there are a few important things to remember:

1. Connect it all to the donors

Tie everything back to the donors. Focus on their achievements. Don’t just frame it in terms of the nonprofit’s achievements. What did the donors make possible this year? Did their generosity give scholarships to 253 kids? Did their volunteer hours help feed over 500? Do a little humble bragging about your donors.

Focus on each type of donor you have. Chances are there are different ways to support your organization. Do you have individual giving, corporate giving, planned giving? Include short articles on each; how Mary became involved as an individual donor, how ABC Company’s donation built a new gym, and why Hank and Betty decided to name you in their estate plans. Gather quotes on why they became
involved, how giving makes them feel. Personal stories make giving seem more approachable and human. People can imagine themselves giving. This approach can appeal to potential donors by showing them all the ways they can give, and can also motivate a current donor to support in a new way.

2. Make it visual

We all know that a picture is worth a thousand words, and in the digital age it has never been more true. Pictures can grab attention and convey the need more thoroughly, emotionally, and quickly than the most carefully crafted paragraph.

So include pictures! Do you have pictures of the people you help? Before and after pictures on a certain project? Pictures of your volunteers? Pictures of the donors whose story you’re telling? Include them! (And please edit them before you use them. A simple crop can improve a photo dramatically!)

Also use visuals with your financials and statistics. Maybe this is just me, but I find numbers much easier to grasp when I see a visual. Use bar charts, infographics, pie charts (or donut charts if you’re Homer Simpson). This is your chance to get your stats to stick in your donors’ minds.

3. Be clear with your financials

This may seem obvious. And it should be. Be sure your financial data is rock solid but clear as glass. Make sure the areas you are reporting on are consistent year to year. Your donors want to know that you are a good steward of their funds. Be honest, be transparent, and you’ll build trust.

4. Read it over with the eyes of an outsider

Read over your draft as if you knew nothing about your charity. Would you come away with a clear understanding of the mission, values, and impact? While we live and breathe the non-profit life, we can unconsciously assume that everyone knows this or that about our program, or where we are based, or our ways to give. Be sure that your Who, What, Where, When, How, and Why are all there. Also checkto see if you are also including the nitty gritty details of mailing address, who’s on the board, areas served, tax-id, social media handles, website, and who to contact if someone has questions or wants toget involved.

5. Read it over with the eyes of a long-time supporter

If you were reading the annual report of a charity you personally supported, what would you want to ee? I would say:
• Where the money went
• How it made a difference
• A thank you!
• Facts and stories to share

The annual report is an opportunity to get facts, stories, and your gratitude to stick in your donors’ minds. This may motivate more involvement, more giving from them. It also provides them the tools to become your new ambassadors, sharing your story and mission in a personal and authentic way.

Getting Products You Need for Free: How Gifts-in-Kind Organizations Make It Easy to Connect With Donors

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In Kind Donations for NonprofitsWhen nonprofits think about what they need to keep their organizations running, they often think of fundraising campaigns. But what if they could get the items they need donated just by flipping through a catalog?

It sounds too easy, but that’s the idea behind gifts-in-kind organizations. These organizations act as a go-between between companies with excess inventory and nonprofits in need. Groups like social service organizations, schools and churches can all benefit from donations that range from office equipment and supplies to toys and clothing.

How does it work? A qualified nonprofit pays a small annual fee to join a gifts-in-kind organization. Once the nonprofit becomes a member, it can request any of the donated items the gifts-in-kind organization has in stock at any time throughout the year. The nonprofit may make selections by browsing through the organization’s catalog of donated items or scrolling through an online list of inventory. Once the nonprofit places its order for the items it wants, the nonprofit then pays only for handling and processing fees incurred to ship the items.

Who can join? You must be affiliated with a 501(c)(3) nonprofit organization, school or church to join a gifts-in-kind organization. This may include charities, community organizations, government institutions and health facilities, among others.

What are the limitations? A member can request as many items as they want throughout the year. The only requirement is that they act in accordance with IRC section 170(e)(3). According to those guidelines, merchandise must go to care for the ill, needy or minors. It can be given directly to such qualified individuals served by an organization or used in the administration of the organization. The emphasis is on direct use—the items cannot be bartered, traded or sold.

How much can I save? It depends on how many and what types of items you request. Members of NAEIR, a leading gifts-in-kind organization, have reported a wide range of savings. On the high end, one church reported receiving $2 million in donated merchandise in one year. (Those items mostly went to children overseas through the church’s ministry.) On a smaller scale, a school that hosted a family arts and crafts event received enough paintbrushes, ornament shapes, tablecloths, stickers and pipe cleaners for all 341 participating students. On average, NAEIR members receive about $18,000 worth of merchandise a year. To boost their savings even more, some members opt to drive to the NAEIR warehouse in Illinois to pick up and transport items on their own.

What types of items are available? Gifts-in-kind organizations may have printers, pens, art supplies, toys, clothing, tools, health and beauty products, cleaning supplies and more. While available stock will vary throughout the year, nonprofits will find a wide variety of items on hand.

What types of companies donate? Both large corporations and small business donate to gifts-in-kind organizations. There are no restrictions on the size of donations so even mom-and-pop stores can make donations. Items may come from large companies like Hallmark, Microsoft, Stanley Tools, 3M Rubbermaid, Reebok, Gillette, Xerox and SC Johnson as well as small businesses, like a family-owned comic book store.

Why do companies donate? There are all kinds of reasons they donate. A few include to promote good will, to make room in their warehouses for new stock, to keep their products out of landfills and to take advantage of tax deductions that are often more advantageous than liquidating or discounting unsold merchandise. Since companies pay only to ship their goods to a gifts-in-kind warehouse, donating to a gifts-in-kind organization can be more cost-efficient than designating employees to spend time seeking out prospective charities for their donations.

How can it work for you? Think about the larger items your nonprofit wants to replace or items that you need on an ongoing or monthly basis. Replacing any of those items with donations from a gifts-in-kind organization could save you money—and help you keep perfectly good merchandise from clogging up landfills. The one downside is that you won’t only have your pick of brands. You’ll have to choose among donated items. But just choosing a few items from a gifts-in-kind organization, or using it to provide supplies for one event, could save you money as well as time. And if you add in the manpower hours you would need to collect a similar array of donated items—or the cash to pay for them—the savings grows. In an environment where cost-cutting is key, a gifts-in-kind membership is definitely worth considering.

Why Nonprofits Should Rethink Risk

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Nonprofit Management TipsNonprofit and risk are two words that tend to fit uncomfortably in the same sentence. When they do come together, it is inevitably in the context of the former avoiding the latter, as in risk management or risk mitigation. But, should nonprofits ever proactively seek to take more risk? If we hope to move the needle on the long-standing problems that plague our society, the answer is a resounding ‘yes’.

Of course, when we’re working with people and communities who are already in vulnerable situations, the idea of introducing any unnecessary variables may seem irresponsible. Ensuring we do no harm is essential. Yet, when people are suffering, disenfranchised, or otherwise unable to achieve their full potential, the status quo is also not acceptable. We have a responsibility to do the most we can. And, when our existing interventions are insufficient, that includes taking the calculated risk required to seek better solutions.

To put this in stark perspective, if the polio vaccine had not been administered, at some risk, to the first human being and then subsequently to thousands of schoolchildren through extensive clinical trials, hundreds of millions more people would have been paralyzed or killed by the disease. Of course, such experiments are only undertaken after eliminating as much risk as possible through lab and animal testing.

When we don’t run such staged experiments to allow for failing small, we risk failing big. One Acre Fund, a nonprofit that helps desperately poor smallholder farmers in Africa increase their incomes, learned this lesson the hard way. Early on, it rolled out passion fruit as a new crop to its farmer network after financial modeling indicated strong potential profits, only to discover that real world conditions didn’t match the theoretical assumptions. Transport was more expensive and fruit quality low in the absence of extensive training on proper cultivation. The economics never worked.

This failure motivated One Acre Fund to adopt an innovation framework to stage risk more gradually, so that potential issues would be identified and addressed earlier. Promising ideas are first tested with a small number of farmers, then successively larger trials, and either improved or discontinued based on the results. By the time something is rolled out to the full network, most of the risks are well understood. Today, One Acre Fund dedicates 7% of their annual budget to research and development (R&D), highly unusual for the nonprofit sector. Based on the impact to date, it estimates a four- to six-times return on investment. This means better livelihoods for more farmers.

In the private sector, investors treat a company’s R&D spending as a sign of health and a leading indicator of future growth. After all, wise investment leads to better products and services. While nonprofits do not have the same profit motive, the quest for mission fulfillment should equally drive a search for better solutions. Even for the most lauded programs, opportunities will always exist to enhance effectiveness, decrease costs, adapt to a changing landscape, and leverage technological advances.

Practically speaking, this requires both donors and nonprofits to make the tough tradeoff to forgo a degree of short-term benefit in favor of potential greater long-term impact. Here are four important steps to take to get started:

  1. Goal. Establish and reinforce an audacious goal for impact and scale, based on real world needs. A stretch goal that cannot be achieved with business-as-usual forms the foundation for innovation.
  2. Invest. Budget resources that are not tied to short-term deliverables to seek better solutions through staged experiments. The further the trajectory of current interventions fall short of mission achievement, the greater the appropriate investment. Funding may be sought as an R&D component of a larger grant or from new, flexible sources.
  3. Metrics. Identify and track the key unit-level (as opposed to aggregate) metrics that are the underlying drivers for success – such as conversion rate, unit cost, and success rate. Optimizing the metrics that matter will pay dividends over time.
  4. Culture. Reinforce a culture of innovation by incentivizing rapid learning rather than predictable execution. Celebrate rather than punish the small failures that underlie progress and prevent larger failures.

Just as companies are expected to maximize profits and shareholder value, nonprofits should be expected to maximize impact and stakeholder value. Doing some good is not enough. We need to raise the bar. And, that means risk can no longer be considered a four-letter word.

10 Management Best Practices for NPO Leaders

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Nonprofit Best PracticesAs a nonprofit leader, you have more on your plate than ever before. Promoting your organization’s mission, securing donors, prospecting for new donors, and growing the influence of your organization leave little time for ensuring that critical business tasks are complete. NPOs, like any other business, must perform numerous regular tasks to ensure compliance with both state and federal regulations. Annual filings, keeping records, reporting, addressing tax and employment issues require careful management. Here are ten best practices for staying on top of these tasks, including tips for strengthening your management practices before problems arise.

  1. Confirm that required annual filings have been made.

Your state requires annual filings from your organization to maintain “Good Standing”.  You also must file annually with the IRS to maintain your tax-exemption. Ensure that these documents are filed correctly and on time. Pay attention to any additional requirements your organization may have, especially if you are incorporating for the first time or your mission has changed or evolved.

  1. Review of articles of incorporation and review of bylaws.

The articles of incorporation and bylaws that you produced and filed when your NPO launched shouldn’t be placed in a file and forgotten. It is essential for a nonprofit leader to review these regularly, making sure that the operations of the NPO align with these governing documents, such as the appropriate number of Board of Directors positions have been elected and filled.

  1. Review corporate meeting records.

Like any business, efficient and comprehensive record-keeping is essential for NPOs. Keep records of minutes and related documents from annual meetings, as well as any other meetings your organization conducts throughout the year. This documentation supports the actions taken by the Board of Directors to fulfill the mission of the organization.

  1. Mission conform and comply.

You were passionate and thoughtful when you launched your NPO and constructed your organization’s mission statement. Now that your work has begun, your annual filings must be consistent with that mission statement and any mission actions that were initially stated in IRS or state filings. Your mission, vision, and values in practice should reflect the commitments you made to the IRS and in your governing documents. Any changes should be reported and updates to your documents should be made.

  1. State boundaries.

With the influence and reach of crowdfunding, social media and email marketing, NPOs often find that they are serving out-of-state constituents or soliciting donations across state borders. “Cross-state service” may require additional agency filings, and these filings will also be critical to your ability to solicit out-of-state contributions in the future.

  1. Review IRS 990 forms.

Your NPO grows and evolves. The required Form 990, 990-PF or 990-EZ you file with the IRS provides the public with program and financial information about your organization and is often the only public source of such information. Check for accuracy on this form, ensuring that current Board of Director members are listed correctly, that general information about your NPO is right, and that your service area is described accurately. Ensure that any required state filings also contain the most current information about your organization.

  1. GuideStar review check.

The widely-used online resource GuideStar (www.guidestar.org) informs donors about the charities and issues they wish to support and helps funders locate potential grantees. You may also use the site to benchmark your organization against your peers. To maximize your use of this resource to inform your decision-making, increase your ability to make connections and learn from others, make sure that all of the information on the site regarding your organization is correct and frequently updated.

  1. COI Policy – Conflict of Interest.

Conflict of Interest policies are designed to help directors, officers and employees of your NPO identify situations that present (or may present) conflicts of interest. The policy should also assign responsibility for resolving any actual or potential conflicts. Make sure your policy is in place and that each member of your Board of Directors and all key staff sign the policy each year.

  1. Donation acknowledgment.

Patrons of your organization making tax-deductible donations expect a donor “receipt,” often called an acknowledgment letter. Whether the receipts you issue are in letter, email or postcard form, review the process for confirming and documenting donations on an ongoing basis. Consider your receipt process, making sure you include key information: your tax-exempt statement; your EIN; the names of your organization and donor; the date of the contribution; contribution details (i.e., cash or non-cash); and the value of any goods or services made to the donor (such as a fundraiser’s dinner or small token gift).

  1. Employee matters.

Review all employee compensation and policies on an ongoing basis for reasonableness and compliance with current laws. As long as your organization demonstrates that enterprises in the same position as yours would similarly value roles within the organization, the IRS will view your compensation structure as reasonable. Employee matter review should include benefits and insurance, policy standards, and any relevant training and certification updates.

Putting it all together

Keep three hard copies of all important documents: one at the organization’s principal office, one with a trusted advisor, and one offsite. You can also keep electronic files for these and other documents.  Consider tracking adoption, review dates and updates to important documents, as well as an annual action list for the Board of Directors. If you follow these recommendations, your organization will be well on its way to the efficient and effective management of the regular tasks NPOs are required to complete – enabling you to make more time for the outstanding work that achieving your mission requires.

Setting-up QuickBooks Online for Nonprofits

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Quickbooks online nonprofitMany nonprofits utilize QuickBooks Online (QBO) for their accounting software – primarily due to its ease of use and ability to integrate with multiple applications.  And, since nonprofits are required to employ fund accounting and many fund accounting systems can cost upwards of $10,000 or more, QuickBooks Online is an effective solution for budget-conscious nonprofits.  However, because QBO is not inherently a fund accounting system, there are certain steps nonprofits should take to ensure their QBO account mimics that of a true fund accounting system.

Initial Settings

The first step nonprofits should take is to make sure they have turned-on all of the necessary settings in QBO in order for them to be able to track revenues and expenses by donor, by project, and by service activity.  To do this, they should make sure the company type in the settings field is changed to “nonprofit organization”.  This will change the QBO database so that the field “customers” is relabeled “donors”.  In the company settings, they should also ensure that the Tax Form 990 is selected.

Because the organization will want to track spending not just by donor but by project as well, it’s important to turn on the project feature in the account settings.  The organization should also turn on classes, as this will allow the organization to track both revenues and expenses against the organization’s various services or activities.

Donors

Once the organization has turned-on the appropriate features outlined above, they can then begin populating the system with their list of donors.  The organization should enter all of their donors in the donor section that was created once the company type setting was changed above.  QBO also allows the use of sub-donor fields, which can be useful if the organization is being funded by a donor with multiple agencies.  For instance, if the organization receives funding from various agencies of the United Nations (UN), you would want to list United Nations as the donor and the various agencies that are funding the organization (i.e., UNDP, UNICF) as sub-donors.  This will allow you to not only track funding from the various agencies, but to also see how much the UN as a whole provided the nonprofit.  This information will prove useful when reporting to the Board, government bodies, and management, and for strategic planning purposes.

Projects

The next step would be to enter all of the organization’s projects.  If the set-up outlined above to track revenues and expenses by project was turned on, then you will now see a new module appear on your dashboard titled “Projects”.  It is in this module that you would enter all of the projects and then assign them to each donor.  You will want to be very careful when naming your projects, especially if the organization receives multiple grants from the same funder, to ensure you do not accidentally enter a transaction to the wrong project.  Consider using a project number in addition to a project name to help prevent miscoding.

Program Services

Next, the organization should enter all of their services in the “Classes” list.  Doing this means the organization will be able to track their revenues and expenses against the various services they offer.  Nonprofits are required to report spending by program service area on their tax form 990, so having set-up the accounting system to track this information up-front, the organization can now easily extract these figures from the system.  Knowing how much an organization spends on each of its various services is also helpful for reporting to potential funders, for benchmarking, and for gaining inside into unit costs (such as how much it costs to provide a social service to one recipient).

Functional Expenses

The next step that the organization should undertake so that their QBO account mimics a fund accounting system is to set-up the three functional areas (program services, management and administrative, and fundraising) in the system.  This will allow the organization to easily produce the required Statement of Functional Expenses.  To do this, the best thing for the organization to do is to create three expense accounts: 1) Program Services; 2) Management & Administrative; and 3) Fundraising.  Then, set-up the normal expense accounts (such as salaries, fringe benefits, travel, etc.) as subaccounts under each of those three parent accounts.  This set-up will also help with allocating expenses across different functional areas.

Entering Revenues and Expenses

Now that the organization has set-up the system to track revenues and expenses by donor, project, service, and functional area, it’s imperative that all entries into QBO be tracked accordingly.  You can turn on alerts in QBO so that any transaction missing a class produces a warning, but this can also cause some confusion because QBO will generate this warning whenever the class field is empty regardless if it’s a transaction assigned to an asset and liability account (in which case a class is not actually needed).  The best way to handle this is to devise a coding system (using either numbers, letters, or a combination of the two) that matches the donor, project, class, and account set-up in QBO and to make sure staff are trained on the coding system.  Allowing staff to understand the coding system and requiring them to code all bills and financial documents using the appropriate code(s) will attest to the organization’s internal control system by confirming that everything is reviewed before being entered into the accounting system.

Editing Reports

Once you have successfully set-up your QuickBooks Online account using these techniques, your nonprofit will be able to easily run reports that are already within the QBO system under the “Reports” tab.  However, since the names of nonprofit financial statements differ from that of for-profit companies, you will want to adjust the header on the balance sheet and profit-and-loss statement to the correct nonprofit titles and save them as custom reports so that you can easily generate them again in the future without the need to manipulate the titles.

Wrapping-Up

It can take a little bit of time and effort, but setting up your nonprofit’s QBO is an important step to ensuring your organization is accurately practicing fund accounting.  This will allow the nonprofit to not only properly report to the IRS how donated funds are spent but will also allow the organization’s funders and constituents, who, if they are able to properly see how their monies are being utilized and have confidence in the organization’s ability to properly manage and track their funds, may be more likely to continue donating to the organization in the future.

Assistance

Nonprofits needing assistance in setting-up or managing their QuickBooks Online account are welcome to contact Altiga Accounting & Financial Solutions at altigasolutions@gmail.com.  Altiga can also provide you a step-by-step guide (with screenshots) for completing the steps outlined above.  Altiga Solutions is a Gold Member of QuickBooks Online and the author of this article (James Willis) is a QuickBooks Certified ProAdivsor.

A Simple, Affordable Way to Manage your Donations, Receipting and Accounting

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nonprofit accounting softwareFor charities, churches and nonprofits, tracking and receipting your donations, not to mention the rest of your finances, can seem like an onerous task.

Cooperstock Software, through its products found at www.software4nonprofits.com, helps small to mid-sized churches, charities and nonprofits with their financial recording and reporting, with our two programs for Windows:

DONATION: Tracks donors and donations and issues charitable receipts

ACCOUNTS: Bookkeeping, including simple and completely automatic fund accounting.

This all started in the early 1990’s when I was the Treasurer for my Quaker Meeting and I bought us a commercial program for what DONATION now does, called ChurchMouse. Unfortunately, after a couple of years it started falling apart, losing data, and doing unfortunate things like allowing a donor with donations to be deleted, but leaving the donations there, owned by nobody! Being an experienced programmer, I realized I could write something much more professional and solid, and DONATION was born.

nonprofit church accounting softwareThe first version of DONATION was a DOS program used only by my Quaker Meeting. When I re-wrote it for Windows in 1999, I started giving it away for free, under FreeDonationSoftware.org. I finally decided to make it commercial in 2007, and I created Software4Nonprofits.com as its new home.

ACCOUNTS was born in 2012, after years of resisting writing a bookkeeping program that would have to compete with Intuit’s QuickBooks and Quicken. More and more of our DONATION users were asking for something comparably simple and affordable, that handled fund accounting properly, so I finally gave in and created ACCOUNTS.

We currently have over 7,000 registered users of DONATION, and over 1,000 registered users of ACCOUNTS.

Why Choose Software4Nonprofits?

Our goal is to be as simple as possible to use, yet powerful, and extremely affordable.  We have lots of users who tell us “I’m not very good with computers” but who still find they can use the programs. They also appreciate our responsive support, and comprehensive help files.

We regularly have users switch to our programs from other programs that have been discontinued (for example Membership Plus users switching to DONATION), or that are too expensive and complex.

Features

Of course, there are many more features in the programs than are indicated in the brief summaries above!
Details for DONATION are at www.software4nonprofits.com/features.htm, and for ACCOUNTS at www.software4nonprofits.com/accounts/features.htm.

Some significant features include:

  • lots of built-in reports, custom reports, and memorized reports in both programs
  • appropriate receipts for the U.S.A., Canada (including all of the Canada Revenue Agency’s complex requirements), Australia and New Zealand
  • receipts can be printed or emailed as PDFs
  • many importing features in DONATION, to avoid re-entering data when you first start using it, including for donors and donations from Excel or text files, and direct imports from several other programs including Membership Plus and GiftWorks
  • importing of charts of accounts in ACCOUNTS from QuickBooks, Quicken, and Simply Accounting
  • a Bank Deposits feature in DONATION that can export summary deposit transactions to ACCOUNTS
  • memorized and recurring transactions in ACCOUNTS
  • various special features for churches in DONATION, such as envelope numbers, batch entry for collections, and a limited user password for counters or tellers
  • mail-merge letters in DONATION, plus the option to use a mail-merge version of the receipts if you need to add your own wording to them
  • linking of accounts in ACCOUNTS to lines on government forms, with related reporting to make filling in those forms easier

DONATION is not trying to be either a full-featured church management program or a full-featured fundraising program – which keeps it simple and focused!

Fund Accounting in ACCOUNTS

The big “win” in ACCOUNTS comes if you need fund accounting. That is when you have various funds, with running balances that you need to track, and income and expenses associated with those funds.

In traditional bookkeeping programs like QuickBooks, it is extremely difficult to keep fund balances up to date in the program. Users often have to resort to awkward and error-prone work-arounds like sub-bank accounts to indicate fund balances, occasional journal entries to update the fund balances, or even independent spreadsheets to track those balances.

In ACCOUNTS, the fund balances are always automatically completely up to date. Each income and expense account is linked to one fund, and every transaction using those accounts automatically updates the fund balance.

Fund Income Statement reports show the income and expenses for each fund, followed by the starting fund balance for the period, the amount of changes due to the net income and any explicit inter-fund transfers, and the ending fund balance for the period. There is no way to get such an obviously helpful report like that out of a conventional program like QuickBooks that doesn’t have fund accounting concepts built into it!

Pricing

One of our principles is being very transparent about our pricing (and everything else!).

Both programs can be downloaded, installed and evaluated for free for 60 days.

Full pricing information is at www.software4nonprofits.com/pricing.htm for DONATION and www.software4nonprofits.com/accounts/pricing.htm for ACCOUNTS.

Specific purchase prices as of 2018:

DONATION:

  • Feature-limited Lite version: free (optional $20 fee for a year of support)
  • Full-featured versions: $100
  • Versions that support up to 5 simultaneous users: $180

ACCOUNTS:

  • Full-featured versions: $130
  • Versions that support up to 5 simultaneous users: $220

The purchase prices include a year of support and upgrades.

In the 2nd  and subsequent years you can pay an Annual Renewal fee of ½ the purchase price for your version, for another year of support and upgrades.

You can have multiple databases for multiple organization in each program, except for the Lite version of DONATION.

Versions of the Programs

All versions of the two programs are installed Windows programs. The Lite version of DONATION and Standalone versions of both programs are installed on your computer, with their database also on your computer.

Local Network versions of the programs are for use on multiple computers within one network (generally one building or set of offices), with the database on one of those computers. Web Network versions of the programs are for use on computers connected over the Internet, and have their databases stored on our servers rather than your computers.

There are several different ways to share one database between multiple users, even with the Standalone version. These options are detailed online and in the programs’ help.

Users Love the Programs!

We are always delighted at how often users tell us that they love the program, and how much better it is than what they were doing before, whether that was manual, Excel, or a different program.

You can see some great user reactions on our Testimonials pages, www.software4nonprofits.com/testimonials.htm for DONATION or www.software4nonprofits.com/accounts/testimonials.htm for ACCOUNTS. The DONATION page also has a link to lots of reviews on the independent site Capterra.

We invite you to try the free 60-day evaluations of the programs, and hope you will love them as much as the existing users do! You can get to everything on the site by starting from the home page, www.software4nonprofits.com.

How Technology Makes Pickups and Drop-Offs of Nonprofit Donations Easier

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nonprofit scheduling softwareIn Nashville, Tennessee, two families turn the key to enter their new homes, built by Habitat for Humanity. Thanks to the generosity of donors, families all over the world will be sleeping soundly tonight in homes built by the global charity.

Habitat for Humanity was founded in 1976 with a mission to build simple, decent, and affordable housing for families in need. For the work of building, they depend on the kindness of volunteers all over the world. For fundraising, a major part of the revenue that they generate comes from their ReStore locations, where they sell donated building materials, new and used.

Especially in larger city centers, these ReStore locations process a lot of volume—with donors requesting pick-ups and dropping off goods that can be resold. It’s a concept that a lot of nonprofits that operate retail locations will be familiar with. To help them process these donations and issue receipts, many ReStore locations have leveraged technology to save time and effort, both for donors and the teams in the stores. Here’s how.

Online Booking Gives Donors the Control They Want

Taking bookings for pickups over the phone takes time, and requires nonprofits to have dedicated team members focused on that task alone. The same is true of emailed booking requests—a time still has to be confirmed between both parties and the back-and-forth can take a non-trivial amount of time.

Online booking puts the control in the hands of the donor. The nonprofits can offer available pick-up windows in the booking tool, leaving it up to the donor to choose a convenient time. No more guesswork and no more back-and-forth. The LA chapter saw a saw a 300% increase in Habitat for Humanity donations by using online booking. “It’s really important for us to make it easy for people to donate,” says Karen Moore, ReStore Acquisition Manager for Habitat for Humanity of Greater Los Angeles (Habitat LA). “(It’s) really very simple for our donors; a step-by-step program for people to schedule a pick-up of the items they want to donate.”

“We opened our second store location in September 2016,” says Robin Henrichsen, ReStore Donations Manager of Twin Cities Restore in Minnesota. “To support increased donation pick ups and sales, we expanded our truck fleet from one to two trucks. This change was easy to implement in the software system and got us up to speed quickly for increased donations pick ups. We increased donation pick ups 170% in the first year with two trucks.”

Nonprofits Save Time on Scheduling and Administration

Since the customer has made the booking themselves, the nonprofit’s scheduling software automatically adds the booking to the calendar. It can even suggest the most convenient route for pickups. This way, the teams working at the ReStores can focus on staging the materials in the stores and ringing up sales at the register.

“We’re more organized, and we are able to take less time to schedule a pick-up,” says Kyle Thornhill, ReStore Manager of Habitat for Humanity of Huron Valley. “In the past, when someone would call to add an item to their pickup or to switch their date, we’d have to shuffle through papers and then rewrite their donation receipts. This took lots of time and also created a window for human error, which occurred often.” The switch to using nonprofit donation software worked. “We were doing approximately 40 pickups a week and (now) we’ve been doing approximately 64 pickups a week,” says Thornhill. That’s an increase of 60%. “We are currently having our best year-to-date and have beaten our sales records for each month since this past July.”

Donor Gifts“Since we implemented online donation scheduling, we’ve seen that over 50 percent of all donation pickups are now scheduled online. That’s a better use of time than having to schedule over the phone with a member of our Call Center staff,” says Ryan Smith, Chief Retail Officer of Habitat for Humanity of Metro Denver. “Our donations have gone up 25 percent, our sales 35%, and earnings 40%.”

 

No Need to Create Manual Receipts for Donors

Receipts are another way that technology can save time. When the donor processes the booking themselves, the system can issue a donation receipt digitally. This saves both paper and time, which makes the locations much more efficient over the long term.

Even Drop-Offs Can Be Made Easier with Technology

Habitat for Humanity of East Bay/Silicon Valley has take the use of tech at their ReStore to the next level. Donors have the option of entering their items into an online donation form before dropping them off. Or, when donors bring items to drop off, they can also use one of the location’s iPad “kiosks” to process the donation and get a receipt.

Online Donation Management Software

Donors used to have to wait for store staff to record their donations and issue receipts, but the new way saves much more time. “The online form saves our donors time and offers them the convenience of automatically receiving a professional-looking email receipt containing all the details they need for tax purposes,” says Matt Nelson, Project Specialist at Habitat East Bay/Silicon Valley.

With so many conveniences it brings to nonprofit retail locations, and an increasingly savvy public who demand convenience, booking and scheduling software can be a major asset in helping nonprofits grow their donations and resulting revenue.

 

About Vonigo
Vonigo is a service business management platform that helps streamline operations and increase sales of mobile service companies and nonprofits. Vonigo offers a unified suite of configurable cloud-based modules including; CRM, scheduling, online booking, work order management, estimating, dispatch, routing, GPS, invoicing, payments, reporting, and more all accessible over the internet from any desktop or mobile device. Millions of jobs have been successfully booked and managed with Vonigo.

6 Essential Email Tips for Nonprofit Marketers

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nonprofit email marketing tipsNavigating the world of email marketing for a nonprofit can be tough, especially as inboxes become more and more crowded. To break through the noise and make a genuine, helpful connection with your donors, consider how automation, mobile design, calls to action, subject lines, list growth and segmentation come into play within your email marketing. The following piece will explore those topics in more depth.

 

  1. Automate to reach donors at the right time.

Some marketers are hesitant to embrace automation, but it’s an easy way to both save time and send more personalized messages. Nonprofits should consider it a win-win. Think of a thank you email: if someone makes a donation to your nonprofit, that should trigger an automated email thanking them for doing so. Or, if someone signs up for your email list, you should automate a welcome series that asks them to set their preferences, introduces some of your biggest projects, and asks them to get involved.

Email Nonprofit MarketingNot only will you be able to scale your work more efficiently, you will get great results in the process: Automated email messages average 70.5% higher open rates and 152% higher click-through rates than “business as usual” marketing messages, according to Epsilon Email Institute. These are some of the highest-performing emails you could ever send, so don’t miss this critical opportunity to build customer loyalty.

  1. Design with mobile in mind.

Your audience is likely checking their inbox on a phone, so now more than ever, emails should look beautiful whether they’re opened on a smartphone, tablet, or desktop. When in doubt, design for a small screen first. Nonprofit marketers can create compelling mobile-friendly content by focusing on the following strategies: arranging content in a single-column format, Incorporating white space throughout and organizing content with sections clearly designated with headers and dividers. Effective mobile design helps boost click rates, helps engage your audience when they are on the go and increases credibility for your brand.

  1. Include a compelling call to action.

Speaking of mobile: be sure to use buttons over text links for your primary call to action, since buttons are much easier to see and tap on a small screen. An effective CTA button should tell you exactly what happens when you click through. That doesn’t mean every call-to-action button should say “donate now,” though. For instance, charity: water often gets creative with their call-to-action language, avoiding words like “donate” in favor of language like this: “Say it with water.”

email for nonprofits

  1. Test your subject lines.

Because it’s one of the primary criteria recipients will use to decide whether or not to open or delete your email, subject lines should be compelling and irresistible to open. Subject lines are competitive by nature, so marketers should take advantage of this behavior by split testing them against one another. Split testing is an easy way to boost open rates, and simple subject line changes can produce big results for nonprofits.

  1. Make list growth a priority.

Your email marketing can only be as successful as the quality of your subscriber list. Because the average list churns 25-30% year-over-year, you need to constantly be growing your audience with new subscribers.

Growing your list ultimately starts on your website, and knowing how and where to use the right tools on your site is important. For instance, Emma customer Thistle Farms set up their lightbox signup form to appear on a 7-second time delay. That way, people have enough time to get to their website, comprehend what they’re doing, and sign up for the Thistle Farms email list if they want to. If not, it’s easy for website visitors to exit the form and go about their business.Nonprofit Donor Marketing

  1. Segment for relevant messaging.

Once you’ve gathered subscribers and welcomed them to your list, you NEED to be segmenting whenever possible, even if it’s just by how they signed up or their engagement with that first welcome email. The best email marketing relies on relevant, personalized messaging, and segmentation is what will get you there. Some key things to segment by…

  • How they signed up
  • Location
  • Engagement (highly engaged, inactive, etc.)
  • Donation amount
  • By any action, really. If you have the data, use it!

 

Wrapping it up

Strategic email marketing is critical to nurturing current donors and converting prospective ones. Email is king for all organizations, but especially nonprofits. Take into account this stat: 47% of marketers report that email generates the most ROI for their organization, and 58% plan to increase spending on email marketing during the next year. Now’s the time for nonprofits to optimize their email marketing strategies, and the tips in this article should help set them up for success.

 

Protecting God’s Money: Tips to Prevent Church Embezzlement

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Embezzlement ChurchFraud makes most people think of Wall Street and shady investment figures like Bernie Madoff or Martin Shkreli.  Although many frauds are perpetrated at that level, fraudsters normally start closer to home.

Churches and nonprofit organizations are prime targets for fraudsters starting out, mostly because these types of organizations don’t want to prosecute someone, especially if they can be viewed as a person “in need.”  This mindset, though well-intentioned, can make these organizations vulnerable.

Professionals boil the broad array of possible frauds down to three main categories: Financial Statement Fraud, Misappropriation of Assets, and Corruption.  Of the three, misappropriation of church funds (or embezzlement) is of the most concern for churches and nonprofits.

What drives people to commit these types of crimes?  The “Fraud Triangle” helps illuminate how someone might be tempted.  There are three sides to the fraud triangle that create the perfect conditions for fraud to occur.

  • Perceived Pressure: An individual can feel pressure from themselves, from other people, or from situations. This could come in the form of financial instability in the family, questionable job outlook, or inner greed.
  • Rationalization: An individual finds a suitable reason for performing the fraudulent act.  For example, someone who volunteers with the parish could feel entitled to snagging a $10 bill for lunch “because he does so much for the parish” or someone who thinks “$10 won’t hurt the parish because it is so wealthy and it’ll only be once.”
  • Opportunity: This is where pastors can help prevent fraud.  Poor internal controls or a weak culture of accountability provide someone the opportunity to steal from the parish.

Of all of the processes a church conducts throughout the year, taking up the collection is one of the riskiest.  Volunteers and elders in the church are typically trusted to count and care for the funds.  Here are a few practical steps a pastor and finance committee can take to ensure the entire collection makes it into the church bank account:

  • Designate a secure counting room, with a security camera in plain sight, and review the tape periodically.
  • Utilize at least two, unrelated counters, and require them to fill out their own count sheet.  Require each counter to verify the other’s work.
  • Have the counters prepare two deposit slips: one for the bank, and one for the parish bookkeeper.  Have the bookkeeper reconcile all deposits weekly.
  • Church employees and their family members should not be counters.
  • Checks should be stamped “For deposit only” immediately upon receipt.
  • Rotate cash counters randomly.  Observe collection trends with the different counting teams to identify discrepancies.
  • Deposit collection into the parish bank account as soon as possible.  Utilize different routes and transportation times.
  • Perform background checks on anyone who handles money.
  • Encourage parishioners to use checks for collection.

Nothing can completely prevent theft from the collection.  There are a few pitfalls that even the best of controls can’t fully mitigate, including:

  • Collusion: Two or more individuals agree to work together to perpetrate and conceal a fraudulent activity.  This generally leads to greater losses.  Because frauds are inherently difficult to find because the fraudster attempts to conceal the effect of the missing or improper disclosure, when two people team up, they can double the original effect.  The ACFE 2018 Report to the Nations (the 2018 Report) found that the median loss for a single perpetrator was $74,000 and for two perpetrators was $150,000.
  • Management Override: Those in charge don’t take controls seriously, rendering them useless.  The best thing pastors can do is maintain a good “Tone at the Top,” emphasizing the importance of protecting parish assets.
  • Clean Criminal History: The 2018 Report found that 89% of perpetrators studied had never been charged or convicted of anything.

Everyone knows about red flags in different situations.  There are specific red flags that pastors should be mindful of when selecting counters and others that are to be trusted with parish funds.  Some of the top red flags that were prevalent in the cases studied in the 2018 Report include:

  • Living beyond one’s means
  • Financial difficulties
  • Unusual close association with vendors
  • Wheeler-dealer attitude
  • Control issues or unwillingness to share duties

Fraud prevention is an ongoing process; parishes of any size could become victims. The best things for a pastor to do is to pay attention to red flags, be mindful of the ebbs and flows of parish finances, and be ready to ask questions if things don’t add up.

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