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What Are “Audited Statements” and Why Does My Organization Need Them?

3648 2056 Betsy Schuurman

A recent trend among granting organizations is to require charities provide audited financial statements.

What are “audited” financial statements?

Generally, this means that a person (usually a CPA or PA) independent of the organization’s management has reviewed the financial statements, accounting practices, internal controls, etc. to ensure accuracy and adherence with generally accepted accounting principles. This is a review that goes beyond your Registered Charity Information Form (T3010).

What does the CRA require?

The CRA recommends audited financial statements if the charity has annual gross income of more than $250,000.

How much does an audit cost?

Because it requires significant staff time on behalf of the auditing firm, an audit, even for a small nonprofit can cost $5,000 or more.

Are there any methods for cost-savings?

  • A “remote audit” may be more affordable as it does not require a site visit from an auditor.
  • Instead of an independent audit, auditors can provide a financial statement “review” or “compilation.” This may be acceptable to some funders.
  • An audit can be scheduled for every few years rather than annually.

Given the expense, why should we engage an audit?

An audit may make sense for your organization if:

  • Your organization wants assurance its financial practices and reporting are sound.
  • Your funders/potential funders require audited statements.

The Case for Donor List Consolidation

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If your organization is large and well-established, you probably already have relationship management software (such as Raiser’s Edge or Salesforce) to track donor information and gifts. For smaller organizations, this “database” may simply be an excel file… or many, many excel files! Gathering this information may seem like a daunting task, but it’s absolutely necessary to ensure that your donor data is accurate and secure.

Over the years, an unknown number of donor/volunteer/general contact lists may have been created, used, and shared by employees and volunteers. There are several things you may not know, such as: 1) how many lists exist; 2) whether the information on these lists is accurate/current; 3) whether personal information is secure and protected.

What Needs to be Done

Step 1: Call for return of lists to your organization from volunteers and ask volunteers to delete their local copies.

Step 2: Consolidate lists into one master list.

Step 3: Verify and update list information.

Step 4: Establish procedures for updates and sharing of list.

Step 5: Convert Excel list to donor database once one has been selected.

Why Does This Need to Be Done?

1. Enhance ease of use to aid fundraising and communication efforts. Verified information contained in one master list will make mailings much easier to produce and will make fundraising more effective.

2. Privacy concerns. Though past volunteers had good reason for using donor/contact lists and it is reasonable to trust that they only used the information for purposes specified by your organization, you cannot guarantee protection of data once it is copied. Your organization should to ask that local copies be returned and deleted as well as establish policies for information-sharing in the future.

3. Compliance with Canada’s Anti-Spam Law. While non-profits are generally exempt from CASL it is a best practice to ensure that those you contact have consented to receiving emails/mailings from us. With a master list/database, you can track whether an individual consents to receive communication.

4. Track anonymous donors and other information about donors. A master list/database will allow you to track donors who wish to remain anonymous as well as other useful donor information.

Does It Need to Be Done Immediately?

Yes. Your Fundraising Committee’s activities should require up-to-date donor/contact lists as well as donor segmentation. If the lists are not consolidated and cleaned up, the Committee’s efforts will not be as effective as they should be. Equally important are the privacy concerns. While nothing may have happened yet and you believe that all your volunteers have good intentions, you cannot protect our donor information if a volunteer’s computer gets a virus or is sold without data being deleted.

What Fields Should the New Consolidated Spreadsheet Contain?

Constituent ID
Constituent Code
Source
Source 2
Salutation
Title
First name
Middle name
Last name
Spouse First name
Addressee
Organization
Address 1
Address 2
City
Province
Postal Code
Country
Telephone 1
Telephone 2
Email 1
Email 2
Gift 2016
Gift 2015
Gift 2014
Gift 2013
Gift 2012
Anonymous?
Newsletter?
Is Inactive?
Has No Valid Address?
Is Deceased?
Notes

Does Your Organization Mail Out an End-of-Year Solicitation?

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Rationale for Annual Fund Solicitation

Most organizations send an annual fundraising solicitation in the Fall. This is timed to coincide with the end of the year for charitable donation deductions for tax purposes as well as the increased inclination for some donors to give in conjunction with certain holidays that occur during this time period. Many donors rely on this end-of-year solicitation as a reminder to give to a particular charity and will not seek out a way to give on their own.

Some organizations also make solicitations in the spring for a specific project.

General Annual Fund Solicitation Strategy

While most organizations seek unrestricted donations that can be put to operating expenses and overhead, many donors prefer to give to a specific project. Thus the creation of a named “Annual Fund” that can be directed to certain projects with a portion reserved for overhead. Funding drives that demonstrate a direct link between a donor’s gift and a concrete, measurable result are most successful. Donors also are more likely to give if they can develop an emotional connection with the project.

Strategy for an End-of-Year Solicitation

Decide on a project/reason for a donor to make a donation. Possible options:

  • General information on what your organization does- profile of Board, Executive Director, or mission and call for a donation in order to continue good work
  • Give directly to existing project that is successful
  • Profile of a donor/volunteer/member

Decide on method of solicitation. Possible options:

  • Physical mailing
  • Email
  • Use a fulfillment house to manage the mailing

Recommended Timeline

  • October 1-15 2016: Decide on project/solicitation strategy and write letter/content
  • October 16-31 2016: Create materials and ready mailing lists
  • November 1-15 2016: Put package together and mail out
  • November 16-30 2016: ED calls top donors from previous years for a chat and to check that they received mailing
  • December 1-14 2016: Follow-up with donors who gave last year if this year’s gift has not been received
What if we want to end our physical end-of-year mail-out or skip a year?

You may feel that your end-of-year mailing is not worth the time/staff effort it takes to produce. It may not be! But check the data first to ensure that there aren’t any gifts that your organization usually receives based on this mail-out. A donor may be counting on getting that piece of mail from your organization as a reminder to donate before the year’s end.

Are You Ready for National Volunteer Week?

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No, it’s not actually April- yet. But it soon will be! Be honest- when do you start planning for National Volunteer Week? It’s April 10-16 this year so my guess is around April 1.

Here’s a few easy ways to start planning now and make sure your volunteers know that YOU know your organization wouldn’t exist without their generous service.

  • Even if your budget for volunteer recognition is $0, an informal email from the President/ED with a few examples of how volunteers helped further your organization’s mission paired with a heartfelt thanks can help your volunteers feel appreciated.
  • Do you have a Volunteer of the Year award? Maybe you did at one point and the program lapsed. Bring it back or start one now. All it takes is a simple one page nomination form, a committee to pick the recipient (your Board can do this if they’re interested), an email announcing nominations are open, and a printed certificate to present to the winner during Volunteer Week.
  • Ask a local business to donate items for a thank you coffee break. Muffins and cookies in the kitchen with a sign thanking volunteers are always appreciated.
  • Encourage your staff to seek out volunteers and to take a minute to give a sincere “thank you.”
  • Conduct a volunteer survey and ask volunteers directly how they’d like to be thanked, whether they have the support/training they need, whether they feel valued, etc. Surveys are easy (and sometimes free depending on the number surveyed) with Survey Monkey.
  • Take a few hours and map out a formal Volunteer Recognition Plan.
  • Check out Volunteer Canada’s Volunteer Recognition site for more ideas.

Why Hire an Independent Prospect Researcher?

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In 2015, non-profits tend to come in two varieties: large organizations and small shops. Large organizations are usually lucky to have a prospect researcher on staff but in small shops, an Executive Director, Development Officer, or support staffer is often tasked with doing the work of researching prospects. This person is usually so overloaded that there’s no time to apply systematic processes to identifying and researching potential donors.

Does any of this sound familiar?

  • Your list of “top prospects” is based solely on who’s given recently
  • Your meetings are scheduled haphazardly based on who you’ve run in to/can get in touch with
  • “As much as possible” is your annual fundraising target
  • You think some of your donors might have a family foundation, but aren’t sure
  • You’re nervous talking about planned gifts with your older donors
  • You don’t think about asking younger donors for planned gifts at all
  • You haven’t asked your annual donors to upgrade
  • You use Raiser’s Edge (or a similar donor database) to record gifts only and don’t know how to use additional features
  • You don’t know what the next action on any of your prospects should be
  • Stewardship consists of a handwritten “Thank You!” on the donor’s tax receipt
  • You’re gearing up for a capital campaign and *hope* your major donors step up

No matter the size of your organization, I’ve never met a non-profit professional who didn’t say their organization wasn’t feeling pressure to increase performance with fewer resources. Especially in today’s funding environment where donors prefer to allocate funds to projects only, finding resources for vital development work is more difficult, and yet more necessary, than ever.

Schuurman Communications will work with your organization to develop a customized plan to utilize your resources at peak efficiency and effectiveness. This may be as simple as identifying your top 25 future prospects or as involved as developing, implementing, and training staff on specialized processes for the Raiser’s Edge Prospect tab. Maybe your fundraising staff will feel more confident making calls if they have individual profiles on top donors. Or perhaps automating stewardship processes will free up support staff time and enhance donor relations.

Contact Betsy at betsy@schuurmancomms.com today for a free consultation to see how your organization can benefit from prospect research services.