Archive for May 29, 2014

Cultivating a Relationship Between the Finance and Development Offices

It is not uncommon for the relationship between the finance and development offices at non-profit organizations to be strained or non-existent. Yet this relationship is probably one of the most important within a non-profit organization, especially for those organizations that rely heavily on donations and grants. Poor communication between these two offices can result in the improper receiving and handling of contributions and, ultimately, lost funding and upset donors.

Effective two-way communication is vital to cultivating the relationship between the finance and development offices. Below are specific situations in which communication is important:


Most organizations have two independent systems that track contributions, one used by the development office and one used by the finance office. Also the treatment used by each office to track contributions can be different, resulting in variances when comparing reports for the same time period from one system to the other. If the two systems are not reconciled, this can be very confusing to a finance committee or management when reviewing the reports. Therefore, it is important that a reconciliation between the two systems is completed monthly, or at least quarterly. Monthly reconciliations will enable the two offices to ensure that there are no errors (such as incorrect, duplicate, late or missed postings) and confirm that the reports are complete and accurate. The only reconciling items should be the differences in treatment of the contributions.

Reconciling the two systems requires cooperation and good communication between the development and finance offices. In order for a reconciliation to be completed, the two offices must first understand the underlying differences in the treatment of various types of contributions. There could be several differences. For example, when a verbal pledge is received, the development office will usually record the pledge; however, the finance office might not record a pledge unless it is agreed to formally in writing, or if it is contingent upon an event or a matching contribution. Once these differences are understood, the two offices should then work collectively to reconcile the reports. The two systems should be set up so that they are in alignment with each other as much as possible (for example, having the same tracking number for each type of contribution, e.g. annual fund, endowment), which will assist with the reconciliation process.

Restricted Donations and Grants

Many times, only the development office is involved during the beginning stages of a grant. Not involving the finance office early in the process could result in important deadlines being missed, restrictions being broken and, the worst case situation, the funding falling through. It is important that, during the RFP stages, the development office communicates to the finance office any deadlines for reporting requirements and details on any restrictions. This will enable the two offices to work together to evaluate the opportunity, prepare a proposal budget (or complete any other necessary paperwork or reporting requirement) and ensure that the restrictions meet the goals and fiscal needs of the organization. The finance office will also need to adequately understand the restrictions for financial statement reporting purposes and to ensure the funds are spent in accordance with the restriction and the proper information is tracked for reporting purposes.  

Campaigns and Pledges

Likewise, with restricted contributions, the development office should involve the finance office, senior management and the board in the beginning stages of a campaign for funds. In particular, the offices should work together and agree on the purpose of the campaign to ensure that any restrictions on the funds are in accordance with the goals and fiscal needs of the organization. 

When pledges are made, the development office should communicate the details (donor, amount, restrictions, timing of the pledge, as well as verbal or written) to the finance office as soon as possible. It is important that the finance office records the pledges in the correct fiscal year and spends the funds in accordance with the restriction.

Effective two-way communication requires the willingness of the personnel within both the development and finance offices. Both offices should be proactive and seek out necessary information, rather than waiting or assuming the other office will communicate the information. Scheduling frequent meetings between the two offices is also recommended. Agenda discussion items can include new grant opportunities, new campaign initiatives, reporting requirements and other topics. While both the development and finance offices are essential to a non-profit organization, the two offices working together collectively is invaluable.

For more information, please contact Shannon Crowley at or 781-610-1245.

Shannon Crowley Massachusetts CPAShannon Crowley is a manager in BlumShapiro’s Accounting and Auditing Department, based in Quincy, Massachusetts, Shannon oversees audit engagements and is responsible for engagement planning, staff supervision and coordination with client personnel to ensure successful completion of projects. Shannon has worked with clients in a variety of industries, including healthcare, higher education, non-profit, manufacturing and distribution.

Ask Not What You Can Do for Your Software; But What Your Software Can Do for YOU

Nonprofit Accounting SoftwareYour key software, whether accounting, donor management or payroll, should be constantly evolving. Because of limited time and resources, it is easy to lose track of what your software’s capabilities are and should be. A few quick items to review on a regular basis:

What is the current version? Which version are you on? The further behind you are, the more costly upgrades will become in regards to both money and time.  If you do not have the immediate resources to upgrade, it is still important to confirm the current hardware and software requirements. This will ensure you are budgeting for what could otherwise be hidden costs for new required hardware and related software.

Current Features:
Occasionally, updates are performed to address a specific issue such as fixing a software bug or updates for W-2/1099 processing. Chances are these updates include other enhancements that you should know about! Even if you don’t plan on installing the latest release, make sure to ask your vendor for a list of enhancements on a regular basis.

Also, do not forget to have someone attend training on a regular basis. At worst, current knowledge will be reinforced. More likely, attendees will learn additional tips and tricks.

You can do that?
From the early 1900s to the 1960s, the average kitchen changed in dramatic fashion – candles and windows to light bulbs; ice boxes to refrigerators; your kids speaking with you to watching TV. Report generation has evolved dramatically as well – 15 years ago, you would have to print 25 reports and distribute to each manager via interoffice mail; if you were being “efficient,” you might have scanned each of the reports and created 25 separate emails. Now you can press a button and everyone gets their information immediately. Even better, they have their own direct access from wherever they are.

This is one example, but it’s important to know not just what your software can do, but what it should be able to do. Make sure to ask colleagues, new employees or simply talk to those salespeople who call you to make sure you actually know what is available.

Look for a follow-up post on how to find the time to review items outlined above.

As a manager in our Consulting Group, Matt provides implementation, conversion assistance, training and ongoing support for the firm’s clients. His industry experience includes non-profit organizations such as independent schools, health and human service organizations, arts and cultural organizations and municipalities.

5 Questions to Ask Before Joining a Board

Joining a Nonprofit BoardAs we gain experience and grow in our respective “day jobs,” some of us will be offered the opportunity to serve on the board of a non-profit organization.  Others among us may seek out such an opportunity as a way to give back to the community that has given them so much.  In either case, there are some questions that you will need to ask yourself before committing to such a position.

1.    What is the organization’s mission?

First and foremost, what does the organization do and is it something that you believe in.  Your duty as a board member will be to act in the best interest of the organization. For this reason, you should make sure that the mission does not conflict with any of your personal beliefs/interests (or interests of any other organization (your employer or other) that you may represent). Identify any potential conflicts of interest prior to joining a board.  And above all, you want to make sure that it is an organization whose mission you can stand behind.  As we discuss with the next question, a lot may be asked of you, with little to no compensation.  So make sure you are putting your efforts towards an organization and a mission that you truly believe in.

2.    What responsibilities would you have?

Discuss with the executive director or chairman of the board, some of the responsibilities that will be expected of you.  Some of the items to discuss are:

  • Frequency, typical duration, dates and location of meetings
  • Expected availability of board members between meetings and involvement on other committees
  • Length of your term as well as any term limits, and other limits on a board member’s continuing involvement, including any mandatory terminations for failure to attend meetings
  • Any meeting, travel, meal and expenses you will be expected to absorb or contribute

3.    What’s in the organization’s Form 990 (and other documents)?

I recommend reviewing the organizations Form 990 before agreeing to serve on a board.  The Form 990 provides detailed financial information and governance information about the organization. Other documents that you should review are the organization’s governing documents, including articles or the certificate of incorporation, bylaws or regulations as well as any board policies or guidelines, especially those regarding conflicts of interest and statements of mission. You’ll definitely want to review the latest (hopefully audited) financial statements as well.  Also, check the organization’s website, to gather additional information.

4.    What protections are available to the organization’s board members?

You should confirm the extent that board members of the organization will be entitled to protection of laws limiting liability of volunteers under federal and any applicable state law, as well as the protections of a business judgment rule and of statutory indemnification under state law. More importantly, you should determine the extent that the organization’s board members will be protected by:

  • Contractual indemnification; and
  • D&O insurance policies

The most important of these protections is likely volunteer protection. Typically, you lose volunteer protection if you are paid other than reimbursements of out-of-pocket expenses or you are enriched through a conflicting relationship.

5.    Can you be a valuable asset for this organization and are you willing to dedicate the time and effort to be that valuable asset?

Assuming the questions above were all answered to your liking, the true question is whether or not you are willing to make the sacrifices necessaryto help the organization in whatever way you can.  If the organization is something that you truly believe in and it appears that they have their house in order, then it’s a matter of determining how much you are able and willing to offer.  If you feel like you have a little extra to give (pro bono) back, there are plenty of organization that would love the help.  I hope you find a great organization that you can be proud to be a part of and I know they’ll be proud (and glad) to have you.

Sean Niland, Intacct ConsultantSean Niland is a manager in our Consulting Group, Sean provides implementation, conversion assistance, training and ongoing support for the firm’s clients.  His industry experience includes privately held businesses such as hospitality and professional service firms; non-profit organizations such as health and human service agencies and arts and cultural organizations; and municipalities.

Sean is certified in Intacct, AccuFund and Tagetik.


DATA ACT Passes House and Senate

This past Monday, the House unanimously passed The Digital Accountability and Transparency Act of 2014 (The DATA Act). The DATA Act was passed by the Senate earlier this month and President Obama is expected to sign it into law, based on his support of this Act in the past.

The Data Act

The DATA Act is an extension of the 2006 Federal Funding Accountability and Transparency Act and mandates the adoption of consistent government-wide data standards in its reporting on government spending. Using this consistent language in its financial reports enhances accessibility for policy makers and tax payers. A public, searchable and reliable database of government spending will be accessible on a new and improved, allowing users greater access to information regarding government grants and contracts between the federal government and grantees and contractors. The result is anticipated to be greater accountability of those who spend tax payer dollars, as well as those who grant and monitor government dollars. The DATA Act will commit the Office of Management and Budget (OMB) and the Treasury to utilizing more robust data standards throughout all aspects of funding, including budgets, grants, contracts and other financial reporting.

The DATA Act aims at reducing waste and fraud and increasing the transparency and effectiveness of government spending across agencies. Many believe this bill will greatly modernize the way the government tracks and monitors agency spending, as well as increasing the ease of information gathering. Under the current system, all budgets, grants, contracts and disbursements are largely reported in manual formats, such as tedious forms and spreadsheets.  As a result, obtaining information regarding agency spending and grant reporting is extremely cumbersome and time consuming. In addition, the current system lacks methods for enforcing existing regulations regarding reporting certain information. The hope under the DATA Act is that a universal automated system will help to enforce existing requirements.

Non-Profit Industry Impact

How this will impact the non-profit industry is yet to be determined. Some question if implementation of new reporting standards will be a burden. Others feel that once up and running, a more modern system will save organizations a great deal of time and effort automating much of their financial reporting. Bill Co-sponsors, Sen. Mark R. Warner (D-VA), Sen. Rob Portman (R-OH), Rep. Darrell Issa (R-CA) and Rep. Elijah Cummings (D-MD) explained in a Congress blog post published on, on December 16, 2013 that a new system would greatly decrease the burden on entities that are awarded taxpayer dollars, such as state and local government agencies, as well as higher education institutions, citing the current system of duplicative forms and reporting. The lawmakers claim that “If this reporting were streamlined, our institutes of higher education and our state and local governments could direct more funding to programs and less to overhead costs.”

While the implementation issues and questions have yet to be answered, most agree that the requirements set forth in this proposed legislation will create greater accountability, accuracy and efficiency in overall government spending and help to tackle the ongoing concern of government waste and fraud.

Jeanne Pagnozzi Boston AccountantJeanne Pagnozzi is a manager in BlumShapiro’s Accounting and Auditing Department, based in Quincy, Massachusetts, Jeanne oversees attest and tax engagements and is responsible for engagement planning, staff supervision and coordination with client personnel to ensure successful completion of projects.