The number of options for Massachusetts donors is eye-popping: more than 23,000 public charities exist in the Commonwealth, according to the Attorney General’s office. Existing is one thing, but thriving is another—and thriving makes all the difference to the success of your mission.

With the intense competition for every donor dollar, donors will need more than mere empathy with your nonprofit’s mission to decide to contribute to your cause. They need to feel confident that their gift will be stewarded appropriately.

Transparency fundamentals

One way to ensure your donors’ confidence in your organization is through accurate and transparent nonprofit bookkeeping. Here are some fundamental best practices.

Nonprofit bookkeeping transparency means utilizing fund accounting to track revenue and expenses.

  • Fund accounting allows the agency to specify types of gifts—permanently restricted, temporarily restricted, or unrestricted—and how each of those gifts were allocated and expensed (if they were).
  • Fund accounting enhances management control by clearly showing fund restrictions which allows managers to better understand cash flow.
  • Fund accounting assists the agency’s Board of Directors in carrying out their fiduciary duty of fiscal oversight, since the line by line tracking of gift revenue and expenses—as well as earned income and related expenses—is transparent.
  • Fund accounting demonstrates the fiscal stewarding of funds in an agency to potential grantors.
  • Fund accounting can help predict the need to increase donations in the current fiscal year to make ends meet.

In short, fund accounting is a detailed, transparent look into the fiscal health of an agency. It is the key to accurate and transparent bookkeeping for nonprofits of any size.

The confidence factor

The importance of donor confidence cannot be overstated. It starts with the fact that most major gift donors are experienced at making nonprofit gifts. They have familiarity with donor relations and gift stewardship. They want to be assured ahead of time that their gift will be spent wisely.

Often, many major donors have served—or are serving—as trustees of other nonprofits. These savvy donors may even require copies of 990 forms, which are public, before deciding to make that major gift to an organization. Certainly larger foundations will request copies of audit reports, as well, before deciding to make a grant.

Navitance is donor friendly.

Keep in mind that great bookkeeping will attract larger donors—and poor bookkeeping will turn them away.

Navitance can assist Massachusetts nonprofits in a number of ways to ensure that the nonprofit is financially prepared to bring confidence to donors with respect to the stewardship of donor funds. For more information, please contact us.