Your California nonprofit’s operational health relies on clear communication between all departments, but especially between accounting and development. Miscommunication or communication breakdowns can cause employee conflicts, incorrect financial statements, and loss of grants.
Follow these steps to improve communication by increasing collaboration.
1. Understand the accounting methods used by each department
Nonprofit departments typically record financial information differently. For example, development might use cash basis accounting while the accounting department uses Generally Accepted Accounting Principles (GAAP). Though each method results in different numbers, both are correct.
Let’s say a donor makes a payment in February 2021 on a pledge made in November 2020. Under cash basis accounting, development will record the payment as revenue in February. But under GAAP, accounting will record the payment as revenue in November. Both figures for February 2021 and November 2020 are accurate, but disagree with each other.
2. Implement communication protocols
Accounting and development schedules should be reconciled on a monthly basis. They also need clear protocols for communicating important activity.
If development fails to inform accounting about a particular grant on a timely basis, the latter won’t be aware of the grant’s financial reporting requirements and could lose funds. And if accounting doesn’t record grants or pledges in the proper financial period according to GAAP, you could run into audit issues and jeopardize future funding.
3. Have regular communication between departments
Schedule meetings so that accounting representatives can educate the development team about the information it needs and the risks of not receiving it. For their part, development representatives should keep accounting updated about pending grants and proposed capital campaigns. Development should also present status reports on different types of giving (gifts, grants, pledges, etc.). This is extremely important for items received in multiple payments that might need to be discounted on financial statements.
4. Use California nonprofit audit services to locate areas where communication is failing
Whether your nonprofit has a handful of employees or hundreds, coordination can easily be disrupted. Contact a local tax and audit services firm for help determining how to improve your California nonprofit’s financial communication.