The Nonprofit FAQ

Who should process incoming donations?
Barb Coleman wrote to nonprofit@rain.org (see http://www.rain.org/mailman/listinfo/nonprofit) in June 2004:

The director of finance wants all donations to bypass the development office and go straight to accounting (10 miles away). Of course, the trouble is, as we all know, the copies of checks don't always arive in a timely manner, no other included information arrives, donor thank you's are late, etc, etc.

Aparantly, if I can 'prove' that most places have donations go directly to development (or foundation) office, I can win this insane battle. Can anyone provide with some sample policies about cash flow, or check handling policies.

Rodney Bean of the Yellow Springs Sr. Center (Ohio) provided this practical advice as 'feedback' for the Nonprofit FAQ on September 14, 2006:

Comment: Yes fiduciary concerns are important.

Two apply; one says, “guard the money you have” the other says, “grow your assets” and that means prompt thank-you letters. It just makes sense for the office receiving the mail to open it and send the checks on to the finance office. The finance office is one interdepartmental mail target; routing information in the other direction can involve a large number of interdepartmental mail targets and so is less reliable.

Here's what we do: The thank-you employee puts each check on a sheet of paper with a pocket at the bottom just deep enough to cover the donor's account number and makes him/herself a machine copy. The check then goes to the finance person.

This works well; the check is not delayed by the thank-you person. The sheet with the shallow pocket at the bottom also has on it a line designated "Thank you letter date” and one designated "Date entered to data base." The machine copy then serves to track processing and is a lasting record of any notation the donor may have written on the check and whether the check was issued from a depository account (requiring no 501(c)(3) language in the thank-you letter.)

Restricted gifts should receive no thank-you letters and should not be deposited to the bank until reviewed against a restricted gifts policy by the committee or individual designated to undertake such a review. If a protracted review is anticipated, a letter acknowledging receipt of the check and informing the donor of the review is appropriate.

Robert D. Shriner, Ph.D. of
Shriner-Midland Company,
Management & Economic Consultants, in
Warrenton, Virginia U.S.A., responded to Barb Coleman's original question in 2004:


I have some good news and some bad news.

From a fiduciary standpoint, I would strongly favor having all funds being received and recorded by the Finance department. But because of the importance of prompt and proper documentation and acknowledgment of donations, I would also strongly favor the establishment of a procedure that is mutually agreeable to both Finance and Development in terms of both financial accountability, donor information and recognition, and other development information.

Don't argue over who gets first crack at the checks! Work out a procedure that meets both Financial and Development needs. Hold out for a mutually agreeable procedure; but don't try to control the dollars or preempt accounting priority. You'll lose if you try to outflank accounting, unless your Board's Finance Committee is asleep at the switch.

This situation requires a "win-win" solution!!! You can "win" by joining with acccounting and working to create a sound process for recording and responding to contributions in a timely, efficient fashion.

But Tony Poderis, author of the Fund Raising Forum Library (
http://www.raise-funds.com/library.html)) advanced a very different point of view:


I am reminded of the many times I worked with development officers whose Finance Directors insisted that their
organizations' charitable contributions be received in the finance department first.

Strongly countering those demands on those many occasions, I have always insisted that all checks --- all gift transmittals --- from any source --- should go initially and directly to the development department.

This makes sense from a good organizational and efficiency point of view --- considering the avoidance of troublesome time lags to thank donors, facilitating the presentation to donors of any special benefits for membership gifts and named opportunities, apprising solicitors right away that their efforts paid off so that they do not make embarrassing follow-up calls to donors whose gifts are already in house, developing timely progress reports for the campaign leadership, being up to the minute regarding campaign results to know exactly how
we are doing toward working to meet our goal, etc., etc.

But, there is something else, and I think it is very important, which is lost on most folks outside of the development departments' mindset.

That is the morale boost and the excitement the hard-working development folks experience when contributions are received in the morning's mail. All of the contributions, not some of them, and as promptly received as possible from the time they were dispatched by the donors. Not as an after-the-fact from finance when they were able to get around to it, but first and foremost to the department and location where such gifts should logically be directed --- as sent directly by the donors, passed on by volunteer solicitors, when they are inadvertently sent to other departments --- any which way.

I hasten to add that I am not a Finance Director "basher." When I was a Director of Development, that was the same person who saw to it that I received my paycheck on time, worked well with me to develop and regularly review budgets and forecasts, and who helped to pay development-incurred expense invoices as promptly as possible --- and who came through in a timely manner with cash advances, and expense reimbursements.

But we differed mightily when it came to my development department's point-of-receipt of our organization's charitable gifts. Opening the mail each morning, with the hope and the anticipation of first seeing those new and renewed gifts, was something I simply would not give up. On many special occasions, sometimes minutes after opening the mail, I
would be on the phone in the most timely way to thank donors and volunteer solicitors, and let the campaign Chair know the good news.

If the news was bad, I could as well move with dispatch to find out why. Any other process to delay those actions, even for a short time, was unacceptable.