Fundraising and the Chart of Accounts

Every fundraiser knows that data is important. Knowing our supporters is vital, and what we need to know more than anything is how to ask them, when to ask them, and how much to ask them for. The best way to do that is by observing their past behavior. People, as a friend of mine likes to say, are reliably themselves; all things being equal, people will tend to do what they’ve always done. And if we know what someone has always done, we can subtly make other things not equal and try to change that behavior.

This is why your database is so important. It’s an ongoing record of what your donors, volunteers, and others do. A clean database is a truly amazing tool.

Of course, databases are rarely clean. I’d even say that they’re often dirty.

There are perfectly normal reasons that databases get dirty. Data entry errors mess up titles and spelling. Normal moves mess up address, phone number, and email accuracy. Deaths mess up… well, everything.

And there a lot of services that will help you clean those things up. But something that’s not often discussed is the chart of accounts. The chart of accounts is a list of all of the accounts in the general ledger of the organization: all of the cash, securities, accounts receivable, liabilities, payable wages, revenue, and so on. It’s usually kept and maintained by the financial people… and what makes sense to them doesn’t always make sense to the development folks.

Let me explain.

In development, we care about few basic things about every gift. On the one hand, we want to know about the gift itself: how much it was, when it came in, and so on. On the other hand, we want to know how the gift is related to three things:

The constituentThis is the person or organization who made the gift.

The appeal. This is what we did to get the gift.

The fund. This is the purpose for which the constituent intended the gift.

Ideally, we want every gift to have these three relationships. And we don’t want these three things to have any overlap. So, for example, if our unrestricted gifts go into the unrestricted fund, we don’t want any events to have a fund. What would we do if an event raised unrestricted money? We want our events to be appeals.

How does this get messed up? One organization I know had more than 150 funds in its development database. Some of them were real funds. A lot of them were appeals or constituents or both. One ‘fund’ was only for unrestricted dollars from one particular funder, another was for one grant from one funder, another was from unrestricted dollars from a single event, and so on. Meanwhile, all restricted gifts from individuals went into a single ‘restricted’ fund (the actual restrictions were put in a note). When the leadership of the organization wanted to know how much was raised for a particular program, it had to know all of the ‘funds’ – which grants, which events, and so on – that were related to that program and search through the notes! When development staff wanted to find donors to particular programs, they had to do through the same process! A lot of time could have been saved – and more accurate analysis provided – by cleaning up the chart of accounts.

The fact is that the finance office had been making all of the decisions about how to enter gift data in the fundraising database. And while I love the finance people I’ve worked with over the years, their skill set and priorities are very different from the skill set and priorities that development people have. The system that had been put it place didn’t work.

And cleaning it up wasn’t easy.

Clean data is important. It’s the only way for a fundraiser to keep track of an organization’s relationships with thousands of donors. And keeping your list of funds clean is critical to understanding donor behavior and interest.

So, since it’s still early in the new year, here’s a resolution. Sit down with your director of development and ask them, “If you could remake the list of funds that you deal with, what would you do?”

It will make a world of difference.