In the midst of uncertainty caused by shrinking profit margins and limited resources, C-Suite interest in and reliance on cash flow generated by development shops has never been greater. As nine- and ten-figure campaigns are becoming the norm, there is a growing need to be able to reconcile and explain any differences between campaign counting and reporting and internal financial accounting and how those differences relate to total dollars raised and cashflow. As a result, while it’s easy to say (1) we need to raise more money or (2) our fundraising efforts are not generating enough cash, the process of evaluating programs and identifying opportunities to make them more productive can be challenging. The evaluation process must begin by answering some key questions:
- What does our institution count and report?
- Which institutions should we consider for peer group comparisons? What do our peer group institutions count and report?
- Are our counting and reporting standards/guidelines consistent with those of our identified peer institutions?
- What changes should we consider making in our standards/guidelines to ensure that any peer group comparison is valid?
Fundraising Reporting Standards
Before beginning the process of evaluating our program and engaging in any peer group comparisons, each institution must determine what standards it will incorporate into its guidelines for counting and reporting on fundraising activity.
Relevant Fundraising Reporting Standards include those from:
- American Association of Medical Colleges (AAMC)—For academic medical centers and teaching hospitals.
- Council for Advancement and Support of Education (CASE)—For universities.
- National Association of Charitable Gift Planners (CGP)—Formerly known as the Partnership for Philanthropic Planning (PPP) and the National Committee on Planned Giving (NCPG)—For gift planning professionals across all industries.
Financial Reporting Standards
C-Suite leaders, especially chief financial officers, are more familiar with Financial Reporting Standards from the Financial Accounting Standards Board (FASB) used for accounting purposes as well as Generally Accepted Accounting Principles (GAAP).
Fundraising Reporting Standards vs. Financial Reporting Standards
It is important to understand both the institution’s adopted fundraising counting and reporting guidelines and how Finance interprets and applies the relevant Financial Reporting Standards in order to effectively determine (and explain) any variations in total dollars raised and cash flow produced by Development Operations. Some examples of areas where significant variations in counting vs. accounting can occur include:
- Current Gifts and Pledges (cash vs. accrual method; maximum allowable pledge term)
- Planned Gifts
- Revocable Planned Gifts—primarily bequest expectancies (counted or not counted; face value vs. present value)
- Life Insurance (face value vs. cash surrender value)
Identifying Opportunities to Make Our Programs More Productive
Once we establish standards and adopt appropriate counting and reporting guidelines, we are ready for an “apples-to-apples” comparison with our identified peer group. Only then will a program derive maximum benefit from a comprehensive evaluation of each critical component of an effective donor-focused fundraising program.