Donations are solicited, collected, counted, deposited and reported in your nonprofit’s financial statements. Whether you are a church that collects donations every weekend, a social service organization conducting a capital campaign or a private school hosting a fundraiser – creating strong internal controls surrounding contributions protects the reputation and resources of the organization. Here are the top 5 controls to safeguard your contributions:
- Security – contributions should never be available to only one individual. If funds are held overnight before they are deposited they should be secured in a safe with controlled access.
- Count teams – have rotating count teams that process your receipts and who prepare and sign the count sheet. At least two people should count and document the funds collected.
- Validated bank deposit slip should be matched to the count sheet and any discrepancies investigated in a timely manner.
- Deposits should be recorded in your general ledger and reconciled to your donor system on a timely basis.
- Follow your donor’s designation or restricted use for the funds. If you deposit the restricted funds you are telling the donor you will comply with their restriction. For large restrictions – consider providing a report to the donor of how and when the funds were used.
Creating segregated functions surrounding the controls identified above enhances your internal control environment. The person who collects the funds should not be responsible for posting or reconciling the information in the accounting system. Segregate possession from posting and from reconciliation. Need help in defining stronger internal controls – contact us.