Bank Reconciliation Made Easy: Part I

Is reconciling the bank statement a task that causes you to shudder? Do you procrastinate reconciling the cash records to the monthly bank statement? Ideally, reconciling the bank statement is a task accomplished through specialized accounting software; however, understanding the underlying principles will lead to more accurate transactions entries and a bank reconciliation process that might just make you smile.

Reconciling the bank statement is simply comparing your organization’s cash records to the monthly statement provided by the bank. Your cash records, also known as your cash general ledger or GL, contain a list of all your cash transactions during the month. The deposits to the bank will be debits to your cash general ledger account. The checks will be credits to the cash general ledger. Bank service fees and check fees are some other cash withdrawal items and should be entered as credits to the cash account.

In a perfect world, the differences between the cash general ledger and the bank statement should be mostly timing differences.  For example: an outstanding check written on July 31 will be a July transaction reflected in the cash GL, but may not appear on the bank statement until August. Resulting in a timing difference between the cash GL and the bank statement.

Deposits taken to the bank at 5:00 p.m. on July 31 will be listed on the cash GL as a July transaction but will most likely not be listed on the bank statement until August. This is known as a deposit in transit. This is also a timing difference between the cash GL and the bank statement.

Steps to Reconciling the Bank Statement

1.  Start with the balance on the bank statement:

Bank Balance July 31
Add	Deposits in Transit
Deduct	Outstanding checks
Add or Deduct	Bank Errors
Total	Adjusted/Corrected Bank Balance

1. Obtain the cash balance from the general ledger:

Cash Balance from General Ledger July 31
Deduct	Bank Service Charges
Add	Interest paid by the bank on your cash balance
Add or Deduct	Errors in the organization’s cash account
Total	Adjusted/Corrected Cash Balance

1. Compare the adjusted totals. They should be the same. If not, identify the differences so that corrections and adjustments may be entered into the correct place.
2. Finally, prepare the appropriate journals for the corrections and adjustments. A good rule is to enter the item where it is missing. For example, interest that appears on the bank statement will need to be entered in the cash general ledger. Deposits in transit or outstanding checks are simply noted as an adjustment to the bank balance. Those items will appear on the next statement but will already be included in the cash balance.

Bank reconciliation is an important tool in protecting your assets. In our imperfect world, mistakes happen. Reconciling the bank statement on a regular basis allows mistakes to be found and corrected, reflecting accurate data for reporting. In Part 2, I will examine how to find the differences between the adjusted bank balance and the adjusted cash balance and how to handle the list of adjustments.

Laura Reifschlager
Trainer
Sage Nonprofit

Read Full Post »

Going For Gold – United States Olympic Committee

Do you know that the United States Olympic Committee is a 501(c)(3) not-for-profit?  The USOC was incorporated by Congress to establish and help amateur athletes reach their goals. The Committee governs the participation of the US in the Olympic, Paralympic, and Pan-American Games. The Committee represents the US as its National Olympic Committee in relations with International Olympic Committee and the Pan-American Sports Organization, and as National Paralympic Committee with the International Paralympic Committee.

However, unlike other nations the USOC does not receive direct federal funding for athletic programs.   Given the recent flap in Congress over “Made in China” Opening Ceremony uniforms you would think the USOC and our athletes receive direct federal funding.  But, they don’t.

Instead the USOC relies on broadcast revenues, corporate sponsorships, grants and donations.   Here is an infographic depicting where their revenue comes from and where it goes.

A direct link to the chart is here.

Of course infographics can obscure details.  So, I visited Charity Navigator to see how they rate the USOC.  The organization received 3 out of 4 stars, not too bad of a rating.  Why not 4 stars? There are a few”dings” against the USOC.

First off, the USOC compensates its Board of Directors, while this isn’t illegal, the practice is considered questionable.  The USOC also loses points for not publishing audited financial statements online and not guaranteeing donor privacy. Donors must proactively opt out to protect their privacy.  You can read more here.

What’s more many would be donors are skeptical of giving because of the large salaries of the top administrators and the use of commercial fundraising companies.

So, how do you support Team USA?  Did you know that the USOC is a nonprofit?

Read Full Post »

One, Two, Three…Smile!

Donor photos are one of the most valuable pieces of donor experience content a nonprofit can have.  After doing a recent customer photo shoot, I was thinking about how wonderful it was to connect with our customers and what a huge asset we had in the photos.

I often see nonprofits with the “shiny, happy people” stock photos and shudder.  There is such a huge opportunity for nonprofits to connect with their donors and volunteers through photography.

Use Photos to Increase Web Traffic:

A report from Curata not surprisingly suggests that bringing visual components to website content is key to boosting engagement, and Content LEAD found that adding images to your pages can result in 47 percent more clicks than pages with text-only articles.  Use images that illustrate your story or further convey your mission, purpose and goals.

If you want to learn more about the value of adding photos and tips to improve your search engine optimization just watch Google’s related Webmaster Central video.

Use Visuals to Tell a Story:

Another form of visual content that has helped web content marketing campaigns is the infographic.

Infographics have become increasingly popular for organizations attempting to differentiate their website from others, or those trying to draw more people to their sites.  I would suggest that nonprofits start thinking about infographics for annual reports.  They are more sharable, easier to digest, and more affordable.

Here is a great example of an infographic for the new Sage Nonprofit Cloud Suite.

Use Photos to Enhance Social Media:

Nonprofit use of social media is growing by leaps and bounds.  You can see just how nonprofits are using social media in Mashable’s infographic. In the study they found that 92% of nonprofits are using at least one social media button.

Facebook, Twitter, Pintrest and other social networks do help nonprofits reach donors, but many NPOs are missing the opportunity to really leverage the networks.  Web Liquid recently found that 37% of users that saw visual content Liked the page, compared to 31% who saw video content, 27% exposed to text updates and 15% shown a link.  Pretty interesting!

Take-away:

There are many ways to add visuals/images to your properties here are a few:

1. Add images to text content on your site.
2. Add photos of your employees, volunteers, and even your board members.  (Don’t use bad, grey headshots.)
3. Share images of your events on Facebook, Pintrest, or Google+.
4. Tweet photos from everything you do.
5. Capture photos of your donors and volunteers in action, just like we did!

This blog is courtesy of http://donorexperience101.com/, our own Bridget Brandt’s blog.

Bridget L. Brandt
Director of Marketing
Sage North America

Read Full Post »

Bust Out Of The Donate Now Button Rut

Is your organization capturing a slice of the $20+ billion in online giving? Are you raising the funds you expected when you put up your “Donate Now” button? Have you used your online fundraising tools for anything other than a “Donate Now” page? If the answer is “no” then you need to re-think your online fundraising strategy and start using your tools for more than just a donation page.

As an online fundraising product manager, I know that organizations are much more likely to see success in their online fundraising goals if they go beyond more than just a donation page. While getting that main donation page up and optimized is important and we could spend an entire webinar just on that, it’s even more important to weave your online fundraising into other strategies you may already be doing as well as trying new ways to raise funds online.

Most organizations see the most success with online fundraising with an event. An event doesn’t have to be a fun run, it could be a dinner gala or a picnic or an event like Movember. Take a look at your campaign calendar and select an event. Then, follow some basic principles in using your online fundraising tools:

• Build a registration form or sign up for specific to your event.
• Get your registration or sign up forms up early! You want to create anticipation and participation as soon as possible.
• Place your event form front and center on your website or create a mini-site for your event. You want to drive traffic to your event.
• Link to your online form with every tweet, Facebook post and all your other social media effort. The goal is to drive supporters to sign up online.
• Email your supporters! Email often and, of course, link to your form in every email.
• Most important – TRY! You may think that your event is too small for online registration. It’s not. The effort you put into it this year will increase your success next year. You’ll be gathering email addresses and your form will already be built when you kick off your event next year. Start now.

This is just one way of using your online fundraising tools. In my Beyond the Donation Form webinar, I’m going to help you break out of the Donate rut and give more ideas on how to use online fundraising for events (by far the biggest money makers), pledging, birthday/anniversary giving and more.

It’s time to take your tools to the next level so you can start taking bites out of the online giving pie that is growing each year.

Read Full Post »

Encumbrance: Your “Piggybank” For Future Purchases

According to Wikipedia, an encumbrance in accounting is “A way to reflect commitments in the accounting system and attempt to prevent overspending. Encumbrances allow organizations to recognize future commitments of resources prior to an actual expenditure.”

In your personal life, you may have a piggy bank for your vacation fund.  The money you stash away is your encumbrance.  The amount you expect to spend on your vacation.

To get a better handle of cash flow, organizations create encumbrances to earmark funds for future purchases all the time. A purchase order is a type of encumbrance.  Encumbrances enable organizations to forecast their spending accurately.

At the end of the fiscal year, there are often encumbrances that will never be used.  A financial best practice is to close any open encumbrances.

Sage 100 Fund Accounting has a very cool feature that can save you time called “Auto-Close of Encumbrances”.   Tom Tweedle blogged about in April here.  With Auto-Close Encumbrances, you can see a list of outstanding encumbrances and choose which ones to close. You can even select which the ones you want to reappear in the New Year using the “reverse” checkbox.  You can see how easy it is to close encumbrances in the video below.

Read Full Post »

Increase Your Donations Through Audience Segmentation

Audience segmentation is something businesses figured out a long time ago. To get an idea of why segmenting your audience data is important, watch this video about Star Trek Red Shirt Death Rates with Matt Bailey:

Ok, so you’re not trying to survive the next away mission (maybe you are, but that’s a different article), still there are a few key points to learn from this example.

1. Different people are motived by different things
2. People are more likely to do what you want when your message resonates with their individual perspective
3. Tailor your message to connect with that perspective

Let me give you an example of what this means for nonprofit fundraisers.

Pretend you run an animal welfare organization. You have both myself and my husband in your database because we both love animals. But, there is a key difference in our perspectives. (You happen to track this key detail in your CRM because you are a rock-star fundraiser!) What is it?

I am a cat person.

My husband is a dog person.

Now you want to send us each an email asking to give to your annual fund.

To me, your appeal features a picture of a sweet, fuzzy kitten. I am more likely to connect emotionally with your message and click to go to your donation form.  There, I see a picture of another cute kitten. Now I know I am in the right place! You are bunch of kitten-loving fools and of course I am going to support you!

To my husband, you send the same appeal, but feature an image of a dog instead. He sees your adorable puppy face and raises you another donation!

What happened here? It was the same campaign, the same message, and you doubled your responses (and donations) just by segmenting your audience.  By targeting each segment with an email and landing page specifically designed to create an emotional connection with them, you were able to tap into sources of support which you would not have otherwise.

That is the power of segmentation.

One message doesn’t work for everyone. Identify what key attributes differentiate your audience and target campaigns to emotionally connect with each segment of your donor base.

Stacy Dyer
Product Marketing Manager
Sage Nonprofit

Read Full Post »

What’s Your Bottom Line?

It’s an important question to answer and often reveals how an organization measures its success.  The reason I inquire is because someone recently asked me if I could identify Sage customers (specifically nonprofit or government organizations) who measure their triple bottom line.   And, while I am confident we have customers who report outcome measures that reflect the concepts of the triple bottom line, I am not sure how widespread adoption of the framework is in our community.

The “triple bottom line” also known as TBL or 3BL began as an accounting framework to capture the full cost of doing business and as a guide for companies to report on the sustainability of their business practices.

The triple bottom line measures a company’s performance in terms of three bottom lines: profit, people and the planet.

•  A single bottom line measures “profit” the fiscal or economic performance of an organization, profit and loss at the end of the year.
• A second bottom line measures “people” the social impact of an organization, how well does the organization treat people within the organization, throughout their supply chain and in the communities they touch.
• A third bottom line measures “planet” the environmental responsibility of an organization or their ecological impact locally and globally.

Because “you get what you measure”, organizations that establish and report on the triple bottom line are in turn more socially and environmentally responsible or sustainable.

Is Triple Bottom Line for Business Only? 3BL can be adjusted to fit any organization. Nonprofits and government entities can use 3BL by establishing outcome measures that report their economic, social and environmental performance.

Nonprofits can report “profit” as revenue generated or funds raised.  “People” as number of constituents served. Environment as resources recycled or even the amount of green energy purchased each year.  How 3BL is implemented really depends on the organization.  There is an excellent article here on the Indiana Business Review that explains the concept of triple bottom line in more detail and provides examples of measures your organization can use.

Does your organization measure the triple bottom line?  Let us know by commenting below.

Patricia Tynan
Social Media and Community
Sage Nonprofit

Read Full Post »

Sage Nonprofit Online: A Cloud-Based Solution

It’s official we released Sage Nonprofit Online a cloud-based solution starting at $349 per month. The nonprofit solution provides full-featured accounting, fundraising and grant management solutions with subscription payment options.  Learn more on our website and read the press release here.

Read Full Post »

Diversify Your Funding: Webcast Follow Up

Last Thursday, over 100 people joined us for our second Summer School webcast, Diversify Your Funding.  David Holmes, of The Foundation Center Cleveland walked us through the actions nonprofits need to take to cultivate multiple revenue streams and develop a solid fundraising plan.  If you missed the webcast, no worries.  You can download the slides here and listen to a recording of the webcast here. 

Two key messages David shared were  1) nonprofits need to stay true to their mission and 2) funders give because of the needs your organization responds to versus the needs of your organization.

David went on to explain that oftentimes nonprofits get off track in their fundraising efforts because they focus too much on their specific needs and deficits.  We need to make up X in fundraising for our budget, we need to hire another staff person or we need a $1000 to fund Y.  However, funders give because your organization’s mission meets their need to do something good and make a difference.

To attract funders to your organization and stay on track, nonprofits should take stock of their strengths and focus on the positive outcomes their organization delivers.   To help nonprofits with this task, the Foundation Center recommends conducting an Assets Inventory first.   A snapshot of what an Asset Inventory looks like is on the left.   You can download it here courtesy of the Foundation Center.

The process of completing an assets inventory will help ensure your fundraising plan reflects your organization’s vision, showcases your accomplishments and clearly communicates how your mission meets the needs of potential funders.

Let us know if this write up is helpful by commenting below.

Read Full Post »

Inspiring Story: Supporting Our Troops

This past weekend as I watched my favorite news show, CBS Sunday Morning, I was especially touched by the story of Karen Grimond. Over the past eight years she has single handedly sent out 7300 care packages to our troops. Talk about someone who is making a difference! You can watch her inspiring story here.

Karen’s one woman nonprofit and personal service to our troops made me wonder how many other people or organizations exist to support military personnel, their families and veterans?  I found a good listing of organizations on the Charity Navigator website here.

Before you watch the fireworks this Independence Day, take a moment to reflect on all the people who have served our country.  Thank a Vet or even better make a donation to a military or veteran-related charity.

 

Read Full Post »