Nonprofit stewardship means cultivating an ongoing relationship with a donor. Accountability is demonstrating to funding sources that funds were used for its donor designated purpose.
Nonprofit Stewardship Requires Donor Designation
In 2018, new reporting requirements went into affect for nonprofits. Accounting Standards Update 2016-14 (ASU 2016-14) reduced the number of net assets nonprofits have to report on to two distinct classes:
- Without donor restrictions
- With donor restrictions
The latter includes what was formerly separated into the temporarily restricted and permanently restricted net asset categories.
With the new regulations it is imperative that when you receive a donation from a donor, you classify the donation into the appropriate net asset class, and provide documentation to the donor how their funds were used. Along with the proper accounting of the donation, a nonprofit has a responsibility of providing stewardship to the donor.
Nonprofits Must Demonstrate Accountability
For a nonprofit, receiving a donation brings up issues of nonprofit stewardship and accountability. Nonprofit stewardship is cultivating an ongoing relationship with a donor. Accountability is demonstrating to funding sources that funds were used for their donor designated purpose.
Do not underestimate the importance of fundraising stewardship. A donor acknowledgment should be sent to every donor who donates to your organization. But, stewardship goes beyond acknowledging donations. Its building a stronger relationship with your donors by communicating with them using e-mails, newsletters and social media.
Advice for Implementing a Nonprofit Stewardship Plan
To implement an effective nonprofit stewardship plan, you should use fund raising software that organizes all your donor relations, captures the multifaceted relationships you’ve built with donors and stores them for future fund raising activities.
From a fund accounting perspective, all revenue is categorized as without donor restrictions, or with donor restrictions. If a donation is identified as restricted, the accounting requirements are extremely important. Accountability is the core concept of nonprofit accounting requirements. If restrictions are imposed by the donor when they make the gift or grant, the income must be recognized when the funds are received in the proper net asset category and then matched with related expenses. This adds a complexity to nonprofit financial reports, which makes accurate and reliable accounting especially important.
FastFund Online Accounting is a nonprofit accounting system that is designed to provide proper accountability and transparency. With the use of FastFund Online, your organization can develop an effective stewardship outreach and provide management with the tools needed to measure financial outcomes and help you focus on your mission.
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