Our Business Office uses an accounting system that does not talk to Raiser's Edge. We have several projects for which we raised money during the current fiscal year 2009, but the projects won't take place until fiscal year 2010 and are part of that year's budget. The Business Office defers revenue for these projects until the next fiscal year. However, Development uses Raiser's Edge in real time and all donations appear as current fiscal year. Currently, when donations are received for projects taking place during the next fiscal year, development notifies the business office to defer the money on their end. This causes issues when the business offices runs monthly reconcilation reports. They see the deferred project revenue on the Raiser's Edge report as current year revenue.

We have thought about creating a fund code for deferred revenue and then adding an action reminder to update the gift record when it is time to move the money from the deferred revenue account to, for example, the general operating expenses account. The problem with this system is that other departments oversee most of these projects with deferred revenue and development has no way of knowing when they will use the money. The fear is that money may get lost in the deferred account in Raiser's Edge, thus creating more reconcilation issues. Also, our development office uses RE solely as a gift database and not for accounting purposes.

What does your organization do in these situations?

I hate to say it - but my thought is that this is your Accounting office's issue - sounds like they need to spend some time with the auditors if they don't know FASB & IRS regulations.

 You should of course be tracking your receivables and cash flow for them via Raiser's Edge reports. A deferred gift (pledge) IS Revenue for the current year legally - it is not 'deferred' until used - If you have a pledge in any accrual accounting system-  that is not considered deferred as part of revenue reporting to the IRS.

Under the canned pledge reports there are many reports that can help you manage this with your accounting office. I assume you are balancing out every day internally (includes tracking your receivables balance) and balancing out with Accounting in some fashion periodically. Perhaps all that needs to happen is a conversation about each gift type and what it means (Pledge and Pay-Cash for instance)

 Of course, this is my opinion

I suggest you also post this question on the listserv at www.fundsvcs.org (the website is clumsy but joining the listserv is the best)

I do not have accounting background so I may not use the right terminology so pardon my clumsiness.  I do not know how deferrred revenue works.  What I have seen happen in these situations is count it as current revenue with a temproary restriction.  At the end of the FY review all temproarily restricted gifts and if the $$ was spent finance releases the restriction.  If the money has not been spent yet (because project has not started, etc.) then the restriction remains and the $$ is carried over to be used in the next year (but does not count as revenue in the next year - you can't count it twice.)

Again - seek other advice and I suggest www.fundsvcs.org as a place to start.

Another thought - this also may be something as simple as adjusting your Funds and Accounting 's General Ledger codes to coincide based upon restrictions (one ledger per project) I have seen where this could be problematic with organizations that lump all development monies into on ledger.

Every Accounting software I know of has ways to handle roll-over balances in funds, budgeting,etc. so I'm not sure what the issue exactly is. This is standard procedure - I think you'd be hard pressed to find an organization that spends exactly what it raises in the same year. I would suggest your organization work with your auditors if there are concerns about accounting versus RE structure

I agree with the other posts that you should check your legal requirements but having said that one solution may be this. Since your RE does not talk to your accounting system, could you not make the GL post date a date in the future. Then you could report on GL post date for working out revenue.

Just a thought...

David

Thanks for the feedback!

It's a difficult problem to explain, but here is an example. Our fiscal year runs April to March. We have an overnight trip for an upper level membership group taking place at the end of April 2009(which is the start of our FY10), but we collected all the payments for the trips during FY09. The FY10 budget includes the trip payments, so that money is temporarily restricted/deferred until April 2009.

The business office, it seems, would like development to be more accounting-like in how we enter gifts. But since we are issuing the tax receipts for all gifts, we need the actual date the gift was receivied, not when the money was used.

Do not mean to speak out of turn but I think what you need is your accounting office to be more accounting like in how they enter gifts. 

It is current revenue because it came in this year.  It is just temporarily restricted for a use in next year's budget.  Once you report to them that you received recenue and what the restriction is - development's job is kinda done.  They need to account for when it can and is spent - not development.  That is why RE does not have the accounting functionality they seem to want you to have - that is for their accountig software to do.

This is basic business accounting practice 101 - the only thing on the development side you should be managing and reporting on is the restricted fund the money goes into (ledger the acocunting office needs it to be in to meet the restriction) and receipting as the gift comes in as you indicated - your fiscal year should have absolutely no bearing on anything. There is absolutely nothing deferred on your end about this at all.

Is there a higher up in the organization that can work with the Business Office? - I would be extremely worried about your organizations accounting practices if this very standard, very basic thing is considered a problem or issue.

Hi all,

There may be some confusion as to the type of revenue. While it is true pledges and restricted giving are recognized as revenue in the period they are given, event registrations are only recognized as revenue when the event is held. I believe Melinda's situation is referring to an event.

If you have the Event module you can easily run reports for the Finance Office on money collected this year for events held in future fiscal years. This is what the Finance Office should be tracking as Deferred Revenue. If you don't have the Event module I would recommend using the Appeal or a Gift Attribute to track the event on the gift. Then you can use report filters to show money collected in the current year for events being held in future years to give to Finance.

Hope this helps.

Thanks,

Jeff Sobers

Hi everyone,

Thanks again for all of your input. It's been very helpful to us!