Efficiency at a Nonprofit: Donations, Receipts, Reporting and Volunteers

At a nonprofit every donation serves three different needs: the donor wants a receipt and a thank you, management wants to know where the money comes from, and annual reporting requires orderly data. When the recording happens three times in three places, each of them is partial.

Why does the same donation get recorded three times?

An average nonprofit receives donations on several channels: bank transfer, card through a donation page, cash or a cheque at an event, and a monthly standing order. Each lands somewhere different, so the record fragments.

What is needed is one field tying them together: a donor identifier. With one, the same person who gave at an event and later set up a standing order is a single record, and you can know how much they gave this year. Without it, those are two rows with no way to connect them.

The fields worth holding on every donation: donor identifier, amount, date, channel, designation if there is one, and what was sent back. That last field prevents the common state in which nobody knows whether a receipt went out.

Receipts: where this stalls

The third row is the central pain: a bank transfer arrives with a name and sometimes without, and if nobody matches it to a donor, that person receives no receipt and does not appear on any list. So a weekly reconciliation of bank transactions is not only an accounting task - it decides whether a donor is treated as one.

What a receipt must contain, and what a particular tax status means, are matters for the accountant and for advice - what is described here is only the operational process of confirming a receipt went out.

Annual reporting: what to collect through the year

The Registrar of Associations requires annual reporting, and the narrative report is filed by 30 June of the year following the report year. It covers the activity, the office holders and the sources of funding, including reporting on the five highest-paid individuals and on donations from a foreign state entity. A consolidated description sits on the Israel Corporations Authority site.

Operationally, what matters is not what is filed but when it is collected. A nonprofit gathering that data through the year - activity, changes in office holders, funding sources - files in two hours; one starting in May spends a fortnight reconstructing. What exactly is required, and who is subject to what, is a matter for the accountant.

Three funding sources, three different demands

An average nonprofit lives off several sources - private donations, foundations, public support and sometimes activity income - and each demands something different operationally.

Private donations demand speed and attention: a receipt and a thank you within days. Foundations demand reporting - usually an interim and a final report against metrics defined in advance. Public support demands meeting timetables and the conditions set out in the call.

What follows operationally is that the three cannot be managed identically. What can be done, and what saves most of the work, is that the data every report is built from - how many people, how many activities, how much money against which designation - be collected once through the year rather than reassembled for each funder.

The repeat donor: what changes

At nonprofits, as at businesses, an existing donor is far cheaper than a new one - and the only difference between the two is that somebody identified them and came back. Identification is possible only when the record is by person.

Three actions produce most of the difference: a thank you sent within days rather than weeks, one or two updates a year on what was done with the money, and a repeat approach at a time that suits the donor - usually near the point in the year when they last gave.

The second action is what makes the third work. A donor who received an update on the outcome responds differently to a repeat approach than one who hears from you only when you are asking.

Volunteers: a managed resource

Volunteers are usually managed on a phone list and in a WhatsApp group, and that is enough up to about thirty. Beyond that the same problems start: who comes when, who was trained in what, and who stopped coming without anybody noticing.

What is needed is a basic record per volunteer - areas of activity, availability, what training they have had, and when they were last active. That last field prevents quiet attrition, which is usually the number one reason volunteer capacity declines.

What has to be documented about volunteers, and what applies to volunteers working with particular populations, is a matter for legal counsel and is not settled in an internal procedure.

What to measure

1. How many donations went unmatched to a donor, per month.
2. Average time from donation to receipt sent.
3. The repeat donor rate year on year.
4. How many volunteers were active in the last three months.

The first number underpins all the others - every unmatched donation is a donor who does not exist in the system, and so cannot be a repeat donor and receives no update.

Sources

• Israel Corporations Authority - proper management and reporting
• Israel Tax Authority - public institutions
• A personal data map for a small business
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