Receiving Donations


Once you have established yourself as an official not-for-profit (here’s the IRS website with info on how to do that), you need to set up a procedure for receiving donations to your entity.

This procedure needs to provide for each of the following:

Timeliness

When people make a donation to your entity, two things need to happen in a timely way. Large not-for-profits try to do these things within a day or two. I recommend all clients, even small ones, have a setup to process gifts on a weekly basis, at the longest.

  1. Their gift should be processed so that the funds move from their account to yours. (Deposit the check, draft the credit card, etc.)
  2. They need to be thanked for their giving.

Security

All funds belonging to your not-for-profit need to be maintained in a secure way. (The funds become yours as soon as they initiate the gift. If you don’t deposit the check, it’s on YOU, not them.)

  1. A dedicated checking account with controls so that donor funds are guaranteed to be used for your mission.
  2. A paper or electronic filing system with confidentiality so that donor private information is private.

Recordkeeping

Whether you’re reporting to your board, your leadership team or a tax agency, you need to keep good records of all funds that come into your not-for-profit. These records can be on paper, in Excel or in a system like Quickbooks, but you need to keep records.

  1. A record of who gave, when and how much.
  2. A record of what, if any, designation the donor made for how the funds should be used.
  3. A record, when it happens, of how the funds are used to fulfill your mission.

Suggestions for starting out:

  1. If you will be receiving paper checks in the mail, establish a P.O. Box where donor gifts can be mailed. This is more secure and professional than a personal mailbox, unless you have an office address.
  2. If you anticipate receiving credit card giving online, the quickest thing to setup is an account with Paypal. There are lots of other vendors that do this if you want to shop it. (A friend speaks highly of aplos.com but I haven’t used it personally.)
  3. If you will be running credit card transactions when you go to an event, you will want a card swipe option. Your bank or Square are good options for this. As with online credit card processors, you will want to think about the fees associated with the service, the recordkeeping, the donor’s security, the convenience and the reputability of the provider.
  4. A business checking account for your not-for-profit is a must. I have written about this here.

Email me at eric@amservicesgroup.com if you have any additional questions. I’m happy to help!