SayPro How to track and report donations, sponsorships, and crowdfunding funds.

Tracking and reporting donations, sponsorships, and crowdfunding funds are vital aspects of financial management for nonprofits, especially when preparing for an audit. Proper tracking ensures transparency, accountability, and compliance with legal and financial standards. Below are insights on how to track and report these funds effectively:

1. Tracking Donations

a. Donation Recording

• Donor Management System (DMS): Use a donor management system or CRM (Customer Relationship Management) software, such as DonorPerfect, Bloomerang, or Salesforce Nonprofit to track individual donations. These systems record details such as donor names, donation amounts, dates, and method of payment.
• Unique Donor ID: Assign each donor a unique ID in your system to track multiple donations over time and to avoid duplication of records.
• Recurring Donations: For ongoing donations, track frequency, payment amounts, and billing cycles. Automate reminders for both donors and staff to ensure payments are made on time.

b. Donation Details

• Donation Receipts: Send a receipt to donors for every contribution over $250, per IRS regulations (if in the U.S.). The receipt must include the donation amount, the date, and a statement regarding any goods or services provided in exchange for the gift.
• Gift Acknowledgment Letters: Develop a clear, standardized acknowledgment process for donations of all sizes. For larger donations, a personalized letter or phone call helps strengthen relationships and ensures proper documentation for the donor’s tax purposes.

c. Fund Allocation

• Unrestricted vs. Restricted Funds: Clearly differentiate between unrestricted and restricted funds. Restricted funds are donations that are designated by the donor for a specific purpose (e.g., program funding, event support), and these funds must be tracked separately.
• Fund Accounting: Use fund accounting software to track how donations are allocated across different programs, general operating expenses, or endowment funds. This ensures that funds are spent according to the donor’s wishes and that reports align with donor restrictions.

2. Tracking Sponsorships

a. Sponsorship Agreements

• Written Contracts: Ensure that all sponsorships are formalized with written agreements outlining the terms and expectations of both parties. Contracts should specify the financial contribution, the deliverables (e.g., logo placement, event visibility), and the time frame for sponsorship.
• Track Sponsorship Payments: Record the payment schedule and amounts for each sponsorship. Many sponsors pay in installments, so make sure to monitor these payments through your accounting system or donor management software.

b. Sponsorship Benefits and Deliverables

• Tracking Deliverables: For each sponsorship, track the benefits or services provided in return for the sponsorship (e.g., event recognition, website exposure). This helps ensure you meet the terms of the agreement and allows you to report to sponsors on the value they received from the partnership.
• Sponsorship In-Kind Contributions: Track in-kind sponsorships (e.g., donated goods or services) separately from cash sponsorships. Ensure that the fair market value of the in-kind donation is properly recorded and acknowledged in your financial reports.

c. Reporting Sponsorships

• Revenue Reporting: Sponsorships should be reported as revenue in the financial statements under a distinct category to differentiate them from other types of donations.
• Showcase in Annual Reports: Highlight key sponsorships in annual reports or donor recognition materials. Acknowledge sponsors publicly to build relationships and encourage continued support.

3. Tracking Crowdfunding Funds

a. Crowdfunding Campaign Setup

• Select Crowdfunding Platforms: Choose reputable crowdfunding platforms (e.g., GoFundMe, Kickstarter, Fundly, or Classy) that offer built-in tools for tracking and reporting funds. These platforms generally provide real-time tracking of donations, shareable links, and integrated reporting features.
• Campaign Page Details: Set clear fundraising goals and provide transparency about the purpose of the campaign. Include specific details about how the funds will be used, which is crucial for donor confidence and reporting.

b. Fundraising Tracking

• Automated Tracking: Crowdfunding platforms automatically track and report donations by date, amount, and donor information. Ensure the platform provides downloadable donation reports that can be easily integrated with your accounting software.
• Withdrawals and Fees: Monitor the amounts withdrawn from the crowdfunding platform to your organization’s bank account, and take note of any platform fees deducted from the funds raised (e.g., 3-5% processing fees).

c. Reporting Crowdfunding Funds

• Separate Fund Reporting: If your crowdfunding campaign has a specific goal (e.g., raising money for a particular project or event), track and report the funds separately from other fundraising sources. This ensures that donors see how their money was used and builds trust in the campaign’s transparency.
• Fund Utilization Reports: Provide reports to stakeholders showing how crowdfunding funds were allocated. Donors may want to see a breakdown of how funds were spent, especially for large campaigns or those with specific goals.
• Thank You and Tax Receipts: As with other forms of fundraising, send acknowledgment and tax receipts to crowdfunding donors. This builds relationships and demonstrates that you are maintaining proper records for tax and audit purposes.

4. Reporting Donations, Sponsorships, and Crowdfunding Funds

a. Financial Reporting

• Categorize Revenue Streams: In your financial reports, break down revenue into clear categories such as “Individual Donations,” “Corporate Sponsorships,” and “Crowdfunding Campaigns.” This allows for easier analysis and transparency.
• Cash vs. Non-Cash Contributions: Report both cash donations and non-cash donations (in-kind contributions, e.g., sponsorship goods or services) in the financial statements. The fair market value of non-cash donations must be assessed and included in the report.

b. Donor and Sponsorship Reporting

• Donor List and Giving History: Maintain a clear, up-to-date record of all donations and sponsorships, including the donor’s or sponsor’s contact information, amount given, and frequency of contributions. This is crucial for sending acknowledgment letters, maintaining relationships, and complying with tax laws.
• Campaign or Event Reporting: For specific fundraising events or campaigns (e.g., crowdfunding), provide detailed reports on the total funds raised, expenses incurred, and net funds available for the organization’s use. These reports can be shared with donors, sponsors, and board members.

c. Compliance and Audit Trail

• Audit Trail: Maintain an organized audit trail for all funds raised, including detailed records of donations, sponsorships, and crowdfunding. This includes transaction details, receipts, contracts, and acknowledgments, ensuring transparency and accuracy during audits.
• Compliance with Regulations: Ensure that donations and sponsorships are recorded in compliance with relevant laws and tax requirements (e.g., IRS rules in the U.S.). Crowdfunding platforms often issue 1099-K forms for certain amounts of money raised, and it is important to track and report these in your filings.

5. Technology and Tools for Tracking

• Integrated Software Solutions: Use integrated financial management software like QuickBooks Nonprofit or Xero alongside your donor management system to track donations, sponsorships, and crowdfunding funds. Many of these systems offer real-time reporting and reconciliation tools to streamline the process.
• Fundraising Platforms: If you’re using third-party crowdfunding platforms, check if they integrate directly with your accounting system to simplify tracking and reporting.
• Donor Portal: Offer a donor portal where sponsors and crowdfunding donors can log in to view their donation history, receive receipts, and track the impact of their contribution.

By following these strategies for tracking and reporting donations, sponsorships, and crowdfunding funds, nonprofits can ensure transparency, improve donor confidence, and prepare for audits more effectively. Clear, accurate records will also help maintain compliance with legal requirements and enhance overall financial management.