The Power of Recurring Giving
December 5, 2008
By Heather Burton, Sage Nonprofit Solutions
Many religious organizations have been faced with shrinking congregations yet increasing demand for the services they provide to the community. This translates to fewer dollars to spread among a higher need. With many people tightening their belts during these rocky economic times, establishing or formalizing your recurring giving program may be the answer for your church.
What are recurring giving programs?
In its simplest form, a recurring giving program is nothing more asking people to commit to donate a set amount of money at consistent intervals with no defined end date. Typically, these programs are managed by using electronic fund transfer (EFT) from a person’s credit card, debit card, or checking account, and a donor management or constituent relationship management (CRM) system. It is very similar to setting up an automatic bill pay with your local bank. Sometimes these programs are referred to as monthly giving programs, sustaining gift programs, or have a special name specific to the organization or the donors, such as “partners in faith.”
Why do recurring giving programs work?
In order to understand how these programs work, let’s look at a simple example. Sally Jones donates a total of $1,000 to 10 causes each year, including your church. Two of the causes have recruited Sally into their monthly giving program at $10 per month, leaving $760 for the remaining eight causes. Does Sally split the remaining donation amount among the eight, or choose to forgo a cause this year, especially in the tightening economy? And for the two organizations who recruited Sally into their program, their gift has just increased from $100 per year – assuming Sally would have divided her $1,000 evenly among her 10 chosen charities – to $120 per year.
Glenn Stephens, CPA, and CEO of ProSoft Solutions in Highland Village, Texas, a consulting firm serving ministries and nonprofits, says many of his ministry and nonprofit clients have had tremendous success with recurring giving programs. ”Clients have been able to raise more money, establish a much more stable revenue stream, and simplify their fundraising efforts,” he says.
In the case of First Presbyterian Church (FPC) in Albuquerque, N.M.,, a recurring giving program has been an essential part of operations since it was established in 1881. “Without a recurring giving program, we couldn’t operate,” says Sam Mayer, FPC’s finance administrator. “We wouldn’t be able to maintain the religious programs and activities, or maintain the paid staff to run our ministries. It would be a nightmare of a guessing game.”
FPC refers to its recurring givers as “Pledging Households.” Mayer says, “When the congregants RSVP or pledge an amount per week, month, or year to the Church, we know how much we can budget, grow or cut back, or otherwise adjust our Church activities.”
Common Misconceptions
Some organizations never start a recurring giving program, or do not take their current program to the next level, because of misconceptions about either their congregation or their church’s ability to process the gifts. Common misconceptions include:
- “It won’t work with our congregation because….”;
- “It’s doesn’t add up to a significant amount of money;” and
- “It will take too much time, effort, and resources.”
”Often, our clients to have initial concerns related to recurring gifts,” says Stephens. “For some contributors, it is a new concept that simply needs to be explained. That’s why we’ve found that communication is key . It’s vital that church leadership clearly communicate to their congregations that it’s an easier and more convenient way to give. It’s also extremely safe if churches have the right security measures in place.“
If you are experiencing the previously mentioned objections in your church, there are ways to overcome the concerns. Most importantly, arm yourself with facts. Look to other organizations that have implemented recurring giving programs, and find resources on recurring giving.
Second, ensure that you have the technology in place to help streamline the process. This includes both payment processing capabilities and a constituent or donor management system.
Finally, do not hesitate to engage a consultant or partner, if necessary. They can help you to educate your congregation about the program, create support cases, and even help with evaluating your technology.
Getting started or taking your program to the next level
Like any other initiative your church undertakes, an evaluation of the current situation is essential. This will help you develop a plan to best reach your congregation and ensure your program’s success.
1) Analyze WHAT your program consists of today. Ask yourself these questions:
· Do we already make recurring giving an option for our members?
· If so, what frequency? What price?
· Do we need to send invoices?
· Can people sign up online?
2) Understand WHO is in your program today. It’s important to understand how many people are in your current recurring giving program, as well as their demographics, relationship with the church, and involvement in the program. If possible, find out about their experience with other recurring giving programs. By profiling your existing recurring giving donors, you will be more successful in moving additional members into the program.
3) Evaluate your “back-end” TECHNOLOGY. This point cannot be stressed enough. By doing a quick technology audit, you will be able to determine what infrastructure you already have, as well as what you may need in order to minimize your staff’s efforts. Ask yourself:
· Do we accept credit cards and bank withdrawals? Should we?
· Do we have ways to protect donor’s sensitive data?
· How will we track our donors?
· Do we thank donors promptly?
· How will we address individual concerns?
Stephens says, ”Our culture has embraced the technology required for a successful recurring giving program. Religious organizations must realize that many of their members already use recurring payments for various expenses and donations.”
4) Start SMALL. No matter where you are in your recurring giving program, adjustments are often necessary. Build your program into existing activities or natural requests for funding to help minimize any potential distraction from your core operating activities.
5) COMMUNICATION is key. You need to carefully plan the communication of your program, especially if you are just starting out. All of your evaulation work comes into play when communicating your recurring giving strategy and gaining agreement from leadership.
Next, you need to execute on educating your congregation about the program to start recruiting participants. Design simple, clear, and easy-to-understand ways to communicate your messages, and be sure to explain the benefits of joining the program. How will the gift impact the donor? How will it impact your church and the community it serves?
6) Take a TEST drive. Whenever you make changes, whether it is to the marketing of your program or to the technology used to process gifts, perform a test. Were the changes beneficial? Is the program better than before?
Testing helps make for a stronger “ask” of your larger congregation, and helps ensure that your processes are working and efficient.
If You Build It, They Will Come, Right?
Recurring giving programs are not a one-hit wonder, and do not generate income instantaneously. Like any other fundraising initiative, they take time and cultivation. You can help ensure your church’s success by committing to a recurring giving program, embracing technology to help simplify the processing, setting realistic fundraising goals, and implementing changes in ways that are sustainable for your church.
“Our experience, without exception, is that when organizations implement a properly planned and designed recurring giving program, they are extremely happy with the long-term success,” says Stephens. “We have never known any of our clients to terminate their program after starting it. All have been successful.”
Mayer adds, “We can’t always ’step out in faith‘ as we’d like to, particularly in difficult economic times. I can’t imagine a Church of any size being able to run their ministry without a recurring giving program in place.”
Heather Burton is senior marketing manager for Sage North America’s Nonprofit Solutions, including the Sage MIP Fund Accounting and Sage Fundraising products. Previously, Burton worked in various development roles at several nonprofit organizations. She is currently board president-elect for a nonprofit organization in her local Austin, Texas, community.
Glenn Stephens, CPA, is CEO and Owner of ProSoft Solutions
http://www.prosoftsolutions.net/
ProSoft Wins the President’s Circle from Sage!
October 17, 2008
Congratulations on your 2008 Awards and for earning a spot at President’s Circle!
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Dear Glenn: We extend our sincere congratulations to you and your team on earning President’s Circle and Chairman’s Club status. You are recognized with the Top Product Sales- Sage Fund Accounting, Sage Fundraising award. This distinction earns you a spot at this year’s exclusive President’s Circle, where you will be honored at an official awards ceremony to be held at the luxurious Grand Hyatt Kauai Resort and Spa in Kauai, Hawaii, January 29 – February 2, 2009. We look forward to spending time with you there! By publicizing the achievement you’ve earned through your exceptional sales efforts, you can influence your exposure and build confidence among your customers and prospects. Next week you will receive an e-mail with attachments for a press release template and distinctive award logos to include in your marketing and sales pieces and collaterals. In what proved to be a very challenging year for all businesses, the outstanding results you have achieved are all the more impressive. We thank you again for your ongoing dedication, commitment, and excellence. We look forward to another exciting year.
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Fund Accounting 101, Part 2
August 29, 2008
Does my church need a fund accounting solution?
“Many churches use commercial accounting products initially,” said Stephens. “Once they have multiple donation or revenue sources, off-the-shelf accounting software won’t meet their special tracking and reporting requirements. The process can grow impractical and difficult. At worst, it can open the door to costly errors and complex or erroneous audits.”
To help determine your organization’s specific accounting system needs, ask yourself the following questions.
1. Do we have certain funds that we must spend in particular ways or for certain purposes?
Churches must carefully track and report on separate restrictions on money used to support their programs. Major donations and grants are commonly given with a set of particular and unique requirements, restrictions, and responsibilities. The associated funds are either “restricted” or “unrestricted.”
Failure to demonstrate that restricted funds have been used correctly can have serious consequences: termination of senior staff, loss of funding, or the loss of tax-exempt status.
Solutions built specifically for this type of accounting are designed to help churches meet those tracking responsibilities, plus handle any special requirements that come with new sources of funding.
First Presbyterian Church (FPC) in Albuquerque, New Mexico, is governed by a Session of 40 members, each serving three-year terms.
“Fund accounting software helps us account for our various funding sources, including an annual operating budget, sponsored activities, a capital budget, and restricted activities, in a way that’s easily understood by anyone who uses reports,” said Sam Mayer, FPC’s finance administrator. “No matter how specific donors get, we can create an account for it. We can also sub-divide in many different ways.”
2. Are we required to create reports for fiscal years that are scheduled differently than our own?
Fund accounting is also different from traditional business accounting in its time period flexibility. Each grant and donation may be applied for and granted annually, but each funding agency or organization may function on unique timetables that don’t correspond with your church’s fiscal year.
”Commercial accounting often assumes that fiscal years end in the same months each year, but churches regularly report to several different audiences, with diverse requirements and reporting timelines,” said Stephens. “Many times, funding sources require reports covering unique accounting periods or multi-year reports. Thus, the ability to track and report across different time periods is critical for churches.”
3. Do we have funds that must be recorded as encumbered?
Churches may require an accounting system where expenditures or purchase commitments are encumbered prior to receipt of goods and services. In encumbrance accounting, churches can track and report on spending commitments to significantly reduce the risk of fund over-commitment.
The ability to report on purchase commitments gives nonprofits tighter controls on spending, while fully using a grant budget. Fund accounting systems are specifically designed to address these reporting and tracking requirements.
4. Do we need to perform indirect cost allocations by funding source?
“Allocations of interest and program expenses can become very complex, depending on the funding source’s requirements,” said Stephens. “These allocations are not typically handled well by commercial accounting systems.”
In fund accounting systems, allocations can be performed on virtually any account balance, at the program level, department level, or grant level, and across multiple segments at one time, with advanced calculation options, including fixed or dynamic percentages, unit measures, and more. Accurate allocations provide auditors and grantors with a complete audit trail, which demonstrates that allocated expenses have a consistent and reasonable basis.
5. Do we have multiple audiences, requiring us to provide various report types showing how money is being spent?
Continued funding and donations can depend on reporting accuracy. A church that can provide detailed levels of reporting may stand a better chance of seeing its funding, and the scope of its ministry, increase.
Each audience, and the reports specific to the church, will have unique requirements. Generally, churches need access to sophisticated, audit-level reports for good accounting, as well as simple, high-level reports that can be understood by less accounting-savvy audiences. Being able to easily generate necessary reports without custom report-writing is vital.
Good fund accounting systems provide flexible report detail and presentation, plus graphing and charting capabilities to improve the presentation of complex financials.
“Using nonprofit accounting software allows us to easily compile reports requested by the auditors,” said Harry J. Richards, director of operations for the African Methodist Episcopal (AME) Church Finance Department.
6. Can we easily adhere to nonprofit-specific accounting rules?
Churches designated as 501(c)(3) organizations need to comply with stringent reporting standards. Audited financial statements must present information in accordance with the Financial Accounting Standards Board (FASB). Fund accounting software typically includes reports that make compliance easy, whereas commercial accounting software can require customization to produce these reports.
“Our fund accounting software greatly helps with FASB 117 reporting requirements by enabling us to easily analyze and report by program and/or restriction,” said Dennis Williams, director of finance for Richmond-based Virginia Council of Churches.
7. Do we need to manage and report on multiple budgets?
In commercial accounting, budgets are primarily used for planning. Churches use budgets for planning, too, but they also rely on them as compliance and monitoring tools, as well as formal parts of financial records.
True fund accounting solutions enable organizations to produce unlimited budget versions, create “what if” scenarios, report on multiple budgets simultaneously, and use capabilities designed to prevent overspending.
8. Do we need a self-balancing chart of accounts?
Because of the nature of funds, a separate chart of accounts must be maintained for each fund. In commercial accounting systems, separate revenue and expense accounts are maintained, but then combined on balance sheet accounts.
For fund accounting, funds must be treated as separate entities, with their own general ledger and individual revenue, expense, income, and balance sheet reports. True fund accounting software automatically handles the offset postings to cash or payable accounts by fund, as well as the encumbrance processing, grant tracking, and budget controls.
9. Do we need integration with other mission-critical or back-office software?
Providing auditors, stakeholders, and key decision-makers with a clear look at the lifecycle of every dollar, from receipt to expenditure, will continue to be the focus for the future. This is why integration to church management, fundraising, and human resources software is essential for some churches.
Commercial accounting systems offer integration to other systems, but not those aligned specifically to the public sector. Fund accounting software has integration capabilities to allow non-financial, yet mission-critical, data to be recorded, tracked, and reported on within the software.
If you found yourself answering “yes” to these questions, you should consider how fund accounting software might better handle your church’s unique requirements, so you can focus on serving your community.
This article was written by Glenn Stephens, CEO of ProSoft Solutions and Heather Burton, who is a senior marketing manager for Sage Software’s Nonprofit Solutions, including the Sage MIP Fund Accounting and Sage Fundraising products.
Fund Accounting 101
August 11, 2008
There are two basic types of accounting packages on the market: fund and commercial. Commercial organizations, such as enterprises and businesses, have accounting systems that measure product, division, and company performance by gain and loss of profits.
Some small businesses have nothing more than a checkbook. Revenue is generated, and expenditures are paid. The same can be said for a church, but churches have social and legal responsibilities extending beyond the balance sheet.
The word “fund” is the key difference. Merriam-Webster dictionaries define “fund” as “a sum of money or other resources whose principal or interest is set apart for a specific objective.” In other words, a fund is something restricted for a particular purpose. In its simplest form, a fund accounting program automatically keeps these monies separate to help ensure their use for intended purposes.
To learn more, keep watching this blog…
What a winning combination! At ProSoft Solutions, we don’t believe in just turning you loose with a box of software. We believe in training your properly on the software, fully integrating it with your current systems, and teaching how to grow and expand for the future. Your mission should always be on the growth chart and we can help you ensure that happens.
We are a team of CPAs, MBAs, and other accounting experts that all specialize in nonprofit accounting. We’re not just salesmen. Not by any means. When put to a side-by-side comparison of ProSoft Solutions and our competitiors for expertise, customer service, and long-term committment, we win out every single time.
Our Experience
May 30, 2008
ProSoft Solutions has over 20 years experience in the nonprofit accounting industry. We’ve made great strides to be able to serve nonprofit organizations and government agencies to the best of our abilities and to be able to go above and beyond our competitors.
We stand out from our competitors because we are actually experts in the field of nonprofit accounting. We do a lot more than just sell a box of software to you. We are committed to meeting your financial and fundraising goals. We ensure you are fully trained and all systems are implemented and integrated and also have room for your future growth. Our ultimate goal is to build long-term, trusting and successful relationships.
“Give a man a fish and you feed him for a day. Teach a man to fish and you feed him for a lifetime.”
We listen. We understand. We make a difference.
User Groups and Seminars
May 12, 2008
We still have plenty of User Groups and Seminars left for the Spring 2008 schedule. Don’t forget to sign up and ensure yourself a spot. Please see our schedules and sign up form here:
http://www.prosoftsolutions.net/request_info.html
and here:
http://www.prosoftsolutions.net/client_resources.html
And you can also get downloadable information here:
http://www.prosoftsolutions.net/learn_more.html
We’re looking forward to working with you and helping your mission to succeed and meet both financial and fundraising goals.
Government Accounting Software
May 6, 2008
If you need government accounting software, we’ve got you covered. We only offer the top software products available and we couple that with our top notch customer service and long-term dedication to your mission.
Easy to install, customize, and use, Sage FAS Nonprofit or Gov software from ProSoft Solutions are comprehensive, seamlessly integrated fixed asset management programs perfectly suited for organizations of any size – whether you have 10 assets or manage a system requiring the power of a Microsoft SQL.
There are four modules are available:
FAS Nonprofit or FAS Gov Asset Inventory
FAS Nonprofit or FAS Gov Asset Accounting
FAS Report Writer
FAS 100 CIP Accounting
We look forward to helping your government accounting grow and helping you to meet your financial needs now and into the future.
Please see our site for more details and go to the Request Info page to contact us:
http://www.prosoftsolutions.net/request_info.html
Fresh Face Coming Soon…
April 28, 2008
We’re working to improve the usability, searchability, and overall look of our site (and blog) to better serve you. We’ve been testing a few things and reviewing a few things. We’re almost ready to reveal our face lift to you. Keep watching…
Take care!
Fund Accounting
April 21, 2008
Fund Accounting is completely different from traditional accounting. Any nonprofit or government organization can tell you that in a heartbeat. So when, as a nonprofit or government entity, you are looking to meet your fund accounting needs, why would you turn to a traditional accountant? Even worse, why would you turn to a company who has no experts at all, just salesmen who can’t help you with the products they’re selling?
With ProSoft Solutions, we not only meet and exceed your Fund Accounting Software needs, we meet and exceed your Fund Accounting service needs. We are the nonprofit and government accounting experts. All of are staff are CPAs, MBAs, and other accounting experts, all specializing in nonprofit accounting. We can’t stress to you the importance of that.
We also have customer service that is parallel to none. We’ve never met a client in person that we didn’t win over. We are here for the long-haul with you. With us, you don’t just get a box of software, you get expertise, customer service, training, follow-up and commitment. Anything we can do to meet or exceed your needs we do.
If you would like to have your Fund Accounting needs met by the nonprofit and government accounting experts, then please contact us today and let’s get started on you mission:
http://www.prosoftsolutions.net/fund_accounting.html
