Recording donated items for an auction yes or no in RE gift transacitons?

Theodore VanPatten

Our new accountant does not want me to enter items donated for an auction as a gift transaction into RENXT? We previously just recorded as a zero value gik transaction just so we record the donation. I have never worked a place where we didn't enter a donation into the fundraising donor database. I am bringing this to the executive director so need some best practices and resources to state my case. 1. it records the donation, 2. we can solicit again next year 3. it counts to donor count, any more? Thank you Ted

Faith Murray

Ted, my suggestion to make the accountant happy would be to mark the gift as “do not post” and do it on its own batch. Then it will not pull over into Financial Edge or whatever accounting software you use. The objection that some accountants might have is that the gift has no solid value, and once on the books, it becomes an item of interest to auditors. We run a GIK report for our annual audit and track the estimated Fair Market Value (provided by the donor) in a Gift Attribute.

You are completely on target with regards to recording these items. There are several reasons to do so:

• It creates consistency to treat all GIK's equally, so you already have a process in place when that future donor donates a $10K car (or in our case, a boat), and you must record it because of its high value. Imagine if someone donates real estate – wouldn't you want to record that? Auction gifts are like any other GIK because…
• Gifts – even those intended for an auction to be bought by other donors – ARE gifts to your nonprofit. Just because someone else buys them doesn't mean your nonprofit didn't own them temporarily.
• It prevents you from pulling GIK donors into a lapsed donor mailing and thereby offending them.
• You can solicit them for a gift next year, and even better, you can save time and resources by just merging their last donation info into the solicitation letter. ("Last year you gave a pearl necklace. Could you donate again this year?")
• You can include in Lifetime Donor totals, if desired, for your recognition societies.
• With a $0 Gift Amount, there is no double-counting of event revenue. It can easily be excluded from any desired reports, so it won't skew your average gift stats and the like.

But don't take my word for it. Print out this article written by a CPA from Aldrich: “If your nonprofit prepares financial statements according to Generally Accepted Accounting Principles (GAAP), then all in-kind donations must be captured and reported appropriately in the organization’s financial records.” Per the article, this includes auction gifts to Development offices.

Good luck!

Sandra Moore

I think this could be used as a stellar example of why Development, not Finance, MUST be the boss of Raiser's Edge. As Faith stated, there are ways to deal with GIK that won't touch Finance if they don't want it to, but those gifts must be recorded. When a Development officer meets with a donor and pulls a statement of gifts, how will the donor feel if multiple gifts to auctions just weren't there? RE is NOT a financial database, it is a Development database, created for the primary purpose of stewarding relationships and recording/acknowledging gifts, no matter the type. Blackbaud's in person conference always has a great session driving this point home - I've missed it being part of the virtual conferences.

The organization I work most closely with uses gift type “other” for these and “do not post” or code them “posted” before any interface takes place. Easily excluded from any query they are using to download gifts they want to record. The whole idea of RE being a “people” database, not a financial database, sometimes takes some gentle training. ?

Christine Cooke

I know that some finance folks are overwhelmed and don't wanna look at Gift InKind, but guess what? It's part of fundraising. And your department needs that information.

Additionally - I have been asked on a regular basis to provided a Gifts InKind report to the auditors when they do their annual review - along with a myriad of other reports that have to do with actual dollars. Maybe this finance person has not been in a nonprofit environment before <shrug>

Sandra Moore

Christine Cooke bCREPro:

……Maybe this finance person has not been in a nonprofit environment before <shrug>

I think you are right. I just noticed that Ted described them as the new accountant. There is a whole different learning curve for being a finance person for a fundraising organization.

Karen Diener

Sandra Moore:

The organization I work most closely with uses gift type “other” for these and “do not post” or code them “posted” before any interface takes place.

Sandra - could I ask why they use “Other” and not the existing “Gift in Kind”? I'm on board with what you started off saying - that this is a perfect example of why Finance is not in charge of Raiser's Edge and that it is a people database. But I got a little confused about using a gift type of Other!

Karen

Sandra Moore

Sandra Moore:

The organization I work most closely with uses gift type “other” for these and “do not post” or code them “posted” before any interface takes place.

Sandra - could I ask why they use “Other” and not the existing “Gift in Kind”? I'm on board with what you started off saying - that this is a perfect example of why Finance is not in charge of Raiser's Edge and that it is a people database. But I got a little confused about using a gift type of Other!

Karen

Good question. I should have thought to address it in my original comment.

Actually we use both. In our case, our finance team does need to track certain gifts-in-kind that have high value and are held for a period of time, thus considered a true asset. These are included in revenue. However, Finance does not want to or need to track small stuff with low, non permanent value like a gift certificate to a local restaurant that someone gave for the auction (big difference between a piece of artwork worth thousands and a gift certificate for dinner!) However, we still need to track them in RE for donor stewardship purposes.

So “Gift in kind” is used for the items counted as revenue, “Other” is used for those that do not fit the criteria of true “revenue”. We do use the reference field in the gift record and a letter code that identifies it as a gift in kind for Development purposes.

Jennifer Kluh

Christine do your auditors want you to give an estimated value of your gifts in kind or can you keep that value empty

Theodore VanPatten

Thank you everyone for your replies, I suggested Do not post, but still no is the answer. I feel like it's my responsibility to the fundraisers and to the accountant can be satisfied by your suggestions. Much appreciated! I will make another attempt. Otherwise I feel like I am not meeting my obligations to the fundraisers and accurate donor counts.