Development Finance and Operation Basics for the Jack-of-All Arts Administrator (Gift Acceptance, Disclosure Rules & Basic Financial Reporting) For arts administrators of small to mid-sized nonprofits Wednesday, June 4th, from 4-6 p.m. @ Fresh Arts, 2101 Winter Street, #B11, Houston, TX 77007 PRESENTERS: Amy Lampi, Senior Director of Development Support Systems, Memorial Hermann Foundation Joanna Torok, Director of Advancement Operations, Houston Grand Opera Are you in charge of fundraising AND finance within a small organization? Do you struggle with creating a regular routine for acknowledging donations? Do you know how to present your financial position effectively to your board? Are you certain you’re in total compliance with the IRS when accepting gifts? Administrators can expect to walk away from this workshop better equipped to manage broad financial concerns along with a simple check-list of things to do each day to ensure you are staying in compliance. Topics will include: - Creating simple systems for fund development management and operations - Timing, rules, and language for donor receipts - Common mistakes in communicating the tax benefits of donations - How to determine Fair Market Value for special events, etc. - Basic financial reports - Forecasting revenues - Reconciling fundraising activities with greater financial goals

2. ABOUT FRESH ARTS
ONLINE SERVICES
• The Culture Guide
Online event calendar
• The Houston Artist Registry
A warehouse of local artists and
creatives
• Houston Artist Field Guide
A wealth of resources for artists
and arts administrators
PHYSICAL PROGRAMMING
• Community Supported Art
A subscription for local art
• Workshops & Professional
Development- Offered to assist
arts administrators and artists
• Exhibitions - We work exclusively
with local emerging artists
• Cultured Cocktails
Raises funds for local arts projects
• Winter Holiday Art Market
An annual holiday art market
involving over 60 local artists (Last
year we sold over $153,000 of
local art!)
• M-Lab - Marketing incubator for
small to mid-sized nonprofit
organizations

3. ABOUT OUR GUEST experts TONIGHT:
Amy Lampi has 12 years of fundraising experience in the arts, education and
now health care. As a development generalist, she has done everything from gift
processing and database administration to major gift fundraising and
management of a department/team. Her current role as Senior Director of
Development Support Services at Memorial Hermann Foundation has her
overseeing database, prospect research, gift processing, finance and annual
fund for the Foundation. Her goal is to streamline processes and discover best
practices so fundraising operations remain smooth and efficient.
Joanna Torok’s first official paycheck came from the Houston Grand Opera
in 1989, after performing as a children’s chorus member in Carmen. Many years
later, after various professional experiences and obtaining an MBA in 2008,
Joanna decided to take the leap from corporate America back in to the arts
community. With a background in technical television operations, Joanna has
always had an interest in back-end technology, and developing systems for
seamless product distribution. Currently working as the Director of Advancement
Operations, Joanna specializes in automating processes and increasing
operational efficiency in the Development and Marketing departments of HGO.

4. Development Finance and Operation
Basics for the Jack-of-All Arts
Administrator
Gift Acceptance, Disclosure Rules & Basic Financial
Reporting
Amy Lampi
Senior Director of Development Support Systems
Memorial Hermann Foundation
Joanna Torok
Director of Advancement Operations
Houston Grand Opera
We would like to acknowledge the contribution of the
GWSCPA for some of the copyrighted content of this
presentation.
http://www.gwscpa.org/

5.  Creating simple systems for fund development
management and operations
 Timing, rules, and language for donor receipts
 Common mistakes in communicating the tax benefits of
donations
 How to determine Fair Market Values for special events,
etc.
 Basic financial reports
 Forecasting revenues
 Reconciling fundraising activities with greater financial
goals
 Daily ‘to-dos’ to stay on track (Amy)
The BIG ideas. What we will cover:

6. OPERATIONAL SYSTEMS
No matter your size, invest in healthy
operational systems:
Financial investment
• Hiring &/or training qualified staff
• Implementing new Software/Programs
Resource investment
• Time researching needs
• Creating & updating Policies & Procedures
• Developing effective system

7. OPERATIONAL SYSTEMS
Researching Needs: Data Management
Cloud based v. Installed v. Consortium
1. Reach out, ask questions
– What are others using? Good vs. Bad
– Is a free system sufficient for your needs?
2. Think Long-term
– Before committing: Scalable/strategic forward thinking
– After commitment: Set-up/ Structure
Already set up with a system?
• Analysis
• Possible realignment/restructure

8. Researching Needs: Reporting
Q: When do your stakeholders need information?
• What info and when?
• Develop and stick to a reporting schedule
• Automate reports where you can / create templates
– Daily transaction log: see example on next slide
– Mail Merges- create and use template letters for:
• acknowledgements, receipts, invoices
– Gift acknowledgments sent within 72 hours (if at all possible)
– If 72 hr. formal acknowledgment isn’t possible, a phone call or email
acknowledgment will build important trust with your donor
– Sample acknowledgment will be included in follow up materials
– Report templates
• Excel sheets, email text, .pdf
OPERATIONAL SYSTEMS

9. Researching Needs: Reporting
EXAMPLE: HGO Daily Transaction Log
OPERATIONAL SYSTEMS

10. Researching Needs: Roles &
Responsibilities
Define up front, who is responsible for what
• Create written workflows, accessible to all staff
• Delegate and Define, no matter the size
– Important in the scheduling of reports/duties
– Ownership of quality
– No questions
• ARC-Authorization, Record-keeping & Custody
– Best practice: have three separate people responsible for
recording different aspects of any financial transactions
• Add info to or start a Policy & Procedure document
OPERATIONAL SYSTEMS

11. Researching Needs: Policy & Procedures
[ aka Operations Manual ]
• Clearly state the organization’s expectations for transparency
and accountability
• Promote good internal controls
• Backed by / approved by Board & Senior Management
• Updated regularly: This is an organic document that will grow
with your organization.
• Good to start by documenting major annual events
OPERATIONAL SYSTEMS
&

12. • After all research is done, build timelines and
workflows
– Think smart, efficient
• Use all information collected in research and build optimal
system around your needs
– Prioritize by importance/weight
• Stakeholders, financial, legal
• Organic in nature
– Let it flow, it should feel right and not forced
OPERATIONAL SYSTEMS

13. HGO EXAMPLE:
Q: Who would like to share their current
system?
OPERATIONAL SYSTEMS

14. DONOR RECEIPTS (Sample will be
emailed)
Timing
• gift processed within 48 hours
after received
• receipt sent 72 hours after
received
• Prompt TY phone call or email
ack. will build trust with donor
Rules
• IRS requires gift receipts for
all gifts $250+
• receipts to contain amount
and date
• directed to the name and
address of payee on the gift
Language must
contain:
• name
• address
• gift date/date received
• amount
• restrictions
• organization tax status
• fair market value/goods or
services received

15. DONOR RECEIPTS
• Resource: http://fundsvcs.org/ FREE resource for
advancement services
• Your receipt or a letter should contains the following:
My organization’s logo
Date: «Gift date»
Amount: «Amount»
Campaign: «Campaign_description_1»
Receipt #: «Receipt Number»
«Addressee»
«Address_line_1»
«Address_line_2»
«City», «State» «ZIP Code»
My organization is a 501(c)(3) nonprofit organization.
The tax-deductible portion of your gift is $X.
No goods or services were provided in exchange for your contribution.
Please retain this document for your federal income tax records.

16. TAX BENEFITS
COMMON MISTAKES IN COMMUNICATING TAX BENEFITS:
• Raffle tickets
• In Kind Goods
• In Kind Services
• Membership benefits
• Special events
• Donated “Services" are not tax deductible
• Donations are only 100% tax deductible if absolutely no
goods or services are received
• Fundraising events are not fully tax deductible (unless
the donor does not attend)
• Stewardship events are usually tax deductible
• Giving away stuff to donors with your orgs logo can
be tax deductible, but know the IRS limits

17. TAX BENEFITS
RESOURCES:
 IRS Publication 526
 IRS Publication 561
 “Quid Pro Quo”
Contributions
 http://www.irs.gov

18. FAIR MARKET VALUE
• Fair market value (FMV): is good faith estimate of any goods or
services received in exchange for a contribution
• Basically, if you were to walk off the street to an event, what is the
value of what you consume or receive in exchange for your donation
at the event
• Good faith estimates can be a grey area
• Some organizations are more conservative than others
• Bottom line, you could get fined if audited by the IRS $1,000 per
underestimated FMV receipt
• This includes any gifts donated to guests at the event (unless your
logo is on them, see quid pro quo)
• Do not count taxes
• Do not count catering charges
• Do not count entertainment value (may be considered in-kind
donation)

19. FINANCIAL
REPORTING<< To be financially accountable, we
must
1. Adopt and follow
good financial
management
policies
2. Engage staff or
board who have
appropriate
analytical skills
3. Provide timely,
accurate and
readable financial
reports with
relevant content
to interpret
4. Use data and
analysis to make
good
management
decisions and
plan for the future
of the

20. FINANCIAL REPORTING
Ties back to Research phase:
WHAT INFO DO WE NEED > When do we need the
report?
Standard Reports
Primary: Income Statement, Balance Sheet
Secondary: Revenue detail (contributed & earned),
Expense detail, Actual v. Forecast, Current v. Prior year

21. Income Statement
Reflects the changes to an organization’s net
assets resulting from income and expenses that
occur during the current fiscal year.
• What was last year’s total?
• What is the annual budget for this year and what
percentage of the budget is represented by the
year-to-date amounts?
• How do we expect to end the year and how does
that compare to the approved budget?
FINANCIAL REPORTING

22. FINANCIAL REPORTING

23. The Reporting Process
Define constituents  Gather needs Build & Test 
Evolve
Example: HGO Finance Committee
1. Set schedule/agenda in advance
2. Develop standard reports
3. Gather feedback, refine
FINANCIAL REPORTING

24. Example: HGO Finance Committee Meeting Schedule
FINANCIAL REPORTING

25. Example: HGO Finance Committee
2. Develop standard reports
– Revenue detail
CONTRIBUTED
FINANCIAL REPORTING

26. Example: HGO Finance Committee
2. Develop standard reports
– Revenue detail
EARNED
FINANCIAL REPORTING

27. Example: HGO Finance Committee
2. Develop standard reports - Expense
detail
FINANCIAL REPORTING

28. Example: HGO Finance Committee
2. Develop standard reports
– Board Approved v. Current Forecast
FINANCIAL REPORTING

29. Example: HGO Finance Committee
2. Develop standard reports
– Current Forecast v. Prior Year
FINANCIAL REPORTING

30. Example: HGO Finance Committee
3. Gather feedback, refine
–Missing data/stories
–Visual displays
–Personal preferences
–Group discussion or one-offs?
FINANCIAL REPORTING

31. To develop a good budgeting process:
FORECASTING REVENUES
 Document- Write it down!
 Decide who’s involved and when
• List specific tasks with specific
responsibility assignments
 Create annual timeline
• In line with important meetings for
approvals/review
 Adopt policies for adhering to budgets,
handling variances, approval authority,
etc.
 On-going checks & balances

32. Contributed Revenue
• Revenue is generally the starting point in a budget
planning process
– forecast level determines program delivery
• Incredibly important to accurately predict, AND to
closely track progress of approved goals
Q: How do you currently forecast your
revenue?
% increase? Individualized?
FORECASTING REVENUES

33. %-based Individualized
13% off actuals 6% off
actuals
on average on average

FORECASTING REVENUES
Customer ID Name Customer Type
Total Giving
for 2014
Forecast 3 Forecast 1
87007 MR. A Individual 0.00 1,000.00 1,000.00
2245558 MrR. B Individual 100.00 2,000.00 1,100.00
3059449 MRS. C Individual 1,200.00 0.00 1,200.00
7039 MISS D Individual 0.00 1,200.00 1,200.00
2221315 ETC Individual 1,200.00 1,000.00 1,200.00
2209850 ETC Individual 1,200.00 0.00 1,200.00
3051365 ETC Individual 0.00 1,750.00 1,350.00
3008279 ETC Individual 1,450.00 0.00 1,450.00
1651 ETC Individual 0.00 1,500.00 1,500.00
3008092 ETC Individual 0.00 3,500.00 1,500.00

34. Tracking Goals
Q: How do you track progress once goals are
set?
Forecast data needs to link to contributions:
Can show actuals v. budget (in detail) and
top ‘outstanding’ forecasts
HGO’s Top 10/100/1000:
FORECASTING REVENUES
customer no Name cust type Total Giving Forecast 1 balance
185175 MR. A Individual - 4,000.00 4,000.00
234869 MRS. B Individual 6,000.00 10,000.00 4,000.00
246768 MISS C Individual 1,200.00 5,200.00 4,000.00
2224715 MISTER D Individual - 4,000.00 4,000.00
2238532 ETC Individual - 4,000.00 4,000.00
2259744 ETC Individual 1,166.69 5,000.00 3,833.31
200949 ETC Individual - 2,000.00 2,000.00
3022557 ETC Individual - 2,000.00 2,000.00
17474 ETC Individual - 2,000.00 2,000.00
2250513 ETC Family
Foundation
- 1,000.00 1,000.00
2260945 ETC Individual 6,500.00 7,000.00 500.00
19036 ETC Individual 1,750.00 2,000.00 250.00

35. RECONCILING ACTIVITIES
• Each month, all donations received that month need to be
reconciled with “Finance"
• Donations are batched for deposit and then each month's
batches are balanced
• Pledge, payment and cash reports need to be generated and
reconciled with your organization's bank statements
• This also gives you the opportunities to clean donation data
• After a month is "closed", gift dates and amounts should never
be adjusted. Restrictions can be adjusted.
• If reconciling each month, the end of your fiscal year
reconciliation should be much easier.
• Result? Clean and beautiful audit and IRS 990 filing
• Each month, all donations received that month need to be reconciled with
“Finance"
• Donations are batched for deposit and then each month's batches are
balanced
• Pledge, payment and cash reports need to be generated and reconciled with
your organization's bank statements
• This also gives you the opportunities to clean donation data
• After a month is "closed", gift dates and amounts should never be adjusted.
Restrictions can be adjusted.
• If reconciling each month, the end of your fiscal year reconciliation should be
much easier.
• Result? Clean and beautiful audit and IRS 990 filing

36. RECONCILING ACTIVITIES

37. DAILY CHECKLIST
Today I/We:
1. Opened and dated gifts received today*
2. Batched (grouped) gifts by type
o Checks & Cash
o Credit cards
o Pledges
3. Researched and Collected all possible info on the donor
4. Called and thanked the donors (giving direct impact of their
gift)
5. Captured all new information found in our database
6. Assigned deposit # to the cash/check batches
7. Reviewed my work and committed batches
8. Prepared the cash/check batches for deposit*
9. Generated Receipts/thank you letters for my batches
10. Stamped and Mailed the letters
*Remember ARC Rules

38. RESOURCES
Nonprofit Accounting Basics:
http://www.nonprofitaccountingbasics.org/
Fund Services:
FundSvcs.org
IRS: http://www.irs.gov/Charities-&-Non-Profits/Frequently-
Asked-Questions-about-Tax-Exempt-Organizations
GWSCPA:
http://www.gwscpa.org/

39. IN YOUR INBOX TOMORROW
 This PowerPoint
 List of example docs and resources
 Info about upcoming workshops including
– MEET YOUR MEDIA: With Joel Luks, Molly
Glentzer, Bill Davenport
June 8, 6-8 p.m. @ Diverseworks Artspace
 Link to a post-workshop survey