A nonprofit organization’s main source of income is donations. However, revenue may be received as well in exchange for goods and services or from investments. The source of donations varies. They may come from individuals, corporations, foundations, churches and government entities. They may come in the form of cash, grants and even time.
Most donations come in the form of checks written by donors. It is advisable to deposit the checks as soon as possible to ensure the money promised is available for the needs of the organization.Keeping the organization’s checking account current will help avoid undesirable overdraft fees. However, if the organization has a website, donations can also be received online through companies like PayPal.
It is also necessary to keep a list of donors. Record the donor’s pertinent information such as name, address and amount donated. The auditor uses this list in conjunction with financial records to verify the donations received.
Cash donations are more difficult to track because they lack a corresponding paper trail. To compensate for this, make sure the donor receives a receipt of donation and that the organization keeps a copy as well.
Check donations are a common form of donations but they can lead to bouncing a bad check. Purchase a check-swiping system to verify there is indeed enough money in the account to cover the amount of the check.
With credit card donations, there is a user fee or percentage charged for processing the payment. The organization always receives less than the stated amount due to these finance charges. It is recommended to not account for credit card donations before it clears the bank.
Direct bank draft donations allow people to donate a large sum of money divided into smaller amounts over a longer period of time. It is a common practice with large corporations to encourage their employees to make small donations directly from their paychecks.
This a large amount of money given with no obligation for repayment. It is vital to track and monitor how grant money is used. It is advisable to open up a new account in which to deposit just the grant money. A grant can be received in the form of a check or may be directly deposited after the money is spent.