U.S. Nonprofits Are Accounting for Huge Increase in Donations

Donations to U.S. charities, not including tsunami relief contributions, soared in the first quarter of 2005, according to a report in Knight Ridder Newspapers. Analysts attribute the surge to an improving economy, increasing use of internet giving and individual generosity.

Donations to international relief agencies led the way, with aid to nonprofits that focus on health, the environment, animal welfare, and advocacy growing as well, the Knight Ridder report said.

Online contributions to nonprofits increased significantly in the first quarter of 2005, according to John Mastrobattista of Target Analysis Group, Knight Ridder reported. “It gives a lot more immediacy,” he said. “You reach audiences faster, and you can reach donors fasters with a message that tells them what you’re doing.”

The Chronicle of Philanthropy reported that nearly a quarter of tsunami donations came via the internet. Editor Stacy Palmer wrote “the tsunami giving. . . may make people more comfortable with online giving in the future.”

The internet has also given prospective donors access to nonprofits’ financial information, according to Nathan Shaver of Changing Our World in an interview in OnPhilanthropy. Donors now have access to tools such as Guidestar and Charity Navigator where they can access 990s and read about the nonprofits’ fundraising and administrative costs as well as their mission.

Shaver believes that the current climate of greater transparency and accountability in the public sector applies to nonprofits as well. Donors “want proof of the proper stewardship of their funds,” Shaver says in the interview. In this environment, nonprofits need first of all to recognize the importance of proper gift accounting, beginning with keeping detailed records in their database of everything known about the gift and the giver.

Maximizing use of database systems can lead to greater efficiency in nonprofits, Shaver says in the OnPhilanthropy interview. Although implementing new software can be time–consuming, the systems free up individuals, who might otherwise be occupied by projecting future revenue, to pursue major fund raising activities. “In my opinion,” Shaver commented, “when implemented and used effectively, new technology is always worth the investment.”

Accounting for revocable bequests, a major source of funds for nonprofits, has received attention in Colorado. Colorado State University (CSU) included money from these types of donations as part of their fundraising total for 2004, according to the Denver Post. If someone bequeaths money to CSU, the university counts that as a donation in the year it receives proper documentation of the will,” said Don Fry, vice president for development at CSU. Previously, the university did not count the money until it was received.

The Denver Post reported that the Council for Advancement and Support of Education (CASE) does not allow universities to include revocable bequests when they report fundraising figures for comparison surveys. Universities may choose whether or not to follow CASE recommendations.

Proper valuation of revocable gifts is another aspect of accounting for these kinds of gifts. In general, revocable gifts are valued in light of the probability of receipt, according to the National Committee on Planned Giving (NCPG), who noted in a report published on their web site that charitable organizations have had guidance for accounting for planned gifts from the Federal Accounting Standards Board, for determining the charitable tax deduction for planned gifts from the U.S. Treasury and for capital campaign reporting from CASE regulations. NCPG has developed valuation standards for charitable planned gifts.

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