How to Handle Money From a Fundraiser

Handling money from a fundraiser requires attention to detail, transparency, and adherence to practices. This approach maintains donor trust and ensures funds are used as intended. Effective financial management, from initial collection to final disbursement, is necessary for any organization.

Initial Collection and Safeguarding Funds

Collecting funds at a fundraiser demands immediate security measures to prevent loss or theft. For cash handling, have at least two individuals involved in receiving and counting money. This dual-control system enhances accountability and reduces risk. All cash should be counted promptly, ideally on-site, and then secured in a locked cash box or secure container before deposit.

Checks received should be immediately endorsed with a restrictive endorsement, such as “For Deposit Only” followed by the organization’s name and account number, to prevent unauthorized use. This ensures deposit into the designated organizational bank account. Details of each check, including the donor’s name, check number, and amount, should be recorded upon receipt. Digital payments, often processed through online fundraising platforms, require secure gateways that encrypt financial information to protect donor data. Organizations should ensure these platforms adhere to Payment Card Industry Data Security Standards (PCI-DSS).

Providing donors with receipts is important for ethical practice and tax purposes. For single cash contributions of $250 or more, the Internal Revenue Service (IRS) requires a written acknowledgment from the organization for the donor to claim a charitable contribution deduction. Receipts should include the organization’s name, the amount and date of the contribution, and a statement indicating whether any goods or services were provided in return for the donation. All collected funds, whether cash, checks, or digital payment confirmations, should be secured in locked containers or safes at the event location. Funds should be transported by designated personnel, ideally with two individuals present, directly to a bank or a secure organizational facility to minimize vulnerability.

Maintaining Accurate Financial Records

Meticulous record-keeping is fundamental to financial integrity when managing fundraiser money. Comprehensive donor records should capture essential information such as the donor’s full name, contact details, the date and amount of the donation, and the specific purpose or campaign the donation supports. This data is crucial for acknowledging gifts, maintaining accountability, and fostering future engagement.

Establishing a systematic tracking method is important for organizing this information. Options range from simple spreadsheets to dedicated fundraising software, or even traditional manual ledgers. The chosen system should allow for easy input, retrieval, and analysis of financial data. Categorizing income by source, such as specific events or campaigns, and expenses by type, provides a clear understanding of financial flows and helps assess the success of different fundraising efforts.

Regular reconciliation involves comparing internal records of collected funds and expenses with external documents like bank statements. This process helps identify and correct any discrepancies, ensuring all recorded transactions align with actual financial movements. Reconciling records promptly maintains accuracy and helps prevent errors or fraud.

Documentation retention is an important component of sound financial management. All supporting documents, including donor receipts, deposit slips, bank statements, and invoices for expenses, must be retained in an organized and accessible manner. These documents serve as proof of transactions and are essential for internal review, external audits, and compliance with regulatory requirements, such as those set by the IRS.

Banking and Fund Management

Once collected, funds from a fundraiser must be promptly and securely integrated into an organization’s banking system. Establishing a dedicated bank account specifically for organizational funds, separate from any personal accounts, is important for maintaining clear financial boundaries and transparency. Opening one typically requires official organizational documents, such as articles of incorporation or an Employer Identification Number (EIN).

Timely deposits of collected funds are important to minimize the risk of loss or theft and to ensure financial records accurately reflect available balances. Cash and checks should be deposited within one to two business days of collection. Procedures for making deposits include preparing accurate deposit slips, verifying totals against previously recorded collection figures, and obtaining a dated receipt from the bank for proof of deposit.

Monitoring bank balances consistently is an important aspect of fund management. Regularly reviewing bank statements and utilizing online banking tools allows an organization to track funds, identify any unauthorized transactions, and reconcile internal records with bank records. This continuous oversight helps promptly address any discrepancies or errors.

Implementing internal controls for banking further enhances financial security. Practices such as requiring multiple authorized signatories for checks or electronic transfers help ensure no single individual has complete control over an organization’s funds. Regular, independent reviews of bank statements by someone not involved in the daily deposit or disbursement process provide an added layer of oversight, helping to detect and prevent potential financial irregularities.

Using and Disbursing Funds Responsibly

Disbursing funds collected from a fundraiser requires careful adherence to the stated purpose of the fundraising effort. Every expenditure must directly align with the goals communicated to donors, whether for a specific program, project, or general operational support. This alignment maintains donor trust and fulfills the ethical obligation of the organization to use funds as intended.

A clear and documented authorization process for all expenditures is important. This typically involves requiring approvals from designated individuals or committees, ensuring spending decisions are made collaboratively and are subject to oversight. For instance, purchases above a certain threshold might require approval from a board treasurer or an executive committee.

Meticulously documenting every expense is important. Organizations must obtain and retain original receipts, invoices, contracts, and other proofs of payment for all disbursements. These documents should clearly detail the date of the transaction, the vendor, a description of the goods or services, and the amount. Such comprehensive documentation is essential for internal audits, financial reporting, and compliance with tax regulations.

Various secure payment methods can be used for disbursements, including organizational checks or electronic transfers. Each method requires specific record-keeping; for checks, this includes the check number, payee, amount, and date, while electronic transfers require transaction IDs and confirmation of receipt. Maintaining these records ensures a clear audit trail for all outgoing funds.

Financial transparency and regular reporting on how funds are used are important for accountability, especially to donors and stakeholders. Maintaining comprehensive and accurate records throughout the collection, management, and disbursement processes facilitates the creation of clear, concise financial reports. These reports demonstrate responsible stewardship of donated funds and reinforce public confidence in the organization’s financial practices.