Accounting for Year-End Gifts

It's important to remember the donor's deduction year does not have to correspond to the year you recognize the revenue. But with that being said there are some things your organization should do:

• No matter what your process is, make sure to document it. Like everything in accounting, proper documentation is crucial to proving your accountability.
• Be consistent. Create a process and stick to it. The documentation helps.
• Decide what to do with checks dated in the prior year with a postdate in the current year. Usually you want to give the donor credit for these in the prior tax year.

Earlier I said the business office does not have to recognize revenue in the same period the donor takes the tax deduction. But in most business offices, it's easier to maintain consistency so development and finance can stay on the same page. Booking revenue in the prior year for gifts with checks dated on or before Dec. 31 or that arrived in envelopes postdated on or before Dec. 31 keeps your fundraising and accounting systems in sync and makes for easier reconciliation.