We’ve all been on one side or the other of a big communication blunder, whether you received the same email twice from two different people, or someone gave you the wrong address for an 8AM meeting so now you’re late.
After a great “Know and Grow” presentation earlier this week by Amber McElduff of Moss and Yantis CPA Firm, we’ve been thinking a lot about inter-office communication and collaboration. During the presentation, Amber walked non-profit professionals through some tricky financial regulations regarding grants. Funds received through grants can be classified as conditional or unconditional. Conditional funding is contingent upon certain stipulations and can’t be recognized as revenue until those stipulations are met. Unconditional funding is just that – the kind we all want to have! Unconditional funding can be recognized as revenue immediately.
Conditional funding can present a problem for a non-profit’s finances. For example, ABC Education nonprofit is working on Project 123 to serve 65 students through an after school program. If ABC Education nonprofit applies for a $25,000 education grant using that same specific language, the organization providing the grant may send an award letter that details that ABC Education nonprofit is granted $25,000 for use in their after school program, and that ABC Education nonprofit must serve 65 students. What happens if only 55 students register? Until 65 students have been served by the after school program, ABC Education nonprofit cannot declare that $25,000 as revenue. ABC Education nonprofit’s expenses would go up dramatically in preparation for their after school program, while no increase in revenue would be reflected. If you are a non-profit professional, you can already imagine the reaction of their board without that additional knowledge. Yikes!
It’s important as a grant writer to be mindful of rules like this so that you can write a compelling grant request without boxing yourself into a challenging financial position. Even more so, it’s crucial that your nonprofit’s internal departments communicate with each other. If ABC Education nonprofit’s development officer had run their grant application by their CFO, the 65 students stipulation may never have appeared in the award letter. It’s easy to get tunnel vision and forget about how your work relates to your organization at large… until big communication issues like this one come up. It’s well worth the extra time invested to check in with other team members!
Note: We at CDS specialize in the planning, direction and execution of capital campaigns, not accounting. If you have questions about how to classify funds or other financial issues, please contact your tax advisor or CPA. Moss and Yantis is a full service certified public accounting firm based in Mt. Pleasant SC. Established to serve the tax, accounting and consulting needs of Lowcountry nonprofits. Follow them on Facebook for more details of their next “Know and Grow” Luncheon.