Common Points of Confusion Between the Accounting and Development Teams


By: Eric Joseph Rubio

In: Development

As our organizations grow, the number of donations and the number of financial transactions grow along with it. On top of that, the accounting function, if it hasn’t already, likely will move from cash basis to the more complex accrual basis. This growth leads to the need for specialization among staff and often a separation of the gift processing and bookkeeping functions. It is very appropriate and desirable for internal control purposes to have separate people handling the bookkeeping aspects of a donation from the donor stewardship aspects. And yet, this bifurcation can lead to some common points of confusion between the accounting and development teams, owing to the different ways of thinking about handling money in those professions. Let’s look at three common points of potential confusion and how development and accounting counterparts can proactively manage them.

Dates of Donations

If it’s an online gift where your donor uses a credit card, there’s generally no date discrepancy. Your payment processor that sends deposits to your bank account will have the same transaction date as the gift record that appears in your CRM. But if a donor mails a physical check, typical accounting practice is to use the check date, while typical stewardship practice is to use the date received to the office. And if it’s around the turn of the calendar or fiscal year, postmark date often comes into play. Assuming you reconcile donation records monthly, this only creates an issue for checks dated late in the month that arrive early in the next, and it is fairly straightforward to itemize the checks that fall under this scenario.


The accounting standards prescribe that the full amount of a written pledge should be accrued on the date the pledge was made. In cases of a multi-year pledge, where a donor may pledge a large amount to be given in installments over several years to support the programming in each year (or conversely, pledge to give a specified amount each year for several years), for accounting purposes, the total amount counts in the first year. On accrual basis accounting, the date the funds are received is immaterial to the date the pledge should be recorded. But, that leads to the next point of confusion.


Net Assets (the nonprofit equivalent of Equity, the final major section of a balance sheet) are divided into “with restrictions” and “without restrictions.” These restrictions are those imposed by the donor or funder, not internally by management or even by the board.

A donor might put in writing that they intend to give $10,000 each year for five years. This is a typical example of a multi-year pledge. As described above, accounting will accrue the full $50,000 to the first year, and this amount will be part of the total “Contribution and Grants” on the Form 990. By contrast, development will give the donor recognition appropriate to the $10,000 level each year for five years. But back on the accounting side, in year one, $40,000 will be tagged as “with restrictions” (the time-bound restriction imposed by the donor), and included with that label on the balance sheet. $10,000 will be released and moved to “without restrictions,” since the restrictions were satisfied with the passage of time, each year. This helps accounting’s Statement of Activities reconcile to development’s running total of the annual fund.

Donors could also impose purpose restrictions, such as underwriting the appearance of a particular soloist. This purpose restriction inherently also carries a time restriction: the date of the soloist’s appearance. Once that production has finished, the restriction has been satisfied.


The accounting rules for donations are complex. It can take a bit of work for development and finance counterparts to reconcile their corresponding records. Seek the advice of an accounting professional for situations where you are unsure of how to record a donation, particularly the major, multi-year gifts that are key pieces of an organization’s revenue picture.

Eric Joseph Rubio
Eric Joseph Rubio
Eric Joseph Rubio is a nonprofit and arts management professional originally from Chicago, and now based in Washington, DC. He has served in staff and leadership roles with churches, schools, and arts organizations in the Chicago, South Florida, and Washington, DC areas. Eric is a proud alumnus of the Wheaton College (IL) Conservatory of Music, and is an occasional freelance writer across a variety of platforms. Follow Eric on Twitter and Instagram at @TheRubioRoom, and visit his website
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