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Successfully Navigating Your Cash Flow

by the AFRDS


According to a survey by the Association of Fund Raisers and Direct Sellers, product fundraising programs raise nearly $2 billion net profit each year for schools, school groups and other non-profit organizations. Schools and school groups account for 88 percent of those profits. The money pays for computers, field trips, athletic, music and art programs no longer covered by shrinking school budgets. Clearly, the practice of fundraising is serving an increasingly significant role in providing resources for thousands of school and youth programs.

"Fundraising is simply a means to an end," according to Carol Talbot, a parent in Columbus, GA, and current treasurer for the Georgia State PTA. The typical school fundraising drive lasts only the few weeks it takes to reach an immediate goal. But despite its short-term nature, Talbot believes fundraising activities should be approached in a professional manner and run like a business. "Most of running a fundraising program is common sense," says Talbot.

But, she cautions that a well-meaning and overly trusting volunteer is vulnerable to careless mistakes — sometimes with devastating results. "I know of units who went thousands of dollars in debt due to mismanagement," Monroe reports. Ohio PTA’s Executive Director Barbara Sprague agrees, "We have PTAs with budgets that range from $3,000 to $100,000. And, I’ll bet most of these units, regardless of their ability to absorb a significant loss, have paid a price, at one time or another, for carelessness."

These losses can severely hamper a parent group’s ability to meet their organization’s goals or fund new student programs. But, many believe these costly lessons can be avoided with careful recordkeeping and a strong buddy system.

Handling Money:

  • Two heads are better than one
    Whenever money is involved, experienced fundraisers say that two people should share the job of handling the money. "If two people are counting, recording and verifying each other’s amounts, you’ll catch each other," according to Monroe. Ideally, each will have experience and feel comfortable working with money. But Kerry McCullough, a fundraising company owner in El Paso, TX, believes math skills are secondary to good organizational skills. "To be successful, treasurers and fundraising chairpersons need an accurate paper trail."

    It’s also a good idea to assign money handling responsibilities to individuals from separate households. Even innocent mistakes made by a husband and wife can be misconstrued, experts say. Further-more, many groups provide fidelity bond insurance to cover losses resulting from honest mistakes. Band booster Susan Farris says her group uses a "drop box" buddy system. "We’ve got 360 students and just as many booster members. You can imagine how difficult it is to collect all the forms and money on a particular day and at a pre-determined time." Her club installed a "drop box" to which only she and the president have a key. "That way, we control who has access to the money. And the kids have a central, secure place to deliver their money."

  • Before deposits, think like a teller
    "Fundraising groups can make it easy for themselves and their bank if they prepare their deposits properly," according to Lou Gresham, branch manager, Premier Bank in Acworth, GA. Her first advice: make sure all checks are signed and endorsed properly with your organization’s name and account number. Many groups encourage student and parent volunteers to include the student’s first and last name on every check. That way, if a check bounces, the affected student is easily identified and the product order can be adjusted.

    When counting the money, use a calculator. Better yet, Gresham suggests using a printing calculator to actually record each check amount. Then attach the tape printout to the bundled checks. She also recommends that bills be "strapped" together by denomination using pre-printed, self-adhesive paper straps. Many volunteers use recordkeeping systems or accounting software, to manage cash flow. However, Talbot warns that any bookkeeping system is only as good as the data it receives. It must be updated regularly and accurately for fundraising organizers to reap the full benefits.

    Deposits should also be made in a timely fashion, daily if possible and, again, by at least two people. Lisa Newburn, a representative of North Carolina-based First Union, also suggests that volunteers vary the times they make deposits and avoid forming any type of pattern that may be observed. Between visits to the bank, make arrangements to keep money under lock and key.

  • What to do when checks bounce
    Unfortunately, fundraising is not immune from the occasional bad check. So, as a prudent business owner would take measures to collect the debt, so should fundraising organizations, experts advise. "You are serving as a steward for your organization and as such you must watch the money wisely and pursue it legally if necessary," says Texas PTA Treasurer Monroe. In her workshops, she suggests running the check through the bank a second time. If the check bounces again, many fundraising coordinators will place a courtesy phone call to the person who wrote the check.Others suggest calling the bank first before making the second deposit attempt. At most banks, a check can be presented 2-3 times for deposit.

    In most cases, it is simply a matter of timing. However, if the person who issued the bad check is non-responsive, Monroe and her colleagues suggest the same procedure followed by most businesses: n Send a certified letter (which requires a signature and provides the sender with a proof of mailing) to the person who issued the check;n State in the letter that the check was returned and for what reason (e.g., insufficient funds) and that the party has 10 days to provide a cashier’s check or money order for the appropriate amount. Experienced fundraisers agree that timeliness is critical. The longer you wait to follow-through on bad debts, the tougher it is to collect.

  • Look to the professionals
    There are almost as many fundraising programs as there are products and services available today. Some are structured as a pre-pay — orders are paid for upfront. Other programs are set-up as post-pay — orders are placed in advance and product is paid for upon delivery. Each organization must work with their fundraising company to determine what system will work best for their group. Fundraising companies will provide simple instructions to volunteers on how to complete the paperwork.

    They also have the knowledge and expertise to provide information on tax laws, recordkeeping and other administrative issues. "We have an obligation to make this easy on sponsors," says Frank Miller, a Tennessee-based professional fundraiser. "You can’t always avoid problems, but you can show people how to be prepared for and deal with them." For example, Miller’s company provides sponsoring organizations with collection envelopes, order forms and other necessary paperwork along with detailed instructions on how to complete the paperwork, samples of completed forms, as well as computer generated reports to track results.

    These are just some of the innovative services available to help make fundraising drives painless and profitable for volunteers. Such services however, may affect the cost of the program. It is important that sponsoring organizations understand and thoroughly evaluate services before reaching an agreement with a fundraiser. Summing up her feeelings about fundraising, band booster Susan Farris notes, "We aren’t doing this just to make money. We’re doing this so our kids can have instructors, new sheet music, participate in local and national competitions."

    Indeed, fundraising has become a significant resource for American youth. It is more important than ever that fundraising activities and the monies raised through these activities be handled professionally and with great care.

Additional Resources: The Official Football Fundraiser’s Guide by J. Alden Briggs, Jr., published by Boosters Clubs of America; PTA Money Matters, published by The National PTA; Raising Funds for Your Child’s School by Cynthia Francis Gensheimer, published by Walker and Company, New York, NY and Earning More Funds by Chip and Ralfie Blasius published by B.C. Creations, Fort Wayne, IN.


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About the Author:

This article is from the Fall 1998 issue of the Fundraising Edge, an online publication of the Association of Fund Raisers and Direct Sellers and is reprinted with permission. Visit their web site at http://www.afrds.org/ for more information and a look at the complete issues of the Fundraising Edge.



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