Since we are approaching the end of the year, I’m kicking off a 3 part series on 3 calendar year-end finance processes to make your year-end as smooth as possible. As the Administrator for your church, you want these processes to go smoothly.

The 3 Areas: – Contributions, Accounts Payable & Payroll.

 

Contributions

The overall goal is to have the Contribution Statements as accurate as possible with minimal effort before they go out. (receiving phone calls or visits from people with incorrect statements are embarrassing/time consuming). The trust they have in the Financial Office/People is potentially negatively impacted for recurring or careless errors.

To get started, print or save Contribution Statements to a .pdf.

Review the Following 6 Areas:

Addresses

I like to send out a survey to the church in October giving people the chance to update their contact information. Nonetheless, still review for:

Missing or incorrect addresses
Multiple addresses for the same donor (merge those multiple addresses to the correct one)

Funds

Typically the columns on the Statement show each fund contributed to. Of course it goes without saying that you only want tax deductible cash donations on your statements

Review the funds that are on these statements to ensure you have all the ones needed

Perform a cursory review of individual giving patterns within these funds because sometimes they get criss-crossed. For example a contribution normally posted to Budget was posted to Building and/or vice-versa. Be aware of contributions that may be posted to the wrong person – where you have a few families with the same last name, for example.

Pledge Amounts

If you are going to include pledges from Capital Campaigns (for example), you will need to make sure to only include the ones that were active as well as to make sure the pledge amounts and remaining pledge balances are correct. Look at the details behind a few to ensure the system is reflecting the correct balances.

You will want to adjust remaining pledge balances for any non-cash gifts toward those pledges even though non-cash gifts would not be on the contribution statements. They are treated separately on acknowledgement letters. Be sure to include Form 1098-C as needed for donations of vehicles, boats or airplanes valued $500 or greater.

Another thing to look for is amounts given against pledges were from the correct person. As mentioned already, gifts from people with the same last name can be an issue. To the extent gifts from one family end up on another’s statement is kind of embarrassing.

One more thing to deal with are Pledges made by a business but gifts given or posted to the individual’s account – or vice-versa.

Reconciliations and Cutoffs

Reconcile general ledger income accounts to your Contributions System – deductible and non-deductible.

Be sure to update Contribution records for NSF’s tied into your December banking transactions/statement.

Keep a close eye on oncoming mail received after Dec 31 – check the post mark date to get those post-marked Dec 31 or before in the year end statement.

This goes for in-house receipts as well. Technically, checks dated Dec 31 or before not received in the finance office by Dec 31 would be next year’s business.

Wording

I like to include a Thank You statement in addition to required IRS wording on the Contribution Statement.

If you can, include a letter from the Pastor to go out with the Statements. These letters thank them for investing in the church, but also talk about what was accomplished by their donations. In addition talk about what’s coming in the next year and so on.

Distribution

I wouldn’t email the statements as they are not secure. Mail so the recipient has by Jan 31st (Statement and Form 1098-C as needed) or have them picked up. Some systems can offer the ability for donors to view and print statements online, just make sure they have the required IRS wording included. Opting to mail with a letter from Pastor is the best way to go.

 

Finally

Improve your processes by making changes based upon the findings in your reviews to make next year’s statements more accurate and the review/correction time less time consuming.

The key really is having solid weekly, monthly and quarterly processes in place.

What have seen work well?