By Jan McGuire
Ah, Spring! How we anticipate its arrival each year after the dreary days of winter. We emerge from layers of sweatpants and blankets and prepare to "spring forward" and enjoy more hours of daylight. Many of us plan to get outside and plant a few flowers or invest in houseplants, claiming this will be the year we brighten our apartments or homes. The anticipation of blooming plants and flowering gardens is high, and we willingly take on the added responsibility of caring for our new investments to help them grow and flourish.
We need to look at fund audits with this same lens: our donors have invested in our organization to help it grow and achieve its mission. Are we doing our part to help these funds flourish? In Donor Relations, thankfully, we're not talking about investment strategies to grow endowments — other people are charged with those tasks. We're talking about having our documentation, spending plans, and stewardship activities in place to maximize the benefit of the funds, just as our donors intended.
Think of it this way: can you say with certainty that documentation for every fund is housed in a centralized place, accessible to all who need it? Think of the people at your organization that award or spend the monies— have we set them up for success by providing the criteria for using these funds? And have we checked to be sure that the criteria are being used correctly?
We don't expect to grow sunflowers from tomato seeds, so what are our checks and balances to ensure scholarships don't become discretionary accounts? And sometimes there are spendable accounts that don't get used at all. Perhaps this is due to overly restrictive criteria or simply human error, but what are we doing to remove the weeds that inhibit those funds from being used? After all, before we ask the same donors to invest more "seed" money into our organization, we need to be sure we're using the funding they've already provided AND using it correctly.
We can go on and on with analogies, but this should help paint a picture of why fund audits are a worthwhile investment. At the DRG Group, we joke that we put the "fun" in fund audits, but it's true. We uncover surplus funds, highlight potential legal issues with criteria, and celebrate the wins, such as having complete documentation for a majority of accounts.
If a complete fund audit seems too daunting for your organization, consider it in steps or phases. Start with a documentation check: do you have paperwork for each fund? If not, who at your organization might have it? Once you get it, be sure to store it in a centralized place. From there, you can compare criteria to awarding practices or start with a review of the criteria to ensure it is even possible or practical to use in the first place.
Just as we don’t expect blossoms from bulbs overnight, fund audits are not a source of instant gratification. However, they are an essential part of the lifecycle of our organization and a worthy investment of our time. If you're looking for help, let us do the work for you! Our team has partnered with many organizations to assess fund criteria and financial activity that resulted in flagging thousands of funds with untapped potential — representing millions of dollars of budgetary impact. We want to do this for you, too! Reach out to us at info@donorrelations.com to find out how we can help.
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