How to handle cash transactions in a Not-For-Profit environmentSeptember 28, 2018
Without the proper controls in place, accepting cash donations can pose a serious risk for your organization. Learn what you should do to ensure that every penny earned is used to further your mission.
Donations of any kind are a key source of revenue for most not-for-profit organizations and greatly welcomed in any form such as in-kind services, discounts on services, stock donations and cash. Accepting cash donations, however, can create additional risk within an organization and requires additional controls to be in place to ensure that every penny earned is used to further the mission of the organization.
The trouble with cash donations
While most contributions may come in the form of a check or credit card, cash donations are received as well (typically at fundraising events). This adds additional risk, as the controls in place at your office, may be difficult to carry out at an outside location such as a golf tournament, walk or bake sale.
But with the proper controls in place for these situations you can greatly mitigate the risk associated with cash donations.
Handling cash….first things first
Implementing proper internal controls and enforcing those controls are crucial to having a secure cash handling policy. By teaching all employees and volunteers the proper controls over cash you create a foundation of trust among your organization that allows for transparency and accuracy.
So what do you do if your organization collects cash, but you do not have adequate controls in place to collect, record and deposit cash?
First you want to identify the different occasions in which you collect cash within your organization and walkthrough a typical transaction to determine how cash flows from your donor to your checkbook. By documenting the process you can now begin to analyze the transaction to identify areas of weakness and controls that could be implemented.
Controls are Key- Having the proper system of checks and balances will reduce the risks associated with improper handling of cash.
If you received cash donations at a fundraising event here are a few controls to implement:
- Provide receipts for all cash collections;
- Always have two employees involved in cash collection;
- Limit the number of employees who have access to cash;
- Use a locked drop safe for all cash collections;
- Reconcile cash boxes at the beginning and end of the event and have employees/volunteers take responsibility for all cash transactions;
- Reconcile tickets or items sold to cash receipts at the end of the event;
- Cash receipts should be deposited daily, by someone other than the person collecting the cash.
Once in place controls over cash handling procedures allow your organization to focus on your mission and those in the community that you serve on a daily basis. Have further questions? Let’s connect. Contact me or any member of our Not-for-Profit Services Team today!