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Team Welter

Oct 20
0

The Rules About Multi-State Charitable Solicitations Might Surprise You

By | Fundraising, Nonprofit | No Comments

Most nonprofits understand the basics of corporate registration within their state. They register in their desired legal format and learn the rules (and ropes) of compliance with their state’s corporate commission, employment commission, and so on. Then they begin the work to fulfill their mission and, of course, to do so, they need to make some margin. So up goes the “Donate” button on their website and…

They may have already violated several rules about charitable solicitations.

What?! Yes, it’s true. Just as your state’s corporate commission regulates the rules that guide your nonprofit, so too do the rules of each of the 50 United States guide charitable solicitations within that state.

person at computer with mobile devices and large CHARITY overlay. Multi-State Charitable Solicitations

Problems arise, however, in this age of the internet, when nonprofits unwittingly violate state laws by allowing cross-state donations. The laws for each state vary considerably, and although you might think they’d all get together and come up with a reciprocal agreement to make life easier for nonprofits, they haven’t yet found a way to do this.

Instead, your organization must make it a point to do your homework and register with each state when required. Here, we’ve put together a brief guide to what you need to do, but you should also make an appointment with Welter Consulting to get expert insight and compliance guidance.

When Do You Need to Register in Other States?

We mentioned the “Donate” button on a website, and that really gets to the heart of the matter: when to register is dictated by your fundraising activities.

If you run a local charity that only solicits donations from within your state, you may not need to register. Fundraising activities conducted solely within your state such as a local bake sale, car wash, or mailed solicitations to state-specific zip codes might be fine.

However, once you put that button on your website, theoretically you could collect donations from people in other states. And that opens up the can of worms known as “possibly need state registration, but not always.”

I wish it were crystal clear, but it’s not. Each state has its own tangled web of requirements. Some waive the need to register for nonprofits of a certain size, or donations of under a certain threshold. Others have reciprocal arrangements, meaning if you’re registered in one state, it’s fine to solicit donations in their state. And, as we’ve stated, every state is different, with its own unique set of requirements.

How to Be Safe Rather Than Sorry

Well, you could restrict your fundraising activities to within your state, but that would also restrict your ability to grow. A better option is to work with a consultant, or a professional service provider, to help you navigate the labyrinth of fundraising laws by state.

Hiring a professional to navigate state donation rules protects a nonprofit from costly compliance mistakes and ensures it can legally fundraise across state lines without interruption. Because each state has its own registration requirements, renewal deadlines, fees, and mandated disclosure language, managing them internally can quickly overwhelm small teams. A professional service organization streamlines the entire process, handling filings, monitoring changes in regulations, and keeping donation pages compliant, so the nonprofit can focus on mission and fundraising rather than paperwork and legal risk.

Having an experienced consultant helps you navigate these waters is essential for full transparency and compliance. It’s better to do so proactively than to get a “love note” from a state attorney general’s office or the secretary of state and a big fine to boot. This is where an ounce of prevention is definitely worth a pound of cure, and registering with the proper states a smart move. A consultant can help you take care of this upfront and avoid the hassle and headache of problems later.

Welter Consulting

Welter Consulting bridges people and technology together for effective solutions for nonprofit organizations. We offer software and services that can help you with your accounting needs. Please contact us for more information.

Oct 15
0

Strengthen Board Financial Oversight with These Tips

By | Accounting, Nonprofit | No Comments

Nonprofit boards serve several purposes. Among their responsibilities is financial oversight. This doesn’t mean that they are hands-on with the bookkeeping. Instead, it means reviewing and shepherding the organization so that it adheres to sound financial best practices that support achieving its mission. If you’re confused about what this means, or you’d like to steer your board towards productive conversations around finance, the following tips will help you strengthen your board’s financial oversight to your organization’s benefit.

What Does a Nonprofit Board Do in Terms of Financial Oversight?

Nonprofit board meeting with speaker and 4 attendees. Financial oversight meeting.

Nonprofits boards focus on specific tasks when it comes to financial oversight. They should be well-briefed on the organization’s financial position, review major financial investments and decisions, and approve or halt them if they feel they aren’t a good fit for the organization. They serve as trusted stewards and advisors who keep one experienced eye on the mission and the other on the margin it takes to achieve the mission.

What they are not is hands-on financial help. A board’s financial oversight duties do not extend to working directly on any accounts, systems, payroll, or finances. Review them, yes. Guide and advise, yes. But actually, performing bookkeeping functions, writing checks, or handling money is not within the scope of their duties.

Financial Oversight: The Board as Wise Advisors

Healthy nonprofits treat their boards like the wise advisors they are (or should be). They regularly share financial information with their boards, including but not limited to:

  • Budgets and budgets versus actual
  • Cash flow statements
  • Statement of financial position
  • Restricted fund information and updates
  • Overall financial dashboards, reports, and plans

Of course, this list is just a suggestion. Your organization may wish to share different information with your board, and that’s fine. As for how often to share it, the answer depends. If your organization is growing rapidly, you may wish to share information frequently. Mature organizations may have a quarterly, biannual, or annual cadence, whatever works best.

Tips for Getting the Most from Your Board’s Financial Oversight

The members of your board should have extensive experience they share to help your organization thrive. To get the most of their knowledge, talent, and experience, use these tips.

  1. Set expectations from the start: New board members should be briefed on their role. Learn about any special expertise they may have, too, that you can tap into. Set the expectations right from the get-go so everyone is clear on what financial oversight means at your organization and what you hope to achieve by partnering with your board on this important responsibility.
  2. Create a finance committee: Let’s face it: not everyone on your board has the experience or interest in finance you may hope for. A subcommittee dedicated to financial oversight may work better for some boards so that people on the committee can focus on finances while others focus on operations, talent management, mission, or other important activities.
  3. Offer training: It may also be helpful to offer training to your board on how to read financial statements. Your CFO, treasurer, or accounting team leader should work with the board to ensure they truly understand how to read and interpret key financial information.
  4. Make financial conversations about impact and strategy: Try to keep financial conversations with your board focused on the impact the organization has as well as its strategy for using money effectively to achieve its mission.
  5. Maintain good lines of communication: No matter whether you work with a portion of your board or the entire board on financial oversight, always maintain open communication with them.

Organizations can live or die by their financial state, and many a nonprofit that was doing great work closed its doors due to poor financial management. Conversely, with good financial oversight and advice, and a board that supports you, your organization will thrive.

Welter Consulting

Welter Consulting bridges people and technology together for effective solutions for nonprofit organizations. We offer software and services that can help you with your accounting needs. Please contact us for more information.

Oct 13
0

Not Just Nice to Have, But Absolutely Essential: Grant Management Best Practices

By | Accounting, Accounting Software, MIP Fund Accounting, Nonprofit | No Comments

There are three things you absolutely must do (and do right!) if you manage grant funds. Nonprofits that rely upon grant funding should have best practices and good software in place to help manage grant funds and activities. Without these in place, you run the risk of compliance issues that range from an expensive mistake to losing your nonprofit status. Let’s take a look at the three things you must do to properly manage grant funds and talk about efficient ways to ensure compliance.

Grant Funds Differ from Donations

woman standing in front of table with several information boards behind it. Grant Management

Not all funds are created equal. Although both grant funds and donations may come to your nonprofit, these funds come with different stipulations, and as such, must be treated differently.

Grant funds differ from general donations in several important ways, and those differences shape how nonprofits must manage them. Grants are typically restricted, meaning the money must be spent exactly as the funder specifies: on certain activities, within certain time frames, and under specific rules.

Donations, on the other hand, are often unrestricted, allowing organizations to use them for whatever best supports the mission, from salaries and rent to emergencies or overhead. Because of this, restricted grant dollars require careful tracking, documentation, and reporting, while unrestricted donations offer flexibility.

Grants also come with formal agreements, including contracts, budgets, reporting obligations, compliance requirements, and sometimes audit rights. A typical donation rarely involves more than a thank‑you letter and a tax receipt. This means grants create legal and financial responsibilities, whereas donations primarily create stewardship responsibilities. Grants require detailed reporting—financial statements, outcome data, narrative updates, and proof that spending aligns with the approved budget. Donations simply require acknowledgment and relationship-building through updates or annual summaries.

Finally, grants often prohibit certain expenses, such as food, lobbying, capital purchases, or indirect costs above a set rate, while donations generally allow any mission-supporting use. In short, grant compliance is about staying within strict boundaries, while donations give nonprofits room to maneuver.

Three Grant Fund Management Best Practices

  1. Track every restricted dollar in true fund accounting
  2. Keep one compliance calendar for every funder deadline
  3. Connect grant spending to program outcomes before the report is due

Given these key differences between grants and donations, it comes as no surprise that managing grants comes with a specific set of guidelines, too. These include tracking every restricted dollar in true fund accounting, keeping a compliance calendar, and connecting grant spending to program outcomes. Please note that there are more best practices when it comes to grants – we’re just covering three of them. If you’d like to learn more, AlignMint offers a longer guide with other best practices to note.

1.   Tracking Restricted Dollars in True Fund Accounting

Because grants are restricted dollars, they must be used towards the specific program associated with the grant. You need to know, at all times, exactly how much you’ve spent and how much remains. To do this, you must use true fund accounting. True fund accounting tracks dollars against a specific fund rather than in general categories. Each grant is treated like a mini budget or “fund.”

Why this matters: If you can’t provide an accurate report to funders about how their money was spent, not only are you at risk of losing funding, you are also at grave risk of losing both the funder’s trust and the public’s trust. Grants are awarded based upon specific criteria, and the money must be put towards a stated purpose. True fund accounting enables both your organization and the grantor to see exactly how the funds were used and for what purpose, giving clarity and insight into how well they met their stated purpose.

2. Maintain a Fund Compliance Calendar

Grant compliance often involves multiple time-sensitive tasks. To ensure you maintain compliance, it is vital to keep a calendar of key dates for specific grants.

Every grant has deadlines: reports, site visits, audits, reimbursement requests, renewal dates, data submissions. Instead of tracking these in scattered emails, spreadsheets, or staff memory, you maintain a single shared calendar.

This calendar should include:

  • Due dates
  • Required documents
  • Who is responsible
  • Reminders well before deadlines

Why it matters: You worked hard to secure the grant. A simple slip up, like failing to submit the required documents on time to maintain it, may be all it takes to lose it. A calendar is the simplest way to track everything that matters to maintain grant compliance.

3. Connect Grant Spending to Program Outcomes

This one should be obvious, but you’d be surprised at how often it is overlooked: before spending one penny of a grant, ensure that you’ve mapped specific program outcomes to every dollar you intend to spend.

Nonprofits who skip this step often scramble at the last minute to connect the dots, and that’s a shame. There’s no need for a “funding fire drill” when preplanning and preparation can prepare you for success.

Grants are performance-based. Funders want to see that dollars produced results. By establishing goals before spending grant funds, you’ll be able to regularly compare what you’ve presented, the outcomes you’ve achieved, and what you’ve promised in the grant. And, doing this throughout the grant period (rather than at the last minute) helps you catch any gaps early. For example, spending may be on track, but outcomes are lagging. If you’re tracking it in real time, you’re able to see this gap early and take steps to close it. You can also adjust activities before reporting and produce better reports.

Why this matters: Funders care about impact. When you can clearly show how money turned into outcomes, you strengthen your credibility and future funding chances.

New to True Fund Accounting? Welter Consulting Can Help

To manage grants effectively, organizations need to know exactly how much of each award has been spent and how much remains at any given moment. Because grant dollars are typically restricted for specific purposes, true fund accounting is essential. This means treating each grant as its own mini‑budget rather than lumping all revenue together. Solutions like MIP Fund Accounting, Araize FastFund, and Sage Intacct are designed specifically for nonprofits and provide the structure needed to track restricted dollars accurately, prevent overspending or underspending, and ensure every expense is charged to the correct grant. With this level of clarity, organizations can quickly answer funder questions, stay compliant, and maintain the trust that future funding depends on.

There are many grant management software platforms available that help nonprofits strengthen these best practices, streamline grant tracking, and simplify reporting. If you’d like guidance on choosing the right tools for your organization’s needs, Welter Consulting can help you evaluate options and get you connected with the solutions that fit your structure, size, and goals.

Welter Consulting

Welter Consulting bridges people and technology together for effective solutions for nonprofit organizations. We offer software and services that can help you with your accounting needs. Please contact us for more information.

Sep 18
0

The Importance of Data Hygiene for Fundraising and AI Readiness

By | Fundraising, Nonprofit | No Comments

The term “data hygiene” conjures up images of scrub brushes and soapy bubbles for me. In fact, the term does mean scrubbing or cleaning data. Data hygiene is the bedrock of fundraising and donor activities. Without accurate, clean data, you are likely wasting time, money, and effort. And, if you’re planning on adopting any of the many AI-based tools to help you with fundraising, they absolutely need accurate and clean data to get the best results.

Yet we can probably lay odds on the fact that few, if any, nonprofits are thinking about it. It’s like data gets entered into the system and then forgotten.

mini-people scrubbing the inside of a computer

If your organization is like most, many people enter data into your fundraising systems. Accounting, finance, marketing, operations, and program leaders all add names, addresses, and contact information to the system.

Unfortunately, over time, people make mistakes. They fail to follow consistent naming and abbreviation conventions, for example, which leads to Susan Smith at 123 State Street being entered into the system as S. Smith, Sue Smith, and Susan Smith—and her address as 123 State St. and 123 State Street. In this simple example, Susan could have multiple listings in your database. That can lead to costly wasted contacts, especially if you use direct mail alongside digital marketing for your fundraising efforts.

Add AI into the mix, and you can see the problems compounding in missed opportunities, exhausted donor lists, and inaccurate reports.

Data Hygiene Is Everyone’s Job

Smart nonprofits don’t rely on a single person to ensure they have clean data. They treat data hygiene as everyone’s job. The best way to get started if your data is, well, a bit dusty, is to form a team to work on the problem. That doesn’t mean the team has to actually do the data cleansing, just help organize it. There are companies that can help you update and clean data (we’ll get to that in a bit).

Leadership should organize a team or committee with representatives from each department to begin the process of consolidating and cleaning the organization’s data. This team gets the ball rolling. Once the data cleaning is underway, a smaller subsection of the team can continue to monitor, manage, and maintain the data standards for the organization. It’s kind of like doing a deep cleaning or spring cleaning and then weekly dusting. The initial work of the committee will be deep cleaning, and the smaller subset continues with the data version of dusting and maintenance.

The Data Dictionary Is Your Friend

A data dictionary is an invaluable tool. It’s a set of standards or guidelines that tells anyone entering data what should be collected and how it should be entered into the system. The data team or a subset of the larger team can create the organization’s data dictionary.

The data dictionary, for example, would indicate whether Susan Smith’s address should be entered as “123 State St” or “123 State Street.”  While such decisions may seem trivial, imagine that Susan Smith is entered twice into the database under “State St.” and “State Street.” Now, multiply that by 10, 100 times, and you’ll see how quickly a small, seemingly inconsequential mistake can add up to many hundreds of errors in a database.

Once decisions have been made for each major piece of data the organization collects, the data dictionary can guide both new data entry and cleaning up old data.

Inventory Your Existing Databases and Spreadsheets

Next, to fully clean old data, you need to know what you are working with. This means taking an inventory and collecting all potential data sources in your organization. At first, you may assume that data only exists in recognized organization wide databases, such as the marketing department’s fundraising database or the accounting department’s system. However, the data team should go back to their respective departments and ask each individual for any data they collect. You may be shocked at how many people maintain their own spreadsheets apart from the company’s official databases. These spreadsheets may be rife with errors, outdated information, or duplicate records.

When taking an inventory of data sources, ask each person:

  1. What do you use this database or spreadsheet for?
  2. Who adds new information?
  3. Who updates it when something needs to be corrected, like a new email address?
  4. When was the last time you used it?

This exercise can be eye-opening on many levels. For example, one nonprofit found that several departments kept their own contact spreadsheets because they didn’t trust the information obtained by marketing. They felt that their spreadsheets were more accurate than the lists marketing acquired from a major list vendor! It took a while, but they were able to convince the department to give up their separate spreadsheet and use the main fundraising database once they proved that the contacts were indeed in the main database.

The Costs of Outdated Data, and the Benefits of Cleaning It

Many organizations have never conducted a data hygiene or cleaning effort, and if your organization is one of them, don’t despair. Even the messiest, oldest database can be fixed.

If it’s been a while since your database was cleaned, you may want to find a third-party company that performs list hygiene or database hygiene work. Such work usually takes several steps.

First, the company will ask for all the data sources to be cleaned. Next, they will ask for your data dictionary or help you create one. The company will move all data sources into a standard format and compare their information to your database to remove old, outdated information. For example, if you rely on direct mail for fundraising, data companies can compare your data with published lists from the postal service of mail that has been forwarded or address changes. The National Change of Address (NCOA) system enables them to quickly update the list for you. They can also access lists of deceased people and remove them from your donor lists.

Good list scrubbing also includes flagging those pesky potential duplicates and sending them back to the team to manually check them. The company should flag all the possible permutations of Susan Smith (using our example) and send them to a human being to check. Then, your team or a member of your team can indicate which one should be used, and you can retire the duplicates.

Is it worth scrubbing a list clean like this using an outside company? One nonprofit conducted this exercise and saved over $100,000 on postage, printing, and mailing costs by removing duplicate records. They were so pleased with the cost savings, they used a fraction of that amount each quarter moving forward to continually update and cleanse their data, helping to stop unnecessary expenses.

AI Requires Clean Data

As more and more fundraising systems incorporate AI into their platforms, nonprofits are finding that the old adage, “Garbage in, garbage out,” is very true. AI inputs rely upon clean data. If the data is stale, outdated, duplicative, or incorrect, you’ll waste money, time, and effort. AI accelerates marketing, the good and the bad.

But just as garbage in, garbage out holds true, the converse is equally true: good in, good out. When you clean your data, AI can then use it efficiently, improving fundraising through personalization, customization, and better reports.

It all starts with clean data and data hygiene best practices. If you need help getting started, or you feel overwhelmed by the number of data sources that need to be fixed, we can help guide you in the right direction to get started.

Welter Consulting

Welter Consulting bridges people and technology together for effective solutions for nonprofit organizations. We offer software and services that can help you with your accounting needs. Please contact us for more information.