Three options for managing data between your CRM and accounting system

When working with prospective clients, I am frequently asked what accounting or financial features our CRM (Constituent Relationship Management) software provides. It is understandable that an organization would want to consolidate as many systems as possible, especially when nonprofits are continuously asked to do more with less. It is important to understand, however, that a CRM is not an accounting system and should not replace your accounting system.

The primary purpose of a CRM is to help an organization track and manage their relationships with their constituents. It’s true, tracking donations is a significant part of these relationships, but there is more to it. It is likely that you’re also recording things like volunteer participation, event attendance, and contact and correspondence notes – likely all things your accounting department worries little about. On the other hand, your accounting system is your organization’s general ledger, tracking things like payables, receivables, payroll and depreciation.

Instead of trying to do two roles with one system, think about how you can manage your internal data entry procedures to streamline the process.

Three data entry methods to help you determine which is the best fit for your organization.

• Double Entry – For organizations with a relatively small number of donations on a daily basis, entering all of the transaction data into both your CRM and accounting system should be feasible. With the same information in both systems, this method allows you to easily reconcile your data and locate and correct any data entry errors. If your CRM shows a $50 donation for Sally Smith but your accounting system reports a $500 donation for Sally, you can simply refer to your hard copy donation records to determine which is correct.
• Lump Sum Entry – If double entry is taking up too much time, consider using lump sum entry. With this method, detailed transaction data is entered into the CRM while lump sum data is entered into the accounting system. You will want to work with your accountant to determine how you will lump together gifts. This method still allows for fairly simple reconciliation of the data, but may take a little longer to locate specific data entry errors.
• Data Export & Import – A third option is to export your donation data from your CRM and upload into your accounting system. If your accounting system does not accept standard file formats, a quick search online will return a number of tools to help you convert your files into an accepted format. While this method could save you a considerable amount of time, especially if you enter large quantities of donations per day, this does make locating data entry errors more difficult as the error will be present in both the CRM and accounting system.

In determining which procedure is right for your organization, find out what tools are available in your CRM to help make the process as seamless as possible. If built in fundraising reports are not included in your system, create a custom report that can be used to easily view your most recent gifts or a summary of your fundraising campaigns over a given time period. Most CRMs also allow you to designate a fund or accounting code to your gift entries. I strongly encourage you to create a chart of accounts for your organizations that will be used by both your accounting and development departments.

Make sure to sit down with your development and accounting teams and determine which information is necessary to have in each system, and develop a process for data entry. Not only will this save you time, it will create a system of checks and balances to ensure the accuracy of your data.