Each July you might see them at your nonprofit, copying documents, staring at a computer screen or hunched over a desk filled with stacks of invoices and receipts – the external auditors.
According to the Business Dictionary, auditors review records checking for:
- Compliance and use of
- Sound financial practices.
Similar to a financial audit, a Development Audit focuses on:
- Accuracy of record keeping and
- Existence of and compliance with policies and procedures such as gift acceptance.
But a Development Audit takes some important next steps, revealing information such as:
- Whether donor retention is increasing or decreasing
- Significant changes in fundraising income and potential causes of those changes
- Which fundraising methods continue to perform well and which may be losing momentum, e.g., identifying prospective bequest gift donors.
A Development Audit has the potential to provide short-term benefits such as:
- Decreasing the size of your mailing list while increasing the quality of prospective donors on that list.
- Identifying long-time loyal donors who you can begin to cultivate for major gifts.
- Reducing fundraising costs by discontinuing events which have low ROI and donor cultivation potential.
Some of the longer-term benefits of a Development Audit include:
- Identifying potential planned giving donors.
- Providing a template for ongoing annual review of fundraising performance.
- Giving you a new, informative perspective regarding fundraising activities versus revenue.
The Development Audit that Sophie Penney conducted for the CCWRC helped us identify patterns in giving, areas needing more attention, and who our most loyal donors are. All in all, an incredibly helpful process!
—Anne K. Ard, Executive Director, Centre County Women’s Resource Center