For over 20 years, I’ve been working with nonprofits (mostly churches). I’ve been doing this so long I’ve started assuming that everyone knows the basics of internal controls. That’s obviously wrong. There are always new people just starting to work for churches. It’s not like you automatically get the knowledge as soon as you accept the responsibility.
In the video, I just go over the process really quickly on how I handle deposits for a small nonprofit. In this blog post, I’m giving you four guiding principles:
#1 – Never count cash alone
I remember once attending a workshop on Fraud Auditing. The main thing that stuck with me is that, while there are some people looking for any opportunity to steal and others who will never steal, the vast majority of people will steal if given the opportunity, some outside pressure, and are able to justify their actions. If you have a volunteer that is expected to count the cash alone…and is hungry but forgot their wallet at home, would it be okay to borrow $20 from the offering to buy lunch if you intend to pay it back next week? This is the kind of situation that can lead to someone stealing, because, once you do something once, it becomes so much easier to do it again and again and again.
#2 – Count everything twice
Like the old adage, “Measure twice, cut once.” It is pretty easy to make a mistake county. If you have two counters, have each person count the money and checks. If you just have checks and are counting it by yourself, add up the total real quick and then double check that you get the same amount when you fill out the deposit slip or enter into the donor system. If you count only once, you will be making a lot more corrections and journal entries.
#3 – Leave a paper trail
You might be doing everything correctly…two counters counting everything twice. You might also just be saying you are doing everything correctly. The written record is what counts. I have a couple of templates for Counter Sheets below. You document both the count and the counters.
#4 – Keep it safe
The offering or deposit needs to be in a secure place, ideally a safe or locked drawer, until it is ready to be counted, recorded, and deposited. The safest place is the bank. Do you have to run every check to the bank immediately when you receive it? I’ve worked for some smaller nonprofits that maybe get two or three checks per week. I recommend making at least weekly deposits. This sets a good rhythm for your work plus reduces the risk of a gift getting misplaced or forgotten.
- Counter Form (detailed version): https://jctaccounting.com/wp-content/uploads/2023/10/Counter_Sheet.xlsx
- Counter Form (short version): https://jctaccounting.com/wp-content/uploads/2023/10/Offering_Recorder.xlsx
- Judy’s TenKey: https://www.judysapps.com/TenKey.htm
- Planning Center: https://www.planningcenter.com/
- Check Stamp: https://www.excelmark.com/products/self-inking-1848