Good administration is like developing good health habits

Very few of us would say that the purpose of our lives is to be healthy people. Even if we hold this as a high value, we would concede that it is not the sole purpose of our lives. Our physical health is simply a means to keep our bodies and minds sharp enough to do the things that are really important to us – work for a cause we love, spend time with the people we love, play the way we enjoy.
I see strong organizational administration the same way. Chances are, you aren’t starting a church so you can sit at a computer and track donor records. Nor did you feel the drive to start a nonprofit so that you could reconcile bank accounts and review budgets. But if those things are neglected, it’s going to be a challenge to so the things you really want to do – serve the people you love in a way that is not stressed out. Honor your donors with an accounting of how you’ve spent their money. Have accurate records to be able to obtain a grant to better serve those you love. 
Here are a few tips that will help keep your organization in shape and healthy:

  1. Be creative in tracking those receipts. Having trouble keeping track of those little bits of paper? Snap a picture with your smart phone and email it to yourself. If it was a business meal, jot down in the email who was with you and the purpose of the meeting for IRS purposes. When you are working on your inbox, save these files by date and you develop a digital record of the expense.
  2. Avoid debit cards. I know, they are so convenient. They are also dangerous for a small nonprofit. It’s too easy to lose track of how much money you have a bounce a check or overdraw the account. Instead, find a free credit card to get in your name. One with rewards points works great. Use it exclusively for organizational expenses and at the end of the month, fill out a simple expense report and reimburse yourself. It helps keep you accountable for turning in receipts, you reap the card benefits and it avoids over-taxing your bank account.
  3. Discipline yourself to do a monthly review. Set aside just an hour or two each month and force yourself to look at the numbers. If you have someone to format a report for you, look at it and compare it to your budget numbers. Even if you just look at a Year to Date Profit and Loss to check that net income number, you will be able to get a broad sense of the health of your organization. This is important!

Of course, the Church Network Hub can help you with all these things as well as be like that fitness trainer – bugging you to stay on track with your “workout schedule” and motivating you to stay on target so you can do what you really love. 

Client Story – Rock Bible Church

I met Scott Berglin in a living room in San Francisco. He had been working for churches for a while and was now feeling called to plant a church in his hometown of Pleasanton, CA. He had the passion and a core of committed people, but wasn’t sure where to start. Linda Bergquist, church planting strategist with his denomination, coached him through the starting process. It was several months later when he called me again, but at that point it was a go!

They officially launched on October 10, 2010. With the Church Network Hub, I got to walk him through his incorporation, filing with the state to be tax exempt, getting his systems in place to track donors, bills, etc. Eventually, the church was given an unused building near downtown, opening up an entire second set of issues with insurance, utilities, etc. They have added two new staff and the Hub has been there to develop the job descriptions and walk through the paperwork. They’ve also implemented a membership database system that helps their members interact more and integrate giving records with the rest of their membership system.

By working behind the scenes, I feel a part of what God is doing in Pleasanton. I’ve confronted new challenges with them and celebrated the ways God has provided. It certainly isn’t the same as being on staff with the church or part of it, but each time I’m posting donor records and praying for those members I feel as if I am a small part. This is the joy I get from this work. The Kingdom wins!

Donor relations – Why details are so important

I always encourage the organizations I work with to be especially mindful of details and record-keeping when it comes to donors. No church or nonprofit could operate without donors that contribute to cover the expenses of your organization. They give of what they have worked hard and been blessed with to bless others. Many of the people that give to your church or nonprofit are friends, family and co-laborers. They give because they believe in what you do and want to see the work continue. Here are some ways you can make sure your donors feel honored and a part of what you are doing:

  1. Send receipts often. Whatever your tracking system, there should be a simple way to send an email receipt with the proper IRS language and a thank you for each donation. This gives the donor peace of mind that his/her donation has been received and tracked.
  2. Consider quarterly mailings. Everyone likes to feel thanked and an intimate part of what you do. Consider sending out paper letter at the end of each quarter totaling their giving and telling a story about how their money furthered kingdom work. If you are working hard and using the funds wisely, you should be able to point to some real fruit born from what your organization is doing. Share the hard stuff too – people who donate to you care and believe in what you are doing so don’t be afraid to tell them what’s a challenge.
  3. Keep accurate records. Make sure you have processes in place to verify that all the money put in the bank has donor information attached to it. This way, your end-of-year receipts will be accurate. Having a mistake on your annual donation statement breaks trust with your donor and sews that seed of doubt that his or her money is being used well.
  4. Make sure your status with the state registry is up to date and accurate. Each state has a department that tracks charities. There are various laws in place that require registry in some cases. Some donors, especially large ones, will check to see if your organization is registered. Make sure you are in compliance to show that you are a solid organization.

As a side note, end-year-statements are not required by the IRS. But you are required to keep records of all donations and provide receipts upon request with the appropriate language to enable the donor to claim it as a tax deduction if he or she chooses. They are customary and encouraged and definitely improve donor relations and perceptions of your organization. 

Getting your new church or nonprofit off on the right foot with administration

Forming a new organization is a big task and the steps can seem like a crazy maze. To help you through that process, we’ve developed a checklist. Not all these items apply to every church or organization, but they are a good starting point. (see the attached PDF file)

In addition, there are some common mistakes everyone can fall into when forming a church or nonprofit:

Understanding the difference between articles, EIN, nonprofit status, etc. If you haven’t started a company or something similar before, the basic vocabulary can be daunting. Here’s a little guide:

  1. Articles of Incorporation These are filed with the state you operate in and form the basic legal existence for your organization. Some people use an attorney or legal service to do this, which can be helpful, but not necessary. The Secretary of States’ website usually has samples and clear instructions. Just make sure you file as they type of entity you want to be – usually a nonprofit or nonprofit religious organization.
  2. Your EIN or TIN Your Employer Identification Number or Taxpayer Identification Number is obtained from the IRS. This is like your Social Security number for your organization and can be done online at It’s important to make sure your articles have been approved and that you file the name EXACTLY as it is on our articles. It will ask you to indicate what type of organization you are and church or nonprofit is an option. There is no such thing as a nonprofit number for individual organizations (church associations sometimes get a group number so they can grant tax exempt status to their member churches).
  3. Tax exempt versus nonprofit once you have done these things, and have bylaws, you are officially a nonprofit. But you are not tax exempt. For that, you will need to file the IRS 1023 application which can be found on the website. Some will use an attorney for this but if funds are tight, the application can be reasonably navigated by a detail-oriented person.

Establish donor tracking and record keeping early. Keep every receipt, record every donation and check the IRS website for the required receipt language. Take small steps each week towards implementing an efficient system that serves your needs and keeps you compliant without too many headaches.