DONATION and Fiscal Years

Hello again DONATION advisors.

I have been thinking about to what extent (if at all) I should add handling of fiscal years different from the calendar year into DONATION. I have always resisted this (and may still resist it!) because of my “Keep It Simple” philosophy for the program, not wanting to add too many complicating features that only a small minority of the users will want.

There are actually two different issues here, the first of which I definitely do not want to accommodate. That is for countries (such as England and Australia, as I understand it) where the receipting year is not the calendar year, e.g. you claim on your taxes the donations made between (say) April 1 of one year and March 31 of the next year, and so in theory receipts should also cover that period. I have just told users in those countries to handle that by issuing two receipts per year – one covering January 1 to March 31, and one covering April 1 to December 31. Handling this any other way would be an enormous complication that I just don’t want to get into, given that my major market is the U.S.A. and Canada, both of which have a tax receipting year that is the same as the calendar year.

The current offering for organizations in Canada and the U.S.A. with a fiscal year different from the calendar year is just a couple of reports, run through the Database -> SQL Select menu option, explained in a Support Forum post at http://forums.software4nonprofits.com/cgi-bin/fdsforum/gforum.cgi?post=2. One gives total donations by donor, within one fiscal year, and the other gives individual donation details, within one fiscal year. Both need to be hand edited to put in your specific years you are reporting on, and fiscal year start and end dates.

If I was to really build something into the program to handle fiscal years, some or all of the following changes would be needed:

  • Add a settable option (perhaps in Maintenance -> Main Window Options, though it doesn’t really affect the main window) for showing fiscal year options in the program, and specifying your fiscal year end’s month and day.
  • Add two or more fiscal year reports, based on those settings. I think they would start with ones like the two mentioned above, and perhaps also include one that gives donation totals by donation category, for the fiscal year, for use in reconciling with an accounting program’s data. (These might be in a new Reports -> Fiscal Year sub-menu.)
  • Add an option in Reports -> Custom Reports for reporting on one fiscal year. (See below for complexities about this, and the fiscal reports mentioned in the previous point, however.)
  • Possibly add two keywords for use in Database -> SQL Select (similar to the existing DONATION_FROM_DATE and DONATION_TO_DATE, which cause the report to prompt the user for a range of dates) that cause it to select the donations in the current fiscal year.
  • Possibly add options for the mail-merge letters, particularly the Total Donations information ones, to select a fiscal year to include in that letter, rather than all or part of the current calendar year.
  • Possibly add an option to have the Annual Pledge be considered to be for a fiscal year. (But if so, how or when does this get changed, when you pass the fiscal year end in the current calendar year?)

One thing that complicates all of this is the way I have chosen to store donor data, with a copy of each donor record being made for each calendar year. The advantage of this is that you can get rid of donors that are no longer with your organization / donating to your organization. The disadvantage is that currently, multi-year reports (such as Reports -> Donor -> Donation Info -> Sort by Amount) do not always accurately show all of the previous year’s donors, and thus don’t always have an accurate previous year total. (This happens when donors in the previous year have been deleted from, or never copied to, the current year. It can be fixed with the Database -> Copy Missing Donors menu option.)

This problem with reports is arguably not too terrible for the current multi-year reports (because presumably you are most interested in the current year, and looking back to see how much your current year donors gave in past years). However, it is really bad for fiscal year reports, that cover part of this year and part of last year, because they really cannot be considered to be accurate if they are missing some of last year’s donors that have been deleted in the current year! I would really have to build in a check for that being a potential problem, and prompt the user to use Copy Missing Donors to fix it before running those reports. (The check is this: are there any donors present in last year’s list of donors, who had donations last year, who are not present in this year’s list of donors.)

Another big problem with built-in fiscal year reports is the question of which fiscal year you are reporting on. Suppose your fiscal year end is May 30. If you are running fiscal year reports in June or later, how is the program supposed to know whether you want to report on the fiscal year that is just over, or the new one that has started? Would it have to prompt and ask the user, each time? Or only do that in the part of the calendar year that is after the fiscal year end?

I should note that when you are after your fiscal year end, currently you can already run correct reports for the current fiscal year, because you just select one of many available reports that prompt for a range of dates, and select from your fiscal year start up to the current date (or the calendar year end, whichever you prefer).

Also, there is an awkward (but accurate) way to get fiscal year reports now. Again, suppose your fiscal year end is May 30, and it’s currently June 2012, so you want a report on fiscal 2012 (June 1, 2011 to May 30, 2012.) Run a report in the 2012 year covering the 2nd part of the 2012 fiscal year (January 1 to May 30, 2012). Switch back to 2011 with Maintenance -> Change Year -> Previous Year, and run a report for the 1st part of the 2012 fiscal year (April 1 to December 31, 2011). Paste them together, and add up any totals, to get a complete fiscal year report. Of course, it may not be sorted appropriately! (You could export both to Excel, copy the data from one at the bottom of the data from the other, and re-sort them in Excel, if you wished.)

Another question I am asking myself is, if I were to add all of these features, would they be completely invisible until you make the setting in the Maintenance option that selects to use fiscal years and specifies your fiscal year end? Or would they be visible, but either inactive (greyed out), or active but give an error message explaining that if you want to use them, you need to make the appropriate Maintenance setting?

I would as usual appreciate any comments or thoughts you have on this, either as a Comment on the blog post, or by an email reply. Particularly for those of you who aren’t regular blog readers, to whom I have emailed a link to this blog posting because you asked me about fiscal year issues in the past – which of those features are “must haves”, and which just “nice to haves”? (Since some of you who asked me about fiscal year handling purchased the program despite the almost non-existing fiscal year support, I suppose I can conclude that none of them are “must haves”, but please tell me if that is incorrect!)

7 thoughts on “DONATION and Fiscal Years

  1. Perhaps you could request England and Australia to change to fiscal years that agree with calendar years. All kidding aside, I’m not interested. This would make testing very important before sending the program to your customers.

    • Thanks.

      I suspected most of my regular advisors would not be interested in this, so I have also forwarded the post to everyone that has written and asked me about fiscal years in the last year or so, asking for their comments.

  2. I agree with Robert. Sounds like allot of confusion to me. It was my first year generating tax receipts and reports and I found it very fast, simple and the most convenient yet. It only took me half a day, where before it would take at least 2 weeks and allot of headaches! I think generating 2 receipts really isn’t such a big deal. Or changing the program slightly to prompt for a date range wouldn’t be so bad depending on the complexity of what it would take for programming and testing. I do like the fact that we don’t have to carry forward years of dead (sorry for the pun) documentation that just ends up cluttering software and leads to problems with reports, etc. I agree with you, Dan, keep it simple! That’s what I like about DONATION.

  3. Dan:
    I also do not see a huge need for the use of a fiscal year in a program which produces receipts so easily. However, I am in canada and as you indicated the need for receipts is on an annual calendar year for tax reporting purposes.
    I do have a client using Donation which operates on a different fiscal year and they have never requested a different reporting period. At the most I could see them needing a report of totals and these are readily available in the current set of reports. Sure it takes two reports, two different year’s database but still relatively siple and easy to accomplish.

  4. Pingback: DONATION version 3.42 beta: Fiscal Year Reports « Software4Nonprofits Blog

  5. The need for fiscal year reports for pledge tracking is important but the work around stated above is not worth it. While we have to report our tax reports by calendar year the fiscal year reports are needed for pledging purposes. Cutting and pasting for 100+ giving units is a lot of work. While using another software product for fiscal year may be a solution that software does not have the ability to summarize by category which your software does a great job with. For now it seems that the best solution is to summarize the information in excel and let them ask for detail only if they really need it.

    • Unfortunately it would be a big effort to add pledging by fiscal year, because potentially during one calendar year, two different pledges would be active – the one for the fiscal year that ends during that calendar year, and the one for the fiscal year that starts during that calendar year. Because DONATION currently only allows for one pledge per fiscal year, changing this would be extremely complex on my end, and I think could seriously complicate the use of pledging for other users who didn’t need that complication.

      Having said that, it might not be too hard to allow pledge mail merge letters to be created for fiscal years, based on the single pledge entered for the calendar year, but assuming it was for the fiscal year that ends during that calendar year. That might appear in a future upgrade, but I don’t think it will be in this next one.

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