Why Is It So Important to Talk About GL Integration?
General Ledger Integration on Salesforce, Part 1
Hello there! My name is Alexandra. I am a Solution Engineer for Salesforce.org based in Chicago, Illinois. Welcome to my blog series about General Ledger integration on Salesforce!
I have spent my technology career specializing in nonprofits, and I love it. I’ve worked on both the CRM and Fund Accounting sides of the (donated) coin. My passion is helping organizations of all sizes use technology to become connected nonprofits that fuel greater mission impact.
One of the areas where I’ve focused my passion is General Ledger (GL) integration. I’ve heard so many customers say that GL integration is a big pain point in delivering their mission, but it doesn’t have to be that way! I’m very excited to share some tips and tricks here to make exchanging data between your CRM and GL Systems easier and more reliable. I’ve also incorporated how many of the industry-standard GL integration best practices can be performed on the Salesforce platform. I will be posting these articles as a series:
- 1. Why Is It So Important to Talk About GL Integration?
- 2. Nonprofit Accounting Basics
- 3. Anatomy of the General Ledger
- 4. Why is General Ledger Integration So Hard to Get Right?
- 5. What Does a Standard General Ledger Integration Look Like?
- 6. Entering & Designating a Gift
- 7. Posting to the Accounting System
- 8. Managing Adjustments
- 9. How to Integrate Your CRM & GL Systems
One quick note before we get started: While many of the foundational concepts about nonprofit financial management that will be addressed in this series apply globally to most types of nonprofit organizations, the accounting and regulatory principles discussed are intended for US-based audiences.
Why Is It So Important to Talk About GL Integration?
Let’s set the stage for why this topic of getting your revenue accounted for and recorded to your General Ledger properly matters. Often when a nonprofit engages with the public it is to tell its stories of impact and making the world a better place. We support your inspiring mission with financial donations so you can keep doing good. At the same time, a nonprofit also has to think about where that money goes and how it is handled, as well as provide a very high level of transparency to your constituents and the public at large so that you don’t put your organization’s very existence in jeopardy.
Whoa! That sounds serious. Well, it is.
The Importance of Transparency in the Modern Nonprofit Landscape
In exchange for providing a public good not otherwise provided by the government, qualifying nonprofit organizations recognized by the IRS under Rule 501(c) enjoy the benefit of federal tax-exempt status. That means they don’t have to pay certain taxes like a for-profit company does, and thereby enjoy significant cost savings. Now, in order to maintain that tax-exempt status nonprofits must comply with several IRS rules that generally prove the organization is spending their revenues on the charitable execution of their mission (and not on profiting any stakeholders). Failure to comply with IRS rules can result in losing your tax-exempt status, which could be a setback for a nonprofit’s mission.
But that transparency is important beyond just legal compliance. Nonprofits must also prove to donors that they are using our hard-earned donation dollars to do the good we are promised. If I don’t trust that you are going to use my $100 to actually feed hungry children, why would I write you a check? Donors expect that their money will be spent in strict accordance with the intended purpose. If a nonprofit breaks or fails to maintain that trust, there is a very high likelihood that donor will not be donating again.
So public trust is critical for nonprofits. Just like in any healthy relationship, transparency is the key to maintaining trust between nonprofits and their constituents. And how do you establish transparency? By accurately and reliably reporting the money you bring in to your General Ledger.
The Importance of Impact Reporting in the Modern Fundraising Landscape
There is another compelling reason for nonprofits to ensure they are accurately reporting incoming donations to their General Ledger. Organizations use the General Ledger to report on how much and from where every dollar came in, and how much and on what each dollar was spent. This allows nonprofits to tell a story of impact. “Here’s all the good we accomplished with the money you donated!” Telling compelling impact stories in the modern fundraising landscape is critical for nonprofits who, in the age of social media and information overload, are finding themselves having to compete for donor attention more than ever before. It’s no longer enough to simply claim, “We do good work, please support us!” Modern donors expect responsible, efficient spending that produces maximum impact. Said another way, nonprofits need to prove “ROM” — Return on Mission.
General Ledger integration is how nonprofits tell that story of impact and return on mission. The articles in this blog series will walk you through the nuts and bolts of how nonprofits use technology to get donations reliably and transparently recorded to the General Ledger.
To help us bring the journey to life, step into the world of Learning Empowerment (LE), an educational support nonprofit that provides support services to adult learners at 20 locations across 3 states. Meet the Learning Empowerment stakeholders who will take us through the journey of a donation:
Diane the Donor — Diane is a Dentist who is passionate about helping all people in her community succeed. Diane is a generous supporter of LE and expects to receive regular updates on the impact of her donations. She loves when LE’s weekly newsletter features a program graduate who is placed in a new job.
George the Gift Manager — As Gift Manager at LE, George oversees donation processing, ensuring that donations are entered correctly and prepares the donation posting file before it is imported to the finance system. George is often called upon by finance when they have a question about a transaction that is hard to reconcile, but ultimately George cares about the development team meeting their fundraising goals.
Anna the Accounting Manager — Anna oversees the accounting at LE, and is responsible for closing the books and preparing LE’s financial statement at the end of the month. Anna is great at her job because she is detail-oriented and is motivated to ensure there are no reconciliation issues before posting donations to the general ledger. Ultimately, Anna cares about producing accurate, reliable, and transparent financial statements.
If any of those terms (like “closing the books”) are unfamiliar to you, fear not! In the next article, I will explain common nonprofit accounting terms. If you’re already an accounting whiz, skip ahead and keep reading my blog posts in this series to get more insight on the best way to set up General Ledger integration using Salesforce.