Two options for tracking donations in NPSP
Salesforce’s Nonprofit Success Pack was built to be a flexible platform. However, sometimes it can be too flexible, allowing for multiple options that can make it hard to choose how best to use NPSP for a nonprofit organization. This is especially true around pledges.
While NPSP is not an accounting platform, Salesforce can track income including donations, payments, and pledges so its users have a more complete history of their donor accounts.
NPSP has several ways of dealing with pledges which we will review at a high level. Many nonprofits use two different NPSP Packages: the Recurring Donations Package and the Payments Package. Here is how to select which would be most appropriate for your nonprofit.
Your accounting system
First, to determine how to best handle pledges you’ll want to consider your accounting methods. Do you use an accrual method or cash method for your nonprofit’s accounting?
Once you know this, choosing an NPSP Package to fit your nonprofit’s needs will be easier.
Your NPSP Package options
You have two NPSP Package options. The first option is NPSP Recurring Donations. Organizations using the cash method accounting should use this package. The second is the NPSP Payments Package, which was originally designed for accrual method accounting needs.
Now we should say, while it's not really an option to install or choose one Package over the other (they both come with NPSP), it is a choice to use one of these Packages. We'll walk through the benefits or drawbacks of using each of these. Plus a few ideas to use them more effectively.
NPSP Recurring Donations Package
NPSP Recurring Donations was the first NPSP Package designed to help nonprofits handle pledges and installment payments. An example for this is used is when a donor would like to give $50 a month, with or without an end date.
Here’s how it works
The NPSP Recurring Donations object gives users basic data by providing documentation on the received or to be received donations in Salesforce. It also provides automation to easily create linked Opportunity records and rollup fields that summarize values from those linked Opportunities, showing how much a donor has given or long a donor has been giving.
A few concerns
There are a few concerns around the NPSP Recurring Donations Package:
1. It lacks some of the more helpful features of the other option, the NPSP Payments Package.
2. It will not track progress of fundraising efforts and, because of this, will provide less information on development efforts.
3. Out of the box, there will be some issues tracking recurring donations on records, so you will need to allow time and budget for configuration.
Here’s who it’s for
Despite these concerns, the Recurring Donations Package is the best choice for organizations that are using the cash method. Some organizations might also choose this approach as it creates less Payments records, lowering data storage amounts and costs.
NPSP Payments Package
The NPSP Payments Package was released after the Recurring Donations Package to provide better data tracking and separation of revenue and cash, a typical need of accrual-based accounting systems.
Here’s how it works
The Payments Package allows for more data around fundraising and donor behavior. It does this by adding more fields and picklists. This means development staff can more effectively track their efforts and engage donors who are regularly donating (or who are not).
A few concerns
While this package has great benefits, it can have drawbacks. The biggest drawback is the predetermined selections around new donations.
We’ll try not to get too technical but here’s what happens: when a donation is created, the picklist choice “Pledged” is automatically selected in the Opportunities Stage field. “Pledged” is considered “Open” (meaning the donation has not been received and is still “open”). Most rollups only look at records considered “Closed/Won” (meaning the donation has happened and is “closed”). This means new donations will not be included in some donation reports. To provide more accurate reporting, we suggest two options to fix this:
1. Change the picklist choice of “Pledged” to be a Type considered “Closed/Won”
2. Create two new choices of “Pledge Promised” (with a Type of “Open”) and “Pledge Committed” (with a Type of “Closed/Won”)
Here’s who it’s for
Any nonprofit with the accrual accounting method will want to use the Payments Package. While it needs slight modifications, it’s best for tracking revenue and cash. The added benefit of tracking donor behavior allows nonprofits to really get the most comprehensive view of their organization, which is what Salesforce is all about.
The quick breakdown
If your organization is using the cash accounting method you want to use NPSP Recurring Donations, as you’ll enter every payment into the accounting system. If your organization is using the accrual accounting method, you’ll want to use NPSP Payments so you only have one entry with the total donation amount in the accounting system. The general goal of using one of the two NPSP Packages for donations is to have the Opportunity object hold the amount that will be entered into accounting.
While Salesforce’s NPSP is not an accounting platform, it does need to work alongside accounting software and provide a complete donor record. With it being so flexible, there are multiple options for finding the best way to track donations within your organization. With modifications (and regular updates), your organization can make the most of NPSP.
If you think you need a full Quickbooks-Salesforce integration, we recommend starting with one of these packages, as it can be a far cheaper and more accessible way to track income in Salesforce.
Want to get technical?
This article is based on a longer, more technical article on the personal website of Idealist Consulting consultant Larry Bednar.
If you’re looking to learn more about NPSP, donations, or a custom Quickbooks-Salesforce integration, let’s connect.