Online Giving: Key Internal Control Considerations for Nonprofit Organizations

Online Giving

Written by Rachel Burrow

March 30, 2021

Accepting online donations can be a great way for nonprofit organizations to grow their donor participation and tap into geographic areas they normally wouldn’t reach. For organizations expanding their online giving options, ensure the factors covered in this article are considered ahead of time to prevent any problems with the process down the road.

Regulatory Requirements

Many states require that nonprofit organizations register with the state before they are allowed to solicit donations from the residents. Before offering this application as a service to donors, it is important to ensure the organization meets all of the applicable requirements. Some types of organizations may be excluded from these registration requirements, but verifying this upfront will prevent any potential issues in the future. State government websites can be used to check on these requirements. The National Association of State Charity Officials (NASCO) conducted the Survey of State Laws Governing Registration of Charities in May 2020. This is a good summary resource for various state reporting requirements.

Procedures and Internal Controls

Internal procedures and controls should also be updated to include factors that pertain specifically to online giving. These key questions and insights should be evaluated:
  • Does the organization have a reconciliation process in place to ensure the online gifts are properly deposited? Staff may need to be trained on how to properly reconcile online giving accounts.
  • How is the organization going to ensure that donor restrictions are followed for online gifts? This should be detailed in the reconciliation process as well, and it should include the system that will be used for tracking the restricted online gifts and the related spending that occurs each year.
  • Do segregation of duties or IT controls need to be updated? Work with the internal IT team to verify there are no other security controls that should be put in place and that there won’t be any issues with the communication of the online gifts with the internal software. To ensure proper segregation of duties, take a look at the people involved in the cash receipts process to determine if additional staff need to be included.

Please contact your Hawkins Ash CPAs representative if you have questions related to receiving online donor gifts.

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Rachel Burrow
As an audit manager in the firm’s La Crosse, WI, office, I provide audit services for commercial entities, nonprofit organizations and employee benefit plans.

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