KELL LABS

NPSP Opportunities and Payments 101

Nonprofits starting with Salesforce and the Nonprofit Starter Pack (NPSP) can be very exciting. The functionality is amazing and the flexibility to store additional information on your constituents is something most “off the shelf” products cannot compete with. Oh the places we can store stuff!

Yet building a valuable fundraising system means ensuring that we’re not just recording data, but rather driving great decisions. Therefore, understanding the use of Opportunities and Payments is central to a decision-minded design. (Note: “Opportunities” and “Payments” are the default labels for these objects and can be renamed, so it’s possible your Salesforce instance uses something different.)

How do you track fundraising revenue? When do you celebrate success?

In Salesforce, Opportunities are meant to record inflows of money. And your organization wants to report on those inflows so that you can get an idea of how you’re doing. Having the reports fit your needs means that you’ve recorded the data in a way that enables those reports. Easy right? No sweat you say! Why go on? Well things are slightly more complicated with nonprofit accounting.

So let’s dive deeper.

While some organizations really care about when a gift was promised, others really care about when the money actually came in to your bank account. This difference is called accrual versus cash accounting. Accrual orgs want to secure the pledge while cash orgs want the moola in hand. Don’t zone out, I see your eyes glazing at the use of “Accrual”. Stay with me.

Now ask yourself “when do we really celebrate a gift”? How do we measure success? The answer to this question determines whether you’re using accrual vs. cash accounting.

Got it? Wunderbar.

Now let’s talk implications for Salesforce.

Opportunity FieldsIf you’re an accrual firm that tries to secure big pledges and major gifts, you’ll create an Opportunity with a stage that indicates you’re still working on it (with an “Open” value) and you will want to use the Opportunity Close Date field as the date that the promise is expected to be made (e.g. We expect that on 7/21 we’ll “win” the grant or receive the commitment from big donor X for the new funds). This is not the date that you will receive the money, it’s the date you expect to get the promise/commitment. Having these open opportunities is what allows you to forecast future revenue. When that promise is actually made you’ll update your Close Date to that day, and update the Opportunity Stage from an Open stage to a Closed/Won stage. Sticking with our example, instead of 7/21 the commitment letter is received on 7/27, so you change the closed date to 7/27. Remember, for accrual orgs, winning means securing a pledge, so it’s effectively closed and won when the pledge comes in.

On the other hand…

If your nonprofit reports on cash only, then you’ll want to use the Opportunity Close Date field as the date that you expect the cash to come in. You’ll keep updating it as you get a better idea of when the money should come in. And when it finally does, you’ll update the Close Date to that date, and update the Opportunity Stage from Open to Closed/Won. The difference here is that the Opportunity is not closed until the cash is received in your bank.

But what about Payments? Ok, let’s address this…

If you’re a pure cash or pure accrual org, caring only about promises or cash, then you won’t need to use the Payments object in the NPSP, you’ll just record your pledges or gifts as Opportunities. Make sense?

But what if you want to record both the pledge and the collection story? Many nonprofits use their accounting software to track the collection of the cash and don’t track this in Salesforce, but many others track pledges and collections in both tools. If you want to track when the cash is expected to be received, then you’ll still need to choose if you’re primarily Accrual or Cash, and you’ll use Close Date and Stage according to what we described above. And you’ll use the Payments object to build out a payment schedule and track the status of each payment.

The Payments object can be really handy because you can see what’s been paid, and what the plan is for each outstanding payment. And on the parent Opportunity, you’ll get a birds-eye view of the pledge, like what’s been paid and what’s outstanding.

But Payments may not be right for you. Let’s get a little technical…

If each of your Payments has a different Allocation or Soft Credit story, then you’ll be stuck. This is because only the parent Opportunity can be split into different Allocations and Soft Credits. In building Payments, the NPSP team assumed that the child Payments would follow the same schema as the parent Opportunity. And that might not be true for you.

And then there’s rollups.

KELL360 RollupsIf you’re a cash org using Payments, then your Opportunity rollups to Contact and Account will be incorrect. This is because the standard rollups are calculated on the Opportunity Amount, based on Stage and Close Date. Payments are NOT factored into the rollups. With the Opportunity, the Stage is either Open (0%), Closed/Won (100%), or Closed/Lost (0%). The rollups won’t take into account the partially paid nature of your payments. And the Close Date is just one date, across the whole Opportunity, and won’t account for the many dates of your Payments.

If you go with Payments, enjoy them and love them and hug them. If not, then turn them off in the NPSP Settings and save yourself some data storage space and confusion.

But whatever direction you go, you’ll want to think about Opportunities and Payments in terms of what will drive the best reports for you. Envision your colorful, decision-driving daily dashboard arriving in your inbox. And then zoom in on the Opportunity and Payment setup that’ll get you there.