Reporting Fundraising Revenue – Understanding Cash and Production
To provide a thorough accounting of fundraising performance, AHP reports fundraising revenue in two categories — “cash” and “production.” Cash represents the dollars available for immediate use by the organization, while production provides a more accurate measure of total fundraising, including both projected and secured revenues. Cash and production are then attributed to the appropriate fundraising programs (i.e., annual giving, major giving, planned giving, special events, etc.).
It is important to understand the definitions of these two terms when reporting fundraising returns. These measures are not mutually exclusive. One cannot simply add them together to create a single calculation of fundraising returns. Instead, cash and production are meant to be examined as two separate metrics.
Cash includes the current market value of outright gifts (made in any form) plus current-year payments from the previous year’s pledges, planned gift maturities, bequests, and marketable securities. This formula provides a picture of “cash on hand,” including the amount available for immediate use by the organization.
Production represents all outright gifts of cash (excluding payments on pledges from previous years) and new gift commitments made in the reporting year. New gift commitments effectively combine all new pledges and letters of intent (including revocable gift commitments) and the current market value of irrevocable planned gifts. Development professionals have found this to be a more thorough measurement of fundraising performance (particularly during a comprehensive campaign when pledge activity can increase by as much as 75 percent).
When reporting revenue as cash or production, fundraising dollars must be attributed to the appropriate individual fundraising program. Fundraising programs that are present in just about every organization are listed below. The definitions for each fundraising program were developed by AHP member practitioners and have been the AHP standard definition since 2003 (see Chapter 5, AHP Standards Manual for more definitions).
Annual Giving — Programs that attract gifts of $9,999 or less from individuals and support groups/auxiliaries.
Major Giving — Programs that attract gifts of $10,000 or more from individuals and support groups/auxiliaries.
Corporate and Foundation Giving — Programs that attract gifts of any value from corporations/businesses and foundations.
Planned Giving — Programs that attract gifts (or commitments) from individuals made as part of an estate or financial plan.
Public Support — Programs that raise grants and gifts from local, state/provincial, and federal government funding sources, which the development function is responsible for raising.
Special Event — Programs that attract gifts of all sizes received in response to any event sponsored by the organization.
Gifts and pledges secured in response to a campaign should be counted under the relevant program area listed above, based on gift size, donor type, or event.
Gifts secured for endowment or endowed-fund purposes should be reported at current market value in a separate category for endowments.