Behind every successful social movement, there is an office (formal or informal) where activists are managing budgets, receipts, bills, payroll, fundraisers, mailing lists, insurance, correspondence, and all manner of behind the scenes items. There’s no one right or wrong way to organize all of this, except to pretend that clerical work is a distraction from the “real” movement work! That’s why I started the Civil Writes section of this blog years ago, and why it continues to provide fodder for thoughtful reflection on the state of movement operations today.
I’ve written before about the well-oiled mail merge and donation attribution system that my hero, Jack O’Dell, orchestrated for the Southern Christian Leadership Conference (SCLC) in the early 60’s. Today, I want to delve into this material with a focus on the financial auditor’s report for the SCLC books at the close of their 1963 fiscal year.
First, let’s review what was happening in the Civil Rights Movement in 1962-1963. You can see in the timeline below that the SCLC was established in 1957, after the wildly successful Montgomery Bus Boycott. In the early 60’s, the Freedom Rides attracted the most attention. Civil Rights leaders were strategizing for another big splash campaign and ultimately focused on Birmingham, AL from April – May in 1963. Many scholars and activists consider the Birmingham Campaign to be a turning point, particularly with police brutality inciting national outrage. From an administrative perspective, scholars Ling and Duffy show that this era marked a commitment to further professionalization in fundraising, accounting, and operations. Suffice it to say, there was a LOT going on!
Which is perhaps why the 1963 financial statements and auditor’s report is so, so juicy.
Some issues that emerged:
- Finance and Fundraising Department discrepancy… sound familiar anyone?? Double counting – “caused in part by the issuance of receipts to individuals who donate money to the organization, and then, the issuance of master receipts to local committee chairmen, from the same set of receipts” whoooooopsy daisey!
- Too many accounts – issues with bank accounts that had too few signers (this is often a Founders Syndrome ™ problem), or paying invoices out of the wrong subsidiary account, led to confusion and lack of transparency. Um, have you ever had this problem with paypal, banks, payment processing platforms, venmo, etc? They just seem to proliferate!
- Separation of responsibilities – “the same employee opens mail, makes up bank deposits, makes cash entries in the books of original entry, applies facsimile signature to checks, claims bank statements and cancelled checks from the bank, undertakes bank reconcilements, and at times, actually transports funds to the bank for deposit! This renders the internal control for the organization totally ineffective” – this could be resolved with MORE PEOPLE sharing and prioritizing operational responsibilities!
- Erratic budgeting
In view of the erratic behavior of revenues and expenditures of this organization occasioned by Christian and democratic principles on the one hand, and opposed by reactionary and evil forces on the other, permanent budget estimates are well nigh impossible. It is suggested that monthly revisions of the budget be authorized and that such revisions be communicated to the accounting department in order that they may be reflected in that department. At any rate, a budget would always be in effect, albeit, it might be formally revised from time to time, or as often as is necessary.
OMG – savoring this one. When auditors note that budgets are political… chef’s kiss. How can we possibly budget expenses during multiple crises? But at the same time, how can we NOT? I really like the process that is further outlined in the primary source!
5. Cash, grants, in kind donations – it seems like there are several issues of funds not being adequately incorporated into the books because the cash went directly to posting bail, purchasing an asset, pass through grant funds, or other immediate operational needs. If the cash was never deposited, how can it be tracked and recognized? If a program was funded through a grant to another agency, how would they model that in the SCLC books? There’s no indication of corruption here – to be perfectly clear – a better explanation is that administrative processes did not line up with the capacity and urgency of the moment.
I was also fascinated by the inclusion of a schedule of Bail Bonds “subject to recovery” that was enumerated in the financial statements. It makes perfect sense that a direct action organization would need to record these liabilities and make a plan for repurposing funds once they were returned. But I have to admit that I have never seen a financial statement structured this way.
So, what does this have to do with databases?
Simply … everything and nothing.
Finance systems are typically independent from CRMs or spreadsheets, which I think is for the best. So perhaps us data-minded folks could simply wash our hands of it and move on to the next protest. However, I think it behooves us to look at all of these systems holistically.
For example, let’s take a donation flow for a second.
A donor makes a contribution. Are they a new donor or a returning donor? Are they responding to an appeal? Has a receipt been issued? These are all questions that are relevant to the data “side” of an org and perhaps less important for the finance side. Meanwhile, the finance side is going to be looking at questions like “what income category is this? did the check clear? are the funds restricted for designated purposes?” In some cases, there is a sponsorship or fulfillment process that needs to be initiated (how will the donor be publicly recognized? do they get a gift in return?). Then there’s the question of “soft credits” and gift influencers. Financial systems do not track this, but fundraising systems certainly do!
So, it’s completely natural that there are discrepancies between these systems, not to mention duplication of efforts, let alone double counting. It’s not a new problem (now) and it wasn’t new (then).
Perhaps it might seem counter-intuitive to write about the things that weren’t going well on a blog where I have so applauded the administrative prowess of the SCLC particularly. But I don’t think so at all!
Having an audit is one of the best things an org can do to identify opportunities for improvement. So kudos to them for doing so!
Plus, attempting to achieve excellence in donor stewardship AND financial accounting is no small feat. They didn’t even have access to some of the technological automation that we do… which perhaps makes our work both easier and harder… so it’s no surprise to me that the audit revealed areas for improvement.
I feel some comfort knowing that the things we find difficult were equally troublesome for my biggest heroes. I feel like I am in dialogue and continuity with them when I work on operational tasks that keep the lights on for orgs that I love. I see affirmation that it really does take this much time and attention to detail to do things the right way, and that the Civil Rights Movement also dedicated time in this arena. It wasn’t all marches and speaking engagements. (In fact… the more marching there was, the more donations had to be processed!)
From 1963-1968, SCLC would continue to scale, which is why it is so interesting to study their accounting measures as they were on the cusp of growing exponentially. So much of the time, I am preparing a system for today’s problems (and hopefully tomorrow’s problems!) but don’t have the benefit of foresight for what the future holds. If the SCLC could accurately predict the struggle of the next few years, would they have organized their resources differently? Would they have beefed up their back office operations in Atlanta (which Jack O’Dell desperately tried to do?) We’ll never know, but we can still take these historical documents as blueprints and experiments, and try not to make the same mistakes twice.
There are SO many ideas out there now-a-days for keeping fundraising + finance systems generally in sync. I’d love to hear how you’re tackling this issue (through people, process, technology, etc!), what’s working and what’s not. If Mail Merge is part of your operation, I’d be honored to learn about it. Perhaps you could also benefit from some of my youtube videos on document automation in Salesforce.