Should I allocate to Opportunities or to Payments?
KELL built the package based on our understanding of different nonprofit accounting systems, but we are not accountants. Please check with your finance department and make any decisions about how to use the Fund Allocations package based on their needs.
What's the difference?
Fund Allocations 3.0 and later allow you to choose whether you will be allocating revenue at the opportunity level or on individual payments. This allows the package to work with the two major methods of accounting used by nonprofit (and other) organizations: Accrual or Cash-Based accounting.
When your organization uses accrual accounting, you 'count' any incoming gifts or other revenue when you receive a promise or firm committment from the donor, regardless of whether or not you have actually received a check or other payment on that promise. This way of doing accounting best matches up to allocating at the opportunity level. When the opportunity or promise comes in (is 'Closed/Won' in Salesforce speak), you will allocate the money to the appropriate funds.
Your accountant/finance department is interested in knowing about the promised/closed revenue and how it is allocated, so the GL Export tool and posting mechanisms within Fund Allocations post opportunities and allocations together. If your finance department also tracks cash flow, you can post any payment records independently of opportunities and allocations to help keep them up to date.
When your organization uses cash-based accounting, you 'count' any incoming gifts or other revenue only when you actually receive a check or other cash payment. This way of doing accounting best matches up to allocating at the payment level. You will create your allocation records connected to each payment and they will be finalized when the payment is paid.
Your accountant/finance department is interested in knowing about paid payments only, and won't be keeping any records of unpaid payments or 'open' opportunities. The GL Export tool and posting mechanisms within Fund Allocations post payments and allocations. Your finance department will likely not need you to export any opportunity information if you are using cash-based accounting, but you can use the posting functionality on opportunities if you'd like to use the validation rules built into Fund Allocations to keep your users from accidentally editing key fields on opportunities once they've been posted.
Choosing the right Fund Settings
Once you have decided whether you are allocating by Opportunity or Payment, you can change this on the Fund Settings page in version 3.x or later.
See the settings section in Completing Post-Install Setup for the Fund Allocations Smartpack for details on how to update your settings in the package.
The posting/reversing functionality will change as soon as you update the fund settings page. If you are changing how you are allocating (from opportunities to payments or vice versa), read the section below before making any changes.
Switching from allocating on Opportunity to allocating on Payment (or vice versa)
If you decide to change how you are allocating funds, you will need to account for the allocation records that you have already created. This can be a very complex process and is important to get right.
When switching from allocating at the Opportunity level to allocating at the Payment level, you will need to decide whether or not to create legacy allocations for gifts with multiple payments. When switching from allocating at the Payment level to allocating at the Opportunity level, you will need to decide how to combine allocations on the same opportunity. In either case, you will need to perform some advanced manipulation of your existing allocation data.