Donations, own funds and accounting
Donations, personal contributions and reimbursements are part of everyday life in many organisations. They help to implement projects, safeguard services and make voluntary work possible.
It is important to manage all funds responsibly. Anyone who receives money, claims expenses or contributes their own labour should keep clear records of how funds are used and which rules apply.
Trust requires clear processes
Funding thrives on trust. People make donations, sponsors support projects and volunteers contribute their time, expertise or their own resources. This trust can be strengthened when procedures are clear and decisions remain transparent.
This includes:
- clear responsibilities for finances and accounting
- careful documentation of income and expenditure
- transparent communication regarding the use of funds
- secure storage of receipts and supporting documents
- regular review of rules, deadlines and agreements
Where tax or legal issues arise, professional advice should be sought. This applies in particular to donation receipts, expense allowances and lump-sum payments.
Important: Clarify the rules early on
Clarify as early as possible which rules apply within your organisation:
- Who is authorised to approve expenditure?
- How are receipts submitted?
- When are expenses reimbursed?
- What supporting documents do you need for grants, donations or contributions from members?
Clear agreements protect volunteers and organisations.
An overview of key elements
Donations, personal contributions, out-of-pocket expenses and expense allowances can provide financial support for voluntary work or even make it possible in the first place. At the same time, they come with a sense of responsibility.
The following sections outline what you should bear in mind when money is received, services are provided, costs are reimbursed or lump-sum payments are made.
Donations are a great sign of trust. Those who receive donations have a responsibility to ensure that they are carefully managed and used for their intended purpose.
The following are particularly important:
- Earmarking: Donations should be used for the stated purpose.
- Transparency: Donors should be able to see how funds are being used.
- Documentation: Income and expenditure must be carefully recorded.
- Communication: A thank-you and regular updates strengthen the relationship with donors.
Ensure that donation income and its use remain verifiable. It is advisable to seek advice on tax matters.
In-kind contributions can make a significant contribution to funding. They demonstrate that a project does not rely solely on external funding, but also contributes its own resources.
These include, for example:
- time and effort contributed by volunteers
- own materials, tools or premises
- Expertise gained through work, training or experience
- Organisation, planning and coordination
- networks and contacts that facilitate support
When applying for funding, it may be relevant whether and how your own contributions can be counted towards your own contribution. This should be checked for each funding programme.
Document as clearly as possible who carried out which tasks, the extent to which they were carried out, and how you estimate their value.
Volunteers sometimes spend their own money, for example on materials, travel costs or other project-related expenses. To ensure that no one is left out of pocket, clear rules regarding reimbursement should be agreed upon.
It is important to note:
- Which expenses can be reimbursed?
- What supporting documents are required?
- Who checks and approves the reimbursement?
- By when must receipts be submitted?
- How is the payment documented?
Expense claims should be made on presentation of supporting documents. Which costs are eligible for reimbursement and which tax rules apply depends on the individual case.
Find out about the legal framework for working in a voluntary organisation
Volunteers are sometimes paid an expense allowance. It is important to clarify exactly what the payment is for and what conditions apply.
A distinction can be made, for example, between:
- flat-rate expense allowances for expenses that cannot be substantiated individually
- a flat-rate allowance for voluntary work
- a flat-rate allowance for trainers carrying out specific activities
Factors to be taken into account include, amongst others, the organisation’s legal form and articles of association, the nature of the work, specific regulations for board members and the distinction from other forms of employment.
A written agreement should be drawn up for voluntary work and coaching allowances. Tax and social security issues should be examined.
Donation receipts and proof of donation
Donation receipts are officially known as donation confirmations. They may only be issued by organisations authorised to do so, for example, those recognised as charitable organisations.
Proof of donation is important for donors if they wish to claim tax relief on their donations. For smaller donations, a simplified form of proof may suffice under certain conditions, such as a bank statement.
Organisations should ensure that they carefully document donations, confirmation of donations and the use of funds. Incorrectly issued certificates may have legal and tax consequences.
If in doubt, tax advice should be sought.
Further information
Here you will find additional information on topics that may be of varying relevance depending on your organisation, legal form and activities.
Act with confidence, clarify any questions
Donations, personal contributions and reimbursements can make many things possible. However, they require clear rules, good documentation and careful coordination.
The sooner responsibilities, supporting evidence and agreements are clarified, the more confidently you can manage your funds. It is worth seeking expert advice on tax or legal matters.
When applying for grants, your own contribution, supporting evidence and financial statements often play an important role.
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