Salesforce Certified Nonprofit Cloud Consultant

What is the primary reason to use a Fixed-Length Recurring Donation instead of a standard Opportunity?

1. The organization uses Accrual Accounting

2. The organization uses Cash-based Accounting

3. To minimize data entry

4. To create child donations automatically

The correct answer is: The organization uses Cash-based Accounting

Using a Fixed-Length Recurring Donation is advantageous due to its structure, which is designed to accommodate specific accounting methods, among other benefits. In the context of cash-based accounting, it allows organizations to effectively manage and track contributions as they are received over time rather than making entries all at once. When an organization uses cash-based accounting, it recognizes revenue only when cash is received, rather than when the obligation is recorded. The Fixed-Length Recurring Donation feature automatically generates future donations based on a predetermined schedule and amount, which aligns with how cash flow is reported. This ensures that the timing of revenue recognition matches the actual cash inflow that the organization experiences. This method ultimately simplifies financial tracking and aids in accurate reporting in alignment with cash-based accounting principles, thus greatly benefitting organizations that operate under this accounting method. While minimizing data entry and creating child donations automatically are features of fixed-length recurring donations, the primary alignment with cash-based accounting makes this choice significant.