Nonprofit organizations, and accountants, understand the need to count every penny. Staying on track with your strategic plan and achieving your goals is based largely on how your organization manages its money. Is your accountant on staff as knowledgeable as you have come to expect? Do they have the benefit of industry perspective and continually collaborate with peers to ensure they are producing an accurate product? Are they staying ahead of annual changes with regulations and reporting? Here are five reasons to outsource your nonprofit’s accounting.
Smaller organizations tend to start with an “in-house” bookkeeper who oftentimes is not an accounting professional. As the nonprofit grows, using a simple spreadsheet won’t cut it. A trained accountant who focuses solely on helping you fulfill your mission not only ensures accuracy in your organization’s financials but can be depended on to produce financials that are up to date and available when needed by the board. Additionally, funds will be allocated appropriately, deadlines will be met, and changes to laws will be known well in advance which give your organization the benefit of being prepared for upcoming modifications and updating your strategic plan in response.
Consistency with Your Accounting
While nonprofits tend to think the turnover rate for staff bookkeepers is high, the 19% average in turnover is the same with for-profits. Even so, losing your bookkeeper will leave you in a bind. If your accounting is outsourced to a firm who supports your mission and strategic plan and respects the ebbs and flows of a nonprofit’s existence, your organization will be able to continue moving forward even as employees come and go. Depending on the outsourced firm you select, there may be an entire team who can seamlessly provide you with services from month to month.
Insight into your Giving
A professional accountant focused on nonprofits will have detailed insight into your financial position as well as help you monitor the giving process for your organization. Proper tracking of income allows you to monitor giving trends, donor retention and new supporters.
Fraud and Auditing
In a 2016 study by the Association of Certified Fraud Examiners, researchers found more than 30% of fraud issues occurred in organizations, both for-profit and nonprofit, with 100 employees or less. The issue was “control” and “processes”. The occurrence of fraud is more likely when smaller organizations rely on employees who lack experience and/or do not have standard operational processes in place.
Many nonprofits are subject to annual audits. Your outsourced accountant can assist with the support your auditor will need to perform the independent audit that your donors depend on for their contribution planning.
While some nonprofit managers are confident in their accounting skills and can certainly handle the bookkeeping and report generation needed to prove fiscal responsibility, we suggest considering outside, independent options for the long-term health of your organization.