Your Mission
As a non-profit, your primary goal is to provide services that contribute to the betterment of society through a variety of different ways, such as charitable and philanthropic work, or advocacy and awareness. Your entity might be a charitable organization, a public charity, or a private foundation.
Whether you are a 501(C)(3),(4), (6), or something else, you need to be absolutely sure your financial statements are in order, bills are being paid, and funds from donors (individuals, corporations, and other entities) are being collected and accounted for properly.
Your non-profit must conform to and comply with accounting principles and regulations required in as many as 32 types of non-profit organizations (NPOs)—as listed in the FORBES Advisor, Updated December 21, 2022).
The Most Difficult Part
Dealing with federal, state, and local government regulations! (And the compliance laws often vary by jurisdiction.)
Why
The reasons why the rules are so complicated and becoming more so are:
- As donors are a “click” away from giving to your organization, they may be in another country/state/city, which may have laws different from those in your locale.
- Compliance laws are in place to protect the donor and the recipient (you) so that both sides of the transaction enhance public trust in your cause and all non-profits. Without trust, the house of cards falls.
Some Major Government Regulation Units
Although your particular organizations may only need to consider some categories, there are enough attention items inhabiting non-profit spaces to warrant listing them. They are:
- Fundraising Stipulations
- Operational Needs
- Appropriate Employees Classification
- Record-keeping Obligations
- Corporate Governance Requirements
- Corporate Requests
- Accounting Requirements
Do You Have the Ability and Manpower to Do All This In-House?
As Statista.com indicated, 1.49 million charitable organization existed in 2021; they also mentioned that 41% of U.S. NGOs reported 6 to 15% of their positions were unfilled and that 63 percent named staffing shortages as one of their biggest challenges.
If you want more time to focus on fundraising, outreach, and building social media campaigns to increase awareness and donations, continue reading.
4 Ways Outsourced Accounting Helps You Reach Your NPO’s Mission:
1. Saves time:
Outsourcing accounting functions can free up time for fundraisers to focus on meeting the organization’s vision and mission. Accounting firms have the expertise and technology to perform the daily bookkeeping, monthly financial reporting, and preparation for yearly audits efficiently and accurately. But their real superpower comes from helping you plan and strategize.
Software Savvy – Your outsourced accounting firm would have knowledge and experience with industry-related software (like MIP Fund Accounting, Blackbaud Financial Edge NXT, and AccuFund Accounting Suite, for example) so that they can start immediately. If you’re using some other software, an outsourced accountant would have the basics and could pick up the nuances of your program very quickly, maybe even helping you understand how to leverage its power in new ways.
2. Saves money:
Outsourced accounting services provide accurate financial reporting, allowing non-profits to manage their cash flow more effectively and avoid costly mistakes such as errors on financial statements that may jeopardize their non-profit status. Well-meaning people with tons of passion for their cause can make unknown errors that get in the way of the excellent reason they’re in business.
Effective cash flow management involves monitoring and forecasting the donation inflows and outflows to ensure that the NPO has enough cash to meet its financial obligations, such as paying bills, meeting payroll, and investing in growth opportunities (like investing in your staff or adding more branches in other geographies). But you can also safeguard your financial stability amidst the foreseeable fluctuations in donations, adapting to shifts in both local and global events that impact individuals’ capacity to contribute.
3. Avoids headaches:
Specifically, for NPOs, meticulous accounting is critical. Every funding source, donations, and miscellaneous earnings, along with outflows for employees, expenses, rent, etc., must be squeaky clean to avoid nonconforming audits, fines, or even a loss of the non-profit status. Outsourcing your accounting can help ensure compliance with federal, state, and local government accounting regulations and reduce the risk of financial errors leading to a loss of NPO status and trust.
4. Reduces Stress:
By taking the stress off accounting tasks in particular, the fundraising visionaries can put their time and energy working on the next fundraising drive.
Enlarges your accounting team without adding to payroll! When you outsource, you benefit from an entire firm of accounting experts knowledgeable in the unique aspects of accounting for non-profits. And you can scale up or down as needed, depending on the level of accounting support required.
The Bottom Line:
You can get an accounting team that offers financial oversight and collaboration to assist with budgeting and forecasting cash flow, help define the NPO’s KPIs, and track results. Outsourced accountants deliver periodic reviews and interim reports outlining progress toward strategic goals.
Don’t they cost more? Not really! Without the costs associated with hiring, training, and managing an in-house accounting team (including salaries, benefits, and overhead costs such as office space and equipment, like printers and computers), outsourced accounting is a money saver from the very beginning. From bookkeeping to an interim CFO, outsourced accounting services for non-profits put more money in the hands of the organizations or people they were intended to serve in the first place.
At LSL CPAs, we love helping our non-profit clients embrace compliance issues as they continue their excellent work in important areas such as the environmental and animal subsector, education, the arts, culture, humanities, and more. If you are short-staffed, over-worked, or just need to focus more on your operations, consider outsourcing.
Please contact us today for more information.
