For many nonprofit leaders and their accounting and finance teams the annual audit can be a stressful and disruptive time, commanding considerable staff resources. This should be the exception, not the rule. There are year-round strategies to help make audit time a less stressful experience. Storing required audit documents throughout the year An auditor’s PBC…
For nonprofits, deciding on a board committee structure can be a challenge. Often, the decision is solely based on the number of board members and their talents and expertise. Proper financial oversight, however, is important to the success of a nonprofit because it ensures that the organization is in compliance with applicable laws, is acting…
5 Steps for Nonprofits to Develop a Wise Investment Policy Nonprofit boards have a fiduciary responsibility to protect the organization’s assets and ensure that they’re used to further the mission. Often, an important part of the board’s responsibility is deciding how to invest the nonprofit’s cash. That requires implementing a sound investment policy that balances…
5 Keys to Develop Your Operating Reserve Policy Every nonprofit needs to have sufficient cash flow to meet obligations. Setting aside an operating reserve is a smart practice as it provides a cushion against unexpected events that could temporarily impact the cash flow. Following are five best practices to follow when establishing your operating reserve…
One of the fundamental decisions a nonprofit organization needs to make is whether to use the cash or accrual accounting method. The method you select will determine how you classify, record, and report on your income and expenses. What is the cash method of accounting? Under the cash method of accounting (cash-basis accounting), revenue is…
3 Keys to Being Prepared for Your Next Nonprofit Audit For many nonprofits, going through an annual audit is like undergoing a root canal—it’s a painful, stressful, and expensive experience. The good news is that it doesn’t have to be that way (the audit, that is.) Through advance planning, organization and knowledge of the audit…
What’s So Different About Nonprofit Accounting? If you’ve never worked in the nonprofit environment, you might assume that the accounting is fairly simple and straightforward. In actuality, proper accounting for a nonprofit is much more complex than accounting for a for-profit business. Why? For starters, most nonprofits operate on an accrual, not cash, basis. This…
Rare is the nonprofit that looks forward to finance and accounting tasks, from bookkeeping to budget reviews and reporting. At a minimum, such tasks are a headache, and sometimes—as when an audit takes place—they become the bane of many executives’ existence. The difficulty of managing finances internally is one of many reasons nonprofits are increasingly…
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