Most nonprofit organizations run on tight budgets and depend on the goodwill of volunteers rather than contracting for outside services. While this is fine for most of their needs, applying this method to accounting often results in disaster.
Nonprofit Regulatory and Filing Requirements
Nonprofits have additional reporting and filing requirements that are paramount to maintaining their 401(c) status. They also have boards that require in depth reporting and analysis as well as donors and annual reports that scrutinize their spending, accounting and practices. This combination does not fit well with volunteer bookkeepers and a lack of continuity and stability in their accounting and bookkeeping procedures.
Spend Money to Save Money
It may seem non-intuitive, but hiring professional accounting services is actually cheaper than having nonprofit bookkeeping managed by a well-intentioned but inexperienced volunteer.
First of all, time is valuable. An experienced bookkeeper can complete your accounting tasks in a fraction of the time and the nonprofit (and its board!) can be confident that it will be done right. Time spent more efficiently is a net gain for your organization.
Skilled accounting saves money by finding the financial leaks in the organization. By categorizing and budgeting your expenses, outsourced accounting services can show exactly where the money is going and give you insight about where exactly your dollars are being spent. Businesses and non-profits are often surprised when they learn where their money is actually being spent!
Write Better Grant Proposals
As nonprofits quickly discover, demonstrating need is not enough to land the grant money they so desperately require. Funding sources want detailed reports showing where every penny of their donations will go so they can ensure that resources are being used appropriately.
Inexperienced bookkeepers can find it difficult to produce reports, much less ones with the level of detailed most grant proposals require.
Professional accounting services provide comprehensive accounting reports that add impact to your grant proposals. When you demonstrate your commitment to fiscal responsibility to potential funders, you can substantially increase the chances of your application being approved.
Minimize Risk and Fraud in Nonprofit Bookkeeping
One of the biggest fears a nonprofit has is hiring an employee who may jeopardize the health and wellbeing of the organization. Horror stories of fraud and embezzlement abound in the nonprofit world, risking the legitimacy of organizations, undermining missions and corrupting otherwise noble opportunities. By using an outsourced, professional accounting service, this risk is mitigated significantly (if not eliminated entirely). There are multiple layers of security and safety nets in place to ensure that the organization is protected and absolved of any wrongdoing, which is far better than having an internal bookkeeper ruin it for everyone.
