Tag Archive for: money

Using Nonprofit Accounting Services to Help with Payroll Management

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Having a hard time managing your payroll?

This problem is much more common if you’re a nonprofit organization. Whether you’re a public charity, private foundation, or civic leagues, the special rules on nonprofit payrolls can be taxing. You have varying HR elements, from volunteers and contractors to board members.

However, a simple solution is to hire nonprofit accounting services. Excited to overhaul your payroll management? Read on and learn these impressive facts about outsourcing accounting services:

1. Payroll Services Remedy Mistakes

Mistakes can lead to law-imposed penalties. If you’re losing money because of payroll errors, outsource your accounting services. These professionals are vigilant and can resolve them before they become troublesome.

Nonprofit accountants use automated audit software to verify each payroll. They’re proactive in letting you know when they encounter errors. It paves the way to corrections before processing the payroll.

You’ll get the accuracy nonprofit payroll software offers. These professionals check your work constantly. They help you avoid mistakes while giving you ample opportunities to learn.

Getting help means familiarizing your accounting department with the rules. It prevents complicated situations from happening. It allows you to be more decisive and have more confidence with how to go from there.

You need not take your chances when you have payroll experts. They will address various issues to ensure you’re following the law. You’ll get a provider that caters to your nonprofit accounting needs.

The software these companies use is complex and specialized. It aids with every step of the process when checking for accuracy. It saves lots of time since you need not retype information across reports.

2. Payroll Services Eases the Process

Nonprofit organizations often put too many roles on their HR and accounting departments. If it’s your situation, hiring an accounting company is beneficial. It allows you to focus more on other issues like finding proper connections to grow your donations.

A payroll service offsets the hours spent reviewing and verifying payroll data in-house. It’s more efficient and can eliminate the risks of underpayments and late payments. It simplifies the process for your HR or accounting teams.

It’s also worth noting that the sooner you process payroll, the faster the payments are. It’s an important asset especially when your paid employees have limited budgets. With more steps eliminated, you won’t have to worry about low morale.

3. Payroll Services Enable Paperless Processing

Paperless payroll systems save more money while staying environment-friendly. Whether you’re looking for more efficiency or care about the environment, payroll services fulfill both. An online nonprofit payroll system streamlines the process across various departments and roles.

It also means you’re riding the wave of the future with paperless payroll. With enough expertise, you can collaborate with your accounting service. It helps you shift from paper to mobile payroll apps and document storage online.

You’ll have more functionalities with your payroll system. Employees can look at their payroll data in real-time. Your accounting department can change security levels to keep sensitive data from getting compromised.

4. Payroll Services Enable Real-Time Tracking

Things are easier when everyone gets quick information access. When professionals track your payroll system, you’ll know when problems happen. It means making timely changes to correct these issues.

It allows you to get closer to a hassle-free payroll process. You’ll always be on time, ensuring everyone’s satisfaction. This process becomes even better when using an integrated system.

You’ll always have an idea about the current labor costs situation. It allows your nonprofit to make more financially-sound decisions. It ensures everything is up-to-date and adherent to your cause.

Why Nonprofit Accounting is More Difficult

Without professional help on accounting for nonprofit organizations, you’ll encounter some hardships. The following are unique challenges for nonprofit payroll accounting. Use them to inspire your organization to outsource:

1. Financial Inexperience

Your board members are accomplished professionals. They have lots of useful skill sets that bring benefits to your organization. However, it’s uncommon for them to come from financial backgrounds.

Your organization must have a higher level of financial transparency. It gives your organization the right information for decision-making. Understanding the nonprofit’s financial aspects is necessary to help the board focus on a higher-level view.

Never let financial bookkeeping distract your leadership from the mission. Outsource professionals that specialize in nonprofit organizations. It maximizes your organization’s greatest potential.

2. Donor Expectations

As a nonprofit, your donor expectations are one of your priorities. Entities donate funds because they believe in your cause. Your funds must go to where your donors expect them, like programs that further your mission.

Your organization must do it without overspending. It means smart budgeting on administrations, expenses, and fundraisers. Keep your donors updated on your expenses to help build their trust.

3. Strict Audit Requirements

Nonprofit organizations have stricter audit requirements. People expect your reporting and internal control standards to be better. Most states require audits if you get at least $500,000 in donations.

This standard is necessary because the funding comes from public donations. It means everyone must know where the money goes. Your organization is accountable to use the funds correctly and advance your mission.

4. Public Trust

As said above, your funding comes from various public entities. It places the burden of public trust upon your organization. These people expect you to have an effective and efficient operation.

Often, they hold your organization to higher standards compared to for-profit businesses. Some organizations serve as watchdogs. They track your financial activities to ensure you’re using your funds as intended.

 

The same applies to your payroll management processes. To avoid discrepancies, invest in nonprofit technology. It can help you further your cause, helping you establish your local presence.

Hire Nonprofit Accounting Services Today!

Never let the lack of financial expertise ruin your nonprofit organization. Outsource nonprofit accounting services to take the burden off your shoulders. It allows you to focus on more important matters for the greater good.

Need a hand with accounting? Use our contact form and request a meeting with us today.

Preparing for a Not-for-Profit Audit: Episode 3 of A Modern Nonprofit Podcast

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Do I need to hire a CPA firm for my nonprofit? Why can’t my finance person just take care of and publish my not-for-profit finance statements? Preparing for a not-for-profit audit is not something you should fear.

Plus, these are complex questions that only an expert accountant for charities can answer.  There are a lot of standards to follow in finance! Unfortunately, these standards do not get any easier when you are asking if your nonprofit should seek an audit.

Preparing for a Not-For-Profit Audit

In fact, this is why Jeanne Dee, a partner at Anders CPAs + Advisors, was this week’s speaker on Episode 3 of A Modern Nonprofit Podcast. Tosha Anderson’s latest guest dove into the specifics of what a certified public accountant does. Additionally, Jeanne discusses the differences between a review versus an audit. LISTEN TO EP. 3: PREPARING FOR A NOT-FOR-PROFIT AUDIT WITH JEANNE DEE HERE. 

Sometimes, different states have different expectations when it comes to the audit of a nonprofit. Nonprofit finances has a lot of standards that you must know! Fortunately, Jeanne highlights the types of expenses, fundings, and risk assessment process for not-for-profits. Plus, Jeanne explains the difference between procedures and policies. This distinction is important for having a good business mindset. Also, good documenting, risk assessment, and succession plans are points that auditors will want to consider.

So, why do nonprofits need to have an audit? Sometimes, an audit is required. Other times, an audit can be a valuable tool to understand the qualitative aspects of an organization. An audit will help you dig deeper! You can become a stronger charity because of it. This consideration is discussed later in Episode 3. Further, the two leaders discuss common mistakes and nonprofit fundraising, too. It’s a great discussion you don’t want to miss!

Prepare for Your Charity’s Audit

Plus, there are many benefits to having an audit. So, if you are looking for a nonprofit certified public accountant, The Charity CFO’s team of expert accountants are ready to help you work through your books. Schedule a free strategy session with us today if your auditors have started asking for spreadsheets. Or, if you are ready to take control of your nonprofit bookkeeping, we are here to help.

Lastly, if you would like to learn more about internal and external accounts with respect to the different industries, check out Jeanne Dee’s information.

The conversation doesn’t end here. Join A Modern Nonprofit Facebook Group to learn from nonprofit leaders about best audit and accounting strategies.

 

 

The Complete Guide to Nonprofit Startup Funding

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We have created a complete guide to nonprofit startup funding. The guide is for both those looking for seed money to start a nonprofit and existing organizations that need additional funding. The topic is overwhelming to many,  but considering the best nonprofit startup funding strategies is important.

Your dream can become a reality.

Funding is a key step for any charity, but this does not happen overnight. This blog will help you learn how to raise funds for your nonprofit so you can help your organization grow.

4 Types of Funding 

We’ve covered four broad types of initial funding (or for existing nonprofits)

1. Start With Your Community for Nonprofit Startup Funding

What do nonprofits do? Nonprofits serve their communities. If you are looking for funding options, start in your community. Work colleagues, friends, and neighbors might see the potential benefits your startup could bring. Don’t be afraid to post calls for help on your social media, too!

Businesses or Community Leaders

Established businesses have cash to spare if they believe your idea can bring something positive to society and be profitable. Also, community leaders tend to be well-connected. They could assist you in reaching out to other people who will likely be interested.

You can present your startup to these leaders and ask them to become board members. This way, they can represent more active stakeholders in your organization. This action will also increase your access to individual donations. Residents are likely to trust these leaders, so they might donate more.

Other Organizations

You can also contact other organizations who provide similar services, or who would be interested in the benefit your startup will bring. For example, churches are likely to find interest in funding food relief centers or homeless shelters. Food providers might also potentially willing to donate some of their own stock to supply your nonprofit. It never hurts to ask.

Friends and Family

You may find it awkward to approach your loved ones for money. But, reaching out to them will give you a good starting ground. They are more likely to understand how passionate you are about the organization. They might be willing to share a stake in the success of your creation. Even if they don’t, they will be more open to sharing your initiative with their circle of friends, thus expanding your reach.

2. Access Grants for Nonprofit Startup Funding

As a nonprofit, you cannot finance your startup in a traditional way. You don’t get to sell items and use the additional money to uphold your organization, so accessing nonprofit grants is a great way for your startup to flourish. However, nonprofit startup grants are a possible option.

What exactly are nonprofit grants, and what do they do?

Nonprofit startup funding is important for your charity.

Well, when it comes to grants, the earlier you receive them, the better. Instead of waiting until you’ve officially started your organization to begin applying, make sure you have a plan. Start reaching out before your organization becomes fully operational because this will prevent future instability. It will also enable the eventual success of your nonprofit.

Here are two prominent types of grants:

Government Grants

There are many government grants out there. This fact will benefit you because there’s no end to the applications you can send out to finance your startup. That being said, make sure to go through the different grants and see which ones will suit your organization the most. To have a better understanding of available grants, you can look through grants.gov.

There are differences between federal grants and state grants. So, make sure to research the ones that are applicable in your area. Keep in mind that there are requirements to meet and contracts to negotiate. You should expect some initial hurdles!

Foundation Grants

Private foundations also provide nonprofit startup grant funds. It may be difficult to know where to begin, but focus on your state and start researching the available private grants in the area.

You may also need to approach the foundation and give them details about what you plan to do with your nonprofit. This will include your projected budget and the specifics of your business plan. If all seems to be suitable, they’ll happily finance your organization.

Note: Business grants are a possible fundraising strategy. Many for-profit businesses create corporate programs, grant options, or scholarships, available to nonprofit organizations. A different type of corporate funding, if you will.

3. Individual Donations for Nonprofit Startup Funding

Did you know that several nonprofits exist by relying on individual contributions from the public? For example, individual donations are the major driving force for the World Wildlife Fund.

To access public donations, set up fundraisers or auctions. Don’t be afraid to get creative. That’s what will draw people in. Fundraising is also a great way to tell people what your nonprofit is all about. This could improve the chances of more donations or public support. Events like bake sales to full-on carnivals, in a post-COVID world, would be useful.

4. Offering Memberships

Providing membership options is a suitable method to earn a fixed amount regularly. People who sign up will contribute to your nonprofit on a recurring basis. You won’t have to worry about finances drying up.

Offering memberships do not apply to all forms of startups. If you have an idea about what to provide to your members- for example, exclusive access to events or information — then this may be a viable funding option.

Tips for Finding Funding Sources

There are several ways to show your organization is ready for funds, improving your chances to bring in more (and do more for your cause).

  • Compile relevant programs: Doing the research work of gathering all relevant programs (nonprofit grant programs, for example) helps determine the possibilities.
  • Clearly convey your nonprofit projects: Whether it’s through memberships, individual donations, grants, or other funding methods those giving will want to know about your track record and how the fund will be used.
  • Show transparency: Keeping accurate track of how dollars and donations are utilized gives people a sense of trust. Accurate financial record-keeping also mitigates issues with governance. Working with a qualified team, experienced in nonprofits, helps immensely.

Nonprofit Startup Funding Can Be Easy

It may seem scary at first. But, you have many options to access nonprofit startup funding. From grants to memberships, you will benefit from researching. You will also benefit if you try out as many options as possible.

Why should you believe in your dreams? If you are compelled to start a nonprofit, use this as your selling point. Helping your community is a great mission to guide your organization. There will always be others who see the potential in your charitable acts.

For more nonprofit help and outsourced bookkeeping assistance, check out our services. This is also a very popular topic in a Modern Nonprofit Facebook Group, which you can join TODAY.

Taking Control of Your Nonprofit Finances

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Today, you might feel there are few things you have control over. Fortunately, taking control of your nonprofit finances is not one of them.

Since the novel COVID-19 pandemic has forced the world into a remote economy, nonprofits face a time of financial transition.

91% of global nonprofit organizations suffered operational damage in the crisis. This 91% is an improvement from the 96.5% recorded in March.

Waiting for normalcy is only a long-term solution that many organizations can’t afford. However, learning how to transition into a new normal can help your organization get back on its feet.

Understanding how to manage your finances is the best path to regaining stability. Here’s how you can start taking control of your nonprofit finances sensibly and effectively.

Taking Control of Your Nonprofit Finances

It’s important to consider how money transfers through different hands within your organization.

A board of directors should oversee general operations. An added financial branch of operation can still go a long way. Delegate financial tasks to a specific individual or group of individuals. That way, you centralize the information handled in the accounting process.

Along with financial managers, you can outsource your accounting tasks. Getting professional advice is a much more efficient way to get your finances in order.

Nonprofits that manage finances internally can appoint at least 2 or 3 people to manage. They can be direct points of contact between the organization and the finances.

You can also assign different functions to those in your financial branch. One member can manage executive functions while supporting members manage secondary tasks. This structure promotes organization, accountability, and transparency within your financial branch of operation.

Multiple Streams of Funding

Adding more streams of funding to your organization is essential to financial balance. Receiving support from more than a few sources adds to the revenue to collect.

It also adds more financial security. Instead of relying on one funding source, you open up more opportunities.

Collective revenue from various sources adds up and gives you more stability. If one stream dries up, you’ll still have the flexibility to focus on others in times of need.

Relevant Streams of Funding

While you grow more streams of funding, you should also make your sources relevant to the times. Prior to the pandemic, common sources of funding for nonprofits included:

  • Sponsorships
  • Grants
  • Programs tuition
  • Fundraising Events
  • Donations
  • Subscriptions

Nonprofits that focus more on in-person fundraising should consider more reliable funding sources.

Instead, there are more reliable, contactless methods of funding. These include sponsorships, grants, donations, and subscriptions.

Sponsorships and grants often involve some research and individual outreach. The scope of their awarding processes also requires waiting periods and gaps. Still, they’re useful sources to consider for long-term operations.

Tracking Expenses and Profits for Taking Control of Your Nonprofit Finances

Multiple streams of funding ensure that money flows into the organization.

This is a two-way stream. It’s possible for cash to flow out of an organization at a high rate.

Tracking the expenses shows you funds entering and exiting the budget. Your financial branch tracks expenses and two-way cash flow. The board of directors advises the active spending goals and habits.

The board and financial managers should meet on a regular basis. Your budget and the size of your organization should determine how often you meet.

It’s also helpful to automate some of the tracking process through software. You can use tools like Quickbooks or GetApp. Tools like these will allow you to begin taking control of your nonprofit finances.

These have specialized features for nonprofit organizations. They can also help you with the distinction between nonprofit and commercial operations. Many softwares also include tax forms and documents. You can use these to help your organization with legal compliance guidelines.

Basic Budgeting

Your organization should use budgeting to inform the other areas of financial management. Here are two basic budgeting tips to follow.

Budget Structures

Each nonprofit should have monetary goals relative to their operational goals. There are three main budgeting structures every nonprofit should know:

  • Surplus budget
  • Balanced budget
  • Deficit budget

These structures are often used in government or commercial spending. They’re useful guidelines to help you estimate profit margins and losses.
When your fundraising efforts exceed expectations, you have a surplus budget.

A balanced budget indicates the expenses are expected to meet profits. In contrast, a deficit budget means that expenses exceed profits. So, there’ll be a margin of lost funds to recover.

Your total budget operates within these structures. As you continue to fundraise, you can determine which type of budget your organization currently operates on.

Budget Timelines

A budget should also include a realistic timeline for specific goals. Be sure to include important landmarks in the year where you need to measure performance.

You can split the fiscal and calendar years into quarters to make goals more realistic. Then expand to an annual timeline to measure more long-term growth.

Board meetings should also align with your timeline of goals. Or, you can increase their frequency to keep up with constant changes.

Taking Control of Your Nonprofit Finances: Outlining Policies

The most important step in financial management is documentation. This includes recording tangible copies of your budget, funding sources, and financial goals.

However, you should also consider implementing or updating your operational policies. This includes spending and investment policies.

Updating your policies may crossover with budgeting. Typically, a budget tends to represent your organization in numbers. A policy shows the larger investment potential.

The content in your policy may also intersect with legal guidelines. For nonprofits, these guidelines often determine eligibility for certain funding opportunities or methods.

Manage Your Nonprofit Finances Now

Financial health is an essential part of any nonprofit organization. We can show your organization how to weather the storm and become financially resilient.

With our team of experts, you can get professional accounting and bookkeeping services. We’ll tailor your financial services to the needs of your organization.

To begin taking control of your nonprofit finances today, contact us, and request a meeting.

Create a Nonprofit Operating Budget

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Are you looking for new ways to keep up with the hustle and bustle of your nonprofit organization? Have you noticed that the bookkeeping is starting to slip by the wayside? If so, then you need to create a nonprofit operating budget and learn how to manage it effectively.

Doing so can help ensure that you’re staying on task. you’ll find yourself with more financial peace of mind after knowing that there’s a specific purpose for every dollar you raise.

See below for an in-depth guide on how to create a nonprofit operating budget to get yourself back on track. Be sure to consider everything that’s listed.

1. Set Aside Time with Your Team to Manage your Budget. 

Perhaps this is the first time that your organization will be addressing the budgetary needs that you have. Maybe it’s been so long since you kept a budget that you need to reassess where you are currently.

No matter the case, it’s important that you set aside time to hash out a new budget with your team. Find a time period where at least one person from each department can offer their input.

For example, if you have an in-house marketing coordinator, be sure to clue them in on your new budget to ensure your marketing needs are being met.

You’ll find that a great deal of this meeting will be compromised. Don’t get discouraged if it feels like you can’t get anywhere at first. It’s all about compromise. Every department will feel like their side of the operations deserves a higher portion of the budget.

If you need assistance with building your budget, then you can also decide to outsource it to a nonprofit accounting and bookkeeping service. If you need help creating a nonprofit operating budget, The Charity CFO is an expert accountant for charities. 

2. Gather Data

You might be wondering to yourself “where am I supposed to come up with the numbers? How would I know how much to budget for marketing, events, fundraising, and so on?”. By looking at the previous data.

They say business is all about learning from the past; building a nonprofit operations budget is no exception.

 

How do you create a nonprofit operating budget? The Charity CFO explains.

Gather up all your bank statements from the checking account you use for your nonprofit’s finances. This might be overwhelming at first, but take a deep breath and give yourself a few weeks/months to comprise all the data (if necessary).

Decide which expenses fall under the umbrella of the different departments of your business, then add them up on a month by month basis. Did you spend more than you raised in previous months? Are you overspending in one area of your organization?

If need be, sit down with each department chair individually to assess the money you spent and the areas in which you could cut costs. This will give you a better idea of the amount you can set for that department’s monthly budget.

Be sure to get input from your board. This budget is a collaborative effort. Accounting for nonprofit organizations can be tricky, so we encourage you to utilize the resources and information we offer! 

3. Plan Your Activities

Nonprofits are all about the activities and events that you both attend and organize for your faithful following. It can lead to some tremendous fundraising opportunities.

However, too many nonprofits design their budget without considering those activities first and foremost. They’re then thrown out of whack when they can’t find the financial room to either attend the event or put on an activity that represents their brand in the right light.

Start by scheduling your activities as far out as possible (preferably a year out). How much money needs to be allocated to those activities? Which ones take priority?

As much as it might hurt, this is a great opportunity to cleanse your schedule of any activities that you aren’t seeing great returns from.

4. Properly Estimate Income

Planning income and expenses for a nonprofit can be challenging, but it isn’t impossible.

First, be sure to list your estimated income if different tiers of risk. This should be prioritized from “least trustworthy” to “most risky”.

For example, say you organize 4 groups for your income sources: group 1, group 2, group 3, and group 4. You might decide that people listed in group 1 are “most trustworthy”, meaning they’re most likely to donate generously and often.

Let the data guide you while you estimate this part of the budget. Put your most frequent sources of funding into group 1, the least frequent in group 4, and so on.

5. Put a Job to Every Dollar

Disclaimer: the job of your budget isn’t to primarily track the money that you spend. It’s to assign a job to every dollar that you raise for your cause.

For example, (for the sake of simple math), say that you budget to receive $1,000 in funds for this upcoming month.

You might consider putting $200 towards donations, $500 towards operations for the month, $200 towards activities and events, then have $100 leftover. This is the wrong way to do it.

You need to budget for all $1,000 in funds that you receive, down to the very last penny. If things change (which they often do), then your budget can be adjusted. Your ability to create a nonprofit operating budget also involves some critical thinking!

What You Can Do Today

Now that you have seen several effective steps that you need to take when building a nonprofit operating budget, it’s time for you to do so the right way.

Be sure to read this article to learn more about how to raise money with virtual events for your nonprofit organization.

And for more inquiries on our ability to be an expert accountant for nonprofits, be sure to reach out by requesting a meeting and we will be happy to discuss our bookkeeping services.