Did you know that sometimes nonprofits must pay income tax? It’s true. Just because you have a tax-exempt status, it does not mean that you’re, well, tax exempt! The IRS incorporated into the tax codes something called Unrelated Business Income (UBI) and it’s especially for nonprofit organizations. Frequently, nonprofits have revenue that the IRS considers unrelated to…
Tag: Nonprofit Accounting
Accounting for Fundraising Expenses
It goes without saying that, for many nonprofits, fundraising is a crucial element towards achieving its goals. Not only does fundraising generate revenue to support mission-critical programs, it can also provide a valuable opportunity to raise awareness for your cause. Guaranteeing your organization’s success beyond the next quarter requires careful planning and prioritizing, as well…
5 Best Practices for Nonprofit Budgeting
One of the biggest challenges for nonprofit organizations is sustainability. Staying afloat during uncertain times can be especially tough without a proper financial plan in place. A carefully planned budget can help NPO’s maintain and improve their operations and even refocus their goals and objectives when challenges arise. Think of a budget as a roadmap that will guide your decisions on how…
5 Key Tips to Successful Nonprofit Financial Management
By adopting nonprofit financial management best practices, organizations can optimize their present and protect their futures. Following a few key steps can make a big difference in the performance of a nonprofit, giving it the stability and flexibility needed to deliver on its goals and achieve its missions. Following financial management best practices also protects nonprofits from making costly mistakes or taking actions that compromise the organization’s integrity. While it is impossible to…
Nonprofit Accounting Basics: Understanding Functional Expenses
If you have ever wanted to expand your knowledge of nonprofit accounting basics, learning about functional expenses is a great place to start. Nonprofits have unique reporting requirements that set them apart from for-profit businesses. One of these reporting requirements is presenting an analysis of natural expenses by function – most commonly through the Statement…
Cash Flow Management for Nonprofits
Cash flow management in any organization is nothing more than the mix and timing of cash receipts and cash payments. In its most simplistic form, it is cash in and cash out and, ultimately, it is where budgets, projections and forecasts meet reality. It is critical to ensuring that funds are available to pay the…
What’s a Statement of Financial Position and What it Can Do For Your Organization
Professional athletes measure their performance all the time. As Peter Drucker–the man who invented modern business management–famously said, “If you can’t measure it, you can’t improve it.” Even though professional athletes are not considered to be in business, they do just that. They measure their performance during each game, during each season, and during their…
The Top 4 Ways to Reduce Audit Stress
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…
Is It Time to Assess Your Accounting and Finance Function?
An assessment can be a valuable tool in determining the current state of your organization’s accounting and finance function. Not having a good grasp of this information can lead to challenges down the road such as inaccurate data used in decision-making or even an unfavorable management letter from your external auditor. A comprehensive accounting and…
Audit vs. Finance Committee: Why Nonprofits Need Both
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…