In Pursuit of Profit
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As a nonprofit we want to save as much money as possible because the donors expect their money to go to the cause, not admin expenses. We also have to meet the requirements to be in compliance with all applicable standards and regulations, so we know it’s an area worthy of investing funds.
This conversation expresses the quandary that nonprofit organizations deal with every day – they understand the importance of good financial management, but they also realize that getting funding to invest more in this area is going to be an uphill battle. As a result, they need a cost-effective way to hire a nonprofit accountant or find accounting services on a budget.
Splitting the Role
Our colleague Jen Girard at CFO Selections gives some great advice when she recommends that nonprofits split accounting/finance responsibilities into multiple roles to cover their needs for less. This is an especially helpful approach when looking to fill an accounting or finance leadership role because it allows you to hire lower level employees to cover the roles. In Jen’s example, she explains that instead of trying to hire a Finance Manager with a $100,000 budgeted salary (which is unlikely to work because the average salary for the role right now is $109,000-137,000), a nonprofit can break out the role’s responsibilities into strategic needs, senior-level accounting needs, and general accounting/bookkeeping needs. Then, the organization can then hire a fractional controller/CFO and also a full-time accountant to address these separated needs in a way that is more cost-effective.
Outsourcing Accounting Activities
In other instances, it may make more sense for a nonprofit to outsource their accounting activities entirely by hiring a third-party accounting services provider to do the work. Outsourcing accounting work allows an organization to avoid the added expenses that an internal employee would incur in the way of payroll taxes, benefits costs, paid time off, raises, and bonuses.
Outsourcing also has the added benefit of bringing someone in more quickly because finding an experienced nonprofit accountant is harder than finding a highly qualified accountant with experience at for-profit entities. By utilizing an accounting company that has a large team of accountants on staff organizations are more likely to find someone to get started right away, which can be a huge cost savings over leaving the position vacant and waiting for the right person to come along.
Training and Upskilling Existing Employees
Sometimes whoever is handling a nonprofit’s books does not have much experience in nonprofit accounting, and other times they simply do not know the organization’s software very well. Obviously, it is ideal if the accounting system that is the best for the organization’s needs is one that someone internally already knows. But, if that is not the case, then the question becomes “Do we hire someone new to oversee accounting or switch systems to something easier or more familiar?” Unless the system in place is not keeping up with the organization’s needs, the solution is going to be on the people-side of the question, not the software-side. So, instead of hiring someone new to do the accounting, consider hiring a nonprofit accounting consultant to train internal personnel. A consulting accountant can come in and upskill existing employees to better equip them to manage the organization’s books, generate financial reports, and stay in compliance with applicable regulations.
When you need nonprofit accounting help, please reach out to us! We work with organizations every day that need help managing their books so that they can do their best work in the communities that they serve. Find out more today!