Nonprofit organizations know just how specialized, impactful, and crucial their work is. These organizations function far differently than for-profit businesses, and many of their processes and procedures differ. This includes a nonprofit’s financial and accounting needs.
The truth is that powerhouse nonprofit organizations need powerhouse accounting services to match. With robust and comprehensive financial and accounting support, nonprofits can maximize the impact of their financial resources and use their funds more effectively. They can easily meet their reporting and compliance obligations.
Here’s everything you need to know about nonprofit accounting, along with a list of the top nonprofit accounting firms out there today, and why you should probably partner with one).
What’s So Special About Nonprofit Accounting?
We know your nonprofit organization is special, destined for great things, and making massive waves in the space you’re operating in. And kudos to you because doing good and addressing social and societal issues is no small feat. But your accounting needs differ greatly. You could even say they’re highly specialized.
Here's why:
- Your nonprofit is still generating funds and working with revenue, even if your organization isn’t pocketing the spare change. US nonprofit revenue has risen past $2.6 trillion. But nonprofits aren’t selling products and services like for-profit businesses – they’re generating funds through donations, grants, membership fees, and program service fees.
- With these unique revenue sources come with specific needs. For example, grants often have certain requirements about how they can be used (which is why nonprofits often turn to grant management solutions). They also often have to be monitored and reported on.
- Nonprofits typically practice fund accounting. Fund accounting is fairly different from any other accounting protocol and involves organizing financial resources into different groups (aptly called funds). Reporting requirements differ between funds, and different funds might have different restrictions on their usage.
- Nonprofits are often tax-exempt (if the IRS approves them), and this status comes with annual reporting and filing requirements.
- Since these organizations aren’t sitting on profits, they might be operating with a lesser runway, meaning that prudent financial practices deeply matter.
So, nonprofits have special accounting needs. Instead of tackling all this while still trying to do the most good, many organizations outsource their accounting to those with nonprofit expertise.
Why Nonprofit Accounting Firms (Actually) Make a Difference
When your organization chooses to outsource its nonprofit accounting services, what can you actually expect to get done? Here are some main benefits of choosing an expert provider.
1. Nonprofit Accounting Is Their Expertise
We said it once (or twice), and we’ll say it again: nonprofit accounting is ultra-specific, and you want experts who know this space inside and out. When you choose to go with nonprofit accounting services, you know you’ll never miss a reporting deadline, your funds will be monitored, and your resources will be maximized.
2. They’re All In, so You Can Focus on What Matters
If you’ve ever spent valuable hours on your nonprofit accounting, or if it has ever kept you up at night, then you’ll appreciate this. When a nonprofit accounting service provider is on board, they can fully own your financial and accounting needs. That means much less financial stuff on your plate and more free time and capacity to focus on furthering your cause.
3. They’re Modular, so You Can Choose the Services You Need
Every nonprofit has different financial and accounting needs; the best nonprofit accounting service providers know that. That’s why they’re built modularly, where you can add services as needed.
Is your bookkeeping suddenly getting more complex as your organization grows? There’s a service for that. Looking for help with your tax paperwork? Yep, that too. What if you want some experts assisting with your cash management? That’s also an a-la-carte service you can add on.
4. You’ll Never Miss a Financial Beat
There are a lot of boxes to tick when it comes to nonprofit accounting. From measuring the impact of funds to meeting your financial reporting requirements, all of your financial requirements must be met continuously.
While this can be a lot for an in-house team to constantly manage on its own, your nonprofit accounting partner has you covered. They can help ensure your financial requirements and reporting needs are easily met.
What Do Nonprofit Accounting Firms Own?
Nonprofit accounting services can take ownership of a few main functions and responsibilities. These can include the following.
Bookkeeping
Nonprofit bookkeeping refers to monitoring cash inflows and outflows, keeping financial transaction records, organizing and verifying them. When it comes to nonprofit accounting, there can be many different cash inflows and outflows, from distributing funds to recipients to receiving grants from the government. Nonprofit bookkeeping services give you rapid and accurate financial information you can rely on.
Taxes
While your organization might be exempt from federal taxes, it is likely subject to other taxes, such as Social Security and Medicare. And even with a tax-exempt status, there are still reporting requirements.
For example, the IRS generally requires tax-exempt organizations to file annual returns. Your nonprofit accounting partner can ensure all your tax and associated reporting obligations are met.
Accounting Management
This refers to expert-led account management led by a dedicated accounting team. You get a dynamic team of experts and state-of-the-art cloud accounting technology who own everything regarding your financials. Oftentimes, these services come with their own HR and tax advisors, meaning your nonprofit will be covered from all angles.
Financial Reporting
As we’ve touched on, nonprofits have plenty of reporting obligations. These might include tax and IRS requirements, fund account reporting, monthly and quarterly reporting, and investor reporting.
All of this is not only time-consuming but can also be high-pressure for in-house teams to get right because one missed deadline can potentially lead to serious consequences. But when you partner with a nonprofit financial services provider, you know your financial reports are in the hands of experts.
Cash Management
Effective cash management is crucial for nonprofits that want to accomplish their missions and goals. With effective cash management, money can be spent in the most effective way possible, maximizing an organization’s impact. Cash management services help correctly manage cash inflows and outflows to maintain the organization’s stability, meet its payment and distribution commitments, and plan for growth.
The Top 5 Nonprofit Accounting Firms Out There Today
With all of that in mind, here’s our official roundup of the top 5 nonprofit accounting services out there today that you can choose to partner with.
1. Hiline
Hello, it’s us 👋
We’re kicking off this list with ourselves because we deeply believe in the work of our team of accounting and finance-obsessed experts. We’re a premium tech-enabled accounting firm, delivering a one-stop shop of cloud-based accounting, tax, HR, finance, and more, and we specialize in accounting services for nonprofits. Our accounting services pricing and plans are suitable for every size organization, and you can choose a package that meets your needs and budget.
Hiline was founded to push the boundaries of what an accounting firm can be and use financial services to help organizations meet their growth potential. Our strategy is to combine our stack of best-in-class cloud accounting technology and our dynamic team of professionals to break the conventional accounting firm model to deliver clients a new, premium experience.
Now that you know a bit about us, we’re happy to list other nonprofit accounting service providers on the market. We’re confident in the quality of our work and value working with organizations that are a one-to-one perfect fit for us.
2. The Charity CFO
The Charity CFO says it offers “professional nonprofit accounting and bookkeeping services.” It also says that its team of CFOs gives you “expert bookkeeping and accounting support to help your nonprofit thrive.”
3. Jitasa
Jitasa’s “mission is to improve the effectiveness and efficiency of nonprofits.” They offer bookkeeping and accounting services, which are “affordable and cater to every nonprofit.”
4. Altruic
Altruic offers a range of accounting and consulting services for nonprofits, including cloud accounting, CFO solutions, and fraud prevention.
5. Foundation Group
Foundation Group says it has been “empowering nonprofit success since 1995,” and it offers services that can help you start a nonprofit and stay compliant. They also offer bookkeeping services.
Your Organization Needs Nonprofit Financial Operations to Move Mountains
Your nonprofit is already making a difference and is destined for even greater things. But in order to reach the heights you dream about, your nonprofit needs a strong financial base. And nonprofit accounting services are just what the doctor ordered.
If you’re looking for comprehensive nonprofit financial services designed to meet your organization’s needs, we’re here to help. Hiline offers premium tech-enabled accounting to nonprofits, and we know how to help you effectively manage your accounting and financial needs.
Contact us today to find out about how our cloud-based accounting package can help your nonprofit thrive while maximizing its ability to do good.
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