Why Financial and Accounting Oversight are Crucial for Nonprofit Organizations
Nonprofits, unlike small businesses are under an intense level of scrutiny. As it is a legal requirement for nonprofit organizations to have a board of directors, their oversight involves a high level of financial review. For these reasons it is very important for nonprofit accounting, operations, and financial review to not only be accurate, but that they support the organization’s views and mission. These financial measures involve a lot of detailed number work and accurate reporting for the nonprofit. That is why it is crucial for a nonprofit to have capable professional resources that provides the organization with the vital financial management and oversight it needs.
Board Experience and Decision Making
Even though nonprofit associations and the board of directors are comprised of many accomplished professionals, most of them serve as volunteers and do not have the required financial background or time to assess the complex finances that come with operating a nonprofit. With the higher level of scrutiny that comes with a nonprofit’s financial compliance, it is important that that the finances that are presented to the board are accurate, relevant, and easy for the directors to understand. This will make it easier for the board to make the important decisions that are required for the success of the nonprofit.
Taxes and Visibility
Taxes are not only an integral part for a nonprofit, they are also extremely complex. Having accurate financial statements is pivotal for a nonprofit to remain in tax-exempt status. The IRS heavily scrutinizes nonprofit organizations for fraud and abuse. Therefore, hiring a dedicated financial management team that knows the in’s and out’s of nonprofit accounting is extremely important to ensure the organization is not only compliant with all the laws, but that the mission of the nonprofit is being carried out.
Meeting Goals and Future Sustainability
The whole purpose of a nonprofit is to carry out its mission, message and goals. If the organization’s financial reporting is inaccurate it could lead to the downfall of any nonprofit. Not only does proper financial reporting allow the nonprofit to make critical decisions for its foundation, but the financial statements are also an indicator of the organization’s successes. Robust accounting for nonprofit organizations helps to determine if the nonprofit can continue to meet its goals into the future. That is why having a dedicated and knowledgeable financial team to assist this process is so essential for the longevity of any nonprofit.
At Fernley & Fernley, we provide complete accounting for nonprofits, including a wide variety of financial management services. We offer these services to not only help your nonprofit stay organized and well managed, but to also provide the resources it needs to continuously expand and meet its vision and objectives.
If you’re looking to help your organization grow and would like to explore our nonprofit accounting or financial management services, please contact us today.
1. Why Financial Management of a Nonprofit is Harder than a For-profit.(ND) By Stephen King.