MemberJune 1, 2023 at 2:39 pm
The very first item should be to link as many of your software products as possible. It will save a lot of manual/one-off task that is common when products are not link. Think of it as managing the software.
Next, because I have spent more than half of my career working in the profit world and I can tell you there is a difference in how non-profits record keep. Highly recommended since you stated that the organization will be overhauling its chart of accounts, etc. Hire a firm that specializes in non-profit auditing and accounting. Yes, it will cost; however, the money spent will be well worth it as the consulting firm will have insight into all items non-profit. Allow the new finance person to work with this firm to create a seamless transition and also a more workable set of day to day parameters for accounting.
Best practices and the Board is huge and there is no one size that fits all board members. Unlike the professionals who prepare the numbers (accounting) most board members do not have this level of training.
I have found that starting with the most important aspect of non-profit, the revenue. Finding the perfect way to explain:
- Restricted funds. These are the funds that must be spent on certain projects and activities at your organization.
- Temporarily restricted funds. These funds should be spent on certain projects and activities at your nonprofit until a certain time period. After that time, they become unrestricted funds.
- Unrestricted funds. This is also known as your annual fund. It can be spent on whatever aspects of your organization require the greatest need.
Understanding how funds are accounted for goes a long way in understanding the Statement of Financial Position, Statement of Activities and Statement of Functional Expense. And as a side note to all of these reports is the 990 (Return of Organization Exempt From Income Tax).
Best practices for everyone that has a seat at the Board Table or in the organization on the Fiscal/Finance/Accounting/Fundraising Teams:
1. Reference your budget frequently.
2. Establish concrete internal controls
3. Conduct regular audits whether or not the organization is required to or not (not meeting the threshold to trigger an audit
4. Use specialized software designed for non-profits. And create links between software. This will streamline the process and give the accounting staff the ability to manage the data (reports and information).
Best to you as you chart the vast territories of the non-profit world and most definitely the world of Board Members challenges.