‘Tis The End of Year Accounting & Tax Preparation Season: Consulting Pro-Tips & Best Practices For Nonprofits From Supporting Strategies  

View a recording of the 24 Months of Learning Workshop

“From complicated nonprofit regulations to delivering financial information to the board on time, nonprofit leaders face a number of bookkeeping challenges that can distract them from focusing on their organization’s mission. If you’re relying on an outsource bookkeeping and controller services provider, you need to know that their work is accurate and that you will get the support that you need when you need it the most. Supporting Strategies consistently delivers on both counts.”

– Joel Burstein | Co-Founder and CEO | BEAM Collaborative

Supporting Strategies: Delivering Financial Peace of Mind Since 2004

As the calendar and back office shift into the December mindset of closing out the year, we turned our attention this week toward helping prepare our network with some advanced accounting fundamentals and pro tips to close out the books and gain a competitive advantage in the upcoming tax season. To facilitate the knowledge transfer, we were joined on our Call For Community Solutions and subsequent 24 Months of Learning deeper dive webinar by Supporting Strategies. Our “surround-sound” approach to conversations with Supporting Strategies was designed to explore best practices financially for nonprofit organizations, including bookkeeping, accounting operations, and controller services.

Since 2004, Supporting Strategies has built a successful nationwide franchising model to support local businesses, nonprofit organizations, and communities throughout the country. The firm currently has more than 77 franchises, including one in Pittsburgh where it is currently working with 130 for-profit and nonprofit organizations, earning the distinction as a top B2B service provider by Clutch, the leading data-driven company for matching and making business buying decisions.

No One-Size Fits All

No matter the size of your nonprofit organization or budget, Supporting Strategies offers a range of outsourced accounting, bookkeeping, and operational support services that fall within six core service areas:

• Essentials – As Jennifer Gilarski, Business Development Manager for Supporting Strategies aptly put it, the essentials are the “meat and potatoes” of accounting. This is the chart of accounts, account reconciling, and peace of mind that your books are up-to-date and accurate. Far too often, this is also the area that many nonprofits are starving their organizations and ability to focus on their core mission because they are distracted by accounting challenges.
• Insights – Stay on top of your numbers in “real-time” with standard financial analysis or more complex monthly reporting, keeping an eye on cash flow and financial performance in real time. Expanded monthly financial reporting including weekly cash flash, forecasting, class location, and budget analysis.
• Compliance – Financial compliance, from the basics to more complex ad-hoc compliance issues and financial management support. Either way, from 1099, sales tax filings, and financial audit assistance, your CPA partner will be better prepared for tax time and preventative measures (i.e. reviews) for audit season. Payroll and benefit administration services on the back end provided by Supporting Strategies are also critical for taking advantage of programs such as the CARES Act and Employee Retention Credit (ERC) which we covered in a previous Call For Community Solutions.
• Revenue – Your nonprofit organization stands to benefit from improved cash flow with timely and accurate A/R management, invoicing, and collections. Easily track all transactions, restricted and unrestricted funds, through external, integrated online software systems.
• Expenses – Given the plethora of fundraising activities, and events, your vendors and partners also stand to benefit from mastering these accounting fundamentals, ensuring proper expense management, allowing you to effectively manage more transactions for your nonprofit organization, and freeing you up to focus on growing new funding streams and tackling bigger issues facing your community.
• People – Without a doubt, it is the people that power your nonprofit organization’s mission. Your mission-critical lens then should be taking care of your people with smooth, accurate, and timely payroll administration solutions, benefits, PTO plans, and onboarding/offboarding experience as you build and optimize your team for the task.

“Instead of spending meetings going over the granular general ledger and whether something is in the wrong line on a balance sheet, now we’re thinking cash flow, budgeting, and deeper-level analysis because we have the time and the confidence in our numbers and our reporting that we can move on to bigger issues.”

– Andrew Schneider | Executive Director | Arlington Thrive

Get The Support Your Nonprofit Needs To Be Financially Sound This Season

The resounding feedback and response from our presenters are there is no need to “go it alone” when it comes to managing the complexities that come with operating a successful nonprofit. Whether your nonprofit organization needs core support with your bookkeeping or wants to outsource all financial and payroll operations, Supporting Strategies will support you how, where and when you need them in a highly-customizable fashion. Their flexible packages give you the option to select only the services you need at a fair and predictable monthly cost and the option to add services as your business scales. Ultimately, the discussion comes down to making informed, intentional financial decisions that is keeping your organization accountable to your stakeholders as good stewards of funding, while allowing you to stay focused on your core mission and going after diversified streams.

“You guys face a number of accounting operations, bookkeeping and tax-related challenges that can distract you from focusing on your organization’s mission. Our mission is to help you build a stronger foundation which will enable you to comply with nonprofit regulations, leverage Quickbooks or other software to present and deliver information to your board more easily and concentrate on the vision and long-term strategy.”

Lauren Jacisin | Financial Operations Manager | Supporting Strategies

The key takeaways and results of following these best practices will empower and enable you and your nonprofit organization to do 4 things:

• Refocus your core mission by modernizing your bookkeeping systems. A few simple steps will enable you to streamline processes, enhance controls, simplify tax preparation and receive real-time insights into your organization’s finances. All of these will increase bandwidth, and free up your staff to devote more time and energy to hitting your fundraising targets and meeting other key goals.
• Improve transparency when providing financial reports to your board, increasing their confidence in your professionalism and ability to safeguard donor funds.
• Gain the confidence that comes from knowing you’re doing things the right way. That’s a huge takeaway. Why? When it comes to bookkeeping, nonprofits are held to a higher standard than the for-profit sector. Fund accounting, grants management, and the new Financial Accounting Standards Board (FASB) regulations are all potential speed bumps. Making sure you have a bookkeeper with requisite nonprofit experience is absolutely essential and can help ensure a smooth ride.
• Think more strategically about your organization’s future rather than simply scrambling to meet the financial demands of the present. Far too often, nonprofit organizations fall short of future expectations by failing to make the right adjustments in the area of finance and controls. Data from the National Center on Charitable Statistics reveal that approximately 30% of nonprofits fail to exist after 10 years, and according to Forbes, over half of all nonprofits fail or stall within a few years due to the lack of a strategic plan. In most cases, poor financial management looms behind the stall.

Operating a nonprofit shouldn’t be an exercise in crisis management. But for many executive directors, that’s what the job has become. Days disappear in a stressful blur – trying to track down a misclassified donation, getting ahead of the implications of yet another change in the tax code or accounting standards, and hustling to keep the funds coming in an increasingly competitive environment. The goal is not to ignore the flow of funds into and out of your organization entirely. Rather, it’s to stop fixating on the details and look at the long-term trends. Which fundraising efforts have been most successful, and why? Could you expand those efforts while eliminating those that have traditionally performed poorly?

And if you are able to boost your performance so that you’re not just maintaining your level of funding but actually growing it, what will you do with those extra resources? Is your most pressing need for improved infrastructure or more full-time staff? Do you need more professional marketing? Or could you simply do a better job of matching benefactors and beneficiaries? Imagine being able to both identify such long-term objectives and have the support in place to actually pursue them. Start building your dream team as a next step:

• Bookkeeper
• CPA
• Banking Relationship
• Staff

Pro Tips and Best Practices from Supporting Strategies

QUICKBOOKS MODERNIZATION

As we close out the year, most nonprofits come to their bookkeeper or firms like Supporting Strategies with a basic chart of accounts and statement of activities. As the year closes, and tax season approaches, you’re going to get an audit or view or compilation for your 990. Then, your CPA creates a new statement of activities and you have no idea how it got to that point from what you provided. For example, your net assets look different than theirs. Or, you discover there is this thing called “restrictions.” By doing a couple of steps in QuickBooks, you can mirror your financials to what the CPA provides, and by doing so, you’re going to be able to create and mimic those reports at the click of a button and you don’t have to wait until year-end. Further, the board relies mostly on those financial statements that the CPA provides so what better than for you to be able to replicate them at any given point in time and go into your board meetings with complete confidence and leave with the complete confidence of your board?

SOFTWARE INTEGRATION

Did you know that implementing some additional tools outside of QuickBooks as part of your best practices creates an even better, more aesthetically pleasing picture for the board? One such tool is Fathom (www.fathomhq.com). Fathom integrates with QuickBooks seamlessly, syncing data into reports utilizing pre-built metrics and key performance indicators. The results are visually pleasing, with stimulating charts and graphics. Fathom is also cost-friendly, and pleasing to the budget eye, averaging right around $7 per user.

INCOME & EXPENSE TRACKING

As nonprofit fiscal leaders, you have a lot to track. You have so much information you need to track and organize in order to make strategic decisions about your organization. You need to track your natural income and expense categories. Those are your basic chart of accounts – your revenue, your salaries, your wages, your postage, and shipping. But then you also want to track expenses by function right? How much did you spend on the DJ for the gala or the meals for the golf outing? You want to be able to track everything by program. You also want to be able to track donor-imposed restrictions. For example, how much money somebody set aside for you that you could only use for one purpose. You may also want to track more designated restrictions. Maybe a donor didn’t restrict it but your board voted and decided to restrict those funds. And lastly, you want to know what you actually have to spend at the end of the day, right?

In an old-school version of QuickBooks, you might only be tracking the natural income and expense categories. But did you know there are some ways that you can change your QuickBooks file in order to see this information in real time? You can go into your settings in QuickBooks to add a function called classes and you have the ability to set what they are. For example, do you want to track your admin costs, fundraising costs, or specific program costs? No problem! You can also code things for a project or customer, so you can track each grant that you get and all the expenses that go against that grant. This is what success would look like. You know exactly where your restricted funds are, and so does your board. And we know where the confidence of the Board goes from there. All the way UP!

AREAS TO DISCUSS WITH YOUR CPA

• New revenue recognition ASC 606
• Accounting for leases
• In-Kind Donations and Contributed Services

As our presenters shared this week, depending on the size of your nonprofit, this may sound like a tall task but the key is to start small. Think about the meat and potatoes, not the fancier fare for now. Think now about how to get your books and accounts set up and prepared for Day 1, on January 1. Don’t let budget be a barrier. You can customize a solution with firms like Supporting Strategies that fit your budget. You can also identify bookkeepers who are willing to work part-time or more seasoned, semi-retired finance or accounting professionals with a desire to reach back, stay active, and support a viable mission. In either event, don’t delay, take faithful action today! To learn more or schedule your FREE consultation with Supporting Strategies, or get prepared for your pre-audit or tax meeting to reduce the cost burden, contact Jennifer Gilarsky, Business Development Manager with Supporting Strategies at jgilarski@supportingstrategies.com or visit their website.

As always, reach out, share feedback or schedule a one-on-one discussion to go deeper:

• erin@forbesfunds.org
• emily@forbesfunds.org

This Week’s Call Framework & Goal Alignment

This week’s call and discussion demonstrated broad alignment within our core framework, specifically matching several UN Sustainable Development Goals, including #8 (Decent Work and Economic Growth); #9 Industry, Innovation and Infrastructure; #11 (Sustainable Cities and Communities); #16 (Peace, Justice and Strong Institutions); and #17 (Partnerships For The Goals). In addition, our concentrated discussion around finance and accounting with Supporting Strategies strongly supports the Economic Stability of the Social Determinants of Health.