I was reading an article in Accounting Today Magazine titled “The complex world of nonprofits” by Antoinette Alexander. She made some great points about issues non-profits could be facing in 2015. I have summarized the 6 main points below.
1. “The Internal Revenue Service audited an average of 6,205 tax returns of tax-exempt organizations per year from 2001 to 2008. However, from 2009 to 2011, that number rose to an average of 11,111 returns per year. That’s an increase of 79%”
Let’s be honest, audits scare everyone. However, if you maintain proper controls and have a good accounting infrastructure, you most likely will significantly decrease the risk of having any issues. Make sure you have a good accounting firm in place that can act as the liaison between your organization and the IRS.
2. “Board members and supporters want to be able to quickly and easily consume and understand data”
Everyone wants everything in real time these days. Your board and supporters are no different. In order to accommodate this need, proper processes and procedures are imperative to have in place. You may want to look into using a financial dashboard to make things easier.
3. “Nonprofits need to show the journey of a dollar toward supporting a mission”
People want to know how their money is impacting a particular project or cause. It is not sufficient enough anymore to just show them how the organization is doing as a whole. Accurate accounting for specific projects is a must have for this!
4. “Increase integration between different systems, such as accounting and fundraising will be essential”
Efficiency is crucial in any business (for profit or non profit). Being able to properly integrate your systems will save you tons of time and allow you to focus more on the mission of the organization. That is why you are running it, right?
5. “A greater emphasis on budgeting and the need to make hard choices”
A good budget is what drives any organization. However, with a good budget may come some tough cost-cutting or cost re-allocation decisions. Make sure your budget is tight and accurate as possible.
6. “I personally see a massive trend of folks moving to the cloud for accounting solutions”
Technology is taking over the world and cloud accounting is no different. Cloud accounting allows multiple users to have seamless collaboration within the accounting software package on a real-time basis. If your accounting system is not currently in the cloud, I would highly recommend making the switch.