Are you involved with a non-profit organization and struggling to navigate the intricate world of finances? Don't worry, we've got you covered. In this blog, we'll break down the key principles of non-profit accounting in a way that's easy to understand and implement.
Listed below are 5 tips for successfully managing your non-profit finances:
1. Keep it Simple: Solid Bookkeeping
Just like at home, managing finances starts with good record keeping. Keep detailed records of your income, expenses, donations, and grants. The more accurate and organized your financial records are, the smoother your financial journey will be. Our go to system for accounting is Quickbooks Online.
2. Funds: Keep Them Separated
Non-profits often deal with various types of funds—unrestricted, temporarily restricted, and permanently restricted. It's important to keep separate accounts for these funds and ensure that each fund is used in accordance with its specific purpose. Clear separation keeps everything transparent and in line with donor intentions. You can NOT afford to mess this part up.
3. Financial Health: Internal Controls
Picture this as your non-profit's internal defense mechanism. Establish strong internal controls to prevent errors and fraud. This could include double-checking financial statements and reconciling bank statements to avoid any financial surprises.
4. Budgeting for Success
Every successful venture requires a roadmap, and your non-profit is no different. Develop an annual budget that aligns with your mission and goals. Keep an eye on your budget throughout the year and make adjustments as necessary to ensure financial sustainability.
5. Shine a Light on Your Finances: Transparency & Reporting
Transparency is the name of the game. Provide timely and accurate financial reports to your board, donors, and the public. Compliance with reporting requirements, such as annual tax filings, is crucial for maintaining trust and accountability.
Incorporating these five best practices will enable your non-profit organization to be financially successful while maintaining the trust and support of your stakeholders. Non-profit accounting may seem complex and scary, but with the right approach and a professional accountant, it's possible.
If you need assistance with getting your accounting in order, reach out to us for a FREE consultation.
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