Gone are the times, when it was enough for a nonprofit organization to focus on its programs and do well at its mission.
With financial scams rocking the world, stakeholders don’t’ just want to know who you are helping. More than ever, they now want to see proof of how wisely your nonprofit organization is spending its resources. And they want it in black and white.
To keep its head above water, a nonprofit organization is required to apply sound accounting practices into all its activities. Simply put, the books of accounts of the organization should adequately reflect the activities of the organization and should adhere to the acceptable accounting principles.
Nonprofit organizations run on limited resources. Most directors of nonprofits live on the edge, worrying about how they’re going to fund their programs, pay salaries on time and pay other expenses.
Professionally managed books of accounts, takes over a lot of these worries by keeping track of revenues and expenses and providing timely signals. Not to forget, the huge advantage it provides when a nonprofit organization applies for grants or approaches IRS for obtaining tax exempt determination letter or at the time of filing form 990.
Benefits of Nonprofit Accounting
Proper accounting also offers insight into the following important questions:
- Am I making or losing money from my business?
- Is the organization making enough to pay salaries and other bills?
- How much is the organization worth?
- How much is owed to the organization, and how much does it owe?