Author: kathy-beck

Nonprofit Financial Management: Managing the Millennials

Nonprofit financial management includes managing not just the money but the people. As part of the leadership team at your nonprofit organization, you’ll be in charge of hiring new employees (especially ones intended for the accounting and finance departments) as well as meeting other potential employees. You’ll also work with broad, diverse teams across the organization—some of which may include millennial employees.

According to AICPA, millennials now make up the largest portion of the United States workforce. Millennials are the generation born between 1977-1995. There are 83 million of this generation in the workforce, making it likely you’ll be working with someone from the millennial group soon.

This is a group that thinks differently from Baby Boomers and Generation X employees. If you are in a senior management position, you are likely from among those generations of people born after 1945 (Boomers) and after 1965 – 1977 (roughly the dates for Generation X). Each generation is shaped by their life experiences, cultural experiences, and family experiences, with specific traits shared among many members that tag them by their group.

AICPA has put together a list of points to help you manage millennials in the workplace. This group, more so than other groups that came before it, values autonomy and mission-driven organizations. This makes them perfect fits for the nonprofit world. Let’s take a look at some of the characteristics of millennials in the workforce.

Long-Term Employment? Think a Year

Our parents and grandparents valued long-term employment and the stability this brought to their paycheck, lifestyle, and families. This generation believes that 13 months or more is long-term employment. Their parents lived through many of the employment upheavals of the 1990s and early 2000s which, unfortunately, made long-term career stability a thing of the past.

If you desire to have these employees around for longer than 13 months, make it a point to engage them in the work early on. Help them feel motivated and inspired by the organization’s mission. This may help develop the loyalty you prize and the career goals they prize.

Control Is Big

Control is big with this generation. They like to run the show and think like entrepreneurs. They prefer to control their workflow, schedule, and environment as much as possible.

As you work with millennials, consider how much autonomy you can give them. It’s probably not a big deal to be more flexible with their work schedule. Allowing some work from home or flex time may benefit all. But, control over the work process may be a point in which you do not wish to compromise. Pick your battles and provide as much autonomy to the workers in this generation as you can.

They’re Used to Grown-Ups Doing Things for Them

A contradiction with control is their need for others to do things for them. On the one hand, they dislike being told what to do, but on the other, they are used to their parents doing quite a lot for them.

Avoid falling into the trap of acting like the parent around them and picking up the slack when they do not perform job duties. Instead, mentor, coach, and advise them on how they can do it for themselves. By empowering them, you’ll help them achieve their potential.

The Good News: This Is a Generation that Values Lifestyle Over Career

The good news among this generation is they value lifestyle over a career. They’re accepting of diversity and will bring new, fresh thoughts to your organization. This includes the area of nonprofit financial management.

Perhaps more importantly, they are passionate about a cause that matches their lifestyle. This makes them seek positions at nonprofits whose mission aligns with their goals and values. You’ll find that once this generation commits to your organization, you have a passionate, motivated employee.

Beck & Company

Beck & Company is an independent certified accounting firm specializing in nonprofit organizations. Since 1987, we have helped many nonprofits in the Washington D.C. area and along the Eastern seaboard with their accounting and financial management needs. We provide audit, tax, accounting, and consulting service that addresses all aspects of a small to mid-sized nonprofit organization’s business. Contact us or call 703-834-0776 x8001.

 

Nonprofit Financial Management Makes a Bigger Impact Than You Think, New Study Shows

A new study published by Bill Meehan and Kim Jonker indicates that nonprofit financial management has a greater impact on how nonprofits are viewed by the public than previously thought. The study, The Stanford Survey on Leadership and Management in the Nonprofit Sector, penned by “friends” of the GuideStar organization, outlines seven areas which the study’s authors call “the engine of impact.” Several of these points, when taken together, point to nonprofit financial management’s role in the leadership of an organization.

The Seven Engines of Impact and Their Role in Nonprofit Financial Management

We know that nonprofit financial management can make or break an organization. Sound financial management provides a sturdy base from which a nonprofit may fulfill its mission. Without responsible financial management, nonprofits—like their for-profit counterparts—may cease to exist.

Among the seven “engines of impact” cited in the study, several can be taken together under the umbrella heading of nonprofit financial management. Let’s take a closer look at each, but especially those that impact nonprofit financial management.

  1. Mission
  2. Strategy
  3. Impact Evaluation
  4. Insight and Courage
  5. Organization and Talent
  6. Funding
  7. Board Governance

Among the seven, most directly or indirectly intersect with the world of nonprofit financial management. The survey’s authors found that among the 3,000 nonprofits they surveyed, most—if not all—fell short in at least one area. Successful nonprofits were strong in all seven.

Supporting Your Nonprofit: Improving the Engine of Impact

The good news is, according to the survey results, more than 80% of nonprofits fell short in one or more of the seven areas. The bad news is your nonprofit may be among that large majority.

Board governance, funding, and impact evaluation—three key areas of nonprofit financial management—were cited among 50% of respondents as areas in which they fell short.

How does your organization measure up? The survey’s authors put together a questionnaire which you can fill out online at the link cited above to assess your own nonprofit.

If you find your organization comes up short, there are quite a few things you can do to improve:

  • Work with an outside consultant: A CPA firm specializing in nonprofit organizations can help you assess your financial status and suggest direct improvements to benefit its health.
  • Use software: Software to help track, manage, and assess fundraising activities, donor communications, and general organizational management can be helpful to add a layer of accountability to your organization. Many nonprofit accounting software packages include good reporting capabilities, which can transform data into useful information that will help finance and non-finance personnel alike manage their work better.
  • Engage the board in direct conversation: If you feel that board governance is an area in which your nonprofit falls short, build an action plan with your board, along with directors and other key stakeholders, to improve stakeholder engagement. How can you engage in conversation with your board so they feel both empowered and invested in the activities of the organization?

There’s no magic to improving nonprofits. A concerted, focused effort, based on an evaluation of major criteria such as those outlined in the seven points presented in this study, can help you improve your nonprofit and build a stronger organization that can best serve your constituents.

Beck & Company

Beck & Company is an independent certified accounting firm specializing in nonprofit organizations. Since 1987, we have helped many nonprofits in the Washington D.C. area and along the Eastern seaboard with their accounting and financial management needs. We provide audit, tax, accounting, and consulting service that addresses all aspects of a small to mid-sized nonprofit organization’s business. Contact us or call 703-834-0776 x8001.

 

Easy Cloud Computing for Nonprofits

Getting employees buy-in when making the change from an old accounting system to cloud-based fund accounting can be a daunting task. Your staff may resist the change altogether. Some may fear losing their value as the team “go-to person” for navigating through the old system and all its antiquated processes. However, when the staff sees how easy their job can be using software in the cloud, you may find it doesn’t take long to have a happier and more productive team.

It’s Easy to Find Data!

For example, “Randall” keeps his data on a USB drive and is rushing to his flight for an important event. He slips the USB drive into his pocket while digging out his ID, the USB drive tumbles to the airport floor. Randall isn’t aware that the USB drive containing his entire presentation—the one he worked on for hours last week—is gone. He can’t retrace his steps because he doesn’t know it’s missing. Only when he gets to his next meeting is when he realizes the USB drive is missing, at which point it’s too late. Anxiously, he makes calls to his office for help, but he is still dealing with problems he wouldn’t have had if he had hosted his data on the cloud.

With cloud computing, you’ll never worry about losing data again. Upload your data to the cloud in D.C., take the metro to Annapolis for an important meeting, and access it as easily as if you were in your office at home. All you need is an internet connection, your user name and password, and you can find, access, and retrieve data quickly.

USB drives can be lost. Computers break down. People forget to back up vital data. The cloud does it all for you, so you don’t have to worry.

It’s Easy to Collaborate!

Many nonprofit organizations are transitioning to flexible work arrangements or environments. It’s not uncommon today to find entire departments outsourced to third parties or to hire a temp, consultant, or freelancer who you’ll never meet in person but who provides outstanding work. These people may be scattered all over the country or the world, but technology connects them in ways never dreamed of. Skype, Trello, Slack, social media and cell phones make it easy to hire the best no matter where they live.

That leads to some challenges when it comes to sharing data on old systems. On-premises systems do not allow for internet access. You must be physically present to log into the system. New, cloud-based systems enable anyone, anywhere with access permission to log onto the system. Collaborate and share data easily no matter where you and your team work. Cloud systems make it seem as if you’re all in the room together working on the same document.

It’s Easy to Overcome Challenges!

“Randall” continues with his tough day. Not only did the USB drive fall out of his pocket, but his laptop is infected with a virus and the computer won’t allow him to access his files.

An infected laptop that won’t allow you to access your data is trouble enough, but compound that with software loaded onto the laptop that you’ve just lost access to and you’ve got heaps of trouble. With cloud systems, it doesn’t matter if you’re using the laptop you’ve always used or if you’re using a loaner while yours gets fixed. The software is located on the cloud, not on your laptop, desktop, or smartphone, so you can access it anywhere, anytime.

It’s peace of mind for your organization software and data.

Beck & Company believes in excellent service, technical expertise, and creative thinking.

Our services are highly personalized, cost effective, accurate, and dependable. Above all, we find the most practical solution to foster success and opportunity in your business and personal financial ventures. Serving small and mid-sized organizations and individuals, we provide audit, tax, accounting, and consulting service that address all aspects of your organization with one goal in mind—exceeding your expectations. Contact us today for more information or assistance.

Will Blockchain Technology Eventually Affect Accounting for Nonprofits?

In the field of accounting for nonprofits, you may never have dreamed that you’d need to consider blockchain. Blockchain, the technology undergirding the entire cryptocurrency realm and beyond, is a rising star in the world of technology innovations. You may not think that as an accountant, especially one who does accounting for nonprofits, that you must consider blockchain. But, its impact goes well beyond Bitcoin, Ripple, and all the other cryptocurrencies out there.

What Is Blockchain?

In 2008, a white paper appeared on an obscure forum for technology enthusiasts. The paper, entitled, “Bitcoin: A Peer-to-Peer Electronic Cash System”, outlined a new system of value exchange. This pure peer-to-peer electronic cash system was built upon a foundation of mathematical computations called blockchain.

Before this paper was published, people worldwide had dreamed up an electronic transfer system for cash, but the problem of double counting and tracking securely each transaction had not been solved. The pseudonymous author of the paper, Satoshi Nakamoto, discovered a solution to the double counting problem through what has since become known as blockchain.

The blockchain is a distributed database of records. This database is also called a public ledger. It contains all the transactions or digital events that have been executed and shared among participating parties.

When a transaction is made in the public ledger, it must be verified by consensus of a majority of the participants in the system. Once a transaction is confirmed, it’s never erased. Every single transaction on the blockchain from the moment it began to this present second is recorded and saved. You can look back along the blockchain to verify a transaction or see it changing now.

The blockchain can be accessed from any location via the internet. Transactions which take place between users are verified and added to the global blockchain ledger by “miners” who, by contributing their computing power, earn small transaction fees.

While we use the singular term “blockchain”, there are literally thousands of blockchains worldwide, or distributed ledgers, each running on their own mathematical code. That’s what sets them apart from one another. When you want to make a transaction, a signal goes out along the blockchain, which then is received by all the computers, or nodes, on the chain. When the majority or consensus verifies the authenticity of the transaction, the transaction is complete.

An Example of a Blockchain Transaction

Let’s use bitcoin as an example since that’s the most famous (and first) cryptocurrency ever on the blockchain, and the first transaction on the blockchain was the transference of bitcoin. In this example, you want to send 1 bitcoin from your account, called a wallet, on an exchange, or place where fiat currency such as dollars can be exchanged for bitcoins.

You want to send this bitcoin to your friend Susan. You log into your exchange account and type in Susan’s public bitcoin wallet address. Each account has a public address, which looks like a long string of letters and numbers, and a private key, which is held by the account owner. The private key is NEVER shared—sharing it gives anyone access to your wallet. It’s like leaving your wallet, purse, or bank account open.

You enter the amount of bitcoin you want to send to Susan and her public wallet address and hit “send.” A signal goes out through the exchange to all the nodes on the bitcoin blockchain. Miners on the blockchain confirm that yes, you have the bitcoin in your account and that yes, Susan’s wallet account is authentic. Once this is confirmed, a process which can take a few hours or even days, depending on blockchain traffic, the bitcoin arrives in Susan’s wallet. Now Susan, using her private key set up on the site hosting her wallet, can access her money and spend it or exchange it for another currency such as dollars, euros, or other cryptocurrencies.

The Impact on Accounting for Nonprofits

Although this may sound esoteric, blockchain technology itself goes well beyond cryptocurrencies. The government of Sweden moved all its land titles onto a unique blockchain, forming a permanent and publicly accessible record of every land title transaction. Think about that for a minute and how it impacts the real estate market. Anyone can now do a title search. It is no longer relegated to title search companies to hunt down records—they are all available via the internet for anyone to view.

For accountants, the potential is still being explored. Imagine using blockchain to record all your nonprofit’s transactions. The blockchain would form a permanent, public ledger. It would eliminate fraud since consensus must be reached to change data on the nodes, so one person can’t tamper with the books.

The Ethereum blockchain offers something called smart contracts which eliminate the middleman in any contract. Consider the benefits of transactions without having a third party involved. Real estate and automobile transactions could take place on the blockchain via smart contract without needing to run them through the court system or another recording body—it’s all on the blockchain.

For accountants, this is an exciting time, and although the blockchain can be difficult to wrap your head around when you’re immersed in traditional finance, it holds enormous potential. It’s still in its infancy, but bears watching.

Beck & Company

Beck & Company is a certified public accounting firm serving the greater Washington D.C. area and the Eastern seaboard. We offer consulting services, auditing, and software selection to help nonprofits with their accounting needs. Contact us today for more information or assistance.

Nonprofit Financial Management Topics: FASB Update

As part of our ongoing efforts to help you with nonprofit financial management, we’d like to share information on the recent FASB update. As you may recall, FASB issued Accounting Standards Update No. 2016-14 Not-for-Profit Entities, the first major change to Statement #117 since 1993. The feedback is in, and the changes took effect starting on December 15, 2017. It’s time to get up to speed and get your team ready for these changes. Are you ready?

The Impacts of FASB Statement #117

The changes begin to impact financial statements starting in 2018. The standards should be implemented during the calendar year 2018 or by the end of the fiscal year 2019.

The impacts on nonprofit financial management are as follows:

  1. Net assets are now two classes instead of three. The three classes of net assets—unrestricted, temporarily restricted, and permanently restricted—are going away. Instead of three, there are now two. The two classes, moving forward, are net assets with donor restrictions and net assets without donor restrictions. You may be thinking, “Wait, this isn’t new!” and you’d be right. Many nonprofits have already moved into these two categories since few used all three. However, this is now the standard. You may need to tweak or update your current net asset classes to adjust for this change.
  2. Enhanced disclosure relating to both classes of assets. Additional disclosure requirements apply to governing board designations, appropriations, or similar actions. If it results in self-imposed limits on the use of resources without donor restrictions, you may need to add additional disclosures. Some reading this may have already voluntarily disclosed information in the past, and that’s great. Now everyone is being held to the same standard and asked to document everything.
  3. Additional disclosure related to qualitative and quantitative aspects of liquidity. This change impacts nonprofit disclosures related to how you manage liquidity to meet short-term cash demands. This may impact how you handle reserves, cash management practices, and anything that influences how cash is handled to meet short-term demand. The nature of financial assets, limitations, and other important facts must be disclosed.
  4. You can now eliminate indirect cash flow reconciliation when direct method cash flow is presented. The direct method is preferred by many for-profit entities and, while not a requirement, has gradually become the standard. It is generally easier for the average person to understand. As such, nonprofits would be smart to adopt it. Under the new guidelines, if the direct method is presented, presenting indirect reconciliation is optional.
  5. Required presentation of both natural and functional classification of expenses and enhanced disclosure of expense allocation methodologies. The goal is simply to improve comparability across not for profit financial statements by addressing differences in practice.
  6. Show the nature and function of each expense in the same location. Functional expenses, which show the natural and functional categories of the expense, should be shared in the same location. It doesn’t matter if it’s in the notes or on the page, just put them near each other.
  7. Report investment returns net of external and direct internal investment expense. You’re no longer required to report the amount of investment expenses. All nonprofits are now asked to report investment returns as net of external and direct internal investment expense. By making this a guideline that now applies to all nonprofit financial management, it helps make comparisons easier across all nonprofit entities.
  8. Changes to restrictions on gifts. Right now, unless a donor states specifically how a gift can be used, you can use that gift for long-term assets. Now such restrictions must be released when the long-lived asset is used instead of a service. If your nonprofit used to release over time, you’ll see a bigger impact than others.

 As with all changes to FASB standards, it’s a good idea to speak with a CPA or an accounting for nonprofit firm. Beck & Company is a certified public accounting firm serving the greater Washington D.C. area and the Eastern seaboard. We offer consulting services, auditing, and software selection to help nonprofits with their accounting needs. Contact us today for more information or assistance.

Tax Changes Impacting Accounting for Nonprofits

The House and the Senate passed the tax reform bill late in 2017, and it will change accounting for nonprofits. This tax reform bill impacts many areas of taxation, including several that will impact nonprofit organizations. President Trump is expected to sign the bill into law, which will enact some sweeping changes that benefit corporate America as well as educational nonprofits, and more.

Some things remain the same, while others are changing. The biggest changes affecting nonprofits include the increase in the deduction limit for charitable contributions and the significant reduction in the corporate tax rate. Below, a summary of major points nonprofit financial managers needs to know. For a complete review of your nonprofit finances, contact Beck & Company. We are happy to assist you with compliance with the new tax laws and reviews and audits of your current financials.

Taxation Changes that Affect Accounting for Nonprofits

Many previous tax reform bills had little, if any, impact on accounting for nonprofits. This one, however, will offer many changes that you should be aware of as you move into the new year.

Here’s a summary of the major changes that will affect accounting for nonprofit organizations:

  1. The deduction limit for charitable contributions increased to 60% from 50%. This may be a good time to add a few donor campaigns to your nonprofit marketing and add this fact to encourage increases in donations.
  2. The corporate tax rate drops from 35% to 21%. This is a big change intended to free capital in the for-profit sector, but one that will also help your nonprofit.
  3. Section 529 plans are now available for both elementary and secondary education support, which may impact educational nonprofits.
  4. Unrelated business activities must report profit and loss as a stand-alone figure before accounting for the $1,000 deduction.
  5. There’s a provision in the House bill under which unrelated business income tax that includes any expenses paid or incurred by a tax-exempt organization for the following, provided such amounts are not deductible under section 274: qualified transportation fringe benefits, a parking facility used in connection with qualified parking, or any on-premises athletic facility.
  6. There’s a new excise tax on education institutions. It generally applies to schools with 500 or more students with 50% of students located in the U.S. The new Act includes a 1.4% excise tax on the net investment income. That’s not yet defined, so you’ll need to check back to see how this ripples through the new year.
  7. There’s a new 21% excise tax on compensation in excess of $1 million to the top five highest-paid employees at tax-exempt organizations. There are several exemptions, limitations, and qualifications to this, so you may wish to consult with the experts at Beck & Company for details.

There are, of course, more changes in the new Act, and some things are untouched. The Johnson Amendment, for example, which restricts 501(c)(3) organizations from directly or indirectly participating in political campaigns or activities remains unchanged.

You may read the Act in its entirety on the White House website.

Any change to the tax code is sure to impact your organization. Large or small, such changes can feel disruptive. Beck & Company is here to help you understand and comply with tax changes and other issues impacting accounting for nonprofit organizations.

Beck & Company

Beck & Company is a certified public accounting firm serving the greater Washington D.C. area and the Eastern seaboard. We offer consulting services, auditing, and software selection to help nonprofits with their accounting needs. Contact us today for more information or assistance.

Technology to Enhance Nonprofit Financial Management, Now and in the Future

Among the trends affecting nonprofit financial management, technology, and its resultant impact are top of mind as organizations work toward their goals. Technology is changing rapidly, with new advances from the for-profit world pushed into the nonprofit world almost as soon as they arrive. It is these advances that are changing operations, accounting, and yes, nonprofit financial management. Here’s a look at several major trends that will enhance nonprofit financial management now and in the future.

Artificial Intelligence (AI)

It’s not the rise of the machines exactly, but close. AI, or artificial intelligence, is making inroads into nearly every aspect of life today. You may not even be aware of the AI all around you. The chatbots that answer your questions on a favorite website or the phone tree at the bank may both be powered by AI bots that combine machine learning with language sensitivity to perform amazingly complex tasks.

Nonprofit financial management may soon include AI in some capacity. Although bots won’t take the place of a smart CFO or director of finance, they can be used for all sorts of clever things, including common accounting tasks.

AI isn’t good with gray areas, so skilled financial managers will still be needed, but it is rapidly becoming an indispensable technology and one that will soon be part of the nonprofit world.

Cybersecurity

If your nonprofit hasn’t been affected by a cyber-attack, phishing scandal, virus, or another cyber crime, consider yourself lucky. Most aren’t so lucky. The Nonprofit Quarterly reports that cyber-attacks are on the rise. In just one example, a small nonprofit was hacked and had their data held for ransom—to the tune of $43,000. The same article previously cited reported that in Los Angeles, a hospital had their data held for $14,000 ransom. If that doesn’t alarm you, it should. When criminals go after hospitals and small nonprofits, you know they will stop at nothing.

Data contained on your nonprofit’s computers can be corrupted, stolen, or held for ransom. It’s not just customer or donor data that’s at risk. Vendor data from your accounting systems can also be stolen and resold.

Many nonprofits do not have someone on staff who specializes in cybersecurity. They can’t afford it. In that case, finding someone trustworthy to outsource cyber security is essential for your security, growth, and peace of mind.

Cloud Computing

Dovetailing on the topic of cyber security is cloud computing. Cloud computing offers greater security for the average company or nonprofit. They also offer shared storage space, shared costs for software, and greater access to software than most companies can afford on their own.

Cloud software includes both nonprofit accounting and nonprofit financial management software, as well as software to help you track and manage grants, donations, donor relations, membership groups, and more. Cloud offers mobile interfaces, so it goes with you, and it offers more access to better software. It’s worth taking a close look at cloud computing for your nonprofit organization.

Technology Now and Later

Technology changes rapidly, and it can feel overwhelming when you must keep up with it. If you aren’t sure what to add to your tech slate now or if you should wait for later, speak with the experts at Beck & Company.

We are a certified public accounting firm that serves the nonprofit world. We keep our finger on the pulse of software related to nonprofit services, so we can guide our clients into wise choices for now and the future.

Trends come and go, but technology is here to stay. Choose the right technology to support your organization’s growth and fulfillment of its mission.

Beck & Company

Beck & Company is a certified public accounting firm serving the greater Washington D.C. area and the Eastern seaboard. We offer consulting services, auditing, and software selection to help nonprofits with their accounting needs. Contact us today for more information or assistance.

Nonprofit Financial Management: Finding CFO Leader

Part of having strong nonprofit financial management at your organization is having the right leader in place. Hiring a great CFO can take a good deal of weight off your CEO’s shoulders. The CFO manages, plans, allocates, and develops budgets and financial materials to responsibly manage an organization’s finances. With a strong CFO in place, you have the right nonprofit financial management to build a strong organization.

When to Hire a CFO

Some organizations may not have a current CFO. Instead, the director, president, or other general manager wears the CFO hat. At some point, the budget of nonprofit financial management becomes too great, and you may feel that hiring a CFO is in order.

It’s time to hire a CFO when …

  • The Executive Director, CEO or President is bogged down with too much work and cannot handle critical financial tasks in time. Finances are too important to be left for a free moment. Instead, you need someone who can devote time to the tasks needed to guide the financial management of the organization.
  • The organization’s finances have grown to be complex, requiring someone in the leadership chair who understands nonprofit accounting. Nonprofit financial management is its own discipline, requiring someone with the knowledge, skills and experience to adequately manage the task.
  • The Board of Directors feels a layer of oversight and leadership is needed to manage the accounting needs of the organization. They may see the problems listed above or conclude independently that the organization needs a CFO.

A CFO can bring unique expertise to the organization. With the right CFO in place, he or she can:

  • Provide strategic, high-level perspective to the organization’s finance and accounting needs.
  • Expand the organization’s capacity to manage its finances as it grows in size and complexity.
  • Reduce excessive workloads in the areas of finance, administration, real estate, technology, or legal for the Executive Director (ED) and/or the Chief Operating Officer (COO).
  • Supplement the skills of the controller or other finance team members.
  • Coordinate with the ED and COO to make decisions that benefit the organization from a financial perspective.

Finding CFO “Right”

Finding the right CFO takes time. As with any hiring decision, rushing into hiring the wrong person for the right reasons can be disastrous. Leave yourself plenty of time—weeks or even months—to build the job description and begin the search process.

The first task is to create a job description outlining the desired characteristics of the CFO. Focus on the necessary core capabilities, strengths, and experiences. It’s imperative that a non-profit CFO has experience with nonprofit financial management.

Look for the following skills and attributes in a potential CFO:

  • Deep, rich understanding of non-profit budget models, contracts, and regulatory requirements
  • Demonstrates passion about the organization’s mission
  • Produces detailed and precise work
  • Exemplifies strong listening and perspective-assessment skills
  • Communicates well, in a transparent fashion
  • Exercises good judgment in the midst of ambiguity

The right CFO must also get along well with the CEO and other leaders. Because the two will work closely together, if they don’t get along or don’t feel entirely comfortable with one another, the tension will eventually turn into a nonworking relationship. A good partnership and chemistry between the two means a solid working relationship.

Options to Find the Great CFO

While hiring a full-time CFO is a great solution for many mid-sized and all large non-profit organizations, many are too small to afford or need a full-time CFO. If your organization falls into that category, there are several things you can do to afford to hire a CFO.

One idea is to hire an interim or temporary CFO. No one earns the title of CFO without building an extensive body of knowledge and experience. Bringing someone into the role on an interim or fractional basis gives the Executive Director and the organization immediate access to the many lessons learned over the course of their career, at significant cost savings.

Lastly, have you considered hiring a specialized nonprofit accounting firm? Nonprofit accounting firms may be a great substitute for a full time CFO, either temporarily or permanently. Beck & Company offers nonprofit accounting, auditing, and consulting, along with nonprofit financial management services, to help your nonprofit thrive.

Even if you cannot find a terrific CFO right away, having a company like Beck by your side means you will have the best support for nonprofit financial management. It can be hard to find a great full time CFO. Finding a strong consulting firm and nonprofit auditing firm isn’t difficult. Contact Beck & Company.

Beck & Company

Beck & Company is a certified public accounting firm serving the greater Washington D.C. area and the Eastern seaboard. We offer consulting services, auditing, and software selection to help nonprofits with their accounting needs. Contact us today for more information or assistance.

The Skills Needed for Nonprofit Financial Management in 2018

Nonprofit financial management requires skills that include attributes of finance, accounting, operations, and technology. To be a good nonprofit financial manager, you need to understand all aspects of nonprofit finance as well as the technology supporting it.

It’s no surprise the teams you manage need these skills, too. Be on the lookout for chances to add these skills to your teams and to acquire them yourself.

The Skills Needed for 2018 and Beyond

  1. Cloud and Distributed Computing: The cloud is rapidly taking over almost all software businesses need. This includes nonprofit software, too. It’s more secure, less expensive, and easier to access on the go. Not only can you save money on your software, hosting, and security, but it also enables better data sharing, storage, and updates. If you don’t have someone on your staff knowledgeable about cloud computing, consider adding it to an IT job description or finding a consulting firm to assist with cloud migration.
  2. Search engine optimization: Visibility is the key to success in any online endeavor, and nonprofits must be keenly aware of the need for their work to stay visible. Search engine optimization helps people find your site by using techniques to make your site appear near the top of search engine results. When your site is near the top, it gets more clicks, hits, and visits. This means more interaction, awareness, and potential donors. Although nonprofit financial management may not include SEO, it may include helping departments budget for SEO tactics. It’s definitely a skill your nonprofit can benefit from, moving forward.
  3. BI and Data analytics: Business intelligence takes data from numerous systems and generates usable reports. Having BI as well as data analytics skills at your nonprofit organization is essential for nonprofit financial management, accounting, operations, and more. Understanding what information comes from where, and how to use it adequately, can help you build a more responsive, focused organization.
  4. Network and Information Security: Strong cyber security is essential for all businesses today. Many nonprofits, however, cannot afford dedicated cyber security staff or resources. While many security breaches are preventable, you still need someone in your organization to advise your teams while troubleshooting and fixing your systems. If you think your organization is immune to attack, think again. Criminals often target nonprofits, knowing they don’t have the resources to fight back. Hiring people with cyber security skills may be one of the most important choices you can make in 2018.
  5. Corporate and Nonprofit Law and Governance: Corporate laws, including laws that apply to nonprofit organizations, continually change. It’s important to have someone in your organization who understands their application to the nonprofit world and who can help you adhere to all laws pertaining to corporate management and governance. It’s also helpful to have an accounting team member who understands the nuances of pending FASB changes as they pertain to financial reporting, such as FASB 606 changes, which will impact grants and contracts.

Finding the Skills You Need

It might be hard for you to find people with these skills or you might not have the budget to hire additional people. In that case, consider outsourcing or working with consultants to fill gaps in your staff.

At Beck & Company, we offer nonprofit accounting services, nonprofit auditing services, and more to help nonprofit organizations meet the challenges of their environment. We can help you plan, budget, and prepare for the new year through our slate of services.

If you do not need accounting services but instead need cloud computing, business intelligence, or other services, you have several options. You can find independent contractors to fill these needs. Consulting firms may offer the services or may be able to put you in touch with those that do. Additionally, there are interim and temporary staffing agencies and that can help you find people to fill these gaps if you do not wish to budget for them full time.

While the new year holds many opportunities, to meet these opportunities you need to have the right skills in place for your nonprofit organization. Cloud computing, BI, SEO, and many other skills are all part of a thriving nonprofit organization.

Beck & Company

Beck & Company is a certified public accounting firm serving the greater Washington D.C. area and the Eastern seaboard. We offer consulting services, auditing, and software selection to help nonprofits with their accounting needs. Contact us today for more information or assistance.

Nonprofit Financial Management Update: Revenue and Grant Recognition Reporting

For those responsible for nonprofit financial management and accounting services, here is a brief update from the Financial Accounting Standards Board (FASB). FASB is in the process of improving, clarifying, and enhancing recognition standards for grants and contracts by nonprofits. While the comment period is now closed, it bears noting that the recommendations made to FASB will be taken into consideration with other feedback as they prepare enhanced guidelines.

Nonprofits Seek Clarity on Grant and Contract Revenue Recognition

Government grants and contracts tend to cause confusion among nonprofit financial management when it comes to revenue recognition. Many nonprofit leaders aren’t sure when to recognize such revenue, or revenue recognition is inconsistently recognized and recorded.

To provide further clarity, FASB is hoping to provide an update on the proposed Accounting Standards Update (ASU), titled Clarifying the Scope and Accounting Guidance for Contributions Received and Contributions Made. The commenting period ended November 1. New guidelines are forthcoming.

Proposed ASU Changes                                                                     

The biggest proposed change is differentiating between contributions (nonreciprocal transactions) and exchange (reciprocal) transactions. Under the new guidelines, it is likely more grants will fall into the contributions category.

The proposed framework indicates that if a grant is an exchange transaction, revenues should be recorded in accordance with Revenue from Contracts with Customers. Details on this may be found in Topic 606 or other applicable topics.

Grants, on the other hand, are determined to be contributions and should be recognized as revenue for not for profit entities under Revenue Recognition Subtopic 958-605.

All grants must be evaluated individually, and a designation made for each. Grants can be considered exchanges if the value received is commensurate with the services rendered. Then, it is categorized as an exchange or reciprocal transactions.

The good news is that the ASU includes plenty of examples to help nonprofits determine whether grants are nonreciprocal or reciprocal transactions.

Handling Conditional Contributions

A conditional contribution is a grant that comes with strings attached—conditions that must be met for the grant to be considered fully received. Grants without barriers or considerations may be unconditional.

Typical considerations or conditions include:

  • Goals that can be measured, such as matching grants, levels of service, or other items that can be measured or quantified;
  • A stipulation that specific conditions must be met for the grant;
  • Something limiting how the funds can be spent;
  • Additional actions that would be required to be taken by the recipient organization in addition to the activities that it would normally pursue.

Where there are gray areas, FASB recommends treating them consistently in the manner that makes the most sense for your nonprofit. As with many nonprofit financial management topics, common sense often takes precedence when situations do not easily fit standard guidelines.

If a grant can be considered a contract with a customer, then the specifications in Topic 606 should be followed.

New Guidelines Deadline: 2019

The good news is the changes do not affect prior quarters in any way, so you don’t need to change anything prior to 2019. For more details, please visit FASB.

The new recommendations will go into effect on or around December 31, 2019, for the fiscal year ending in 2020. That may seem like a long way off, but for nonprofits dealing with a lot of grants that fit these categories and descriptions, it may be prudent to take steps now to conform to the new guidelines. Of course, changes may be made to the recommendations based on feedback received by FASB.

If you are unsure of how to adhere to the new guidelines, how to categorize grants or funds, or just need help with your nonprofit financial management and accounting needs, contact Beck & Company. We offer an array of accounting services for nonprofits to help you manage your resources so, by improving your margin, you fulfill your mission.

Nonprofit Financial Management at Beck & Company

Beck & Company is a certified public accounting firm serving the greater Washington D.C. area and the Eastern seaboard. We offer consulting services, auditing, and software selection to help nonprofits with their accounting needs. Contact us today for more information or assistance.