How much confidence do you have in your nonprofit accounting department?
This question is almost never top-of-mind to founders who establish nonprofits based on passion and conviction. Building an administrative infrastructure is often tomorrow’s issue. And keeping the books is often as interesting as washing dishes.
But consider the perspective of donors. They want, they expect, and they assume prudent handling of assets – of their assets – by a charity. Donor confidence underpins every contribution. After donor affinity with mission, two main elements bolster donor confidence, both of which are provided by accounting.
First, donors must believe that their contributions are safeguarded. In addition to careful custody, safeguarding includes internal controls to prevent misappropriation. Internal controls, a primary responsibility of the Controller or other senior financial person, is the first system annually assessed by external auditors. Second, donors want their contributions spent according to their wishes, which often results in restricted donations. While funds from restricted donations are commingled in a bank account with all other cash, donor restrictions are separately tracked by the accounting department. Restricted donations are tantamount to an inventory of promises made by nonprofits to their donors. A well-intentioned but untrained staff member can easily mishandle restricted donations.
Accountants do more than pay bills and process payroll. They also are architects of internal controls, caretakers of assets, guardians of legal obligations and scorekeepers for the organization. A good accounting team frees other staff, board, donors and volunteers to focus and deliver on the mission.
Do you take pride in guiding donors through your accounting department to introduce them to staff? Or do you pick up speed passing that accounting door?
Contact RADAR Nonprofit Solutions today to learn how our expertise in nonprofit accounting can help your organization thrive.