Nonprofit Organizations (NPOs) frequently have sub-optimal staffing configurations. This may arise when employees are tapped to fill needs beyond their capabilities. An example is a bookkeeper who is asked in the annual audit how revenue recognition policies measure up to Generally Accepted Accounting Principles (GAAP). If your organization has federally-sourced revenue, compliance risks are significantly heightened. Revenue recognition is a topic reserved for advanced accounting classes on the CPA path, so it’s unlikely that a bookkeeper would have this expertise.
Financial pressures present another problem and compound the staffing issue. NPOs are under nearly constant budget stress due to business models built upon donor generosity. Predicting donor behavior, when giving can change due to family developments, illness, unemployment or relocation, is an exercise in educated guesses. Add the impacts of inflation, taxes, recession and capital market fluctuations and it becomes easy to see the difficulty of budgeting total contributions for an NPO.
Because of budget uncertainty, NPOs often significantly delay hiring the next needed employee. In general, clerical staff and bookkeepers are the first and easiest to hire. They are then often stretched beyond practical and technical capabilities. Processing transactions like paying bills and meeting payroll is reasonably prioritized. Tasks left wanting are those requiring more experience and expertise – the design of the internal control environment, compliance with GAAP and grant requirements, and strategic guidance. At this stage, an NPO may bring in a second mid-level accounting person with a few years of accounting training, often an Accounting Manager. NPOs can often spend a long time with this configuration: a bookkeeper and an Accounting Manager. The NPO is then deploying 80 hours per week in these two positions but more complex tasks, as described above, remain partially or wholly unaddressed.
There is another way.
Often for a similar cost, RADAR Nonprofit Solutions offers a fully vertical accounting team to precisely match NPO tasks with qualified and experienced individuals at every accounting level on an already-integrated platform of software and applications. This fully vertical team includes a CFO, Accounting Director, Accounting Manager, Accounts Payable Associate, and Payroll Associate, with the same 80 hours distributed among these roles. Moreover, with a deep bench, RADAR clients do not suffer from the anxiety that comes with accounting staff attrition.
Has your NPO outgrown its accounting solution? Come talk to us!
Jane Repensek, CPA, MBA