Financial Integrity and Nonprofit Bookkeeping

Online Electronic Invoice And Finance Audit

Running a nonprofit can be as exhausting as it is rewarding. There are many roles to juggle and things to manage while still making time for fundraising. And somewhere in between, there has to be time to properly maintain your books.

Unlike for-profit businesses which are in it to make money, nonprofits have a bigger purpose. So to be able to continue doing what they do, they need to make sure that all of their finances are clean, transparent, and handled with care. Looking away from this area at any time can have devastating results.

With donations coming in and help to the community going out, how can you ensure that your books are solid? Let’s look closer at maintaining financial integrity with your nonprofit bookkeeping.

What’s Involved in Nonprofit Bookkeeping

Nonprofit bookkeeping is different than for-profit companies. While the basic principles are the same, non-profits deal with a lot of pledges, donations of goods and services, grants, and other such funding. This money has a greater purpose so budgeting is a huge deal.

Creating and following a budget is vital in order for the nonprofit to accomplish its mission. So this bookkeeping will require the ability to successfully budget and monitor the cash flow. Many find this more difficult than traditional accounting since funding comes from a lot of different areas.

What’s more, grant funding often means having to meet certain requirements within certain timeframes. It is just one more thing that requires close attention.

The person you have handling your nonprofit bookkeeping should understand this and be able to follow through with it accurately. A few key activities found in nonprofit bookkeeping include:

  • Tracking income/expenses based on specific programs
  • Reconciling bank accounts
  • Accounts payable/receivable
  • Prepare audits and taxes
  • Send donor acknowledgments

Though these tasks will be directly related to the specific organization and can vary over time.

Why is Proper Nonprofit Bookkeeping So Important?

Proper bookkeeping will let you know where your nonprofit stands — and what its capabilities are. It is also necessary for successfully executing projects, reducing the risk of overspending, and meeting reasonable fundraising budgets.

Having financial accountability and transparency helps you to foster a sense of trust among everyone involved in the organization, as well as the community. It can determine the level of success your nonprofit will have in the future.

Safeguards to Financial Integrity

As a nonprofit, what can you do to safeguard your financial integrity without spending too much of your budget? To make sure that your books are pristine, you will need to adopt the following as a routine part of your organization’s practice:

  • Hire an experienced, professional bookkeeper who has an in-depth understanding of non-profit accounting
  • Properly account for all transactions, regardless of how big or how small
  • Place great significance on your budget — and adhere to it
  • Always provide donors with their documentation right away
  • Maintain organized, thorough notes and documents for each transaction
  • Follow all local and federal regulations so that you are always in compliance

The more time and care that is given to your books, the greater chance you have of achieving financial integrity for your nonprofit.

Mighty Nonprofits provides high-quality, customized bookkeeping services to small and medium-sized nonprofits, including budgeting, planning, consulting, and more.