A Step-by-Step Guide to Transparent Accounting for Not-for-Profit Organizations
Posted by Marco Rolla
Transparency is at the heart of every not-for-profit organization (NFP). When an NFP is at its best, accountability is spread throughout the entire operation. Transparency gives your donors and partners confidence in the mission they're supporting. It also assures regulators that your organization is complying with all the rules. Open accounting practices also make it easier for you to track the path of each dollar that flows in and out of your organization.
Why Transparency in Non-Profit Accounting Matters
Although all companies must adhere to certain rules regarding their money, in many ways NFP organizations are held to even higher standards when it comes to finances. This is due to the objective of NFPs resting on philanthropy: People want to make sure their money is going towards a good cause. Transparency is especially important for accounting tasks, which are crucial in maintaining a trustworthy not-for-profit organization. In order to succeed, you have to manage your accounting procedures with the utmost care.
Developing More Transparent Non-Profit Accounting
Most NFPs can meet the minimum requirements for accountability with little trouble; however, there is a growing call for organizations to go beyond the lowest margin and provide the public with real openness and traceability. There are three key areas you should focus on to bolster your organization's accounting transparency:
- Develop a thorough understanding of the fund accounting system used by not-for-profit organizations. You can't gather or provide accurate, reliable information if you don't have a firm grasp on exactly how revenue, expenses and assets should be accounted for.
- Standardize and schedule accounting tasks. You need to know how often you should perform certain accounting functions and establish a consistent method of getting them accomplished.
- Implement the proper tools. None of the above will be enough if you're not using the best tools for the job. You need a financial data system that can conform to the specific needs of not-for-profit organizations.
The best way to tackle truly responsible non-profit accounting is by following a structured approach. The Step-by-Step Guide to Transparent Accounting for Not-for-Profit Organizations will help you understand your operation's accounting needs and demonstrate how to inject transparency into every aspect of your accounting efforts.