Nonprofit Accounting & Miley Cyrus: 7 Surprising Things They Have In Common
I hope you found the title of this article engaging and perplexing. What could Miley Cyrus and Nonprofit Accounting possibly have in common? Read below to find out.
1. They both play by their own rules
Nonprofit Accounting has one major component not seen in any other type of accounting, donations. Because donors give you money with no expectations of a direct return, the rules are completely different. Contributions, grants, pledges, gifts, trusts, fundraisers, and special events all create a layer of rules and requirements that only nonprofits have to deal with. For a detailed look at the differences between Nonprofit Accounting and For Profit Accounting, look at this detailed table from The Accounting Coach.
2. They're both confusing
For this reason, it’s very easy to become entirely perplexed. If you’ve ever completed the accounting functions for your nonprofit, you’ve most likely run into its bewildering aspects. You probably find yourself asking questions like:
- What’s the difference between a contribution and a grant?
- What makes the accounting of a special event so special?
- Why do we need a policy for everything: gift acceptance, whistleblower, record destruction, internal controls?
- Why does the IRS speak its own language?
- How do I capitalize the computer purchase I’m about to make?
- Why do overhead rates matter and how do I find out what ours is?
It can take years, even decades to master the subtle distinctions Nonprofit Accounting requires to function.
3. They often have a lack of oversight
Because of its complications and the impact to your mission, Nonprofit Accounting demands consistent oversight. Even when outsourced, it’s necessary for your accounting function to have a main point of contact that answers questions and supervises the accounts.
4. You don’t necessarily want to know more
You didn’t sign up for 12+ hour workdays, constant stress, and a lack of sleep so you could perform nonprofit accounting. You agreed to these things because you want to change the situations of others. It’s understandable that you don’t want to know more about Nonprofit Accounting, that you don’t want to become an expert. It can be a convoluted smorgasbord filled with frustration, just one reason you should seek help from the experts.
5. They should stick to the “straight and narrow”
Hearing about fraud in the nonprofit community is disheartening and affects the confidence that donors have in your organization. That’s why preventing fraud with awareness and internal controls is so important. Often, the biggest deterrent to fraud is an individual knowing their dishonesty will be caught. You can find this tip and more in our “Fraud and Your Nonprofit Organization” blog.
6. They “Can’t Stop, Won’t Stop”
Accounting will always be a necessary function for your nonprofit. So while you may not want to know more, you’re going to have to make it a priority. To achieve your mission you have to adhere to state and federal regulations, maintain accuracy, and instill confidence in the donor community.
7. They’re passionate
No one can question the passion that nonprofit organizations possess. While Nonprofit Accounting has nuances and quirks that can often leave people feeling frustrated and overwhelmed, it does make it possible for organizations to achieve their missions and improve the world.
Renata Poe Massie, Content Creator for Jitasa
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