Outsourced Accounting for Nonprofits: Top 10+ Firms
Thursday, November 10, 2022
Nonprofit accounting is unique. While for-profit businesses focus on how they can make the greatest profit for the shareholders and owners, nonprofits are more focused on how they can reinvest their revenue back into the organization’s mission itself. This also means they have slightly different rules and regulations when it comes to taxes and accounting practices.
Not only that, but nonprofits need to report on their earnings to both donors who may restrict the funds they contribute, and to the IRS to ensure organizations are using the tax-exempt status appropriately.
These unique aspects of nonprofit finances are reflected in their accounting practices, which is why nonprofits use a system of fund accounting to manage their finances.
The issue is that many nonprofit professionals have not extensively studied nonprofit-specific accounting practices. You need access to a professional CPA to make sure the organization is following the generally accepted accounting principles, reporting funds correctly, and making financially sound decisions.
This often leads nonprofits to the question: Is it time to outsource accounting services for my nonprofit?
In this guide, we’ll walk through the advantages and disadvantages of outsourcing your nonprofit accounting services, features to look for in firms, and the top firms to consider if you choose this path forward.
Want to get involved with our top choice for outsourced nonprofit accounting services?Contact Jitasa
Why outsource your nonprofit’s accounting services?
When nonprofits’ accounting needs increase, many organizations jump straight to the idea of hiring a full-time accountant to take care of their finances. However, this is often an expensive process as the organization must pay for everything from hiring to maintaining a full-time professional.
Plus, a full-time accountant is often not necessary for small to mid-sized nonprofits. Instead, the ideal service size that these organizations need is offered through outsourced accounting options.
Outsourcing provides nonprofits with access to accounting expertise and allows them to accomplish important financial tasks without hiring a full-time team member. Some of the benefits that accompany outsourcing your nonprofit’s accounting needs include:
- Lower costs: Hiring is expensive! Often, you can receive the services you need through an outsourced accounting firm for nonprofits.
- Access to expertise: While individual accountants bring their own set of expertise, outsourcing firms typically provide your organization with access to a team of accountants. This means you have the experience of a whole team of people.
- Experience in the industry: Not only will your organization have access to a team of professionals but that team likely works with a number of organizations. That means, if your organization runs into a problem, your outsourced nonprofit accountant has likely seen it before.
Outsourcing accounting services for nonprofits allows organizations access to everything from annual taxes to audit preparation services. The trick is, finding the right firm to help provide these services to your organization.
What should you look for in an outsourced nonprofit accounting firm?
Looking for a nonprofit accounting firm to outsource your services can be challenging and overwhelming, especially for nonprofit professionals who have limited time on their hands to review their options.
However, defining what your needs are ahead of time can make the process much simpler and less time-consuming. Consider exactly what your nonprofit needs from your accounting firm and start considering (or ruling out) those options based on whether or not they’ll fit your needs.
Every nonprofit’s needs are slightly different, but there are some common features to keep in mind as you start your search. Some qualities that most nonprofits should look for in an outsourced accounting firm include:
- Nonprofit-specific services: as we mentioned, nonprofits are unique. Therefore, it’s necessary to have an accounting firm that truly understands the needs of your organization.
- Both bookkeeping and accounting services: This helps further reduce the need for your staff members to worry about financial concerns. Instead, your outsourced firm will take care of both the large-scale concerns and everyday data entry.
- Fits within your budgetary constraints: This shouldn’t be the sole reason you choose a specific accounting firm to outsource your nonprofit’s finances to. However, it is a contributing factor as many organizations have limited budgetary resources.
If your nonprofit has a lot of questions or wants some financial insight and guidance, you might also look for a firm that offers strategic advisory services. These types of services provide insight and financial guidance that can lead your organization on the path to growth.
Let’s dive into our favorite outsourced accounting firms and services that your organization can use to organize and manage your finances. Every nonprofit has slightly different needs, so be sure to keep your own in mind as you review the options available. We’ll get started with our favorite option first: Jitasa.
Jitasa offers outsourced accounting, bookkeeping, and advisory services specifically for nonprofit organizations. Their team only serves nonprofits, so they understand exactly what organizations like yours require from an outsourced accounting firm.
The services you can expect from Jitasa’s team of experts include:
- A fully staffed nonprofit accounting team. Those who invest in Jitasa get a team of accountants on their side, offering the best and continuous service for the organization.
- Access to nonprofit accounting experts. Jitasa’s accountants have worked with thousands of clients. They’ve seen and helped resolve so many challenges with other organizations that they’ll have answers to all of your questions.
- Enhanced internal controls. Security is the number one priority at Jitasa. Rather than worrying about how well your organization has set up internal controls, you can rest assured knowing that Jitasa puts your organization’s safety first.
- Access to Quickbooks accounting software. If your nonprofit has on-premise, outdated accounting software or is switching from spreadsheets, Jitasa is here to help! These experts will help you to set up your Quickbooks system, migrate your data, and get moving on a cloud-based system that works.
Their team of accountants will help you with year-end taxes, financial audit preparation, monthly financial statements preparation, account reconciliations, data entry and allocations, and more. They provide everything you need from their outsourced accounting firm for nonprofits, helping mission-driven organizations reach their full potential.
Even the word Jitasa means, “The spirit of serving others.” This is what drives their team. They want to help organizations succeed so that they can continue serving their communities and their constituents. Jitasa will help your nonprofit get back on track with what matters most: your mission.
2. File 990
For small nonprofits simply looking for help with their annual Form 990EZ or 990N, File 990 is an effective solution to help file taxes. While not a full outsourced nonprofit accounting firm, they will resolve this one accounting concern for organizations.
Essentially, File 990 boils down any complex parts of these tax documents into simple questions that the organization professionals can answer. Then, the software auto-completes the form and allows nonprofits to file their taxes through the e-filer.
Growthforce offers bookkeeping, accounting, and advisory services for businesses and nonprofits alike as a part of their outsourced financial services. Organizations that invest in Growthforce are provided with a three-person team to help manage their unique accounting situations.
Similar to Jitasa, Growthforce will also help organizations get started on Quickbooks. Because they offer extensive solutions (accompanied by a custom price tag), this outsourcing firm is an excellent choice for larger nonprofits.
4. EBS Chartered Accountants
EBS Chartered Accountants also provides outsourced accounting services for nonprofits and small businesses alike. Their services extend far beyond accounting and bookkeeping. They also offer audit assurance services, organizational setup services, and web development.
Their a la carte services make for a good investment for rapidly growing organizations. However, their extensive options can quickly become overwhelming or unnecessary for smaller to mid-sized organizations, so it’s best suited for fast-growing large nonprofits.
5. NFP Partners
If your nonprofit is focused on implementing accounting software for your organization, NFP Partners might be the right firm for you! They’ll help you implement your new accounting software solution, then manage that software over time.
NFP Partners offers two main services for nonprofits: implementation and support of software solutions and outsourced accounting services. In addition, they do offer private cloud hosting. Therefore, if your accounting challenges are highly related to your technical software solutions and due to your organization outgrowing your current solutions, consider how the right partner could help.
6. Paro Accountants
Paro Accountants are geared toward businesses and are a part of the larger Paro AI technology company. They do serve nonprofits alongside their target for-profit audience and have over 15 years of experience helping nonprofit organizations with their accounting, financial reporting, taxes, and more.
This firm works slightly differently than others. They allow nonprofits and small businesses to freelance financial experts to cover various financial needs. They’ll provide manpower to help outsource accounting aspects like accounts receivable, controller oversight, and bookkeeping cleanup.
7. Kiwi Partners
Kiwi Partners offers outsourced accounting for nonprofits, in addition to services like consulting and human resources. Their team serves any size organization, from startups to larger organizations, helping with regular bookkeeping tasks, budget productions, and financial reporting.
Kiwi Partners is a great option for organizations looking for temporary support for their financial needs. For example, a large organization may turn to their services when transitioning to an in-house accounting expert or if they need additional services to supplement their existing accounting department.
CBIZ focuses their attention on financial security for nonprofits and for-profits alike. Their firm has a team of experts who help nonprofits conduct financial audits whether the organization is required to conduct one or if they’re simply checking that their financial priorities are in order. They’ll conduct audits to review financial statements, employee benefits programs, and more.
In addition to audits, CBIZ experts offer Systems and Organization Control (SOC) report services for organizations. This helps ensure the organization has all of the necessary security protocols in place to ensure safe financial and data operations.
9. Numbers 4 Nonprofits
Numbers4Nonprofits is an outsourced accounting firm that specializes in nonprofit services. Their team is inspired by the missions of nonprofit organizations and dedicate their time and resources to helping those organizations succeed.
Their team provides a number of financial services for these organizations, including annual budgeting, cash flow projections, audit preparation, cash management, and asset protection. They work at a high level to help organizations prepare for the future and with the day-to-day operations of managing nonprofits’ finances.
Oftentimes, accounting and HR needs go hand-in-hand, requiring nonprofit organizations to take a good look at their entire financial story and overhead expenses in order to make strong financial decisions. Quattro takes this into account, offering outsourced accounting for nonprofits and small businesses alongside HR tasks for a well-rounded view of your organization’s finances.
Some of the services offered by the Quattro team include managing their accounts payable and receivable, reconciling accounts, reporting finances, and making smart financial decisions. Plus, they’ll help ensure HR compliance, overseeing of employee onboarding, and more.
11. In-Kind Donations of Accounting Services
Startup and small nonprofit organizations may not be financially ready to outsource their accounting services yet (much less hire a full-time accountant!). Therefore, they may search for a local accountant who supports the cause and ask that professional to give their time in-kind to help the organization get its start.
This option is accompanied by many flaws, including a lack of sustained motivation for that accountant to continue providing services and weaker internal controls. However, it is a useful option to keep in mind for nonprofits that are transitioning and growing or just getting started. In-kind services can be used as a short-term solution until your organization is ready to look for an outsourced accounting firm for nonprofits.
Nonprofit accounting is unique in that organizations use a system of fund accounting to organize their finances. Therefore, when you go to outsource your nonprofit accounting to a firm, you need to make sure that you’re choosing experts who will understand your particular needs.
Review guides like this one and ask partnering nonprofits for recommendations. However, keep in mind that the right choice of an outsourced nonprofit accounting firm is specific to your organization’s needs. Consider the unique situation that your nonprofit is in and use that to determine the right choice of firm to serve your mission.
If you’re interested in learning more about nonprofit accounting and financial management, check out these additional resources:
- How Do Nonprofits Make Money? Making Nonprofits Profitable. Learn more about how nonprofits diversify their revenue streams for a healthier financial future with this guide.
- Nonprofit Financial Ratios: Definitions & Calculators. Financial ratios can provide a lot of insight into your organization’s efficiency and security. Use Jitasa’s ratio calculators to gain insight into your own financial health.
- Fund Accounting 101: The Basics and Best Practices. Because nonprofit accounting is so unique, it’s important that your organization has an understanding of the fund accounting basics. Learn more about these basics in this comprehensive guide.
Want to get involved with our top choice for outsourced nonprofit accounting services?
Jitasa’s team of experts will help you manage your current finances while preparing for the future.Get a Quote