Challenges of Nonprofit Accounting

Aside from being a slogan, Strength in Numbers also signifies NPFM’s ability to close the financial expertise gaps that typically plague nonprofit organizations.

Every nonprofit has a unique blend of operating income sources and constraints. Some funding streams are steady and recurring, while others must be renewed or replaced every year. Some are simple and unrestricted, while others come with many strings attached. It is detrimental to underestimate the challenges in nonprofit accounting. Nonprofits must satisfy the requirements of the following stakeholders within the confines of a limited budget:

  • Internal Revenue Service
  • FASB (Financial Accounting Standards Board)
  • GAS (Government Auditing Standards)
  • Grantors

Expertise Gap

The quandary that many nonprofits face is the need for a finance department while being limited by budget constraints. When staffing nonprofits, the maximum investment allowed by most budgets do not include CFO-level management. Further, practitioners that possess specialized expertise in higher-level accounting are not best utilized when performing routine accounting and data entry functions, which can lead to attrition across nonprofits. Conversely, junior accountants typically don’t have the skills required to function as a CFO or controller. The NPFM model provides a solution to this problem.

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