LUTZ BUSINESS INSIGHTS
The 5 must-have nonprofit accounting skills
claire hasty, senior accountant
Accountants play a critical role in ensuring the financial performance of any organization. Accountants in the nonprofit sector are responsible for acquiring resources and lowering operational expenses to assist task-driven organizations in doing the greater good in the world.
As a result, hiring a nonprofit accountant is important to achieving the organization’s objectives. However, finding an accountant with the necessary abilities and expertise may be difficult. To help you identify a suitable match, we’ve compiled a list of the top five nonprofit accountant abilities and traits to look for.
1. Understand Nonprofit vs. For-Profit Accounting
The major distinction between for-profit and nonprofit standards is the idea of fund accounting, which focuses on responsibility rather than revenue. Nonprofits often have a series of general ledgers, or funds, as opposed to profit entities, which have a sole self-balancing account.
A common mistake made by nonprofits is entrusting their financial administration to someone unfamiliar with accounting. The ability of a nonprofit to execute its goal depends on its financial resources. Understanding good fiscal management will guarantee that a nonprofit’s financial resources are used in accordance with its objective.
2. Fund Accounting Knowledge
Accountability is emphasized in fund accounting or nonprofit accounting. Because taxpayers, foundations, and the public provide financing for nonprofit organizations and government agencies, a higher focus is put on correctly accounting for those monies, which is where fund accounting comes in.
Even for seasoned accountants, fund accounting may be difficult, but it can be more difficult for people with limited accounting expertise. A fund accountant can help your organization handle endowments received from benefactors by creating a report that outlines how the money was spent.
3. Proficiency with Accounting Software
Accountants employ digital tools and data analytics to estimate future occurrences based on previous data. The most important aspect of analytical skills is the ability to determine what sort of data to gather and how to organize it for the greatest use. Accountants must not only know what data to collect, but they must also comprehend what it means. These insights are critical for guiding the organization to success.
Effective nonprofit accounting software may assist you by enabling you to set up multiple projections and events. If nonprofit accounting software, whether for fundraising, grant administration, or anything else, is an important component of your business, employing someone familiar with the technology will be a huge benefit.
4. Passion for the Organization
Working as an accountant necessitates a vast understanding of how financial statements operate. Accountants must comprehend accounting fundamentals, such as how debits and credits function on a ledger and how to do account reconciliation.
Aside from basic cash inflow and outflow bookkeeping, your nonprofit accountant should also be a team player while simultaneously refining the capacity to operate independently. This key ability also implies that they advise, guide, or give answers to internal and external consumers of the services. This requires sensitivity, transparency, and a readiness to be receptive to inquiries and concerns. Therefore, it is important that they be passionate about the organization’s mission.
Working for a nonprofit usually entails working with limited resources and funding. You will want to employ someone eager to navigate these challenges. Resourceful problem solvers will be creative, finding new ways to get around obstacles.
Working with a nonprofit accountant is essential for your organization’s growth. They will assist you in conducting the necessary financial investigations to assess, summarize, and enhance your financial situation.
At Lutz, we realize the importance of having an accountant who understands your company’s demands. Contact us or visit our website to learn more about our nonprofit accounting solutions.
ABOUT THE AUTHOR
CLAIRE HASTY + SENIOR ACCOUNTANT
Claire Hasty is a Senior Accountant at Lutz. She began her career in 2020. She is responsible for providing credibility to clients through financial reporting with a focus on employee benefit plans and the nonprofit, retail, and service industries.
AREAS OF FOCUS
- Audit & Assurance
- Employee Benefit Plans
- Nonprofit Industry
- Retail Industry
- Service Industry
- MPA, University of Nebraska, Lincoln, NE
- BSBA in Accounting, University of Nebraska, Lincoln, NE
- Top 5 Must-Have Nonprofit Accounting Skills
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