More on Charities Review Council Accountability Standards

The September/October Success Ledger newsletter contained a link to the Charities Review Council’s website for information on its accountability standards project. The Charities Review Council, based in Minnesota, helps charities achieve accountability and transparency to benefit donors. It has developed a set of accountability standards in the areas of public disclosure, governance, financial activity, and fund raising, which is straightforward material that is highly adaptable to all nonprofits.

Five Tips for Boomers Transitioning from the Business Sector to the Nonprofit Sector

Janine Vanderburg, of JVA Consulting, published a very useful article for nonprofits and boomer generation managers, who are thinking about moving to paid or volunteer nonprofit positions in the nonprofit sector. JVA, Colorado experts on this subject, conducted research, developed workshops and job fairs in this area.

Useful Finance Tips

Useful Finance Tips

The NonProfit Times is a great resource for financial tips that get into sufficient detail for a nonprofit to evaluate its own practices and improve upon them. You might start by reviewing, “Fraud signals for which you need to beware.”

Sage MIP Fund Accounting Webcasts

Sage MIP Fund Accounting Webcasts

Sage regularly schedules an overview demonstration of its MIP Fund Accounting software. Attending this informative webcast is an excellent way to learn how specialized nonprofit accounting software differs from entry-level and general commercial software, and to determine if it would work for your organization. Managing Nonprofit Financials With Sage MIP Fund Accounting, is oriented to 501(c)(3) organization and is presented most Tuesdays. Accomplishing Governmental Accountability With Sage MIP Fund Accounting, designed for governmental organizations, is held the first Thursday of the month. Click on the above links to read learn more and to register. When completing the on-line registration form, please indicate NFP Partners or ASI as the reseller in question #4.

Catching Up and Moving Forward

Catching Up and Moving Forward

After a recent trip to South Africa with my wife, Carol, along with some close friends, I’ve been busy catching up with clients, prospects, partners, and my friends in the not-for-profit world.

Our trip was amazing, kicking off with a visit to a private game reserve adjoining the Kruger National Park in the northeastern corner of the country. We spent the rest of the trip in the Western Cape area, including the wine country, the beautiful city of Cape Town and the Cape peninsula. South Africa is a very scenic and an interesting country with a troubled history. Although the travel was quite a marathon, it was all worth the trip. In case you are interested, you can view our photos on flickr. Hint — the animal pictures are first.

Our top priority right now is to implement a new accounting services program. In preparation for my presentation to nonprofit executive and finance directors at the recent Colorado Nonprofit Association Fall Conference, we created a brochure, “Outsourcing Meets In-house Accounting,” which outlines the new program. The positive response from the conference was very encouraging. Look for an introductory offer later in this newsletter to become one of our outsourced accounting services clients.

Our accounting software business, the primary focus of our business over the past three years, continues to grow. We added two new Sage MIP Fund Accounting clients in September and October. Don Gardner, the other member of our LLC, is working diligently with these two new clients, along with several others, in the implementation process. We are also very fortunate to have acquired the services of a nonprofit accounting software professional, Robert (Bob) Blake, formerly the head of professional services at Sage Nonprofit Solutions, who is helping us with the implementation projects.

The software portion of our business and accounting services are complimentary components of our overall quest to help nonprofits become better financial managers. We are certified as QuickBooks ProAdvisors. With its more robust functionality for public and nonprofit organizations, Sage MIP Fund Accounting is the software of choice for organizations with more demanding requirements, regardless if they are deployed in-house or via accounting services. QuickBooks is an appropriate software solution for startup, smaller, and less complicated organizations. I am seriously looking for a person who can devote his or her time primarily to QuickBooks implementation and support for nonprofit organizations. Please contact me if you know someone that can fulfill that role and help our business grow.

We are also collection information regarding nonprofit financial management best practices with the intention of publishing it on our website, blog, this newsletter, Linkedin and Twitter. Please don’t be shy about drilling down to any of the articles in the newsletter and letting us know what you think. For example, I ran across another great resource for nonprofit management, the Nonprofit Risk Management Center. Check it out and follow the link to ‘My Financial Management Plan’. We are evaluating the latter resource with the idea of incorporating it into our accounting services package.

Regards,

Lee Bengston, CPA
Managing Principal NFP Partners

Sage Releases MIP Fund Accounting version 10.2

Sage Releases MIP Fund Accounting Version 10.2

Sage recently released its annual upgrade for Sage MIP Fund Accounting, version 10.2, which will be shipped to currently subscribed customers by the end of November. It is available for downloading now; just contact us. Enhancements include:

* Access to a customer enhancement portal to make suggestions and monitor status, and connect with other MIP customers through Sage Nonprofit and Government Solution Communities.
* More reporting options for the Form 990, GASB, and state unemployment taxes, and improved report drilldown functionality.
* Improved and simplified e-mail functionality from within MIP.
* Expanded imports to minimize manually entered data.
* Improved development tools and expansion of the Sage Development Partner Program.

Please click here to review a recorded webcast of the 10.2 enhancement

Redefining Return on Investment for a Nonprofit Organization

Redefining Return on Investment for a Nonprofit Organization

By Donald Gardner, CPA, Senior Financial Systems Consultant

Return on Investment, or ROI, is critical to the survival of any organization. In simplest terms, ROI is money returned from investment in assets in excess of inflation. Money is necessary to sustain an organization, giving it the necessary resources to accomplish its mission year after year.

There are softer assets that also come into play that are just as important to an organization’s sustainability, but they more difficult to measure and attain. Time and energy committed to these soft assets are critical to the sustainability of the organization.  These significant, but intangible assets include pride and commitment to a cause; faith that it can accomplish the organizational goal; trust in the organization by all stakeholders; and the good deeds demonstrated by staff and volunteers.

The beginning means to attain these soft assets is to create a positive environment, which can be created through having accurate and timely financial records; a method of tracking participant defined statistical information; and a means of identifying, defining, and allocating staff and volunteers to the cause of the organization.  In addition, feedback from staff, volunteers, participants, donors, and community leaders through focus groups adds credibility to the organization.  Once the means to attain these soft assets has been created, it will contribute to the sustainability of the organization.

Outsourcing Meets In-house Accounting

When I started NFP Partners three years ago my goal was to help nonprofits become better at managing their finances by providing proven technology tools and nonprofit accounting expertise. I believed that we had a superior software product in Sage MIP Fund Accounting, as well as deep knowledge and hands-on experience with nonprofit accounting and finance. The original business model envisioned selling the software to a nonprofit organization (501c(3) or government unit) and enabling the client through training and support to operate the software in-house.

 Following this traditional model has produced many successful installation experiences for us and a growing reference base; however, I think we can do better and extend our reach. Software is a significant investment and one that can be deferred, especially during lean times. So I went back the drawing board. Is there a better strategy in delivering the means of good financial management and making it more affordable? The idea that seemed to make the most sense is resource sharing. Can several organizations independently and transparently share technology and human resources to achieve superior results and save money? Over the past few months we have been working on a new model called ‘collaborative outsourcing’ that we believe combines the best features of traditional in-house accounting and having accounting done by a outside provider.

 Here’s how it works: The nonprofit organization and our group, NFP Partners, enter into an agreement where we set up the nonprofit client’s accounting on a secure hosted server with easy access over the Internet. For startup and early growth organizations the client may choose to have us provide a turnkey service, but with the client having 24/7 access for inquiry and reports. For organizations in the mid-growth phase the client’s staff with NFP’s training and guidance performs day-to-day accounting operations, while NFP provides support, oversight, and period-end financial reporting. The client gets the benefits of a superior financial management system without having to hire a financial professional and spend time managing that person. Accounting operations are totally within the capabilities of a lower-cost administrative staff person who may have other duties as well. There are minimal upfront costs and the client is charged a predictable fixed monthly fee. The cost of the service is lower or not more than the cost of maintaining a 100 percent in-house operation. At some point in the organization’s growth when it becomes advisable to hire a financial professional as Controller or CFO, the move to an in-house operation is a smooth transition as most of the infrastructure is in place.

 We do not recommend collaborative outsourcing for all nonprofits. We seek clients that appreciate the value of accurate and timely financial information and are open to alternative strategies in getting the best results for administrative dollars spent.

The yin and yang of it — preparing annual audited financial statements

I ran across this excellent article in Bondi & Co’s newsletter and feel it is worth sharing. There is still considerable confusion about the auditor’s role among nonprofit executives and Boards. This article sheds some light.

When it’s time to prepare annual audited financial statements, you may find it difficult to determine where the responsibilities lie. With your auditor on one side of the equation and your management and board on the other, it’s important to clearly define — and understand — each party’s roles and responsibilities. Remember, both sides have a similar goal in mind: an end product that fairly and accurately represents your organization’s financial health.

Auditor VS. management

At the most basic level, your auditor is responsible for expressing an opinion on your financial statements. Beyond that, the auditor is responsible for obtaining reasonable assurance that your financial statements are free of material misstatement — be it from error or fraud.

Management, on the other hand, is responsible for developing estimates, such as the allowance for bad debts, adopting sound accounting policies, and sound accounting policies, and establishing, maintaining and monitoring internal controls, as clearly outlined in the American Institute of Certified Public Accountants’ standards. Although your auditor may make suggestions about these items, it isn’t his or her responsibility to institute them or to ensure they’re working properly.

What your auditor can do is evaluate whether the assumptions that management used to make decisions on internal controls, accounting policies and deterring and detecting fraud are current and applicable — and won’t materially misstate the financial statements. But deciding what to use, and when to use it, is strictly management’s responsibility. If the audit is performed in accordance with Auditing Standards, the restrictions on what an auditor can do to assist are even more stringent.

Leadership team

During these processes your auditor and board of directors can be real resources for your management team. Your auditor, however, can’t help management pick and implement policies. The auditor must maintain independence, in both fact and appearance, in the public eye.

Conversely, your board — often an untapped resource — can assist you. As your organization’s watchdog, it has significant fiduciary responsibilities that dovetail many of your duties. Often, members have related experience and suggestions for completing the job that they’re willing to share. Also see “Get a board that can help” on this page.

Format and comparisons

Annual financial statements are designed to help you manage your organization. Financial statement items — such as debt ratios, rogram vs. administrative expense ratios and restricted vs. unrestricted resources — can indicate how a nonprofit is doing. So when your nonprofit’s leadership team is preparing them, you want to make
sure the statements are as user friendly as possible.

One of the best ways to see the big financial picture is to compare your budget, your year end internally generated financial statements, and the financial statements generated during the annual audit. This comparison can be completed more easily if the format of
your annual audited statements is as close as possible to that of your internal financial statements and budgets.

Through a review of internal vs. audited statements, you can look for any large differences in individual accounts resulting from audit orrecting adjustments — these are often an indication of an internal
accounting deficiency. You’ll also be able to spot any significant discrepancies between what was budgeted for the year and the actual outcome.

These variances will help you to evaluate your organization’s performance and plan for the following year. Also, your financial
statements should make it fairly easy to determine which of your resources are restricted for particular purposes or time periods.

A nonprofit’s statement of activity and statement of financial position could show a strong financial status overall. But if the financial resources giving rise to the positive results are restricted to a particular purpose beyond regular operating activities, your management and board could come away with a mistaken impression of the organization’s financial health.

For example, donations — either investments or cash — given strictly to keep a maintenance fund for your building could show assets at a higher value even though your organization was barely able to break
even on its basic programs. So, statements should clearly identify restricted resources when they are received and while they are held by the organization at any point held by the organization at any point in
time.

A takeaway point

In the end, auditors and management have the same goal: a correct and user-friendly set of financial statements. Although most of the responsibility rests on management’s shoulders, only by working together can the two sides be successful.

Get a board that can help

Sometimes the board of directors’ role is overlooked in annual financial statement preparation — and that’s a mistake. Management must make sure that the board meets its fiduciary duties in overseeing this function.

The best time to start is when you’re assembling your board. Make sure your prime candidates possess these qualities:

Knowledge — and possibly professional skills — of use to the organization,

• Passion about the mission,
• Commitment to the organization’s success, and
• A willingness to devote adequate amounts of time.

Once the best board members are in place, encourage them to ask questions, come up with new ideas to implement and keep an open dialogue, especially on new topics. All of this will help board members contribute to your questions, come up with new ideas to implement
and keep an open dialogue, especially on new topics. All of this will help board members contribute to your organization. And having a board that is able to help guide the organization through significant financial and accounting policy decisions will pay off.

Nonprofit accounting software review

WebCPA has published a recent article that reviews several nonprofit accounting software products including Sage MIP Fund Accounting. This review is fairly informative as it reports the result of actually installing the software and doing some testing. 

The problems I have with most published software reviews — and this one is no exception — are several:

• There is an aversion to saying anything really negative,  probably not to put off vendor ad purchases.
• The author seems not to understand that some nonprofit accounting products are built specifically for nonprofits with native supporting features, while others are basically general commercial packages that require add-ons and third-party tools to perform adequately in a nonprofit environment.
• There isn’t a strong distinction made between entry-level products such as QuickBooks and more robust, scalable products as to their applicability and usefulness as nonprofits grow and mature.