Accounting For NonProfits

I have a new client that is a nonprofit and even though I aced the class I took in college, I am wondering if there are the big differences between doing work for a profit and a nonprofit.  First thing comes to mind is how important budgeting is and keeping costs down.  Secondly  the decision to employ cash vs accrual accounting.  For a small non-profit, I think cash accounting is better, if only the volume of transactions is low and there is very little for accruals.  Anyway, I found a good guide for nonprofit financial management on the Alliance For NonProfit Management website.


2 thoughts on “Accounting For NonProfits

  1. Hi Nichelle,
    I think there’s quite a huge difference between profit & non-profit accounting. Much of it is “cultural” and ingrained into how the organisation sets it’s priorities. A non-profit org might have conflicting priorities, whereas a commercial one is (hopefully) united in a profit motive. It depends on the size of the organisation, too. When I worked in public sector, the budget was key (both setting it and then managing it). But I agree that for a small charity, cash accounting might be more relevant during the year. In the UK there are differences in the statutory year end accounts for charities, nonprofit and public sector orgs, I presume it’s the same in the States??
    Personally, I love both profit & non-profit accounting, I think you are very fortunate to be able to service such a range of clients. Good luck with your new client.

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