Nonprofit Accounting Basics

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Role in All Volunteer Organizations

Originally Posted: December 30, 2008

Most nonprofits start as all-volunteer organizations (AVO), without a paid staff. The organization operates with the support of its board and maybe additional volunteers.

Individual Board Member Responsibilities

Originally Posted: December 30, 2008

Board members must realize they have personal expectations and responsibilities for their board service.

Ensuring Adequate Resources

Originally Posted: December 30, 2008

The board must ensure adequate resources to allow the organization to carry on its mandate. Financial resources feed into the health and stability of the organization.

Governance & Policies

What is governance?

Derived from the Greek word, kebernon, governance relates to steering, controlling, and exercising authority. The board of a nonprofit is vested with a role to govern the organization. This authority comes with the expectation to lead the organization by:

  • respecting all the laws
  • abiding by strict ethical standards
  • remaining fully accountable for its actions

Good governance constitutes the core of responsible stewardship. Good governance leads the organization to earn the public’s trust.

Who We Are

In 2003, several members of the Not-For-Profit Committee of the Greater Washington Society of CPAs (GWSCPA) formed a subcommittee to focus on accountability issues facing small and midsized nonprofit organizations.  Calling themselves the Accountability Task Force (ATF), members of this committee, representing CPA firms, nonprofit service organizations, independent consultants, and nonprofit leaders, began to develop plans for a website.  

Credit Card Transactions

Originally Posted: October 23, 2008

Many people will opt to charge a contribution or a fee for a service or publication given the option.

Lockboxes

Originally Posted: October 23, 2008

If a large volume of checks is received by the organization, a lockbox may be appropriate. Banks receive the checks directly and the deposit is made upon receipt.

Journal Entries

Originally Posted: October 21, 2008

Most transactions are posted automatically through the accounts payable and accounts receivable modules of the general ledger software owned by the not-for-profit.

Bank Reconciliations

Originally Posted: October 18, 2008

If at all possible, an individual other than the person writing checks and making deposits should reconcile the bank account each month.  Many organizations hire an outside accountant or bookk

Vision and Philosophy

The single most valuable asset of every nonprofit organization is public trust.

The demand for greater accountability within the nonprofit sector is increasing as is the number of organizations receiving exempt status. We believe that accountability should be a top priority from inception and throughout the life of an exempt organization in order to preserve the trust capital we possess by virtue of our missions.

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