Success for nonprofits is more nuanced than an aim to generate revenue—to fulfill your mission, you must connect with donors, wisely allocate your resources, recruit volunteers, strategize fundraising efforts, and market your mission, all while remaining compliant with legal and state regulations.

Ultimately, success may look different for every organization. However, some elements of success are consistent across nonprofits. In this guide, we’ll explore three of those elements and how a bookkeeping expert can boost any nonprofit’s success:

Enlisting the services of a professional bookkeeper does more than outsource your recordkeeping. Learn how their expertise can support all your nonprofit’s endeavors and boost your success!

Accurate budgetary records

First and foremost, your organization must keep accurate records of its daily budgetary activities. An overview of the expenses associated with nonprofit marketing strategies, overhead costs, and fundraising initiatives can guide your next steps on the path to a healthy budget.

Lean on the expertise of a professional bookkeeper to:

  • Lower your expenses. Your bookkeeper’s expert insight will reveal spending patterns and help you determine how to more effectively allocate your resources.
  • Demonstrate accountability to your stakeholders. Presenting your board members and executives with an organized board report shows that your nonprofit is trustworthy with its finances. An expert bookkeeper’s detailed recordkeeping will simplify the creation of your board reports and instill confidence that you know what you’re doing with the nonprofit’s funding.
  • Track your budgeting progress. The longer you employ a professional bookkeeper, the more useful insight you’ll have regarding your budgetary progress. For example, if you’ve created a strategy to lower expenses, the monthly reports created by your bookkeeper will help you gauge whether or not the strategy was successful and how your financial practices have improved over time.

Your bookkeeper’s records can also impact donor engagement by revealing how donations specifically furthered your nonprofit’s work. Referencing each donor’s specific giving history can make your donor appreciation message more personal and cultivate a community of loyal supporters. Detailed records provide the specificity that links your donors’ contributions to your nonprofit’s success.

Legal compliance

The importance of attention to detail goes far beyond donor appreciation—as a nonprofit leader, you’re likely well aware of the detailed reports required by the IRS to maintain tax-exempt status. Form 990 is the most common annual filing and vital to your nonprofit’s success because it allows you to continue operating as a nonprofit organization.

Form 990 can span up to 100 pages in length, and even your staff’s most efficient accounting efforts can leave out important information, especially if staff members are inexperienced in financial management roles. A professional bookkeeper, in contrast, collects most of the information you’ll need when gathering information for your financial statements, including:

  • Assets: Your bookkeeper will record everything your nonprofit owns, from each donation you receive to the furniture in your headquarters building. You’ll also report these assets annually in Form 990.
  • Liabilities: Both Form 990 and your financial statements will include details about your organization’s liabilities, or what it owes. This might include loans, grants you give to other organizations, or accounts payable (like your bookkeeper’s service fee).
  • Activities: Your financial statements will include an income statement, which essentially explains your organization’s financial activity and the results of your work. Form 990 also asks for a summary of your activities and programs to prove that your nonprofit is deserving of its tax-exempt status.

For organized legal compliance, Foundation Group’s guide to Form 990 filing recommends tracking your nonprofit’s activities and accomplishments as they happen. That way, you’ll be prepared to describe, in detail, what your organization accomplished during the year. Or, you might instead rely on an expert bookkeeper to track and organize this information for you so that Form 990 filing is easier when the time comes.

Internal transparency

Just as a bookkeeper’s records might serve as a confirmation of your own records for annual filings, their third-party perspective offers credibility when it comes to managing internal operations. Accounting transparency is a crucial element of nonprofit success not only because it affects your finances, but also because it helps secure potential supporters’ trust.

To ensure internal transparency, you must protect your organization from accidental mismanagement of funds as well as intentional incidents of fraud. A professional bookkeeper’s oversight might identify and correct different types of errors in your books, such as:

  • Data entry errors, which refer to inaccurate data that was entered into your bookkeeping system. Incorrect information could include entering the wrong number, a number instead of a word, or numbers in the wrong order.
  • Omission errors, or false negatives, leave information out of the records. For example, you might forget to record an expenditure or major gift.
  • Duplication errors, which occur when you enter the same income or expense multiple times.
  • Transposition errors, or the reversal of two digits in an entry. For example, you might record an expenditure of $280 instead of the actual $820 purchase. Delegating bookkeeping to an expert can easily avoid transposition errors since the professional will dedicate their time to carefully inputting and double-checking each entry.
  • Compensation errors, which refer to any mistakes made when paying staff members.
  • Principle errors, or entries that violate accounting principles. For example, a purchase’s amount might be correctly recorded, but the purchase itself could be miscategorized as income.

Inviting an outsider to hold your nonprofit accountable not only assures your staff of internal transparency but also shows supporters that your nonprofit prioritizes integrity. Prospective donors and volunteers will feel confident that their contributions are truly making a difference when they know your organization is genuinely fulfilling the charitable purpose it established when it was first started.

A professional bookkeeper can generally boost your nonprofit’s success, but to target necessary adjustments, you should first identify relevant areas for improvement. A deep dive into your nonprofit’s finances will reveal your exact bookkeeping (and other) needs.

Consult professional bookkeepers and compliance experts to determine which would best fit your nonprofit’s needs for the long haul. Remember, their services aren’t crisis control—they’re there to improve the overall health and success of your nonprofit’s financial and compliance activities.