3 Financial Reporting Tips for the Modern Non-Profit

By Elizabeth K. Lewis, CPA, Business Assurance & Advisory Services Senior Manager

3 Financial Reporting Tips for the Modern Non-Profit

Accounting Opportunities to Position Your Non-Profit for Change

Non-profit industry revenue is forecasted to grow an annualized 3.4% over the next several years to 2026, totaling $175.6 billion. As these organizations gear up for this growth, it is important to remember that growth isn’t strictly in size or volume, its often in complexity. We’re living in a strange world of cyber currencies, an unprecedented real estate market, hybrid work environments, and more. Accounting professionals must never let recordkeeping stifle accomplishment of mission, but it’s the accountant’s role to raise a hand when there are new complexities and ensure the organization is prepared from a financial reporting perspective.

To help position your organization for change, here are 3 opportunities to develop accounting infrastructure and hone your financial recordkeeping:

1. New programs or restricted funds for non-profits

  • Connect fundraising communications to accounting
  • Forecast whether all restricted funds will be spent to plan accordingly
  • Establish procedures for identifying applicable expenses and allocating joint costs
  • Establish verifiable procedures for entering information to the accounting records
  • Identify budget to actual “check-points”
  • Internally audit your records and reporting

2. New sources or structure of gifts for non-profits

  • Maintain records of any federal-government sourced funds, including those that pass-through states or local governments to ensure compliance with Single Audit requirements
  • Include transparent, plain-English language in any gift agreements
    • Establish a template with standard language
    • Offer 3 options: An unrestricted gift, a gift with requested (but not required) use by the donor, or a specific restriction (a specified use that is narrower than general mission)
    • For gifts restricted into perpetuity, ensure the donor understands the organization’s spending policy and has specified any restrictions on earnings
    • Include a back-up plan – for example: “If circumstances arise such that the purposes of this donation are no longer feasible or are in conflict with policies of the organization, then the Board may use the gift in a manner that is in the best interest of the organization.”
  • Follow the decision tree provided by FASB accounting standards within ASU 2018-08 to properly account for pass-through funds, exchange transactions, and contributions.

3. Non-cash gifts for non-profits

  • Discuss the potential gift with your audit committee and auditors to get multiple perspectives prior to acceptance
  • Review example documentation and reporting that will be available at the time of gift
  • Plan a process for determining the fair value at the time of the gift
  • Discuss a liquidation plan and timeline
  • Estimate annual costs of managing the assets (including determination of the fair value annually) if it will not or cannot be liquidated

Reach out to your Keiter Opportunity Advisor or Email Call: 804.747.0000 for support for your not-for-profit organization through these growth times.


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About the Author

Elizabeth K. Lewis

Elizabeth K. Lewis, CPA, Business Assurance & Advisory Services Senior Manager

​Elizabeth is part of the Business Assurance & Advisory Services group at Keiter. Her client base consists primarily of private equity and real estate funds and also includes contractors and not-for-profits. Elizabeth specializes in auditing non-registered investment funds and possesses a comprehensive understanding of fund accounting and auditing services. She is also a member of the Firm’s Real Estate and Construction team.

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The information contained within this article is provided for informational purposes only and is current as of the date published. Online readers are advised not to act upon this information without seeking the service of a professional accountant, as this article is not a substitute for obtaining accounting, tax, or financial advice from a professional accountant.


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