In recent years, the IRS has increased its scrutiny of nonprofits’ unrelated...
Nonprofits are facing some of the toughest fundraising environments in recent memory as pragmatic corporate and individual donors are asking to get more for less, and government budgets or grants have been reduced to near record lows. Nonprofits must be able to demonstrate both programmatic impact and organizational sophistication, regardless of size. It can be a tall order for organizations that rely on boards of directors and volunteers to bolster a hard working staff. The supplemental help of a CPA firm to provide back office accounting or design internal controls, and communicate the financial health of an organization through annual reports, an audit or review, or tax preparation, can make the difference when trying to win a donor’s confidence.
What we’re talking with clients about:
Providing an explanation of the new revenue recognition rules around donations “with donor restrictions” and “without donor restrictions” including when to release them.
How to record and value donated gifts, specifically for auctions and other fundraising efforts.
Explaining how to record multi-year contributions including exchange transactions and unconditional contributions.
Assurance and Attest
Whether to stay in compliance with state regulations or Governmental Accounting Standards (Yellow Book) to qualify for government awards, or to satisfy donors, lenders, and grant givers, an annual audit or review is a best practice for all nonprofits. Not all board members are adept at reviewing financial statements for nonprofits, so we present and explain your financial statements at board meetings as part of our comprehensive service approach. LGA can also assist with audit preparation in situations when independence can be maintained.
Most nonprofits must file a tax return (Form 990) with the IRS and most Massachusetts based nonprofit organizations must file a Massachusetts Annual Report (Form PC) with the Massachusetts Attorney General. These publicly available documents are frequently viewed by donors, potential donors, bankers, and others who have an interest in your organization’s financial health. LGA can help you prepare these documents properly and in a timely manner while minimizing the efforts of your internal staff.
Maintaining Tax-Exempt Status
Each year the IRS revokes the tax-exempt status of nonprofits for failure to comply with the rules and regulations or adhere to the tax-exempt purpose. LGA proactively communicates with clients when any organizational activities may put their tax-exempt status at risk.
Regardless of size, internal controls are essential for nonprofits. Proper systems design can help mitigate the risk of fraud and save public embarrassment and donor relations problems. Despite having limited resources, all nonprofit organizations need to implement some form of internal controls. LGA can assist your organization with the review and design of an internal control environment that is appropriate for the size and activities of your organization.
Outsourced Management Accounting Services
Nonprofit organizations typically have limited internal resources of time, personnel or expertise to have the complete and proper oversight of accounting and finance, whether it is the day to day accounting or higher level services that the Executive Director and/or the accounting team cannot adequately perform. Outsourcing some or all of your accounting functions will produce timely reporting and financial analysis that will allow nonprofit executive directors, boards of directors and finance committees to make more timely and better management decisions. LGA can also assist with preparing for your annual audit and serve as a liaison between you and your external auditors. Learn more about LGA’s outsourced management accounting services.
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Nonprofit Team Leaders
Bob is a Principal at LGA and the head of the Accounting and Auditing group. He joined LGA in 2013 and has over 25 years of experience in public accounting focused on providing audits, reviews and compilations to nonprofit organizations and privately held businesses. Bob also develops and delivers technical training to the firm’s staff and provides updates on annual changes affecting LGA’s client base.