Essentially, the aim of a non-profit organization is to do as much good as possible with as little money as possible! This might sound impossible, but it’s how many non-profit organizations work. Given that a non-profit might not always have the kind of funding they want and need, it’s very important for them to keep track of where all their money is coming from and going. That’s where bookkeeping comes in. Here are some of the things that a bookkeeper will need to keep track of at a nonprofit organization:
Nonprofits get their money from individual donations and gifts, government grants, bequests and corporate contributions, to name a few. Nonprofits also raise money by organizing events where people give money to charity by buying a dinner plate, bidding at an auction etc.
One of the most important things that a nonprofit bookkeeper has to do is keep track of all the money coming to the nonprofit organization and the source that it’s coming from. If there are several different sources of funding, then it’s important to make sure that that’s reflected in the non-profit’s books. This will help to avoid confusion in the long run.
The bookkeeper will also need to make sure that the nonprofit’s expenses don’t go over the money which is actually available to them. This means keeping track of the nonprofit’s expenses. How much money is being spent on overheads such as rent, electricity and salaries? And how much is actually going towards the services that the nonprofit provides to the segment of the population that they serve? By keeping track of this, the bookkeeper ensures that the non-profit doesn’t overspend.
Strategy is as important in a nonprofit as it is in any other organization, and bookkeeping can help nonprofits to strategize. For example, it can help the nonprofit decide whether they should take on new clients or provide more services, based on how much money they have in their account. In some cases, looking at the books might indicate that the nonprofit should hold on to their funding since they may not have as much in the next quarter. Any decisions about growth, relocation and providing new services will need to be made after looking at the nonprofit’s books.
Contact us to learn more about the importance of bookkeeping for nonprofits.