To my knowledge, there are very few people who establish a nonprofit organization with a goal to have all their accounting ducks in a row. Nonprofit types like to describe themselves as ‘mission driven’ and the very title of nonprofit tends to imply that the focus of the work in not on and with the dollar but to create tangible change in our world.
Yet, more times than not, it is accounting issues that get many NP’s into trouble and distracts them from their mission. Truthfully, when I started out in this sector, I felt the same way; I resented all the budgets and reports and the agony of turning my books into a 990 that sort of resembled what we did all year. But I began to see things differently as I took more responsibility: that every penny does need to be accounted for, where it came from and where it went. Financial recordkeeping, aka accounting, is necessary and can be very powerful.
But it can be powerfully frightening for those who aren’t comfortable with how to use the numbers. The single most important step you can take is to choose an accounting system, invest the time to set it up as well as you can, and then use it. Label every transaction with date and purpose. Set aside some time on a regular basis to force yourself to look at the reports your system spits out.
Envelopes full of receipts, a stack of credit card statements or check stubs will make your life miserable. Don’t attempt to do this out of a checkbook or a side desk drawer. TechSoup is a fantastic resource for nonprofits and access to Quickbooks is very affordable. Organizing and managing your funds is one of the best things you can do for your mission, even if you don’t like it.