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Accounting for a cause: Learn to become a nonprofit accountant Discover an accounting career that strives to make and track money—all for a worthy cause. Nonprofit organizations need experienced accountants to help organize and regulate their finances so that the organization can continue advancing its mission. Nonprofit accounting can be a lot different than standard accounting for a business whose financial goals are usually straightforward: heed the bottom line and make money. Nonprofit organizations must make money too, but what they do with their funds and where they come from are much different than most businesses. It’s up to nonprofit accountants to ensure that their money is spent, tracked, and reported appropriately. Nonprofit accounting is the process in which nonprofit organizations track, plan for, and report on their finances. Nonprofits typically earn their money from donors and contributors to keep their charitable operations running smoothly, but donors have the right to determine how their donations are used. Nonprofit accountants, therefore, must ensure that donor funds are spent appropriately and in alignment with the restrictions that donors set. They do this through a process called fund accounting . This means that nonprofits allocate their money into different funds to be used for specific purposes. A donor who wants their money to go towards a particular purpose may request that it be put into a restricted fund . If they don’t have these kinds of spending requirements, the organization—with the guidance of their accountants—could decide to put the money into an unrestricted fund to cover overhead or other expenses. Another aspect of nonprofit accounting that’s different from standard for-profit accounting is making sure nonprofit organizations follow what’s known as the non-distribution constraint . This constraint means that nonprofits cannot distribute extra funds to organization leaders or stakeholders—it must be reinvested in the organization’s mission. Where nonprofit accountants work Some nonprofit accountants work directly for a nonprofit organization in their finance department, while others may work for an accounting firm. Some accounting firms specifically cater their accounting services for nonprofits. An accountant working for the nonprofit focuses solely on their organization’s finances. If you work at an accounting firm, you may consult and work with multiple organizations. What nonprofit accountants do Nonprofit accountants perform many of the same functions as other accountants , with some exceptions that include various documentation requirements which are unique to nonprofit organizations. In general, most nonprofit accountants can expect to perform the following duties: Prepare financial statements such as the statement of financial position, statement of activities, statement of functional expense, statement of cash flow, and more. Ensure that all financial statements and documentation are accurate and compliant. Prepare expenditure reports for grantors and donors. Make budgeting suggestions for how to further the organization’s mission with the resources available. Help prepare tax returns and provide tax-related assistance. Communicate vital financial information to organization leaders and provide actionable insights. Requirements to become a nonprofit accountant Becoming a nonprofit accountant is more or less the same as becoming any other kind of accountant, which comes down to a combination of relevant education and experience. Some accountants may also pursue additional licensure and certifications. Specific jobs may require their employees to have certain licenses and credentials, but this varies from employer to employer. Education You can expect to need at least a bachelor’s degree in order to be hired as an accountant. Accountants usually have bachelor’s degrees in accounting, finance, business administration with an accounting concentration, or something similar. Some accountants may have a bachelor’s degree in another subject but then earn a master’s degree later. Even those who earn a bachelor’s in accounting may choose to follow it up with a master’s degree anyway because of the education requirements to become a licensed Certified Public Accountant (CPA). Licensure and certification Some nonprofit accountants may choose to pursue licensure in their state as a Certified Public Accountant (CPA) , though this is not necessarily required and comes down to each individual’s career trajectory. What it’s like to work as a nonprofit accountant Kreiter said that perhaps the greatest part of working as a nonprofit accountant is contributing to mission-driven work. “Even though we’re doing accounting behind the scenes, the work that we’re doing has a bigger purpose. Being able to see a nonprofit apply for a grant that is life-changing for the organization, help get their financials to where they need to be and get structured for that, and then see them get awarded that grant—that is why we do what we do.” Another advantage of working for a nonprofit is that there is less of the cutthroat nature of maximizing profits which can sometimes plague for-profit accounting. Nonprofit accounting can also involve a broader range of responsibilities than other accounting jobs, which may be seen as an advantage or disadvantage depending on the individual. But nonprofit accounting isn’t without its drawbacks, either. Restricted funds can lead to tighter budgeting restraints, and staff at nonprofits often wear a lot of hats. When employees are stretched thin, it can make it difficult for a nonprofit accountant to get the information they need. How much do nonprofit accountants make? Factors including geographic location, years of experience, credentials, education level, employer type, and more all affect your earning potential as a nonprofit accountant. The U.S. Bureau of Labor Statistics (BLS) does not have data on how much nonprofit accountants make specifically, but they do report that the median annual salary for accountants and auditors in general is $79,880. #J-18808-Ljbffr Accounting Education

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