Skip to main content
Tag

accounting

Aug 17

Smart Money, Strong Mission: Why Financial Education Has Become a Strategic Imperative for Nonprofits

By Sponsor Insight

By The National Bank of Indianapolis and Barnes Dennig

Central Indiana is fortunate to have a nonprofit community that is innovative and deeply committed to serving others. Thousands of nonprofit organizations address our community’s most pressing challenges, from education and housing to healthcare, workforce development, arts, culture, youth development, and social services.

Even the most mission-driven organizations face a common reality: competition for funding continues to intensify, making every dollar, staffing decision, and strategic choice more important than ever. In this environment, passion for a mission remains essential, but it must be paired with a strong understanding of financial health. When nonprofit leaders invest in ongoing education, they build more resilient organizations.

Continue to focus on lifelong learning.

Executive directors, financial officers, development professionals, and board members are all expected to navigate increasingly complex financial, regulatory, and operational challenges. Organizations that prioritize learning are often better positioned to adapt, make informed decisions, and sustain their missions over the long term.

Understanding how your money works for you is essential for leadership.

Many nonprofits devote significant attention to fundraising and program outcomes, yet fiscal management is what enables those efforts to remain sustainable. Strong organizations understand not only where funding comes from, but also how to manage cash flow, maintain liquidity, anticipate future needs, and align financial resources with strategic goals.

A valuable opportunity for growth exists at the intersection of banking and accounting.

Too often, these functions operate independently. Yet when banking and accounting strategies work together, nonprofit leaders gain greater visibility into their organization’s financial health. Better forecasting, stronger cash flow planning, and coordinated financial guidance can help identify funding gaps earlier, strengthen governance, and support more informed decision-making.

For nonprofit leaders seeking to strengthen their organizations, three areas deserve ongoing attention:

Cash Flow Forecasting. Understanding when resources will be available is just as important as understanding how much funding has been secured.

Liquidity Planning. Maintaining financial flexibility provides stability during uncertain times and positions organizations to respond when opportunities arise.

Collaborative Financial Leadership. The strongest financial decisions are rarely made in isolation. Boards, executives, accountants, bankers, and operational leaders all bring valuable perspectives to the table.

At The National Bank of Indianapolis and Barnes Dennig, we believe supporting nonprofit education is one of the most important ways we can serve our community. That belief is the foundation of our upcoming joint event called Smart Money, Strong Mission: Banking and Accounting Strategies for Nonprofits, an educational forum designed to bring together nonprofit leaders and financial professionals for practical conversations and shared learning. On October 1 at Indiana Landmarks, this panel-style event followed by a social hour will explore how organizations can better connect their banking and accounting strategies to improve financial visibility, strengthen decision-making, and support long-term sustainability. There is no registration fee, and the program qualifies for 1 hour of CPE credits.

The nonprofit sector has long been one of Indy’s greatest strengths. As the challenges facing organizations continue to evolve, so must the knowledge and skills of the leaders guiding them.

When you invest in financial learning, you strengthen more than your finances. You strengthen your organizations and the communities you serve. Smart money management makes mission success possible.

Please visit here to learn more about the event referenced in this article.

Jun 27

The Essential Ingredients of Nonprofit-Friendly Banking

By Sponsor Insight, Uncategorized

By Amandula Anderson, First Vice President & Manager of Nonprofit Services, The National Bank of Indianapolis

Nonprofits manage frequent and varied types of transactions, from donations to payroll, which means that you need easy access to funds. In this area, you want to look for a combination of convenience from modern digital banking tools and a local team that knows your organization and is accessible in the moments that matter most.

Everyone knows I love sweet treats. But if you know anything about baking, you know that measurements are key to creating the right texture and flavor. A proper blend of flour, sugar, butter, and eggs will translate into a good cookie. There are also primary components that lead to the right style of nonprofit banking to feed your success as an organization.

Ease of Access & Digital Tools

Convenience and strong digital capabilities are essential to help your organization remain responsive to donor and operational needs. The right banking partner can work with you to address these factors and determine which transactional tools you need to accomplish your financial goals:

  • Simple onboarding and documentation processes
  • A full suite of online and mobile banking capabilities with real-time account access
  • Remote deposit capture, ACH, and payment portals for efficient donation processing
  • A local team available when you need them plus a local branch presence; not just a call center

Cost Efficiency & Competitive Pricing

Every dollar your organization can save on banking is a dollar you can re-direct to your mission and its impact. The approach is simple: your resources should advance your mission and not be absorbed by fees. Structure your accounts around how your organization actually operates by securing key benefits, such as:

  • Nonprofit-specific checking and depository accounts with competitive fees
  • Ability to earn interest or earnings credit on balances
  • Flexible structures tailored to activity level (from simple to complex organizations)

Governance, Controls & Security

Your organization operates with board oversight, donor expectations, and compliance pressure, so transparency is non-negotiable. You need to protect what has been entrusted to you with financial tools and controls that support strong governance, audit readiness, and donor confidence. Look for the following:

  • Robust fraud mitigation tools including Positive Pay and ACH blocks/filters
  • Secure, permission-based online access for multiple users
  • Systems that support oversight, reporting, and financial transparency

Cash Flow Management Capabilities

Nonprofits face complex cash flow and restricted funding requirements that require more than basic checking accounts. You want a provider to go beyond basic banking by helping you manage the full lifecycle of your funds and even the most complex financial operations, including:

  • Comprehensive treasury capabilities:
    • Receivables (lockbox, remote deposit)
    • Payments (ACH, wires, bill pay)
    • Cash optimization (sweeps, zero-balance accounts)
    • Data & reporting tools
  • Ability to streamline the full cash cycle, from donation to deployment
  • Investment services to support your long-term sustainability

Service Model & Mission Alignment

This is the most important factor, in my professional opinion. It’s priceless to find a partner who understands your mission and not just your balance sheet. This is where you want experience in nonprofit banking by way of:

  • A dedicated nonprofit services team with specialized knowledge
  • Local decision-making and tailored solutions
  • Deep community involvement through board service, volunteering, and financial support and investments

Find a Partner, Not Just a Provider

Ultimately, you want your bank to be invested in the success of our community. While larger banks with a national scope offer scale and standardization, do not overlook locally based institutions that offer programs that may become more meaningful to your organization. Local causes align well with localized support that focuses on relationships, strategy, and your mission.

According to 501c3Center.com, here are the questions you should ask before choosing a bank and opening your accounts:

  • What documents are required to open a nonprofit account?
  • Are there monthly service fees, and can they be waived?
  • Can multiple board members access the account?
  • Is there a dedicated nonprofit team on staff?
  • What fraud protections or alerts are available?
  • Does the bank offer integrations for online donations or accounting tools?

Final Thoughts

There’s not a one-size-fits all recipe when it comes to choosing the best bank for your nonprofit. The answer depends on multiple characteristics including your size, goals, and whether your operations are local or national. Start a conversation with a banking partner. You might just find a solution that’s sweeter than you ever imagined.

Jun 13

How to comply to new leasing standards for nonprofits

By Sponsor Insight

by Michael A. Staton, CPA, managing director, Alerding CPA Group

As far back as 2016, the Financial Accounting Standards Board (FASB) began discussions on the implementation of new leasing standards. The new leasing recognition guidelines, which outlined requirements for recording almost all leases on entities’ financial statements, met significant pushback from accounting professionals and businesses alike.

Well, the delays are now over. We must all comply with the new FASB standard ASU 842 in 2022. The new standard, which applies to both non-profit and for-profit organizations, became effective for all fiscal years beginning after Dec. 15, 2021. This means that, if you have leases, you must record under the new guidelines effective Jan. 1, 2022. Financial statements for calendar years ending on Dec. 31, 2022 and fiscal years ending in 2023 must be presented with the new standard.

Under the old standards, nonprofits did not record operating leases on their statements of financial position. They simply recorded “lease expense” on statement of activities while making monthly payments. The new requirements were put in place to provide more clarity about organization’s leasing arrangements and cash flow requirements. Donors will now have more information on the future financial commitments that the organization has undertaken.

Leases will be classified as either a financing lease, an operating lease, or a short-term lease.

A financing lease is the same as what we previously called a “capital lease” under the old standards. The classification criteria are basically the same, as it requires the lease term to cover substantially all of the life of the asset being leased, title to pass at the end of the lease or a below market buy-out.

Consistent with current requirements, the lease will be required to be presented on the statement of financial position as “lease assets” and “lease liabilities,” and depreciation and interest will be reflected on the statement of activities.

Operating leases recognition will be significantly changed under the new standards. Instead of simply recording the expenditure on the statement of activities when a lease payment is made, the value of the asset will be recorded just like that of the financing leases. The statement of financial position will reflect the entities “right to use” the asset and the lease liability for remainder of the term. There is no requirement to restate prior years financials for the recognition of operating leases. FASB allows for the assets to be recorded prospectively.

Short term leases of less than 12 months in duration do not need to be recorded on the financial statements. However, if the lease is expected to be renewed annually then the lease should be recorded as an operating lease or financing lease.

There are additional concerns for your non-profit beyond just recording the lease itself. The new leases that you are recording will change the face of your statement of financial position. You will now have more assets, but you will also have more debt. This could cause your ratios to change and potentially make you out of compliance with your bank or financial institution. Your debt-to-net-assets ratio could not be out of compliance, and you could also have issues with your debt service coverage ratio. Please review these ratios with your lender in advance of issuing your year-end financial statements.

For more guidance, contact an Alerding CPA Group account representative to discuss these and any other issues you might have.

Sep 27

Innovative ways to tackle today’s top work challenges

By Sponsor Insight

by Ian McManis, marketing manager, Barnes Dennig

With today’s not-for-profit professionals juggling more priorities than ever, time is at a premium. That’s why Barnes Dennig has hosted a series of concise workshops designed to answer key questions to challenges not-for-profits are facing across a broad range of topics. The following include recaps of the sessions as well as links to access the full recordings:

Cybersecurity: How NFPs protect themselves and their donors

Everyone is at risk to falling prey to ransomware, whether it’s their home office computer or a major oil pipeline company. But the more prepared you are for an attack, the more likely you are to avoid it. In this session, Robert Ramsay, Barnes Dennig director and cybersecurity specialist, shares how to best protect yourself and your organization. Highlights include:

  • Ways to protect against ransomware attacks
  • PCI DSS standards: How to make sure your organization is compliant when soliciting donations online
  • How to keep donor secure and private
  • What you need to know about the California Consumer Privacy Act (CCPA) and how to be compliant

Download the presentation and watch the full recording here.

The new lease standard: Why NFPs need to start planning now

Maybe you’re ready to implement the new lease accounting standard today. Maybe it’s still at the bottom of your never-ending to-do list. No matter where you fall on the spectrum, Brad Sack, Barnes Dennig senior manager and NFP assurance specialist, covers the basics, using real-life examples and experiences from his clients to provide insights. Here is an overview of the session:

  • What do the updates to the lease accounting standard mean for my organization? When do they go into effect?
  • What changes should I need to make today to make sure I’m in compliance?
  • How can I build and manage a process to keep my team and me on track?

Download the presentation and watch the full recording here.

NFP Tax & Accounting Lightning Rounds – 990s, ERC, QBO for NFPs

Join NFP Tax team leader Paula Hume, CPA; COVID-19 team leader Cheryl Ganim, CPA; and QuickBooks specialist Kathleen Haney, MBA as they break down some of the most common accounting and tax issues NFPs face. The 15-minute segments include:

  • It’s just a 990: How hard could it be? Turns out there’s a bit of strategy involved.
  • Wait, did you say we could be eligible for the Employee Retention Credit in 2021 even if we weren’t for 2020? Take the ERC Quick Test and come prepared to discuss how to determine eligibility and calculate the amount.
  • A lot of NFPs use QuickBooks Online (QBO): How can I use it to help my organization grow smart?

Download the presentation and watch the full recording here.

Virtual Auditing 101: How NFPs avoid common issues

Every organization needs audits run for them, but not all have had a virtual audit. Our world is moving more towards virtual every day. While virtual work has a wide list of benefits, there are some downsides as well. Join Senior Manager Kara Wysinski, CPA, and Senior Associate Tricia Hart, CPA in going over the pros and cons of virtual auditing. Here are a few of the highlights:

  • Changes to audit approach
  • New audit risks
  • Changes in internal controls
  • Best practices for a remote audit

Download the presentation and watch the full recording here.

Additional resources and upcoming events

Our nonprofit team works hard to bring the best and most relevant resources to our communities. Barnes Dennig is hosting Measurement Resources Company and SureImpact, Inc. founder and CEO Sheri Chaney Jones as she leads two full workshops in one virtual event:

  • Data-driven strategic planning for fundraising success
  • How to turn data into dollars: Demonstrate your social impact

Learn more and register here.

Every other year, we collect responses from regional non-profits on compensation, benefits, retirement plans, governance and other metrics and release the findings in a free virtual event.

Each attendee will receive a copy of the 2021 Not-for-Profit Compensation & Benefits Benchmarking Study, which will help them compare their organization to others in the region. A well-thought-out compensation and benefits package helps not-for-profits better fulfill their mission.

Learn more and register here.

Feb 15

7 key considerations for analyzing the impact of COVID-19 on nonprofit financial reporting

By Sponsor Insight

by Sarah Gregory, CPA, CFE, director, Alerding CPA Group

With COVID-19 having an unprecedented impact on the operations of nonprofit organizations, it’s critical, as a nonprofit leader, financial/accounting professional, auditor or board member, to consider the impact it may have on your year-end financial reporting for 2020.

As your team closes out its financial records for 2020, make sure you take into account the following key accounting and auditing considerations prior to your financial reporting engagement:

  1. Determine options for remote auditing. While access to records may be limited, auditors will still need to gain access to certain records. Ensure that your financial team takes the necessary steps to accommodate remote auditing. Prepare for this type of engagement by reviewing various remote options beforehand.
  2. Assess existing internal controls and segregation of duties over financial reporting. It’s likely they may have been impacted during the year due to staff absences or reductions.
  3. Analyze your organization’s risk for fraud. Your vulnerability to fraud risk may be heightened as a result of the current environment for added incentive or pressure to perpetrate fraud, opportunity to commit fraud, and rationalization to justify a fraudulent action. Examples of risks could include:
  • Fictious revenue – creating incentives and opportunities to record revenue that is fictious. An example could be an individual who inflates their sales since their compensation is directly tied to meeting sales targets.
  • Improper timing of revenue and expenses – improperly recording revenue and/or expenses in a period in which the revenue was not earned or delaying the expense to a later period in which the services were not performed.
  • Federal relief program applications – increased pressure to apply for Paycheck Protection Program funds, including forgiveness due to economic downturn.

4. Prepare for variances in auditing inventory. With COVID-19 disrupting operations, inventory observations may need to be postponed, conducted remotely or performed under different circumstances than prior years.

5. Account for additional disclosures. Be prepared to account for significant financial impacts related to COVID-19. They may require you to include additional disclosures within your financial statements and potential evaluation of going concern issues related to the organizations ability to continue indefinitely and being profitable.

6. Account for delayed ASU. Accounting Standard Update (ASU) 2020-05, Revenue from Contacts with Customers (Topic 606) and Leases (Topic 842): Effective Date for Certain Entities, allowed organizations to delay the effective date these ASU’s for one year. If your organization did not early adopt as of your most recent fiscal year end, you will be required to adopt these ASU 2014-09, Revenue from Contracts with Customers (Topic 606) in the current year. ASU 2016-02, Leases (Topic 842) will be effective for fiscal years beginning after December 15, 2021 and interim periods within fiscal years beginning after December 15, 2022.

7. Identify delayed payments and waived fees. If your organization received relief from creditors and lessors in the form of delayed payments, waived fees, or adjusted amortization schedules, you will need to ensure you are correctly accounting for these modifications or extinguishment of liabilities.

The impact of COVID-19 will continue to be felt for years to come. As you close out your financial records and prepare for your financial reporting services, make sure you include these considerations as part of your process.

May 30

The overlooked benefits of outsourcing nonprofit accounting

By Sponsor Insight

By Jim Simpson, CPA and director, Financial Technologies & Management

In the nonprofit community, outsourcing typically means long-term delegation of key operation to outside experts. The accompanying expectation is improvement of the quality, strengthening effectiveness, and lowering or controlling costs.

A key difference in the nonprofit sector is not only controlling costs, but becoming a more effective organization. Finance and accounting departments are two essential back-office areas in nonprofit organizations.

With limited resources, a nonprofit can outsource some or all its financial functions, which can help a nonprofit efficiently staff and conduct its financial operations. It also respects the board and executives limited time or expertise to manage the finance functions, and allow more allocation of resources toward mission and program outcomes.

Here are six overlooked, and sometimes unknown, benefits of outsourcing nonprofit accounting.

Button Text

Jun 09

Proposed changes to nonprofit financial reporting

By Finance, Governance, Sponsor Insight

By Chris Mennel, audit manager, Alerding CPA Group | 

A new proposed accounting standard could dramatically impact the current financial reporting methods for the more than 1.5 million nonprofits in the United States. Financial reporting in nonprofits was largely affected in 1993 by the issuance of Financial Accounting Standard No. 116 and Standard No. 117 – two standards that accountants and bookkeepers have come to know very well.

These standards created the three classes of net assets that are used today (unrestricted, temporarily restricted and permanently restricted) as well as many other financial statement components that small to large nonprofit organizations deal with on a regular basis.

Although these changes have been in place for over 20 years, many non-accountant board members and others continue to struggle with the concepts behind nonprofit financial statements. In an effort to improve the usability of these documents, the newly proposed accounting standard would:

  • Create two classes of net assets (unrestricted and restricted) instead of the current three;
  • Require the Statement of Cash Flows to be prepared under the direct method of cash flows instead of the indirect method;
  • Require all nonprofits to report expenses by nature and function. Currently, only voluntary health and welfare organizations are required to present a statement of functional expenses;
  • Require certain reclassifications within the Statement of Activities in order to present new operating measures; and
  • Provide additional changes to the current presentation of financial statements.

Button Text