Non-profit organizations operate under a unique set of financial regulations and accounting standards, making it imperative to hire an accountant who is well-versed in non-profit accounting. Whether you decide to hire an outsourced accountant or bring an accountant onto your staff, here are essential considerations and tips to ensure you find the right fit for your non-profit.
Key Considerations
Experience in Non-Profit Accounting
One of the most critical factors when hiring an accountant for a non-profit is their experience in non-profit accounting. Unlike for-profit entities, non-profits must adhere to specific regulatory requirements, including fund accounting, grant management, and donor restrictions. An accountant unfamiliar with these nuances could lead to compliance issues and mismanagement of funds.
Cost and Budget
Cost is a significant factor for non-profits, which often operate on tight budgets. Compare the cost of an outsourced accountant versus an internal accountant. Outsourcing can be more cost-effective for smaller non-profits, while larger organizations may find that a full-time internal accountant provides more value in the long run. If interested in hiring an outsourced accountant, understanding the accountant’s fee structure is crucial for budget planning. Ensure that the fees are transparent, and there are no hidden costs. Discuss the billing practices to avoid any future misunderstandings.
Flexibility and Availability
Consider the level of flexibility and availability you need. An outsourced accountant may offer more flexible hours and services on an as-needed basis, but an internal accountant will be readily available and more integrated into the day-to-day operations of the organization.
Software Proficiency
Ensure that the candidate is proficient in accounting software commonly used by non-profits, such as QuickBooks, Blackbaud, Fund-EZ, or other fund accounting systems. Familiarity with these tools can streamline financial reporting and enhance accuracy.
Specific Questions to Ask
The scope and complexity of non-profit accounting require specialized knowledge and experience. Therefore, it is essential to ask the right questions to ensure you are engaging a competent and reliable professional. Here are some pivotal questions to consider during the hiring process:
1.) What is Your Experience with Non-Profits?
Non-profit accounting differs significantly from for-profit accounting. It involves unique aspects such as fund accounting, grant management, and compliance with regulations specific to non-profit organizations. Ensure the accountant has substantial experience working with non-profits and understands the nuances of this sector.
Follow-Up Questions:
- Can you provide examples of non-profit organizations you have worked with?
- What accounting challenges have you encountered and how did you resolve them?
2.) Are You Familiar with Non-Profit Accounting Standards?
Non-profits are governed by distinct accounting standards, such as the Financial Accounting Standards Board (FASB) guidelines for non-profits. It is crucial that the accountant is well-versed in these standards to ensure compliance and accurate financial reporting.
Follow-Up Questions:
- How do you stay updated with changes in non-profit accounting standards?
- Have you ever encountered issues with FASB compliance? How were they resolved?
3.) How Do You Handle Fund Accounting and Restricted Funds?
Fund accounting is a critical component of non-profit financial management. The accountant should understand how to manage and report on various funds, including restricted and unrestricted funds, to ensure transparency and accountability.
Follow-Up Questions:
- Can you explain how you manage restricted funds?
- How do you ensure accurate tracking and reporting of all funds?
4.) What is Your Approach to Grant and Donor Management?
Grants and donations are lifelines for many non-profits. It is essential that the accountant has experience managing these funds, ensuring compliance with donor restrictions, and preparing accurate financial reports for grantors.
Follow-Up Questions:
- How do you manage grant compliance and reporting?
- Can you share a scenario where you helped a non-profit manage a complex grant?
5.) How Do You Ensure Compliance with Non-Profit Regulations?
Non-profits must adhere to a myriad of regulations at the federal, state, and local levels. The accountant should be knowledgeable about these regulations and have a robust process for ensuring compliance.
Follow-Up Questions:
- What steps do you take to ensure regulatory compliance?
- How familiar are you with the IRS Form 990 and annual state reporting requirements?
- Have you ever faced a compliance issue? How did you address it?
6.) What Strategies Do You Use to Address Problems?
Effective communication is vital for a successful working relationship. The accountant should be able to explain complex financial concepts in a way that is understandable to non-financial staff and board members.
Follow-Up Questions:
- Can you provide an example of a time when your communication skills helped resolve a financial issue within a non-profit organization?
- How often will you provide financial updates and reports?
7.) Can You Provide References?
Speaking with other non-profits that have worked with the accountant can provide valuable insights into their reliability and effectiveness. Ask for references and follow up with them to get a sense of the accountant’s performance and client satisfaction.
Follow-Up Questions:
- Can you provide contact information for some of your non-profit clients?
- What feedback have you received from your clients?
Where to Find Qualified Individuals
Professional Networks and Associations
Leverage professional networks and associations dedicated to non-profit management, such as the National Council of Nonprofits or the Association of Fundraising Professionals. These organizations often have job boards and can recommend qualified candidates.
Industry-Specific Job Boards
Use industry-specific job boards that cater to the non-profit sector, such as Idealist, NonprofitJobs, or The Chronicle of Philanthropy. These platforms attract candidates with relevant experience and a passion for non-profit work.
Consult with Other Non-Profits
Reach out to other non-profits in your network for recommendations. Peer organizations can provide valuable insights and referrals based on their experiences.
Consider Temp Agencies Specializing in Non-Profits
Some temp agencies specialize in placing accounting professionals in non-profit organizations. These agencies can provide temporary or temp-to-hire solutions, allowing you to assess the candidate’s fit before making a long-term commitment.
Offer Competitive Compensation
While budget constraints are a reality, offering competitive compensation can attract higher-quality candidates. Ensure that your salary and benefits package is in line with industry standards to attract and retain top talent.
In Summary
Making the choice to hire an outsourced accountant or internal accounting staff member for a non-profit organization requires careful consideration and due diligence. By focusing on candidates with specific non-profit accounting experience, asking the right questions, and utilizing targeted recruitment strategies, you can ensure that you are engaging a professional who has the necessary expertise, experience, and approach to manage your non-profit’s finances effectively. The right accountant will not only help in maintaining financial integrity but also contribute significantly to the organization’s success and sustainability.
Mahnaz Cavalluzzi, CPA
Partner
Mahnaz has been a member of Cerini & Associates’ audit and consulting practice area since 2010 where she focuses on serving nonprofit organizations, education, and healthcare clientele. Mahnaz has experience in financial statement audits, financial statement reviews, tax return preparation, cost report filing, and other consulting. Mahnaz brings her expertise, diversified background, and helpful approach to all of her engagements.
