Whether your organization has chapters all over the country or is a small grass roots project with just one office and a small staff, the success of your organization depends on careful monitoring of finances.

The Internal Revenue Service estimates that there are more than 1.5 million organizations in the United States that qualify as tax-exempt under Section 501(c) of the US Tax Code.  That’s a decline of some 22 percent over 2010 levels, and despite a recent increase in applications for some types of tax-exempt entities, it is clear that the challenges facing Nonprofit organizations are intensifying.

• 42% of survey respondents report that they do not have the right mix of financial resources to thrive and be effective in the next 3 years.
• 1 in 4 nonprofits has 30 days or less cash-on-hand.
• Over the next twelve months, 39% plan to change the main ways they raise and spend money.
• 23% will seek funding other than grants or contracts, such as loans or investments.

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Fund accounting is something that pretty much every nonprofit organization has to deal with in one way or another.  Basically, it is used in a way that emphasizes accountability rather than profitability. Nonprofits are required to use their financial statements and reports as a means to demonstrate how money is spent, rather than to account for profits earned.  Oftentimes, they will have multiple funds to manage, depending on the reporting requirements for the account or funding source.  A nonprofit's financial success isn't defined by profit, but rather by financial clarity that shows how the organization works to maximize the impact of every dollar received.