Nonprofit organizations run on notoriously lean budgets. Every dollar spent on administrative needs is a dollar not spent on the organizational mission.

With this frugality in mind, it’s no wonder that nonprofit organizations often “go without,” encouraging everyone to work a little harder and smarter. But this attitude can overtax staff and create inefficiencies. Moreover, nonprofit organizations often reach a point when a lack of knowledge, expertise or time can result in poor financial decisions or outcomes.

Accounting and bookkeeping are among the most important functions in nonprofit organizations, but they are also among the most overlooked when there is availability to add staff.

The good news is that these functions are also among the easiest to outsource. Outsourcing your accounting and bookkeeping functions can be a seamless and cost-effective way to access professional-level services on an as-needed basis.

There are five essential reasons a nonprofit organization should consider outsourcing accounting, bookkeeping or other financial functions:

Why Outsource?

1. CostHiring additional employees is expensive. You must consider a salary or hourly wage, time to recruit, hire, onboard and manage new employees, plus cover their taxes, benefits and hardware and software licenses. Outsourcing can mitigate these costs. 

2. Expertise: While you might find experts to staff various financial positions, it’s likely an outsourced accounting team will have greater depth and breadth. Working with professionals eliminates the learning curve.

3. Improved processes: Outside specialists bring best practices to even the smallest nonprofit organizations. Rigorous processes and controls make accounting and bookkeeping consistent and repeatable. Plus, certain financial functions—especially forecasting and budgeting—benefit from seasoned input.

4. Better risk management: Occupational fraud is a serious concern for nonprofit organizations. Segregation of duties can be easier with an outsider involved to keep authorization, record keeping and custody of assets separate.

5. Better reporting: Outsourced personnel have no excuse for late filing or inadequate reporting. You’ll get actionable data on time and in the right format consistently.

When considering outsourcing, remember that it doesn’t need to be all or nothing. You might have capable staff who can do the daily bookkeeping and only need to outsource your more strategic functions.

When’s the Right Time?

Outsourcing your accounting and bookkeeping functions makes sense at different times for different organizations. For example, when launching a new organization, good counsel from outside experts can help ensure continued success.

As your organization grows, your accounting and reporting demands will grow as well. If your staff is spending too much time learning about new reporting requirements or responding to financial requests from stakeholders, it might be time to get outside help.

Similarly, as you grow, your stakeholders will demand more sophisticated processes to manage the organization and find efficiencies. You’ll need to properly apply accounting principles and get solid insights to make sound, data-driven decisions. Outsourcing brings this expertise to your door.

Finally, outsourced accounting and bookkeeping may make sense in times of change. Or, if you’re upgrading or replacing your accounting system or making budget changes, you might improve results by having an expert step in.

Nonprofit organizations have different accounting and reporting requirements than for-profits. Getting the right expertise at the right time can make a difference in how your organization fulfills its mission.

Considering outsourcing? Christine Lindsay, manager in our Small Business Accounting Services, can help.

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