Should you Outsource Your Nonprofit's Accounting Functions?
Author: Camille Livsey
Nonprofits choose to outsource their accounting functions for a variety of reasons. In these unpredictable, pandemic, economic times, outsourcing all kinds of in-house functions is being considered more than usual.
Things to consider:
Costs: Less Expensive. No benefit costs or expense of frequent on-boarding. No overhead costs such as office space or office supplies for the outsourced accounting service.
Just be sure to confirm that there are no additional, unexpected costs such as inquiries from your board treasurer, assisting your CPA with your audit process, and an annual board presentation.
Fraud: So far, outsourcing has not been blamed for many fraud activities in our current environment.
Risk of non-compliance with laws and regulations: is reduced by utilizing the services of professionals if it is not available in-house.
Your current software: If the accounting software you use is a deal-breaker and is not QuickBooks, it will be more difficult to find an outsourcing service with experience in your software. In most scenarios, outsourced accounting services use QuickBooks.
Timeliness: If your organization frequently requires last-minute accounting support for such things as grant reporting or writing, outsourcing might not be for you. Outsourcing accounting services have more than one client.
Physical presence: Outsourcing can be done remotely from anywhere. If your organization requires face-to-face interaction, outsourcing the accounting function would not be a good fit.
Organization and mission knowledge: Outsourcing services have summary knowledge of your organization and its mission.
When it comes to applying transactions to the appropriate grant, program, etc. that information will still have to be coded in-house.
Regardless of whether you outsource your accounting functions, all nonprofits should have a relationship with a CPA who files their 990, provides auditing services and offers financial analysis and guidance beyond the scope of services indicated on their audit contract if needed.
If you would like to discuss specific pros and cons of outsourcing your nonprofit’s accounting functions, please contact your Whittlesey advisor or email Camille Livsey for assistance.
Manager of Consulting Services
860.524.4465 | clivsey@WAdvising.com
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