Needed across industries and sectors of the economy, accountants play vital roles in maintaining the financial success of any endeavor. In the not-for-profit world, accountants take on the job of securing resources and reducing operating costs to help task-driven organizations achieve more good in the world.
Many accountants likely see this as a good enough reason to pursue accounting as a career. Through managing nonprofit budgets and expenditures, an accountant can indirectly serve individuals and communities in need. Even ministers have switched careers to capitalize on the amount of good they could achieve through accounting.
But not-for-profit work isn’t the same as traditional accounting work. While many of the same skills apply, accountants in the nonprofit world must hone a unique set of talents. Here’s what you should know.
How Non-Profit Accounting Differs
Many accountants making the transition from work in the for-profit world face a steep learning curve when starting with a non-profit. These economic sectors differ, composed, and driven by different goals and overall missions. While for-profit companies will be more focused on bottom lines, not-for-profits look more at their overall goals and the ways they are using their resources.
Accountants in this new environment must be clear on these differences and explore how alternative goals affect accounting work in general. For instance, for-profit entities operate using an often singular ledger system that details revenues and expenditures in a self-balancing account. Not-for-profits, on the other hand, operate with a series of resources and ledgers that must be balanced for ideal application.
In conducting this work, there are all kinds of varying terms and practices for accountants to learn. For example, retained earnings become net assets and a net income means an excess of revenues. Rather than an income statement, non-profit accountants create a statement of operations.
While these differences may seem primarily semantic, they represent the different goals and practices that drive non-profits versus for-profit businesses. With a non-profit, you don’t want money left over: you want an organization that is doing the most with what it has.
That said, there are many useful skills that a not-for-profit accountant can hone to bring greater success to their organization.
Invaluable Skillsets for Not-for-Profit Accountants
First, while accountants can certainly specialize in non-profit work from their undergraduate program onward, any professional with an accounting degree can translate their skills into success with a not-for-profit organization.
Then, it is simply a matter of learning the differences and finding methods to improve the flow of finances and resources towards non-profit goals. Aside from being adept at navigating the nuances of tax-exempt status as a 501(c)(3) organization, not-for-profit accountants require skills like the following:
Excellent Organizational Abilities
For an accountant, the ability to manage a ledger system complete with all its fluctuating account details is a must. For non-profits, however, the impetus for an ideal organization is even stronger. Nonprofits depend on efficiently maintained records to prove their tax-exempt status and be able to highlight processes for investors and stakeholders.
Auditing experience is a highly desirable trait of a non-profit accountant as a result. With the ability to organize and review records to prove compliance with investor and governmental requirements, accountants can keep a non-profit smoothly functioning.
Effective Management of Tight Budgets
The majority of not-for-profit organizations operate with budgets of less than $1 million. Because of this, accountants in the industry need to keep a sharp eye out for any place they can reduce operational costs while also guaranteeing that donor and grant money goes where it needs to go.
Non-profits are often limited by money given with specific donor restrictions. It is the job of the accountant to ensure that these restrictions are being met and reported within financial documentation. This takes attention to detail and great problem-solving skills.
One of the most important qualities for any accountant is the ability to communicate financial information. This is even more important in the not-for-profit sector, where donors want specific things and your organization has a mission to fulfill.
Honing your communication skills can be one of the best ways to excel as a non-profit accountant. This takes empathy and clarity, as well as a willingness to be open to questions and concerns. Any member of your organization should be able to come to you with a question and come away with a clear explanation. Teammates should also be able to contribute with useful feedback and clarify practices wherever necessary.
Implementing these ideal skills into your own toolset can be a great way to maximize the potential of your not-for-profit. If you’re just getting started in the non-profit sector, demonstrating these skills can help get your foot in the door.
Improving your Status as a Non-Profit Accountant
Getting started as a non-profit accountant requires proper networking and professional qualities. While improving your skills, you can adapt your work and academic experience to write a great accounting resume. In turn, you’ll be able to improve your status as a non-profit accountant and land work with your dream organization.
Your ability to do so, however, will come down to how well you showcase your skills on your resume. Highlight your soft skills like listening and communicating effectively alongside harder skills like experience with certain accounting software. Translate relevant job experience into applicable traits for non-profit work, or express a willingness to learn and adapt.
Not-for-profits need skilled and attentive accountants to streamline the effectiveness of their resources. Demonstrating effective organization, budget management, and communication skills can help you get in the door with the non-profit of your choice.
Then, hone these skills to ensure that your organization does the most good that it is capable of doing. By implementing skillsets and strategies like these, accountants can make a real difference in the world.
Lastly, become a certified Professional Bookkeeper that is both trained and certified in both For-Profit & Non-Profit accounting.