Today's Technology for Tomorrow's Firm.
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6 May 2015 • www.CPAPracticeAdvisor.com FROM THE TRENCHES By Randy Johnston How To Help Your Not-For-Proft Clients Lessons many of you have learned a long t he way is t hat ma ny N F P businesses do great and noble work w h i l e o t h e r s a r e s h a m s . S o m e groups work ex traordinar y hours while others coast by on a few hours per d ay. T here a re a sig n i f ic a nt number of organizations supporting worthy causes that can barely make ends meet and that radically under pay their employees whi le volun- t e e r s s e r v e t h e c o n s t i t u e n t s i n extraordinary ways, while others do litle and make a lot. NFP doesn't mean that the organizations aren't making notable amounts of money or t hat t he employees a re poorly paid, as a number of you have dis- covered when per forming audits, f i l l i ng out for m 9 9 0 or t he s up - porting Schedule A. W hat are some of the industries that are typically NFP? Te list from Abila's web site represents the NFP market fairly well: Animal Welfare, A r t s , Cu lt u re , a nd Hu m a n it ie s , E n v i r o n me nt a l O r g a n i z a t i o n s , Faith-based Organizations, Govern - ment, Healthcare, Higher Education, Human and Social Services, Indepen- dent, Private and Charter Schools, National Organizations, and Philan- thropic Organizations. A lthough c o n t r o v e r s i a l i n s o m e p e o p l e 's think ing, you should also add the structures currently used by political action commitees to avoid paying tax, and other notable organizations such as the National Football League or the National Collegiate Athletic Associa- tion and most of the respective bowl games produced at the end of football season. Likewise, tribal governments and the rise of supporting gambling operations can be a source of much cash that has to be controlled and monitored. You see, NFP does not necessarily mean small with no money to spend or to be made. So What Are The Most Important Systems to NFP Organizations? Tis question quickly becomes very broad. In a strict sense, supporting t he cause a nd t he m ission of t he organization for the beneft of the constituents is the botom line. Tis cou ld be a membersh ip g roup, a special or common interest, or one of the many other qualifers under the tax code. Genera l ly, N F P orga n i z at ions w a nt t hei r computer s y stem s to support: fund accounting including the tracking of hours and time in any given project, to track donors and suppor t f und ra ising by develop- ment ofcers, and to accomplish the specifc f unctions of their st yle of organization. My family has t y pi- cally been involved in arts organiza- tions that are NFP and provide local music or theatre opportunities and performances. It is important to track the source of funds, the expenses, the cost of events a nd t he nu mber of people that are involved in the production and atendance at these events. In some c a ses, t ic ket s a re sold a nd t hese need to be t racked as wel l. 6 M a y 2 0 1 5 • w w w . C P A P r a c t i c e A d v Randy Johnston is executive vice president and partner of K2 Enterprises and Network Management Group, Inc. He is a nationally recognized educator, consultant and writer with over 30 years' experience. He can be contacted at randy.johnston@cpapracticeadvisor.com . T he NFP segment of the U.S. market has historically been 5 percent of all businesses, but has grown to over 10 percent in the last decade. W h i l e b u s i n e s s m ay b e d o i n g charitable, human interest or targeted work, this does not mean that the accounting sofware has to strictly comply with tradi- tional NFP reporting for projects or span- ning multiple years. Non-Profit Organizations