November is Government & Nonprofit Month at the VSCPA! All month long, we're celebrating our members who work in the government and nonprofit sectors and those who use their professional expertise to help governmental agencies and nonprofit organizations with their accounting and financial needs. Today, we're speaking with Yoni Saad, CPA, director of finance at the Jewish Community Center of Northern Virginia in Fairfax.
VSCPA: What do you like about working with nonprofits, both from an accounting perspective and otherwise?
YS: I took a position in nonprofit accounting was because I wanted to feel like my career was making more of a positive, direct impact on my community. I had been working in public accounting and for-profit accounting my entire career. I was doing good, hard work, but it felt like I was doing it all just to make the company more money. I wanted to help fulfill missions and values of the nonprofit I am now working for by applying my accounting skills and knowledge.
From an accounting perspective, I found it a big challenge to have to figure out how to keep the books for a nonprofit, as opposed to a for-profit. There are a ton of differences I forgot all about since studying for the CPA and I had to remember some and relearn a lot more.
VSCPA: What are the specific challenges that come with nonprofit accounting?
YS: Nonprofit accounting requires tracking dollars, revenue, donations and expenses a lot more closely than a for-profit organization. You have to be sure that donor’s money is being tracked, spent, and reported in the way the donor intends for it to be handled. In for-profit, generally all of the money comes in from sales and revenue and goes out for whatever expenses management decides to have. Nonprofit accounting requires managing numerous separate accounts and being sure you are spending against those accounts in accordance with your organization’s spending policy and guidelines. The whole concept of unrestricted net assets versus temporarily restricted net assets versus permanently restricted net assets takes a long time to understand, and I still struggle with it.
VSCPA: What are the biggest financial issues facing the nonprofit sector today?
YS: I’m not an expert on all nonprofits, so it’s tough to comment on what other nonprofits are facing, but there are some general trends. I believe the 2018 tax bill will definitely lead to some adjusting their charitable contributions. Since more people will now benefit from the standard deduction (due to it’s significant increase in the new bill) when filing taxes, some donors will feel less incentivized to make charitable contributions since there won’t be a tax writeoff for them. Aside from the tax bill, however, nonprofits often struggle in general with fulfilling their missions with limited funds and resources. I think that is something likely pretty common for many nonprofits is just making sure they are continuing to raise money and manage cash flows so they can operate throughout the year and deliver on their mission(s).
VSCPA: How can CPAs help nonprofits achieve their missions?
YS: Often times I hear that nonprofits are not dedicating enough resources to the accounting/finance roles in their organizations. It is sometimes an afterthought as the organizations are so focused on raising money and delivering on their mission that making sure that they are keeping their books and records properly gets overlooked. Depending on the size of the organization and whether they are required to have an annual audit, etc., they may be able to get by with subpar accounting and finance policies and practices, but eventually that catches up to you.