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Nonprofit Income Accounts – Part I

By CarolCarrie / August 20, 2018 /
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Our Nonprofit Chart of Accounts Grand Tour continues – with income accounts! As an introduction to nonprofit income, over the last few posts we explored where nonprofits get their income as reported on IRS Form 990. We also explored the concept of income diversification. Unlike balance sheet accounts, income accounts can vary widely. Reasons for…

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Alternatives to Diversification

By CarolCarrie / August 13, 2018 /
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Before your organization seeks to diversify income, consider three ways you may be able to move toward financial sustainability. This post continues a series on income diversification before we continue our Nonprofit Chart of Accounts Grand Tour on income accounts. 1. Reduce expenses Before you consider new sources of income, make sure you are not spending…

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Nonprofit Income Diversification: A Cautionary Tale

By CarolCarrie / August 6, 2018 /
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In 2014 one of our clients derived about 25% of income from one Federal pass-through grant. This grant substantially plugged the shortfall between the program service fees they charged to clients and their costs to provide the program. That year the notes to their audited financial statements cautioned (details changed): “The Organization received substantial support…

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Nonprofit Revenue Diversification

By CarolCarrie / July 30, 2018 /
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We’ve all heard the adage, “Don’t put all your eggs in one basket.” How does this advice hold up for nonprofit income? Before we continue our Nonprofit Chart of Accounts Grand Tour into income accounts (here’s the guide to the Tour of balance sheet accounts), first let’s consider the concept of income diversification. Income accounts…

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10 Steps on Hiring Your Nonprofit Organization’s First Employee

By CarolCarrie / July 23, 2018 /
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A reader asked for advice on hiring her organization’s first employee. First let us say congratulations for reaching this milestone! Your first employee, while exciting, also opens up a whole new world of responsibilities, risk management and administration. What are the critical steps? Where do you begin? We offer a punch list of things you…

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Main Sources of Nonprofit Income

By CarolCarrie / July 16, 2018 /
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In last week’s post, we saw that major sources of nonprofit income for public charities include (from largest to smallest): Fees from private sources (also called program service fees) Government grants and contracts Private contributions Investment income Other sources The above “big picture” is from Forms 990 and 990-EZ filed with the IRS. These income…

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Nonprofit Income Streams: An Introduction

By CarolCarrie / July 9, 2018 /
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Over $1.85 trillion dollars of income was reported by public charities filing Form 990 or 990-EZ, based on 2016 IRS data compiled by The Urban Institute, National Center for Charitable Statistics.  Where does all that money come from? Specifically we are focusing on income of 501(c)(3) public charities. For comparison’s sake, here are common types…

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Biggest Bookkeeping Secret

By CarolCarrie / July 2, 2018 /
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Do you know the biggest secret to keeping good books?  Well, we’re going to let you in on it. It’s managing the balance sheet. Many of the problems we’ve seen with bookkeeping can be traced back to not keeping an accurate balance sheet. We see many people focus only on the profit and loss report, and…

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Why Your Bank Reconciliation Is Falling Short

By CarolCarrie / June 25, 2018 /
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Many clients that come to us with messy books reconcile their operating bank accounts every month. Yep, the bookkeeper checks off the cleared items, gets to zero difference in the QuickBooks reconciliation window and happily clicks to Finish the reconciliation. If you are reconciling each month, why can you still have so many problems? The…

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Credit Card Reconciliation Tips in QuickBooks

By CarolCarrie / June 18, 2018 /
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Is the credit card liability on your organization’s balance sheet accurate? Credit card accounts should be reconciled each month just like your bank account. Options for Reconcile Date You can reconcile to the credit card statement, or you can reconcile to the balance at month end per the history in online banking. If you use…

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