Here at KDG, we’ve spent two decades working alongside nonprofits to raise donations, improve online experiences, and support government compliance efforts. And during this time, we’ve learned that tracking donations is just as important as raising them. Where does the funding come from? And where is it going? Nonprofits need accountants on hand to verify donations and confirm they’re assigned to the appropriate designation. But hiring a full-time accountant is not something that most nonprofits have in their budget. This is where nonprofit accounting with Zoho Books and KDG can help.
What Is Nonprofit Accounting?
Nonprofit accounting is different from for-profit accounting in one huge way: accountability. Nonprofits aren’t bookkeeping to see whether they make a profit. They have to ensure extra funds are not going back into the pockets of leadership. Nonprofit accountants must confirm that funds are allocated in the ways donors outline. For example, if someone donates $20 to a local Boys or Girls Scouts organization for new uniforms, the nonprofit accountant must ensure the funds are classified and spent appropriately. This practice is also called fund accounting.
There are two types of funds that nonprofit accountants must be aware of:
- Restricted funds: These funds are restricted to certain projects. New uniforms, equipment, or facilities, for example.
- Unrestricted funds: These donations can be spent on anything the nonprofit needs.
Ensuring these funds are spent appropriately keeps donors happy and the nonprofit in compliance. This is especially important come tax time when nonprofits must complete Form 990. This annual tax form is required for all tax-exempt organizations. It reports on employee compensation and charitable contributions. Nonprofits must show they’re following federal regulations to keep their tax-exempt status. If an organization can’t report on where their donations went, whether they have $10,000 in donations or $10 million, their tax-exempt status is at risk.
Nonprofit Accounting with Zoho Books
There are nonprofit accounting tools out there. However, many are expensive, leaving nonprofits to do their books by hand to save money. After all, these organizations want to maximize the funding they can put back into their community or cause. However, nonprofits don’t have to hire a full-time accountant or invest in a custom accounting system to get the job done. Zoho Books is making nonprofit accounting automated and affordable.
We’ve covered Zoho Books and its benefits for small and medium-sized businesses, but the cloud-based accounting tool is just as effective for the unique needs of nonprofits thanks to:
Management & Tagging: Assign tags and categories to certain funds and generate expense reports to track where money is spent.
Projects: Capital campaigns, annual campaigns, and days of giving…there are a lot of projects nonprofits dedicate themselves to throughout the year. Books allows you to create distinct projects and associate the appropriate funding.
Payment Receipts: Thank donors and record their contributions through automated payment receipts.
Detailed Dashboard: See allocations, donation totals, and spending trends in colorful, detailed dashboards and reports.
Donor Pages: Integrate with Zoho Checkout to create unique pages where donors can contribute online easily and securely.
Affordable: Zoho Books is already an affordable tool, but nonprofit organizations also receive an additional 15% discount.
Support: A Zoho Partner network makes it easy for you to find support with Zoho Books. Plus, Zoho Books Partners, like our team here at KDG, can even do the accounting for you, helping you get back to focusing on your mission.
Outsource Your Accounting to KDG
KDG has a team of qualified accountants to perform all your back-office accounting needs, especially when it comes to nonprofit accounting. Our team has spent years in the nonprofit realm, working for local and national nonprofits. As a Zoho Book Partner, we can assist you with:
- Migrating to Zoho Books
- Zoho Books Setup
- Bookkeeping & Management
- Consulting & Training
Outsourcing your accounting to KDG provides you with the skills and support of a full-time accountant at a fraction of the price. To learn more about nonprofit accounting with Zoho Books and KDG, contact our team of experts today.