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Nonprofit

Is There Any Value for Nonprofits to Accept Cryptocurrency?

By | Cryptocurrency, Nonprofit | No Comments

Bitcoin, Litecoin, Dash, Ethereum…. what in the world is going on? It’s cryptocurrency, the blockchain-based value system that’s taking the world by storm and transforming much of the business world. That includes the world of nonprofits who find that accepting cryptocurrencies may increase their donor base and donations.

What Are Cryptocurrencies?

The world of cryptocurrency was created in January 2009 when a pseudonymous author, Satoshi Nakamoto, published a white paper in an obscure online forum. “Bitcoin: A Peer to Peer Network” set forth the proposition that a distributed ledger could enable peer to peer transactions in a public, secure, and unalterable method. Blockchain technology developed out of this paper and has been quietly revolutionizing many industries including real estate, finance, and even email delivery.

Cryptocurrency was  born out of this invention and remains a controversial outcome. Unlike fiat or hard currency such as dollars, euros or yen, cryptocurrency isn’t issued by a central bank, government or authority. Individuals or companies with enough money and computing power can develop their own blockchain and issue a coin called a cryptocurrency which is then traded on an exchange. The value of the cryptocurrency fluctuates according to the supply and demand for it.

Are They Legal?

Yes, they are legal to own, buy, sell, and trade – in most countries. Some countries, such as the United States, haven’t yet issued a final decision about how to account for cryptocurrencies on your taxes or in your general ledger. Are they assets, securities, or commodities? No one is quite sure and both the SEC and the IRS have weighed in on the issue with various statements that tend to confuse the public more than offer clarity.

  • The IRS indicates that individuals and companies should treat cryptocurrencies like property for U.S. tax purposes.
  • The SEC appears to consider cryptocurrency exchanges as trading platforms similar to exchanges for stocks. They are taking a hard line on the subject.

Because the world of cryptocurrency changes rapidly, it is important to research it on your own before embarking on a plan to accept cryptocurrency through your nonprofit and to keep up to date on tax laws and SEC rules that may follow the publication of this article.

Benefits of Accepting Cryptocurrency for Nonprofit Organizations

Cryptocurrencies appeal to younger donors, so if your nonprofit targets the under 35-crowd, it’s natural to accept cryptocurrencies. By doing so, you’ll open up possible donations to many more people. Some people have accumulated a great deal of money by trading cryptocurrencies and would gladly donate it directly to a nonprofit if they could find a way to do so. As an early adopter of this policy, your nonprofit stands to gain more in donations and add newcomers to its donor base.

First, to accept cryptocurrencies as donations, you’ll need to set up a wallet. A virtual wallet enables you to accept and send cryptocurrencies. Each wallet has: 1) a public address which you can publish with confidence so that donors can send money into it; and 2) a private address to set up a method of changing cryptocurrency into fiat currency and depositing it into your organization’s bank account. This is completed on a cryptocurrency exchange.

Cryptocurrency exchanges deal with one or more cryptocurrencies and enable you to exchange the currency into another or into fiat currency and then transfer it into your bank account. You will need to complete a KYC process for your organization to ensure legal compliance. After completing the KYC process, you’ll then set up your bank account information in the exchange system to transfer money to and from your account.

Exchanges charge a fee to accept cryptocurrency and change it into fiat currency and those fees can add up quickly. Each exchange does state its fees upfront and these are usually calculated as a percent of the transfer.

Once you’ve set up your account and wallet, you’ll be able to generate a QR code which looks like a square, funny-shaped barcode. This code can be placed on your website or onto invoices. The numbers on the code are used to move cryptocurrency into your wallet online.

Once you are accepting cryptocurrency through your nonprofit organization, keep careful records of the assets coming into the exchange from donors, any fees to exchange the currency to fiat currency, and other fees. These should be included in your accounting records and kept on file for reference as you are preparing year-end filings.

Accepting cryptocurrency donations may seem like a big effort, but it’s on par with setting up a cart system on a website to accept PayPal or similar donations. And who knows? Maybe you’ll increase donations thanks to the appeal to a younger, tech-savvy generation.

Welter Consulting

Welter Consulting bridges people and technology together for effective solutions for nonprofit organizations. We offer software and services that can help you with your accounting needs. Please contact Welter Consulting at 206-605-3113 for more information.

5 Tips to Squeeze More Life Out of Your Nonprofit Accounting Software

By | Accounting, Accounting Software, Data, Fiscal, MIP Fund Accounting, Nonprofit | No Comments

With more and more nonprofits embracing fund accounting as a strategy for growth, combined with the ever-changing reporting requirements from fund agencies, getting the most from your technology investment makes its way to the top of the priority list. Organizations need to be proactive when maximizing the returns on fund accounting investment.

Find out if you have you outgrown your accounting software by conducting a software review.

Start with a thorough review of your system’s processes. Next, conduct an in-depth analysis of the chart of accounts’ structure and financial statement formatting as they relate to supporting the organization’s reporting and tracking requirements. Finally, talk with your staff and key stakeholders  who use the system to find out what’s working, and what’s not.

The revelations may surprise you.The results of these three steps will create a roadmap to refresh your system.

Don’t have time for a thorough system review? There are some steps you can take right now to expedite your system and get more life out of it.

  1. Re-order chart of accounts. Remove unused segment values to make data entry and reporting more logical.
  2. Clean up and archive. Start with the Accounts Payable vendor and Accounts Receivable customer rosters, then tackle the register histories. This will speed up the system while reducing staff time sifting through obsolete information.
  3. Close, optimize, or delete old fiscal years. This will expedite report generation and system inquiries.
  4. Identify additional modules that can create efficiencies for staff. Contact your technology consultant to learn about modules that can be added to automate manual tasks like spreadsheet schedules, purchasing and reconciliations.
  5. Train & Re-Train. You can’t learn all there is to know during your initial software training session. Underutilized modules that your team revisits can streamline processes significantly.

Welter Consulting helps nonprofits get more out of their accounting software. We find the most affordable technology, the most powerful solution, and providing expert support. We are dedicated to assist you in achieving your mission by leveraging technology and superior reporting. If you’re needing technology help, we’d love to talk to you about your specific needs.  Contact us online or call 206-605-3113.

New Features in Microsoft Word Worth Noting

By | E-Learning, Microsoft Office, Microsoft Word, Nonprofit, Technology | No Comments

Ah, Clippy. Remember Clippy? The happy, bouncing paperclip was once the icon of Microsoft Word, that ubiquitous program that transforms how the world works.

With over 1.2 billion users of Microsoft Office – that’s one in seven people worldwide – it pays to note changes to the popular and familiar program. The Journal of Accountancy recently reported many updates to Word, some of which are quite useful for accountants.

You won’t need Clippy to report on these features. We’ll look at them together with the top features presented here.

New Features in Microsoft Word 2016

The following features are available in Microsoft Word 2016 except for the “Draw” updates (the last item which is only available in Office 365). For those considering an upgrade to Word 2016, the new features may offer enough of an incentive for you to choose Word over any other product out there. Hey, with 1.2 billion users, you know it’s compatible with the software used by most of your clients, colleagues, members and donors!

  1. Tell Me: The Tell Me feature or Tell Me What You Want to Do enables you to locate commands or tools without having to hunt through the various ribbons and dropdowns. It eliminates the need to know or guess where tools are – you can access them immediately.
  2. Improved Version History: Microsoft seems to have taken a cue from Google Docs by saving a unique version of each document when you save it to your OneDrive. This enables you to access previous versions to pull into the current version.
  3. Real-time Co Authoring: You no longer must shuffle documents back and forth by email. Instead, collaborate in real time on a Word document. Do this through OneDrive or SharePoint. I It does take the best of Google Docs and brings it into the more robust Microsoft product. Thanks to the cloud, you and others on your team can avoid the nightmare of sending different versions by emailing files and instead, collaborate, review and edit together in real time.
  4. Simple Sharing: A new “Share” button enables you to quickly Share documents using OneDrive or SharePoint so you don’t have to save, export, open your email, upload the document and then save. Just add a colleague’s email and you can share it instantly.
  5. New Draw Tab: The new Draw tab offers more tools than ever before, a great addition to the Microsoft suite of features. The new drawing and inking tools allow you to customize your document markups. You can use your finger on a touchscreen or move inked items like shapes once they are in place. These new features are only available to Office 365 subscribers but are expected to be standard in the next iteration of Word.

If you create a lot of custom reports using Microsoft Word, you’ll like the new Shapes features too. For example, Shapes now comes with preset transparent boxes, so you can place them over background text or images. This makes it easier to use shapes like callouts.

What about Mac users? Microsoft Word may be used on Macs, and some prefer the features in Word to Mac Pages. If you create more detailed and customized reports or use your word processing software to build marketing documents like brochures, you may wish to test Mac Pages or a full-fledged graphic design program that works along with Word. Microsoft Publisher comes as part of some packages of Office; it’s fine for beginners but may not offer enough flexibility for advanced graphic design. It is, however, compatible with Word documents, so if you compose text in Word, it is easier to import it into Publisher than into some other graphic design package.

Upgrading to Word 2016 is easier than ever with cloud-based subscriptions that offer flexible packages for home, student, and office use. And although Clippy may be a thing of the past, the new functions are way more fun than an animated paperclip.

Welter Consulting

Welter Consulting bridges people and technology together for effective solutions for nonprofit organizations. We offer software and services that can help you with your accounting needs. Please contact Welter Consulting at 206-605-3113 for more information.

Enterprise Risk Management, a New Frontier for Nonprofits

By | COSO, ERM, Nonprofit | No Comments

How well does your nonprofit measure risk? Risks occur in almost every aspect of business. Managing risk is part of a leader’s job. Enterprise risk management, or ERM for short, offers opportunities to both mitigate and manage risks as well as seize opportunities that present themselves to your organization.

ERM Defined

ERM embraces elements of internal controls, the Sarbanes-Oxley Act, and strategic planning. It also echoes the marketing SWOT analysis (strengths, weaknesses, opportunities and threats) by exposing weaknesses and threats and enhancing opportunities and strengths.

ERM evolved as a method to assess risks in a complex business environment. It applies equally as well to nonprofit organizations as it does to for profits, helping senior leaders assess risks and respond appropriately once all of the risk factors and influences are known.

COSO Recommendations

The Committee of Sponsoring Organizations and Treadway Commission (COSO) recently released a new ERM framework. To use it effectively, COSO recommends the following:

  1. Compare your current ERM practices to the five components and 20 principles of the framework, Enterprise Risk Management — Integrating With Strategy and Performance.
  2. Identify opportunities as they pertain to specific principles that might add the most value and might help your organization manage risk better.
  3. Watch out for and identify areas of potential risk. Potential areas of risk are typically new items added to a system, such as new software, new regulations, new programs or other major changes. Anytime there is significant change, there is risk.
  4. Evaluate the alternatives. If you have identified and evaluated alternatives, you can mitigate risk by having a second or third option to turn to in the event that the first is too risky.
  5. Examine the business context of the risk and reward. If the reward outweighs the risk, it may be time to act.
  6. Note connections. Business decisions rarely stand in isolation and are frequently interconnected. Some risks may have a domino effect, imparting additional risks or openings for risk in other areas of the business. Conversely, closing gaps and mitigating risks may have positive impacts. Understanding these impacts is vital for good management.

Frameworks Can Free or Limit

Does the ERM framework feel freeing or limiting? Some leaders claim they can manage just fine without a risk management framework such as ERM while others find it helpful.

Why do some leaders find frameworks stultifying rather than freeing? It may be because they automatically think in terms of such frameworks without consciously applying them to the decision-making process. For example, an experienced nonprofit leader may think ahead to the risks of a potential new software purchase without consciously examining them and applying them in a framework. He may come to a swift decision regarding rewards versus risks without ever saying the words risk management. This may look like instant decision-making to his colleagues, but it’s actually a skill that’s been honed through practice.

Think of an Olympic gymnast; she makes the balance beam look absolutely effortless. Yet it wasn’t always effortless. At some point her career, she had to take the first steps out onto the beam. She made mistakes and she tumbled to the ground. But over time, with continuous effort, practice, coaching and study, she’s mastered a routine that earns a gold medal.

Seasoned CEOs, CFOs, and other top organizational leaders are akin to Olympic athletes. They’ve mastered the craft of decision making and so it looks effortless.

For those who are still learning such craft, studying and practicing decision making frameworks such as ERM can help you become a gold medalist of risk management too.

For more information on the COSO framework, see Enterprise Risk Management: Integrating with Strategy and Performance.

Welter Consulting

Welter Consulting bridges people and technology together for effective solutions for nonprofit organizations. We offer software and services that can help you with your accounting needs. Please contact Welter Consulting at 206-605-3113 for more information.