Monthly Archives

October 2025

Oct 28
0

AI Helps CPAs Save Time, Improve Efficiency

By | Accounting, Accounting Software, Nonprofit | No Comments

Artificial intelligence (AI) is now embedded into our daily lives in ways we couldn’t have imagined years ago. This includes the workplace. CPAs have discovered new and innovative uses for AI. While some of these applications require a bit more programming skills than the average accountant possesses, they do highlight the many creative ways in which AI can improve workflows and efficiencies for accountants.

Drafting Technical Accounting Memos

Does your department draft memos? AI can do it for you with the right preparation. Using an internal, paid version of an AI tool such as Microsoft Copilot, you can “train” the AI to write memos for you based on previous memos. The key is to ensure that the files you use to train the AI provide best practices. As the AI scans the internal memos, it will use them to develop its own language model and formatting style for future memos. With the right prompts and commands and clean, organized files to train the bot, accountants can use AI to generate new memos. Once the AI platform generates the memo, “humans in the loop” should review the final output for accuracy. AI can, and does, make mistakes, so the last step of a person reviewing the AI output is critical.

One important item to note: Do not try this with “free” or publicly available AI models. Use only proprietary, paid, internal AI tools to train your AI models. Remember that anything scanned by public AI models, like the freely available Copilot and ChatGPT, becomes part of their repository forever, so anything confidential or proprietary should not be used with public models. Private AI models, such as those paid for and installed locally by your IT team, keep the information contained within and used only by your organization.

Faster Code Generation

Even with the best nonprofit accounting software, there may come a time when you need to output data to spreadsheets and use various functions to calculate different things. That’s where AI can come in handy. Many accountants are using AI to develop formulas to use within spreadsheets. Rather than looking them up or tinkering with them, accountants are simply asking AI platforms to help them develop code to run their calculations. AI is good at coding, and many find that code generation is a great time saver.

Research Tasks

AI platforms excel at analyzing vast amounts of data, including searching the web. They are terrific at performing research tasks. This includes market research, accounting research, and more.

One tip: share your own thoughts with the AI platform, then ask it, “What would you add to this, and why?” It’s important to note that while AI does perform good research functions, it can still make mistakes. These “hallucinations” provide incorrect answers. So, take AI-based research with a grain of salt, and read through it carefully. Confirm or double-check sources, especially data that you plan to cite in a report.

Marketing Support

A fourth area that AI can support is marketing. Whether it’s donor outreach, membership drives, or finding new grants, AI platforms offer everything from drafting social media copy to developing ideal donor profiles.

As with other forms of research produced by AI platforms, the last stop for anything generated by AI should be a human being. People can read through text generated by AI and spot inaccuracies, cliches, and odd phrases that just don’t sound right. AI isn’t perfect, and the “human in the loop” is essential to using the tool effectively but not leaning on it as a crutch.

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 us for more information.

Oct 23
0

When Education Meets Medicine: What the Mayo Clinic Case Means for Nonprofit Tax Exemptions

By | Accounting, Nonprofit, Tax | No Comments

The Mayo Clinic is famous both for its medical care and patient education. In fact, its website is often cited by news organizations and others when reporting on medical stories; it is known for its accuracy and excellence. When the IRS determined that the Mayo Clinic was not entitled to its refund claim for substantial Unrelated Business Income Tax (UBIT), which the Mayo Clinic claimed based on its educational activities, the Clinic took action. Here’s the whole story, and what it means for nonprofits.

What Is Unrelated Business Income Tax (UBIT?)

Financial/tax concept about Unrelated Business Taxable Income UBTI with phrase on piece of paper

UBIT stands for Unrelated Business Income Tax. It’s a tax imposed on income that tax-exempt organizations such as nonprofits earn from activities not substantially related to their core exempt purpose. The Mayo Clinic claimed education as an activity substantially related to its core purpose.

The IRS Said No

The IRS felt differently, however. They assessed $11,501,621 in unpaid acquisition indebtedness UBIT for tax years 2003, 2005-2007, and 2010-2012. This amount was based on the acquisition indebtedness of property held by the Mayo Clinic. The property produced income. While the Mayo Clinic paid the debt, they initiated the request for a refund in 2016, which brings us to the current ruling.

Why did the IRS question the Mayo Clinic’s report? The IRS concluded that for the years in question, the Mayo Clinic did not meet the definition of a § 170(b)(1)(A)(ii) qualified organization as defined in Treasury Regulation § 1.170A-9(c)(1). To sum up the regulation, if the Mayo Clinic claimed education, it must be formal instructional activities, not merely incidental educational activities. Given that the clinic’s primary purpose is to provide medical services, at first, this seemed reasonable.

The Case Winds Its Way Through the Courts

The Mayo Clinic contested these findings, and as the case wound its way through the court system, various courts interpreted the IRS rulings differently. At issue was whether the Mayo Clinic’s educational activities were in addition to or inexorably intertwined with its medical services.

After much debate, the final district court found that “primary” purpose in this case means “substantial” and that the Mayo Clinic did meet the definition of education in the context of a substantial portion of its activities. Equally as important, its educational context was not “non-essential” but deemed an essential part of its primary mission. Given this, the court ruled that the Mayo Clinic was entitled to a full refund. The government is appealing this decision.

Context for Nonprofits

This case highlights several nuances in assessing a nonprofit’s educational purpose. To government entities such as the IRS, it means that education must be the primary purpose of the nonprofit, such as the activities of a college, school, or other institution of learning. However, many nonprofits, such as the Mayo Clinic, engage in significant educational activities with their constituents, but primarily engage in other services, such as medical care.

At issue in the case is whether or not such activities count as “substantial” enough to justify the requested refunds, or whether the organization’s primary purpose must be education in order to qualify under the IRS ruling.

Why This Matters

This ruling sets a powerful precedent for nonprofit organizations with hybrid missions. It signals that substantial commercial activities do not automatically disqualify an institution from being considered educational, as long as those activities are integrated with and serve the educational purpose.

For CPAs, nonprofit advisors, and academic institutions, the case offers a roadmap for navigating UBIT exemptions. It emphasizes the importance of demonstrating how various functions support a unified, exempt purpose.

Final Thoughts

The Mayo Clinic case is more than a tax dispute. It’s a reaffirmation of how education can be effectively integrated into complex, real-world operations. It challenges narrow definitions and opens the door for more nuanced evaluations of nonprofit missions. For organizations walking the line between service and instruction, this decision offers clarity with context.

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 us for more information.

Oct 21
0

Accounting Excellence: What Nonprofits Can Learn from Accounting Firms

By | Accounting, Nonprofit | No Comments

How can you measure accounting excellence? And what tools, systems, and processes support excellence?

A recent report from Karbon, a software company specializing in practice management, examined the changes in performance of accounting firms before and after the COVID-19 pandemic. Their findings indicated that organizations that focused on several areas improved practice excellence. These areas included business processes, talent management, and the right software to support operations. Here, we take a look at these three areas and provide recommendations for nonprofits to adopt these lessons for their own accounting departments.

Two financial accountants analyzing business spreadsheets on laptop computer.

Measuring Practice Excellence

Before looking at the results, it’s important to understand how Karbon conducted their study. They measured practice excellence across “four pillars”: strategy, efficiency, growth, and management. The four pillars are then further subdivided into a total of 12 areas that the firm explored in 20-minute telephone surveys with participants. The resulting interviews were distilled into the findings of the report.

Efficiency Drives Success

The main finding throughout the entire study was that improving efficiency drives success for accounting firms. Firms that prioritized efficiency were also the most successful. These companies embraced new technologies, and by doing so, improved operations. The resulting improvements carried over well beyond the pandemic.

There’s also a strong correlation between focusing on business process improvements and overall practice excellence. The study found a 71% correlation between Business Process Excellence and Practice Excellence scores. Accounting firms that spent time examining and improving business processes made improvements across their entire company, resulting in higher scores in Practice Excellence.

Closing the Talent Gap

We’ve written many times about the talent shortage in the accounting profession and how companies, as well as the AICPA, are addressing this gap. Another important finding from the Karbon report is that accounting firms that were intentional about closing the talent gap were more successful than their peers who did not take steps to find, recruit, train, and manage talented people. Factors that improved talent management and retention among successful accounting firms included a thorough onboarding process, searching for candidates with higher emotional intelligence scores and attributes, effective meeting management, and 360-degree performance reviews. It is worth noting that managing meetings effectively is an integral part of the overall talent management cycle. It may be inferred that “meeting creep” (i.e., too many meetings, unfocused meetings, unproductive meetings) exhausts talented people. Or at least that’s what we think!

Adopting the Right Technology Is Critical for Efficiency

Among the many findings in the report, one thing stands out: adopting the right technology is crucial to support efficiency and practice excellence.

The “right” technology differs among firms, of course. A large accounting firm with multiple offices needs a different system than a nonprofit or a government accounting department. Matching accounting software with an organization’s needs is a crucial factor in driving success.

The study found three types of software supported practice success:

  • Business intelligence 
  • Practice management 
  • Communication 

Each type of software supports excellence in different ways:

  • Business intelligence software enables companies to measure performance through visualizations that are often easier to read than standard reports.
  • Practice management software helps accounting firms centralize workflows and streamline operations.
  • Communication tools enable secure real-time messaging.

Key Takeaways for Nonprofits

At Welter Consulting, we help nonprofits find solutions that work for their unique needs. Our key takeaways for clients, based on the Karbon report, are that the right software, matched with the right client, does wonders to improve performance and drive excellence.

Nonprofit accounting software can help nonprofits transition from spreadsheets or general-purpose small business software to nonprofit-specific platforms that support their unique accounting needs. Such software enables program-specific metrics tracking, can integrate with donor and grant software, and supports many of the efficiencies cited in the paper as drivers of practice excellence. Talent management software also supports recruiting and training talented individuals, a challenge that nonprofits often face.

As the Karbon report indicates, accounting firms that not only survived the pandemic but thrived afterwards focused on improving efficiencies. They did this by examining and enhancing business practices, improving talent management, and adopting the right software. Nonprofits can learn from this example and adopt these ideas to further improve their own operations and accounting groups.

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 us for more information.

Oct 07
0

The Right Nonprofit Accounting System for Your Evolving Organization

By | Accounting, Nonprofit | No Comments

Organizations grow and change over time just like people do. They start small and grow in new and interesting ways. As a nonprofit grows, its accounting needs change, too. Often, organizations begin with simple spreadsheets or out-of-the-box small business accounting software. There comes a time, however, when spreadsheets take more time than you have in your day to update, or when your software is sluggish, overburdened, or simply not flexible enough to meet your current requirements.

In this article, we’ll explore what to do next if you’re unhappy with your current system. We’ll discuss the steps to evaluate your needs and select a flexible nonprofit accounting system that supports your current growth and future needs.

person using a tablet for accounting

Symptoms of Accounting System Growth Pains

Doctors ask patients about the symptoms of their maladies. What are the symptoms of accounting system growth pains?

  • A system that makes it difficult to get the reports you need – you find yourself exporting data into spreadsheets, then manipulating spreadsheets to generate the charts, graphs, and reports you need.
  • After typing data into your accounting system, you need to key the exact same information into another system because the systems don’t ‘talk’ to each other.
  • Duplicate data is rampant because everyone must type information into multiple systems. Even something as simple as typing “Rd” instead of “Road” leads to duplicate information and problems.
  • Month-end closing takes hours, even days, when you feel like it should be much easier.
  • It’s almost impossible.


Sounds familiar? If any of this sounds like your situation, you may be experiencing accounting system growing pains. It’s like a pair of shoes that no longer fit – they pinch because your feet have grown. It’s time to get the right size.

Imagine the Possibilities with a New Nonprofit Accounting System

Now imagine the possibilities with a new nonprofit accounting system. Cloud systems provide a comprehensive solution that includes accounting, finance, operations, human resources, and other systems all in one interconnected platform. Information entered into one part of the system flows naturally into other parts, providing unmatched real-time visibility. Preparing for audits, sharing information, and even simple monthly reconciliations are all much easier with a modern cloud-based accounting platform.

Searching for a New Accounting System

How do you begin the search for a new nonprofit accounting system?

  • Select a team from within your organization to steer the search. The members don’t need to be IT experts. A cross-sample from across multiple departments is the best way to steer a software selection team.
  • Work with a consultant. A good consultant who understands the nonprofit world and its unique accounting and reporting needs will save you time and effort by steering you towards software that supports your organization’s growth.
  • Make a list of the current pain points with your existing system and the wish list of what you’d like to see in your new one.
  • Take your time. Your new nonprofit accounting system will be with your organization for many years to come. Take the time now to research, review, and select the best one to support your growth.

It can be challenging to know the next steps when your organization has outgrown spreadsheets and standard accounting programs. With the right partner by your side, you can step forward into the search for a new nonprofit accounting program with confidence.

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 us for more information.