Category

Nonprofit

Sep 13
0

Nonprofit Accounting Topics to Watch

By | Accounting, Nonprofit | No Comments

One of our goals is to ensure that our clients are always up to date on the most important nonprofit accounting topics. To that end, we bring you this update on trends of note. Additional information will be shared on similar topics as it becomes available.

Financial Impacts of COVID-19

Although much of the nation has returned to “business as usual,” the effects of the global COVID-19 pandemic are still being felt throughout much of the accounting and financial world.

Financial managers, auditors, accountants, and others leading finance and accounting at nonprofits must be aware of the following.

  1. Paycheck Protection Program (PPP)

In March 2020, the government passed the CARES Act, which set aside $2 trillion in funding. This was followed by the American Rescue Plan Act in March 2021 with $1.9 trillion in funding.

Under the aegis of these programs come many sub-programs, such as the Paycheck Protection Program. Many nonprofits availed themselves of this program which enabled them to tap into the SBA’s loan program for forgivable loans. These loans could be used to cover payroll, mortgages, rent, and utilities—in other words, necessary expenses to keep a business or nonprofit afloat.

Additionally, the American Rescue Plan Act of 2021 enabled many large NFPs to apply for PPP loans for the first time. This act provided additional or extended employment-related funding and benefits, as well as provided additional federal funding for numerous nonprofit programs (e.g., childcare, arts and humanities, food assistance, and homeless prevention).

  1. Charitable Giving Threshold Changed

Also, under the CARES Act came added incentives for charitable giving. The Act raised the limitations on deductible charitable contributions of cash by individuals who itemize. It also included a $300 above-the-line deduction to individuals who do not itemize and raised the cap for deductible charitable contributions of cash by corporation. These changes were intended to increase charitable gifts to assist nonprofits.

  1. Extended Family Leave

Also, as part of the pandemic response, the Families First Coronavirus Response Act was signed into law on March 18, 2022. It temporarily expanded the Family and Medical Leave Act, permitting certain employees to take up to 12 weeks of leave for specified reasons relating to COVID-19.

  1. Grants for Venues Forced to Close

Many nonprofit organizations such as galleries, performing art venues, and similar artistic services were forced to close during the pandemic to ensure patron safety. The Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act was enacted in December 2020 and provided grants to venues temporarily closed due to the pandemic. Included in this act was $15 billion in grants for museums, zoos, aquariums, and performing arts organizations who meet the criteria outlined in the grant. Entities who qualified for this grant were able to apply for 45% of their gross earned revenue (up to $10 million).

Did Your Organization Avail Itself of These Opportunities?

If your organization took advantage of these opportunities to make it through the pandemic, it is important to note how to account for such finances, whether funds need to be repaid, and so on.

Here are several resources.

About 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.

Sep 06
0

5 Trends to Watch

By | Nonprofit | No Comments

Trends come and go, but some are worth watching because they point to a larger current in the nonprofit world. For example, the trend towards hybrid and remote work has been within motion for some years, but the pandemic brought it to a head and forced many organizations to make a rapid switch to virtual work.

As with any trend, many factors influence whether it fades or becomes part of the nonprofit workplace. The following five trends, however, are ones worth watching.

Five Trends Nonprofits Should Watch

  1. Remote work and collaboration

We began this article by using the historic transition to remote work as a trend to watch and for good reason: it is here to stay. Many nonprofits have embraced the hybrid and remote work arrangements begun during the pandemic as models they can continue to offer to workers. And workers rejoice at this news: more than half of all workers in a recent HubSpot survey state they’d rather quit than return to the office!

Even if your workplace does not currently have a remote work policy, it is best to be prepared in case an emergency does necessitate everyone working from home. Cloud computing technology, such as cloud-based accounting programs, enable users to share data from wherever they log on and foster collaboration and cooperation. Having the right technology in place to facilitate remote work is important in today’s world and a trend we expect to continue.

  1. Demand for speed (and availability)

Gone are the days when a slow response was chalked up to poor technology. Even the most resource-tapped nonprofit is expected to have basic technology in place and fast, reliable internet. Donors, colleagues, and constituents demand answers at the speed of light—and people available to help them. Be prepared to assist more people personally than ever before or put in place technology, such as smart chatbots, to help answer frequently asked questions.

  1. Blockchain, cryptocurrency, and NFTs (non-fungible tokens)

Although they may have seemed like a fad, blockchain, cryptocurrency, and NFTs are now part of the popular parlance. The IRS has set guidelines for how to account for cryptocurrencies, and nonprofits may have to wrestle with such unusual gifts and donations as cryptocurrency and NFTs. Consider the long view that these new digital items are here to stay and that your organization needs a policy for accepting and accounting for them.

  1. Cybercrime

It’s sad to have to put this on the list, but it’s fact: cybercrime isn’t just here to stay, it’s affecting more organizations, including nonprofits, than ever before.

As the economy struggles, criminals continue to prey on the vulnerable—and that includes nonprofits which often lack the IT resources to fight back against cybercrime.

Consider an annual cybersecurity check a must-have and take great care to shore up your defenses. Cloud software offers multiple layers of security that can help protect your nonprofit against the worst effects of a breach or hack. Looking into insurance that protects your organization from cybercrime’s worst financial effects may also be a prudent step.

  1. Multiple business services with one advisor or consultant

In the past, organizations thought nothing of going to multiple specialists for needed services: accountants, auditors, legal advice, marketing firms and so-on. Now, however, there’s a distinct trend of offering one company with multiple resources so that organizations can have all their business needs taken care of in one place.

Consider an accounting firm that offers basic accounting, tax preparation, and financial advice services. Such a firm may now offer software consulting and implementation, an in-house lawyer for legal advice, payroll processing, and benefits administration. It makes it much more convenient for organizations to deal with one company than multiple businesses. If your organization needs such services, Welter Consulting offers many business needs in one group: accounting, software consulting, and more.

Although trends come and go, in business, trends are often much slower to take hold of the general consciousness. Adapting to trends is part of the business mindset, and one which requires prudence to follow only those which benefit an organization.

About 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.

Jul 29
0

A Fresh Approach to Cybersecurity

By | cyber security, Nonprofit | No Comments

Cybersecurity remains a topic of critical importance for nonprofits. Attacks have risen dramatically, with the costs associated with cyberattacks increasing from $3 trillion in 2015 to an estimated $10.5 trillion in 2025. Nonprofits are especially vulnerable given their smaller staffs and often, a lack of IT resources to combat the threats.

Added to these vulnerabilities is the sheer feeling of being overwhelmed from dealing with multiple security layers and platforms required for modern cybersecurity. False alarms, confusing error messages, and other issues can also make managing cybersecurity a challenge for nonprofits.

Strong Security Depends on Employee Vigilance

The best defense is a good offense, as they say. Employee vigilance is your offensive game against potential cyberattacks. Offer a brief refresher annually one how to spot potential scams and attacks including:

  • Avoid opening emails that look suspicious
  • Do not click on password reset links unless you initiated the reset request
  • Do not click on links from emails that look like they are from reputable companies but have telling mistakes in the copy, such as grammatical errors, slight misspellings of the company name, etc.
  • Never give your password out to anyone

If anyone on your team has your password and is authorized to log in on your behalf to any system, be sure to let them know that you will never ask anyone to call them for the password itself. A recent scam is a caller pretending to be someone who works with or knows the CEO, President, or CFO, and then asking for the password on behalf of that employee. This is typically an attempt to gain easy entrée into banking, credit card, and records systems in the company that could be worth thousands on the dark web (digital black market).

Leverage New Technology to Keep Security Simple and Strong

Cloud computing offers stronger and simpler security defenses that can be leveraged by organizations of all sizes. Cloud service providers install multiple security layers and alert systems intended to protect both their own cloud infrastructure and the businesses that rely on it. And, because they have multiple customers and millions of dollars invested in their delivery architecture, they take great pains to protect it from external attacks.

Another way to shield your organization from attack is to leverage a good web hosting company. Such companies have in place many detection methods to protect your site from denial of service (DOS) attacks and other direct attacks on your website.

Lastly, consider upgrading your virus protection systems. Real-time protection may include website scanning as employees use search engines for their work as well as scanning downloads, using cloud-based document storage systems with built in virus protection, and similar systems.

Update Your Software, Systems, and Platforms as Needed

Most major software companies conduct threat monitoring and intelligence, scanning the digital environment for new and emerging threats and developing protection against it. Every software maker and computer manufacturer issues periodic updates to its programs and platforms. These updates are essential to close known security gaps and issue patches to protect against new threats.

Look for security updates for the following systems:

  • Operating systems (i.e., Apple/Mac, Microsoft)
  • Office productivity suites (Microsoft Word, Excel, PowerPoint)
  • Mobile phone operation systems (Android, iOS)
  • Web browsers (Chrome, Edge, Firefox, Safari, and many others)
  • Specialized nonprofit systems such as accounting or grant management systems
  • Website updates (WordPress themes and plugins, for example)

Be sure to confirm that your software company did indeed issue that update. Some systems do update automatically. But others that prompt you to update your software should be investigated. You can often find news of updates published in tech journals online as well as on the software manufacturer’s website.

Although many nonprofits are small, they can take mighty steps to protect against cyberattacks. You can do a great deal to protect what you have built in your organization by using these tips.

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.

Jul 27
0

Just Starting Out? Consider Fiscal Sponsorship

By | Nonprofit | No Comments

Nonprofit organizations just starting out may not have their 501(c)(3) designation yet. This makes it almost impossible to receive charitable donations and apply for grants. One solution they can explore is fiscal sponsorship.

What Is Fiscal Sponsorship?

Fiscal sponsorship for nonprofits is when an established nonprofit acts as an outsourced extension of a new and emerging organization. The legal contract between the two entities establishes their relationship, with the established nonprofit serving as the sponsor. The contract between the two parties does not imply an ownership relationship or a partnership between the entities. Rather, it establishes the guidelines for a working relationship.

By serving as a fiscal sponsor, the established nonprofit provides a valuable service to a newcomer to the nonprofit world. They will charge a fee to cover their services.

What Are the Duties of a Fiscal Sponsor?

The exact duties of a fiscal sponsor are stated in the sponsoring agreement. Some of the more common duties held by sponsors include:

Can Sponsorship Agreements Extend Beyond Financial Assistance?

Yes. Some nonprofits work with a sponsor which extends operational support to the fledgling organization. They may provide back-office support such as bookkeeping services in addition to fundraising and donation management.

The Benefits of Fiscal Sponsorship

Startups face numerous challenges: funding, growth, marketing, accounting, legal needs, and more. Nonprofits face these challenges along with the need to become self-funding over time. Many people who dream of starting a nonprofit choose to work with a sponsor to allow time to test their concept and ensure there’s a place for them in their chosen field.

Another benefit to nonprofits using a sponsor is that they can focus on growing the organization. The time needed to manage accounting, tax preparation, and other back-office tasks can be used for organizational growth and development, as well as program services.

Lastly, larger nonprofits capable of sponsoring a startup often have considerable staff and expertise: legal counsel, an accounting department, and an HR manager. Working with such a team provides startups with access to highly experienced staff at a critical time during the startup phase, which can help them build stronger, better organizations.

Where to Find Fiscal Sponsors

The best place to start looking is among local nonprofits. Use your network of contacts to find out if any local nonprofits offer this service.

Other places to find potential sponsors include:

No matter how you find a fiscal sponsor, as with all work agreements, investigate the sponsor thoroughly. When working with a fiscal sponsor, you must ensure that there’s both a meeting of the minds and the philosophies to make the situation work to your mutual benefit.

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.