By: Jori Hamilton, freelance writer.
Nonprofit organizations keep the moral fabric of our world intact with mission-based, people-centric practices. They’re constantly reminding us that profit doesn’t have to come before purpose. But even nonprofit organizations need someone to manage their finances.
Tax laws changed, people’s economic security was wiped away amid the COVID-19 pandemic, and charitable giving took a significant hit over the past year. All of these things affect the way nonprofit organizations move forward financially. So, it’s up to nonprofit accountants to take the lead by analyzing accounting trends and implementing solutions that keep their organizations afloat financially.
Let’s take a look at four trends of tomorrow that every nonprofit accountant should know.
Accounting Technology Is Evolving
Accountants are especially mindful of how technology can make their jobs more efficient. We’ve evolved from pen and paper accounting methods and have since moved into incorporating technology into daily accounting duties. There are two significant ways that advancements in technology impact nonprofit accounting:
- The way that accounting will be conducted in a remote work world
- The software used to do accounting work
Further, we’re moving into a newly remote world. Companies everywhere are giving workers the option of a fully remote or hybrid work schedule that includes in-office and at-home hours. You should be aware of any software, programs, or devices used to effectively perform accounting duties remotely. Ensure that your home office is equipped with the necessary technology to stay connected with coworkers and company leaders, promote a trusting, inclusive remote work environment, and accommodate the need for flexible scheduling.
Accounting software is also evolving. Companies are producing programs that automate repetitive accounting tasks and improve how data is collected and stored. Nonprofit accounting relies on accurate numbers and how well you track necessary data. Start with using an updated data management system tailored to accountants to ensure you’re taking advantage of advanced accounting technology.
Automation and AI Use Is Becoming Popular
It’s been said that “...labor-intensive accounting tasks like tax preparation, payroll, audits, and banking will be fully automated” in the years to come. Artificial intelligence and automation tools give accountants constant access to real-time data that can allow for automation in these ways, freeing up more time in the day to dedicate to the nitty-gritty parts that require some human problem-solving. Even with the increased use of automation tools and artificial intelligence in non-profit accounting, a human touch will always be necessary for business practices.
With that said, you’ll need to ensure that you’re monitoring your automation and AI tools for efficiency and accuracy. Especially in the realm of non-profits, there’s rarely any extra time or resources set aside to make corrections to inaccurate work, meaning accuracy is imperative as much as possible.
There Was a Decline in Giving, But It Won’t Last Forever
Giving to charitable organizations was down by 6% in the first quarter of 2020. There was also a shift in how these donations were presented to nonprofits. Smaller, individual contributions increased while large donations on behalf of companies decreased.
Millions of dollars that would’ve been given to nonprofits over the last year were lost due to the pandemic’s adverse effects on our economy. But this sharp decline in giving won’t last forever.
Ensure that you’re staying up to date with statistics on giving. Charitable contributions have fluctuated due to the COVID-19 pandemic, but it’s essential to understand these numbers will change as our economy recovers. Prepare for these changes by being flexible in your management practices.
Accountants Will Need To Know More Than Numbers
We love accountants for their magical ability to sift through financial data, navigate numbers, and implement the right solutions at the right time. Nonprofit accounting continues to evolve, and it will be up to accountants to expand their skill set to accommodate industry trends and changing needs in their respective organizations.
If you want to take on an accounting role in a nonprofit organization, you should at the very least have a specialization in not-for-profit accounting. Without it, you’ll lack the necessary knowledge to ensure a company takes advantage of their tax-exempt status, creates their statement of activities, or draws up a statement of financial position.
Besides knowing all things nonprofit and numbers, you should focus on cultivating other non-profit essential skills such as:
- Ensuring you have strong budgeting abilities.
- Strong attention to detail.
- Communication skills.
- Organizational skills
- Familiarity with auditing.
Nonprofit accounting continues to be an essential part of maintaining a successfully not-for-profit operation. When your finances are in working order, it gives you and those working with you an opportunity to focus on your efforts on helping those in need.
Being mindful of technological advancements in accounting software and the increased use of automation and AI in accounting practices is crucial to navigating this industry’s future. From there, focus on exploring specializations that complement your accounting degree and count on giving patterns to change as time goes on.