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The Importance of Transparency in Nonprofit Accounting

make sense of reports and irregularities with the help of an accountant

There are various things you need to keep in mind when you’re running a nonprofit organization. One very important one is transparency. Of late, this has become necessary for any type of organization, but it is even more so for a nonprofit. You want to document exactly where all your funds are coming from and what they are being used towards. This will help you maintain your reputation as a nonprofit and do more good in the bargain. Here are some of the ways in which nonprofit accounting can help you stay transparent:


One of the things that you’ll need to document, and that accounting services can help you with, is where your funds are coming from. Do you have private donors? If so, how much are you getting from them? Have you applied for grants? Are you running fundraisers? Are you selling merchandise that has been made by the section of the population you are trying to help? No matter where your funds are coming from, you need to maintain your account books as rigorously as possible. This will help you with the running of your nonprofit and it will also help you to maintain transparency.


How many employees do you have and how much are you paying them? It may be true that nonprofit salaries are notoriously low. However, people who are donating to your nonprofit want to see that you’re paying your employees well and giving them decent benefits too. We all know that people who work in the nonprofit world do so because they want to make a difference and not because they want to make a lot of money. So it’s important to pay them well and document their salaries in your annual report.


You also need to keep track of and document your overheads; these include things such as rent, utilities, repairs, marketing expenses, etc. Usually, rent is the largest of these expenses, so you need to choose your location with care. Do you want to be located in a bustling downtown area? In that case, your rent is going to be high. But if it doesn’t make that much difference to your nonprofit, you can choose to be located in the suburbs where the rent is lower. Either way, it’s important to document these expenses in your annual report which you can make available online for the sake of transparency.

Contact us for more tips on running your nonprofit in a transparent way.