Top 3 Things to Know to Work with Nonprofit Organizations

Serving the nonprofit community is not for the faint heart. You must understand the intrinsic factors beyond the finances that drive the nonprofit community. This article will share three simple tips for working with nonprofit organizations to provide bookkeeping, accounting or advisory services.

Through my years of focusing on providing accounting, payroll and advisory services to nonprofit organizations, I've put together the most important things to keep in mind as I work with these clients which I'll be sharing next month at the Scaling New Heights conference. In this article, I'm sharing three things to know, but keep in mind that the other seven things are just as important! 

#1 Be Clear on Your Why

Whether you are volunteering for a nonprofit, taking on your first nonprofit client, or have been serving multiple nonprofit clients for years, turning serving the nonprofit sector into a business is rewarding and challenging.

When you get your first nonprofit client, you often walk into a dysfunctional and unorganized organization that requires more than your accounting skills to tame the chaos. In addition, there are often too many personalities (aka too many cooks in the kitchen) to navigate.

You cannot rely on passion alone to weather through the joys and storms of supporting the nonprofit community. If you have ever had to teach a five-year-old not to play with fire or teach a loved one how to use the latest Apple iPhone without getting frustrated, you are steps ahead of the learning curve of working with the nonprofit community.

It would be best to have a robust business model with your why clearly defined to serve nonprofits. You will also need the grace and patience of a mother and the resilience of a teacher’s heart and mindset to scale your firm working for nonprofit organizations.

Here are questions to ask yourself to determine if serving the nonprofit community is the right fit for you:

• Do I enjoy putting accounting puzzles together and leveraging my investigation skills to tame the chaos of nonprofits?
• Do I want to spend time creating 20 detailed grant financial reports every month on top of the normal month-end closing process?
• Do I want to coach and become an accounting therapist to changing boards of directors and nonprofit leaders?
• Do I want to work with organizations that transform local, national, and global communities with their mission?
• Will I continue to serve the nonprofit community even in a pandemic?
• Do I enjoy going through multiple audits each year?
• Do I enjoy being an advocate and voice of wisdom for nonprofit organizations to help them navigate the frustration of fundraising, dealing with funders’ unrealistic expectations, and helping them overcome their money fears?

If the answer to any of the above questions is yes, you are one step closer to serving the nonprofit community. Your ultimate mission is to be passionate about serving this community and making an impact without creating harm and losing you.

#2 Build Your Nonprofit Knowledge Bank & Invest in Psychology Training

Congratulations on deciding to serve the nonprofit community and join the fan club of a subset of nonprofit accounting professionals already doing so. You must invest in yourself before serving nonprofit clients by building your nonprofit knowledge bank and getting some psychology training.

There is a steep learning curve when it comes to working with nonprofit organizations. You are constantly learning new compliance requirements, multiple donor management systems, undergoing new regulation training, and at the same time dealing with relationship dynamics of nonprofit leaders.

Every nonprofit organization is unique in how they operate, raises funds, and tells stories with finances. So, no one-size tech stack, processes, and procedures will fit all nonprofits. A mistake in applying the wrong accounting procedure could lead to the loss of productivity in an audit or cost an organization its funding.

Therefore, it is vital you know the ins and outs of nonprofit accounting beyond just the basics, have a central place for documenting the knowledge you are learning and keep refining your processes to adapt to work for nonprofit organizations.

You don't know what you don't know until you are in the midst of challenges. And what you don't know can be costly. So when you engage a nonprofit client, you are on training wheels operating with a student mindset to learn everything necessary to keep the client in compliance.

Key things to have in your knowledge bank include:

• Two accounting systems that work great for nonprofit accounting
• Nonprofit management training to learn about governance, fundraising, and program management
• Three donor management systems to always recommend to nonprofit clients
• A document and project management system to house all of the information you are acquiring and learning

For the apps, you choose, make sure you have a training ground to implement the information you are learning so the information becomes muscle memory for you. In addition, training will allow you to learn how to build effective workflows to solve client problems.

Building a nonprofit knowledge bank helps you:

• Understand the accounting compliance requirements necessary to perform your duties
• Develop your research skills to know how to find information to help organizations
• Develop your problem-solving skills to help you learn how to anticipate issues and create effective outcomes
• Expand your creative brainpower to empower clients to operate and thrive from a place of abundance to maximize their mission impact
• Become a subject matter expert in the nonprofit community

In addition to building your knowledge bank, you need to invest in some psychology training.

Nonprofits focus primarily on relationships with various stakeholders, including you, to fulfill their mission. And communication is the second factor outside of money that keeps an organization working with an accounting firm longer.

The nonprofit community thrives on human connection and emotional intelligence, so you must be able to speak their love language to engage them, connect the dots and recognize where their heart and intentions are to get them to see the bigger picture beyond their immediate crisis.

You are often leading every conversation, tapping into their emotion and love language to build and retain the relationship.

Your psychology training will help you be mentally and emotionally prepared to listen to the challenges nonprofit organizations face, quickly adapt to changes, and strengthen your leadership skills. In addition, you will learn how to connect with nonprofits while being a better leader and community advocate for causes.

#3 Understand the key factors that drive a nonprofit organization.

Everything a nonprofit organization does is centered around two key factors: relationships and the behaviors behind those relationships. Finances are just the outcomes people see.

Beneath the finances and behind every nonprofit leader is a host of prior trauma of failures and financial scarcity, trust issues from being burned, lack of ability to say no, burnout, etc.

You cannot serve the nonprofit community by coming in and telling them what to do without first understanding the root causes behind the numbers. You must meet them at their level, empathize, and use your psychology training to gradually shift their mindset in micro phases to achieve mission work.

Therefore, in the first 3 to 6 months of working with a nonprofit client, you will spend time and effort learning all the intricacies of how the organization operates, navigating various stakeholders’ dynamics, unearthing the roadblocks in programs, and evaluating inefficient workflows creating accounting chaos.

A nonprofit organization is like an onion. The more layers you peel and issues you discover, the better you can create effective solutions and the stronger the relationship between you and the organization. Together, you both trust each other and can work collaboratively to achieve the goals set in the engagement process.

Overall, when you have clarity on why you want to work with nonprofit clients and have taken the time to invest in building your knowledge and nurturing relationships with the nonprofit community, it is rewarding to scale your firm serving nonprofits.

To learn even more tips on how to get started with working with nonprofits, join me at Scaling New Heights 2022 on Sunday, June 19th, to have some fun discussing the "Top 10 Things to Know to Work with Nonprofit Organization."