This is a guest article provided by Cassidy Jakovickas, CPA at MBS Accountancy.
It’s been said that hiring is like dating, and it’s a fairly accurate analogy. It’s challenging trying to find the perfect fit for any role, and even more so when specifically hiring for a nonprofit accounting role. Many nonprofits give up trying to find specialized talent and hire a business accountant to help with their accounting needs.
But, while nonprofit accountants and other accountants have some similarities, a nonprofit accounting role requires knowledge of specific subjects, like fund accounting, the non-distribution constraint, budget planning, and many other topics. This article will outline the steps needed to ensure you find the best nonprofit accountant for your organization.
Step 1: Define Your Nonprofit’s Accounting Needs
Many organizations, after discovering they need financial support of any kind, will jump straight to asking for referrals and searching on Google for the best professionals. But it’s important that you first define your financial support needs so you don’t end up with an unqualified person who leaves you worse off than before.
Just like you shouldn’t hire a surgeon to repair your car, you shouldn’t hire a bookkeeper to perform accounting or CFO work—or vice versa.
To help you clarify your financial support needs, I’ll describe some typical tasks for a bookkeeper and an accountant within the context of a nonprofit.
Nonprofit bookkeepers keep financial data properly organized and accurately recorded
Nonprofit bookkeepers track and manage the day-to-day transactions of a nonprofit and ensure each financial change is accurately recorded. For example, a nonprofit bookkeeper would help you write checks and make deposits, record transactions for expenses and donations, and assist with payroll and cost allocations.
Nonprofit accountants translate your financial information into practical insights
While a bookkeeper focuses on recording and organizing your nonprofit’s financial information, a nonprofit accountant is concerned with analyzing and interpreting financial reports and statements. Many times, an accountant will have a designation like Certified Public Accountant (CPA) or other specialized credentials that demonstrate their expertise in accounting.
A nonprofit accountant would help with reviewing all accounts to ensure zero discrepancies, preparing financial reports like a statement of cash flow, and explaining the “why” behind your financial transactions. A nonprofit accountant can also help with preparing your books before an audit, filing your nonprofit’s Form 990, handling bank reconciliations, and ensuring that internal controls and compliance standards are being followed.
Warning: Don’t hire out of desperation
Hiring is a juggling act between “Should I hire?” and “I have to hire NOW!” Most companies and organizations wait until the second phase to start hiring, but this often results in poor qualification processes—if any at all—and rarely yields a great fit for your nonprofit. You will either hire someone who’s unqualified or someone who is competent but horrible to work with. Both have disastrous consequences.
If you’re in dire need of financial help, consider hiring a temporary bookkeeper or asking peers for individuals who would be willing to temporarily help you with specific tasks like data entry or payroll functions while you search for a permanent solution. It’s best to get temporary financial support so you can properly prepare and plan out a good hiring strategy for a more permanent accountant role.
Step 2: Ask For Accountant Referrals From Qualified Sources
Once you’ve clarified what type of support you need, you can begin asking for referrals. When asking for referrals, however, it’s important to only ask individuals who are qualified to make recommendations for your nonprofit.
We all make suggestions based on our experience and our knowledge of the other person’s needs or goals. It’s important that you choose someone with relevant experience, either in the nonprofit industry or with your nonprofit specifically. Here are some examples of qualified sources to ask for accountant referrals:
- Your auditor: Due to the nature of their work, auditors have numerous connections within the nonprofit industry and will be able to make informed recommendations based on their knowledge of your nonprofit’s workings.
- Your peers: Let other organizations know that you’re interested in hiring and ask them for recommendations. A good tip is to ask each person who sends a referral to list one reason why they’d be a great fit for your nonprofit.
- Online directories: Look on Craigslist, Facebook, or Google to find the best nonprofit accountants in your area. You can also post a nonprofit accountant job listing on nonprofit job websites like Idealist and Work For Good. You can get inspiration for your job description from Idealist’s job listing here.
Getting candid answers from references
By nature, a candidate’s reference is unlikely to give any negative feedback that may cast them in a bad light. This is why you should ask each reference key questions to extract some insights about the candidate, such as:
- What are their technical skills?
- Did they complete their work accurately and on time?
- How did they handle challenges or unanticipated roadblocks?
- How did they communicate with people in non-accounting roles?
- What advice would you give me for working well with this person?
What should you pay your nonprofit accountant?
How much will this cost? Salary is one of the most significant factors involved in hiring any staff, but it can be difficult to make an informed decision on what to pay your nonprofit accountant if you’ve never hired one before. Here are two ways to go about this:
- If hiring an in-house accountant: Ask referral sources about their accountant’s salary and explain that it would help you understand how much you can expect to pay your new accountant. You can also look at the Form 990 of similar organizations on Guidestar and pay close attention to Part VII, where the CFO’s salary information will be listed.
- If hiring an outsourced accountant: Generally, pricing for outsourced accounting services starts at $2,000 per month. However, outsourced accounting prices depend on the complexity of your business, the level of service being provided, and often geographic location. Revisit the goals you clarified at the beginning of this article and filter out options that are either too barebones or too advanced for your current accounting needs.
Many nonprofits find that outsourcing some or all of their accounting functions can be a highly valuable and scalable way to ensure that organizational growth doesn’t outpace proper financial management. If you’d like to learn more about the benefits of outsourced nonprofit accounting, read Church Accounting Services: 9 Reasons To Outsource.
Step 3: Interview And Find The Best Nonprofit Accountant
Before interviewing anyone, you should research their background and check any references provided in their resume or cover letter. I’d recommend creating a shortlist of candidates you find most promising and including the following information about each of them:
- Noteworthy comments about them or their work from their references
- Their level of experience with your industry, your fund accounting software, or other aspects of your organization
- Any previous experience they have with your organization’s stated mission
The actual interviewing process for a nonprofit accounting role can be tricky since you’re likely hiring them because you don’t have the required accounting knowledge to do it yourself. A quick test you can perform is to show your potential accountant a financial statement and ask them to explain it to you. A good accountant will explain it clearly and ensure that you understand their explanation. You can also gauge the manner and tone in which they give their explanation. Is their tone condescending or helpful?
This test helps you assess a candidate’s communication skills and nonprofit accounting experience, and make a decision on whether or not you will enjoy working with them.
After The Hire: Work With Your Nonprofit Accountant To Ensure Long-Term Success
As with any relationship, effectively collaborating with your nonprofit accountant requires clear, candid communication on both sides about the state of your financials and potential strategies for improving your nonprofit’s operations, compliance, or financial health.