Bookkeeping for a Tiny Nonprofit

Written By Sean Hale
A person who is sad because they don't have enough money. Image by Bing Image Creator.

Running a nonprofit is tough.

Finding a way to cover bookkeeping and other administrative expenses while not running afoul of the Overhead Myth can tie a nonprofit leader up in knots.

This is especially true for nonprofits with annual budgets under $100,000.  You probably can't afford, and wouldn't want to pay, $5,000 or more for bookkeeping every year. But you can probably find a needle in a haystack easier than you can find professional bookkeeping services that charge less than $400 per month.  

It doesn't matter that your needs are relatively small because very few bookkeepers can operate their business at a lower price, especially if they have employees.  Think of it like a supermarket: even though you might only need two slices of bread, they will only sell you bread by the loaf.

So what can you do?

 

Plan A: a volunteer bookkeeper

Given the size of your nonprofit, it may take just a few hours per month to do the books well. Have you checked with your friends, family, board, volunteers, and other people in your network? They may know a good candidate who will do the work for free. You might also find a retired bookkeeper who’s willing to volunteer by reaching out to your local senior centers.

Note: It would likely be a conflict of interest for the bookkeeper, volunteer or otherwise, to be the spouse or close family member of staff.

Pro Tip: If you plan to recruit a board treasurer to also be your bookkeeper, be sure they know that before they officially join the board. It might surprise you to learn how often board members find out about significant expectations on their time after they join the board. That rarely goes over well or builds trust.

 

Plan B: your state association of CPAs

Reach out to your state association of CPAs. Many have systems in place to help you connect with CPAs who want to do volunteer work with nonprofits.

Note: a CPA has much more training, typically, than a bookkeeper. So you might find that they may not want to do your bookkeeping long-term but that they will be happy to:

  • Help you get started

  • Clean up a mess or two

  • Train and support your volunteer bookkeeper

  • Serve as your treasurer

 

Plan C: look for a unicorn

Image of a bookkeeper with a unicorn horn. Image by Bing Image Creator.

If the other options don't work out for you, then you may have to pay someone for bookkeeping services. That can lead you to a quest to find a unicorn: the paid bookkeeper who does good work, charges very little, and who will take on a client who only needs a handful of hours each month.

So, how can you find this unicorn?

If you find an easy way to do this, please let me know. In my experience it can really feel like a big quest.  

You might start by reaching out to organizations working on the same issue area to ask if they have a bookkeeper willing to pick up a little work on the side.  If that doesn't work, broaden the search to organizations with missions adjacent to yours.  And so forth.

This could take dozens of phone calls and coffee meetings, but eventually you may very well accomplish this quest.

Note: Plan for good bookkeeping to take more time than you might imagine. The things that in our imagination only take 5 minutes sometimes really do take an hour.

Plan D: Grow your own unicorn

Do you have a local community college or university? They often have an accounting department that could connect you with either a volunteer or someone willing to do the work at a manageable rate so they can gain experience.

If you go this route, be sure to line up proper oversight and guidance for this person, such as a regular review of their work by an accounting professional.

Plan E: DIY

With a $100,000 budget or less, you might be your organization's only employee, right?  

Unless you and numbers don't get along well, maybe it makes the most sense for you to take on the bookkeeping yourself.  

  • QuickBooks Online accounting software is fairly intuitive and almost free through Tech Soup.  You might also look at WaveHQ, which I’ve heard good things about, especially for very small organizations

  • You can get free QuickBooks and bookkeeping training through resources like SCORE

  • You'll find more great support through online QuickBooks forums and YouTube videos

Note: If you're the executive director, and you know how to do the bookkeeping well, treat this as a temporary strategy until you can get the organization budget to $100,000.  Even if you learn that you enjoy bookkeeping, you will serve your organization better at that point by getting someone else to take over the booking so you can spend your time fundraising.  After all, a single $1,000 gift will pay for two months of professional bookkeeping.  

 

Pro Tip 1: Nonprofit Accounting Experience

Nonprofit bookkeeping and small business bookkeeping have many similarities but also some critical differences. While your budget remains under $100,000 per year, those differences may have little impact on you. But as your organization grows, they will have increasing importance.

So, if at all possible, have someone with deep nonprofit accounting experience set up your bookkeeping and review it from time to time. That will help ensure that the organization doesn’t have an expensive mess to clean up in a few years or find itself unable to create the financial reports it needs for a funder.

Pro Tip 2: Internal Controls

No matter what path you chose, be sure to implement good internal controls including segregation of duties.

Additional resources.

 

Sean Hale
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