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The Nonprofit CFO's Survival Guide 4 Some nonprofits operate for-profit subsidiaries and others sell items on a break-even basis. But many depend on donated monies, fundraising, and other sources. They might receive grants and directed donations—perhaps dozens (or, at the high end, even hundreds) of separate income streams. And each of those donors rightfully wants to know how their investment in your mission is faring. The result: You need to isolate the activity for each revenue source, which enables you to create a regular series of specific reports, each with its own unique requirements, for each source of funds. Those demands mean the accounting system that supports the team must offer an extraordinary level of flexibility. "You need to be very careful in how you design your chart of accounts," explained Nancy Fliss, Partner with LeapThePond, a services consultancy specializing in the needs of nonprofits. "When you have a financial accounting system that properly reflects the fiscal levels of the organization, you'll be in great shape." Fund-based accounting is an essential requirement for most nonprofits. Every funder has their own requirements for reports. That means the accounting system must be designed to present information from a variety of dimensions, such as geography, project, timeframe, and funding source. That enables you to do custom reports, support multiple entities, and consolidate more easily. Jacqueline Tiso, CEO and Founder, JMT Consulting Group There's a level of complexity here that is equivalent to what a major for profit organization deals with. Nikki Jones, Controller, Healthcare Businesswomen's Association "Fund-based accounting is an essential requirement for most nonprofits," said Jacqueline Tiso, CEO and founder of JMT Consulting Group. "Every funder has their own requirements for reports. That means the accounting system must be designed to present information from a variety of dimensions, such as geography, project, timeframe, and funding source. That enables you to do custom reports, support multiple entities, and consolidate more easily." For some nonprofits, there can be a complicated hierarchy of entities such as chapters, subsidiaries, and locations. At Healthcare Businesswomen's Association, a centralized accounting function has helped the organization step up to a higher level. "Previously, we had numerous chapters, all submi ing different spreadsheets for consolidation," said Nikki Jones, Controller. "We have board volunteers with high turnover and we're a completely virtual organization. There's a level of complexity here that is equivalent to what a major for-profit organization deals with."

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