Do Nonprofits Need Bookkeepers Or Accountants?

In the startup phase, nonprofits handle the financial functions as an afterthought.  Finances are limited.  Programs are being developed and you’re doing everything you can to keep your eyes the people you're called to serve. Financial tasks get added onto other staff members in a survival mode.  It won't be long until you're experiencing warning signs that you need to staff this important function.  Those warning signs include not having financial reports, not knowing how you’re doing financially, feeling lost in the business operations and without time to figure it out.

The first financial position nonprofits should hire is a bookkeeper.

Bookkeepers are great at maintaining day to day transactions. They can also generate a basic financial statement and prepare basic reports of financial matters.  This role excels in the they data entry and routine tasks that are critical to good financial practices. 

When should nonprofits add an accountant?

Around the $1 million budget, you'll add a second financial role – an accountant.  This position can start as a part-time role and grow into full-time.  The role can be called a controller, an accounting manager, or a finance director.  The accountant role builds up the financial reporting and financial analysis. They take the information that the bookkeeper has been capturing and interpret it in light of the vision.  They highlight how the finances are going and provides actionable reports to assist leadership. The accountant role also helps to enhance internal controls by having two people to separate duties in the finance function. 

 
Do nonprofits need a CFO?

As you near the $3 million budget, there comes a need for a strategic financial role.  Chief financial officer is a common title for that role.  You can start by engaging a consultant.  As the organization grows closer to 6 million, you will likely need an in-house full-time CFO.  This role is very strategic/forward-looking with financial matters.  They will perform financial modeling, scenario planning, robust budget analysis and revenue strategies.  They will also make financial decisions about optimizing cash, investment strategies and debt management.

Stay focused on the finances to fuel and fund your mission!