It’s Important for Organizations to Assess their Income and Expenses and Document the Established Expectations
Expert Interviews: Natasha Banks-Pronsati, Principal Accountant & Certified Fraud Examiner
Tell us a little about NP Finance & Consulting and what your specialty is:
NP Finance & Consulting specializes in Non-profit, small business, and union financial management. We aim to be a resource for all of their accounting, tax, and audit preparation needs. NP Finance & Consulting’s motto is we train, maintain, and help our clients sustain their finances.
What’s unique about your company?
NP Finance is an African American Woman led business in an industry that is dominated by white males. That makes my company unique before we even get into what we have to offer. Prior to founding the company, I had a successful career in Public Accounting where I specialized in auditing and forensic special-purpose engagements. NP Finance & Consulting is equipped to help clients prepare for their financial obligations and avoid the pitfalls that many organizations have to experience and to learn from.
You focus on non-profit organizations…why?
During my many years in Public Accounting, I spent more time reviewing, advising, and trying to help my clients get their records in an auditable form, than I did actually auditing them. I noticed a pain point and a need that I hoped that NP Finance & Consulting could be the solution for. My mission is to be an advisor and a partner for the many Non-profits that are trying to do the right thing, but also acknowledge that they cannot do it all themselves. Financial management is a very important aspect of running a Non-profit because, understandably, budgets are tight. However, so should be your recordkeeping if you intend to get and keep grants. I really do want to leave this world a better place than how I found it, and applying my time and talent to help Non-profit organizations keep their operations running soundly, is one way that I can do just that.
Non-profit is very different from profit companies/business, what are the financial statements for non-profits to be aware of?
You are positively correct in stating that there is a difference in operations and requirements for nonprofit companies. First things first, the main difference is that Non-profit companies typically don’t earn revenue from their business model. They rely on grants, sponsors, and support from others to achieve their goals and missions. The specific format and acknowledgments on Non-profit Financial Statements are designed to accommodate that difference. The main financial statement that shows the organization's assets and liabilities is called a Statement of Financial Position. The main statement that shows the money-in and money-out for the period is called the Statement of Activities. A third statement called the State of Cash Flows is the same for all business types.
What are the tax responsibilities for non-profits?
In the last question, I mentioned that nonprofits typically get money from grants, sponsors, and other means of external support, and as a result and rightfully so, there is an expectation of annual reporting. The required annual reporting is a way to hold organizations accountable and allow donors to get a proper acknowledgment of their donation when applicable. The IRS requires all nonprofits to file an annual form 990, 990EZ, or 990N depending on the organization’s assets and receipts.
Please list the key nonprofit financial documents?
One of the key documents that a Non-profit should have is Liability and/or Directors and Officers’ insurance. Protecting your personal and organization's assets should always be part of the initial setup process. Your exemption letter and exemption code section specifications are also a key piece of information that all Non-profit organizations need to keep on hand. This information is often needed to confirm your organization exists and is in good standing, a qualifier for funding eligibility in many instances. An accounting system that is more sophisticated than receipts in a drawer until tax time, is the third most important thing. Being able to generate real financial statements and perform an analysis of how well things are going or not is essential to long-term survival and success.
Is there an accounting method for non-profits that should be considered?
The two differences that come to mind when you say the accounting method is accrual or cash basis accounting. Organizations that have good record-keeping and have the ability to calculate and anticipate upcoming expenses and receipts can prepare accrual-basis statements. This is the basis that is required to be compliant with generally accepted accounting principles. Cash basis statements only account for receipts and payments made during the year and it is an acceptable method of preparing financial statements, however, it must be acknowledged as an “other comprehensive basis of accounting”.
Can you list your ideal golden finance rules non-profits should consider at all times and what they consist of?
Be honest, be proactive, and be prepared. (Honesty) Business integrity and reputation is your most valuable asset and your donors, sponsors and the community are relying on and trusting you to operate with the utmost care. (Proactiveness) Deadlines are how organizations live and die. Non-profits have to be proactive to ensure they can effectively complete their donor and IRS obligations. (Preparation) It is very difficult to recreate things from the past and/or get something from nothing. Documentation and organization today, are keys to success tomorrow.
Many non-profits (of all sizes) do not have budgets in place for their organization. Should they make budgets? Why?
A budget is essential. It serves as a gauge of your organization’s performance against what your expectations were. It’s important for organizations to assess their income and expenses and document the established expectations. It’s a great way to measure growth and do a healthy assessment of what is working well and not so well.
How should non-profits record in-kind donations?
All donations both monetary and in-kind need to be tracked in an organization’s accounting system and included in the annual 990. The donors are relying on the nonprofit to give them adequate acknowledgment and report in accordance with IRS guidelines.
How can nonprofits find and keep funding?
Funding is not my area. I will have to defer to Gracie on that question. That is her expertise however, my financial input on funding is that you almost always need to be able to show proof of your financial status with financial statements and be in good standing with the IRS in order to get government and large donor funding.
Do you have anything else you’ll like to share?
If you are reading this and you have marginalized the need for financial management because you think I am a nonprofit or my business is small I should be fine, I have to relay to you the severity of detriment that such thinking can have on your business. It is very difficult to determine your business's future potential with an accurate assessment of where you come from and where you are in the present. Get an accountant or at the very least, get an accounting software system and start maintaining all of your income and expenses in it. You may be thinking that you cannot afford it but believe me, you cannot afford not to!
Also, I cannot leave without sharing the importance of protecting your business assets and company reputation by properly establishing protocol, requiring authorization, and properly vetting vendors, volunteers, and staff. You have worked hard to build your business, you don’t want to give anyone the opportunity to take anything from you.
Gracie;
Thank you Natasha for taking time out to chat with us about your expertise in the non-profit financing world.
Please contact Natasha Banks-Pronsati, if you need accounting, consulting, or tax preparation services for your non-profit and/or consulting services to help your business stay compliant with the government laws.
Natasha;
It was such a pleasure to interview with you and be a part of your information sharing opportunities platform. As I said to you in our interview, if more of us try to find creative ways to be impactful beyond our own needs we will all be better off. I really appreciate your time and hope that I have the opportunity, to be of assistance to some nonprofit and business owners reading this and looking to gain control of their finances.
Gracie;
Continue to watch out for more interviews, tips, and advice from amazing experts like Natasha Pronsati. Please contact Natasha for your non-profit finances, she's a high recommendation from me!
Natasha, thank you again, it was a pleasure!
Until next time,
Gracie
Check out the video chat between Natasha and Gracie:
To learn more about NP Finance & Consulting by visiting www.npfinancesolutions.com
Comments
3 Comments
Hi there to all, hⲟw is thе whole thing, I think every one
iѕ getting more from this site, and your vieᴡs
are pleɑsant in support of new viewers.
Thank you and Happy New Year! We are doing well and hope that you and your love ones are too.
Can I just say what a reduction to seek out somebody who actually knows what theyre talking about on the internet. You definitely know methods to bring a problem to mild and make it important. More people have to read this and understand this facet of the story. I cant consider youre not more common since you positively have the gift.