In this episode of Counting On Chazin, Maria Injic, the US Director of Client Services at Chazin and Company, shares her expertise on basic accounting for nonprofits with Julia Patrick, from the American Nonprofit Academy. The interview highlights the significance of financial management and accounting principles for nonprofits and emphasizes the role of board members in understanding and reviewing financial statements to make informed decisions and fulfill their fiduciary responsibilities.
They delve into the concept of GAAP (Generally Accepted Accounting Principles), which provides rules and regulations for accounting practices. While GAAP is not required for nonprofits, it is considered best practice to follow these principles for accurate and comparable financial statements. They also highlight the differences between nonprofit accounting and for-profit accounting, such as the presence of donor restrictions in nonprofits.
Maria explains various financial statements relevant to nonprofits, including the statement of financial position (balance sheet), statement of activities (income statement), and statement of functional expense. She emphasizes the importance of reviewing these statements regularly, with the balance sheet being reconciled monthly and reviewed by board members in financial packets. The statement of activities shows revenue and expenses, while the statement of functional expense breaks down expenses into programming, administrative, and fundraising categories.
They discuss the concept of restricted funds, including permanently restricted funds (such as endowments) and temporarily restricted funds. Maria mentions the recent shift towards trust philanthropy, where donors allow nonprofits more flexibility in how funds are used during crises like COVID-19. The statement of functional expense helps donors understand how nonprofits are allocating their funds.
Julia raises the question of board members' proficiency in accounting terms, and Maria encourages board members to ask questions and seek clarification from finance professionals within the organization. She emphasizes that board members play a vital role in reviewing financial statements and providing valuable insights from their unique perspectives.
The interview concludes with Julia expressing gratitude for the discussion and emphasizing the importance of financial knowledge for nonprofit board members. She encourages viewers to explore the free resources provided by Chazin and Company to further their understanding of nonprofit accounting.
In this episode of Counting On Chazin, Maria Injic, the US Director of Client Services at Chazin and Company, shares her expertise on basic accounting for nonprofits with Julia Patrick, from the American Nonprofit Academy. The interview highlights the significance of financial management and accounting principles for nonprofits and emphasizes the role of board members in understanding and reviewing financial statements to make informed decisions and fulfill their fiduciary responsibilities.
They delve into the concept of GAAP (Generally Accepted Accounting Principles), which provides rules and regulations for accounting practices. While GAAP is not required for nonprofits, it is considered best practice to follow these principles for accurate and comparable financial statements. They also highlight the differences between nonprofit accounting and for-profit accounting, such as the presence of donor restrictions in nonprofits.
Maria explains various financial statements relevant to nonprofits, including the statement of financial position (balance sheet), statement of activities (income statement), and statement of functional expense. She emphasizes the importance of reviewing these statements regularly, with the balance sheet being reconciled monthly and reviewed by board members in financial packets. The statement of activities shows revenue and expenses, while the statement of functional expense breaks down expenses into programming, administrative, and fundraising categories.
They discuss the concept of restricted funds, including permanently restricted funds (such as endowments) and temporarily restricted funds. Maria mentions the recent shift towards trust philanthropy, where donors allow nonprofits more flexibility in how funds are used during crises like COVID-19. The statement of functional expense helps donors understand how nonprofits are allocating their funds.
Julia raises the question of board members' proficiency in accounting terms, and Maria encourages board members to ask questions and seek clarification from finance professionals within the organization. She emphasizes that board members play a vital role in reviewing financial statements and providing valuable insights from their unique perspectives.
The interview concludes with Julia expressing gratitude for the discussion and emphasizing the importance of financial knowledge for nonprofit board members. She encourages viewers to explore the free resources provided by Chazin and Company to further their understanding of nonprofit accounting.