At times, it seems the field of accounting changes overnight. Keeping up with the nonprofit accounting trends, especially, can be an exhausting task for any team.

Business cycles affect every industry. When consumer spending slows, inventories within companies pile up. All of this has a cascading effect on the national economy and directs nonprofit accounting trends. In fact, nonprofits often have it the worst: If people are forced to scrape together funds just to purchase the necessities, it’s unlikely they’ll have much left to donate. 

It’s been a long year. The Covid-19 pandemic has had a profound effect on the economy, leaving many nonprofit organizations in dire positions. Quite a few unanticipated nonprofit accounting trends have emerged since the start of the pandemic last March. 

We can’t cover all of them because the pandemic affected different verticals within the nonprofit sector differently, but here are a few overarching trends you may have noticed in your day-to-day work. 

1. A Decline in Fundraising Nonprofit Accounting Trend

Unsurprisingly, fundraising isn’t quite where it was just a little over a year ago. 

Although only 8.8 percent of donors say they plan to give less this year than they did in 2019, many nonprofits have still experienced a downturn in fundraising over the course of the months following the start of the pandemic. A decline in grants from private foundations, in particular, has fueled the relative drop in fundraising.

According to the Journal of Philanthropy, contributions from private foundations to nonprofit organizations are projected to decline about 12.7 percent. For many nonprofits, these grants represent one of the most consistent and lucrative forms of funding. 

While this certainly isn’t welcome news for any nonprofit, it need not spell doom for any organization. It simply means you need to spend more time targeting individual donors. Consider the ease with which donors are able to make contributions to your organization. You obviously can’t hold the traditional fundraising dinner, so try to leverage online resources such as your organization’s website and social media to make donating a seamless process.

2. An Increase in Partnerships Nonprofit Accounting Trend

Surviving a period of crisis requires a measure of creativity on the part of nonprofit leadership teams. Sometimes, that entails identifying and leveraging allies.

Across the country, for profit business managers are quickly starting to realize they can’t exist simply to maximize shareholder values. The social impact of the enterprise counts, as well. But launching charitable endeavors really isn’t in the wheelhouse of most business executives. And so instead, they’re turning to nonprofits.

For accounting teams, the new demand for partnerships between nonprofit and for-profit involves processing grant funding stemming from non-traditional sources. As we mentioned before, it’s likely a substantial portion of your yearly income came from private foundation grants. Now, these grants are in many cases coming from corporations. 

It’s yet another stream of revenue your team will need to track in the future. 

3. Increasing Reliance on Government Funding

This week, Congress announced the passing of yet another round of government stimulus. 

In the most recent $900 billion bill, restaurants and nonprofit organizations are slated to receive up to $284 billion in paycheck protection funding. This falls in line with the bailout package passed by the legislature earlier this year. 

Although the long term implications are not yet known, nonprofit accounting teams will need to be wary of the loans their organizations take on over the next few months. While the terms of the loans are expected to be lenient given the unprecedented circumstances faced by their recipients, it is still another liability that must be tracked.

For future updates on the PPP program and its likely impact on your team’s work, refer to the AICPA website

Tracking of all your organization’s new and unique income streams can become challenging without a modern accounting software system. We’re here to help. Sage Intacct is an accounting software system built for nonprofit organizations.

Contact us today for a free product demo! 

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