Running a non-profit organization isn’t easy! It’s a challenge to “do good” efficiently, often with limited resources. Through my work with non-profits, I’ve found the most common issues to be:
2) Man-power, and
3) Keeping on top of all the boring stuff like accounting and compliance.
Xero has made each of these issues easier on non-profits. Not only that, the accounting work is easy, accessible and fun! From first hand experience as a volunteer treasurer, it can be hard to fit all my commitments into a busy schedule. Being able to reconcile accounts on my phone while sitting on the train really adds value to otherwise wasted time.
At Deloitte, the majority of our non-profit clients use Xero. This is because it’s quick and easy to keep a track of day-to-day transactions. Many non-profits have a volunteer bookkeeper or treasurer. To keep their lives as stress-free as possible, Xero is a great solution.
One of the most used features is “Tracking” to monitor expenditure against particular funding sources. Many grant makers require accountability reports to show that funding has been used in accordance with the specified purpose. Instead of having to dig through various general ledger codes to extract this data, Xero lets you produce reports that isolate transactions tagged to specific grants. This reduces the time and effort of compliance significantly. It also helps with those pesky audits!
Our clients, One Percent Collective and The Bellyful New Zealand Trust, use Xero and find it invaluable. Steph Fink, Executive Director of Bellyful says “We are only just starting to realize the full potential of what we can achieve in Xero. As a growing charity we need to understand the breakdown of funding income and donations. And we need to be able to track them as they are entered. It makes things so much easier and transparent”.
Pat Shepherd, Chief Doer of Things at One Percent Collective says “Xero has made the reconciling of the regular donations we receive super easy. We use recurring invoice or bank rules. That way we are able to direct donations to the relevant chart of accounts for each of the small charities we work with. Then every quarter we run a report which details all the generous donations we have received for the NZ-based charities we support. This allows us more time to get on with inspiring more generosity in New Zealand, 1% at a time.”
Keeping track of the boring stuff
As accountants, our expertise lies in reviewing the day-to-day data, sense checking it, and ensuring that all relevant legislative requirements have been complied with. That includes those mysterious accounting standards. It seems to have taken an age, but the new financial reporting standards for non-profit organisations are nearly here! For periods starting 1 April 2015, public benefit entities will need to comply with the new suite of accounting standards. These are split into 4 tiers based on criteria such as public accountability, size and some preparer based choices. The accounting framework for non-profits has previously been a minefield. Especially given that the area has had a long and convoluted history, complicated by several different pieces of historical legislation, and compounded by the addition of more legislation in recent times.
The new suite will clarify a lot of the past areas of confusion, however, ensuring that all the boxes are ticked is a job for us with the help of Xero. Xero recently launched their new not-for-profit reporting packs. Deloitte will be using these to assist our non-profit clients get compliant with the new requirements. The new Xero features will include:
- Customizable Statement of Cash Flows (Direct) report – works like any report template with the added ability to split debit and credit transactions to show as separate line items
- Report templates for both Tier 3 and Tier 4 Not-for-Profits. The cash basis report template requires no customization to take out accruals, it just does it.
- Additional report codes for Not-for-Profits (also, there will be farming and shareholder account report codes added)
Deloitte can help you get the most out of your Xero ledger and customize it to your specific organisation’s needs. We have a wide array of clients that we work with successfully to maximize their outcomes, both financially and operationally.
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