Accounting Best Practices

One of the main priorities of nonprofits is to be responsible stewards of the funds entrusted to them. One important way to demonstrate this responsibility is through the successful execution of accounting best practices, which can ensure an organization provides accurate and timely information about how donations were used.

Sixteen percent of respondents indicated that they still do not used accrual-based accounting. The accrual basis of accounting is consistent with GAAP standards and, in most instances, more accurate than cash-basis accounting.

Just slightly more than 18% of respondents indicated that they do not have a formal process for reviewing grantor imposed requirements prior to accepting grant funds, and the same number reported that they have difficulty meeting the reporting requirements in grants. Failing to carefully review grant requirements prior to accepting funds is a potentially dangerous practice, yet it is one that is rather common in the nonprofit sector.

With the Health Insurance Portability and Accountability Act (HIPAA) and other privacy related initiatives today, guarding the privacy of donors is paramount. Over 13% of respondents indicated that they have not taken specific steps to safeguard the privacy of donors. Privacy is really the first step in accountability when dealing with donors. If donors cannot trust an organization with their personal information, how can they trust it with their funds to carry out a specific mission?


Nonprofits must be accountable to multiple stakeholders, including private and institutional donors; local, state, and federal agencies; volunteers; program recipients; and the public at large. Everyone who works for a nonprofit, whether as a paid staff member or a volunteer, has a role to play in ensuring the organization is answerable to its constituents. We are providing this information to organizations in the nonprofit community, hoping that the results help them benchmark their progress and ensure continued success for the future.