
We consistently get requests from foundations to figure out how to engage business professionals in financial management work for nonprofits. They clearly see a need, but I am struggling to figure out how to make it work in a reliable and scalable way.
Nonprofit accounting is pretty different from corporate accounting. It is more than just the fact that “P&L” and “Balance Sheet” are not terms used by nonprofits. The whole process of placing and releasing restrictions on dollars adds a lot of complexity to the process. Then there is the fun of government grants. It took me about 2 years to get my head around it — and I am sure I am still missing a few pieces.
There is also a tendency for corporate folks to make recommendations that align with their experience (make the books more like a company’s books) which is not always the right answer. For example, business professionals often want to push nonprofits to adopt earned income (e.g., fee for service or goods) programs. More often than not, this is not a good idea.