We often help nonprofits simplify their bookkeeping records that are overwhelming because the financial statements have too much detail. Often, more is NOT better. Too much information (TMI) can be confusing and doesn’t paint a clean picture of how the organization is doing.
Would you prefer to read a three-page P&L or a quick one-pager? We typically try to explain to our nonprofit clients that the most important things to your donors, board or CPA can be stated on a concise, one-page statement for the annual report.
Here are some ways nonprofits can simplify their bookkeeping:
- Minimize the length of the P&L by reducing the number of accounts if the data can be obtained using another feature. For example, use “Special Events” as a subclass of “Fundraising” and then a separate account is not necessary.
- Minimize Classes – Keep classes to a few, broad categories, such as: Grants, Programs, Fundraising, Scholarships, and Administrative. You can get more granular using subclasses and for any restricted, or unique uses of the funds.
- Use Items in QuickBooks Desktop and use products/services in QuickBooks Online - Each item is recognized in a specific account in the “chart of accounts.”
- When running a detailed report, choose the collapse feature to minimize details
- Consider enhancing annual reports using the “Company Snapshot” to generate visuals like graphs and charts, making the numbers more digestible for the reader.
Remember, TMI is actually not helpful in reporting your nonprofit’s financial story. Providing a quick snapshot keeps your advisors and donors focused on the most important performance results of your nonprofit. I am Kathy Dise, and you can reach me at firstname.lastname@example.org.