G'day Justin Hogg here from Right Source we're talking not-for-profits
and bookkeeping for not-for-profits how that's different from
normal bookkeeping, I know, this is an exciting one, I'm really looking forward to it
so let's get into it, before I get into
what's different let's just talk about why I want to talk
about this and that's when you're a not-for-profit and you're
looking for a bookkeeper whether it be in-house or or an
outsourced provider either way, you want to make sure that they've got the skills
that are required to meet the needs of your organisation so
this is why I suppose this video is important to understand those
peculiar things for not-for-profit that may not necessarily be something a
normal bookkeeper is used to dealing with so
let's dive in. First thing that a bookeeper will need to deal with in a
not-for-profit that is unique to not-for-profit space is how
you deal with grants, now, grants are a little different in a not-for-profit
space where compared to some commercial stuff
in terms of you need to be able to acquit the grants which is again similar to
your commercial grants but these grants can quite often be going for a longer
period of time so you need to be able to record that information in terms
of the costs correctly and be able to report back on
it to understand where things are at with the grant because a not-for-profit
is going to need to manage where things are at and know if
they're under or over spending on that grant
the other thing then from a grant perspective is also the income side of
things, so because these are often large grants
and longer periods of time is how you recognise the income side of
the grants can be a little more tricky in not-for-
profit because it can often depend on the grant structure,
the timing, the agreements, what's happened previously
and all those aspects feed into how you actually recognise your income
or revenue that's coming off the grant in the
accounts, the next thing that your bookkeeper needs to have an appreciation
of and potentially knowledge of is salary packaging and FBT because
not-for-profits have an FBT concession which means that effectively they're
able to pay their employees in kind or in a different way
which would normally be subject to FBT and other commercial
businesses but because of this concession they can do things
like pay for employees rent which would if a normal
organisation was to do that would attract FBT
if it's done in a certain way for not-for-profits which is completely
legitimate and there are legislation in place to allow this to
happen, the not-for-profit doesn't have to pay
FBT now these things were put in place to assist not-for-profits
in attracting quality employees without having to necessarily pay the full
commercial rate, having an understanding of how that FBT
concession works, how it interplays with salary packaging
and then making sure that the processes are put in place to ensure that it's
taken full advantage of for the employee and
the employer's point of view but also that it's not done incorrectly
because with anything done with salary if you do it incorrectly can have an
impact on both the employee and the employer so an appreciation and
an understanding of FBT and salary packaging is something that a
bookkeeper needs when they're dealing in the not-for-profit space.
The next thing they need to understand is they need to have a good
understanding of GST now most, I would say all bookkeepers have a
good understanding of GST but GST as it can apply to
not-for-profits because again with not-for-profits there's
a number of concessions in terms of GST that can be taken advantage of in terms
of how your not-for-profit runs so how you
manage fundraising events, how also you deal
with GST that relates to grants, donations or sponsorship and how
that is differently accounted for and reported in your
accounts, also if you've got operations that
aren't running at a commercially viable rate there are
some concessions there for GST as well depending on the percentages and how you
put that all together so having an appreciation of those things
in terms of the GST space and how they affect the operations
of the organisation and how things need to be accounted for in the books
can be very important and can help again the not-for-profit
operate efficiently and make the most of the funds they have available to them.
The last thing a bookkeeper needs to be able to
have an appreciation of when dealing with a not-for-profit
is the number of different stakeholders that require reporting
from the not-for-profit and how that reporting can be different
so for example a not-for-profit often has a board
and they will want reporting in a certain way to them at a certain
frequency so whether they have a monthly report and they want a certain format
and see certain things they'll want that distributed to them,
similarly a not-for-profit will also have to do financial reporting,
that may not be done in the same way as the board reporting there are different
interpretations and different ways you need to compile it,
being able to create your base data that the bookkeeper is putting together
that allows you to report one way for the board and potentially another way
for your financial statements is important.
They'll also potentially need to be able to report back to
large donors or sponsors in terms of where the funds have gone how they've
been utilized so being able to maintain your books in a way that allows
these things to be reported on differently but still maintain that
transparency is definitely a skill set that is unique
to the not-for-profit space and something you should consider
when you're looking for your bookkeeper whether they've got those skills.
So that's a little bit of an insight in terms of some specific areas that a
bookkeeper needs to be across when you're looking to hire
someone to be your bookkeeper in the not-for-profit space and also if
you're a bookkeeper who's looking to get into the not-for-profit space
they are things that you should look to you know get yourself up to speed of
because that can help you provide a better service.
If you enjoyed this video definitely feel free to subscribe or check out the
other videos we've got on YouTube, there's a number there for the
not-for-profit space and that's an area that we work quite closely in,
if you have any questions about bookkeeping or the not-for-profit
space generally definitely feel free to chuck them in the messages down below
or look me up on LinkedIn shoot me a message I'm always happy to help anyone
who's working the not-for-profit space because it's all about achieving your
purpose. Again, thanks for watching, it's been
Justin Hogg from Right Source.