nonprofit

Article Danielle Camara

Nonprofit organizations today face increasing demands: limited resources, complex funding structures, and heightened scrutiny from funders, boards, and regulators. Many organizations, however, still rely on accounting systems that were never designed to meet the unique needs of mission-driven work.

As nonprofits grow in size and complexity, accounting software must evolve from a basic record-keeping tool into a strategic platform for transparency, compliance, and informed decision-making. Understanding what makes a system effective—and why traditional tools fall short—is essential for long-term sustainability.

The challenge with traditional nonprofit accounting tools

Many nonprofits start with systems built for small businesses or general use. While these tools may suffice early on, they often struggle to keep pace as organizations scale. Common pain points include:

  • Limited reporting capabilities, forcing finance teams to rely on spreadsheets
  • Rigid chart of accounts structures that become cumbersome over time
  • Manual workarounds for grant tracking and fund restrictions
  • Slow, resource-heavy month-end closes
  • Difficulty producing board-ready or funder-specific reports

These limitations can pull finance teams away from strategic oversight and into administrative maintenance.

What modern nonprofit accounting systems should offer 

To overcome these challenges, nonprofits need systems designed for their complexity. Here are key capabilities to look for:

1. Dimensional Accounting

Instead of overloading a chart of accounts with codes, dimensional accounting allows organizations to track funds, grants, programs, locations, and projects independently—and simultaneously. This enables:

  • Real-time visibility into financial performance by program or initiative
  • Accurate tracking of restricted and unrestricted funds
  • Easier response to funder and board reporting requests
  • Elimination of parallel spreadsheets

2. Grant and Fund Management

Grant-funded organizations often struggle with compliance and reporting. A strong system should support:

  • Grant budgets and spending controls
  • Time-based or milestone reporting
  • Visibility into remaining balances
  • Built-in compliance with fund restrictions

3. Financial Clarity for Leadership

Boards and executives need timely, actionable insights—not static reports weeks after month-end. Look for:

  • Dashboards and customizable reporting
  • Faster, cleaner closes
  • Consistent reporting across departments
  • Audit-ready transparency

4. Scalability and Integration

As nonprofits grow, merge, or diversify funding sources, their systems must scale. Cloud-based platforms (such as Sage Intacct) often provide:

  • Multi-entity support
  • Integration with donor, payroll, and reporting tools
  • Capacity for increased transaction volume

Turning finance into a strategic advantage

The difference between a basic accounting tool and a true nonprofit financial platform is impact. When finance teams spend less time on manual processes and more time analyzing data, organizations gain:

  • Stronger stewardship of donor and grant funds
  • Improved compliance and transparency
  • More confident leadership decisions
  • Greater organizational resilience

What’s next: preparing for the shift 

Moving to a more robust accounting platform raises important questions about readiness, implementation, and long-term value. Nonprofits should consider:

  • When to move beyond entry-level systems
  • How to design reporting that aligns with mission and strategy
  • What best-in-class financial management looks like in practice

Educational webinars, peer discussions, and case studies can help leaders make informed decisions about the future of their financial systems.

Contact your Dean Dorton advisor to learn more about strengthening your nonprofit’s financial systems and long-term reporting strategy.

Article Autumn Hines

As nonprofits close out the year, leaders face rising operational costs, evolving donor expectations, and increased compliance requirements. Year-end is an ideal time to evaluate financial health, strengthen internal processes, and position your organization for success in 2026.

Below are the key areas nonprofits should focus on as they wrap up the year.

1. Reassess Budget and Cash Flow

Economic fluctuations continue to impact donor behavior and grant cycles. Now is the time to:

  • Reforecast revenue and expenses
  • Stress-test cash flow for early 2026
  • Review reserve levels and liquidity needs

A proactive financial review helps prevent early-year shortfalls.

2. Stay Ahead of Compliance Requirements

Regulatory expectations for nonprofits are increasing. Be sure your organization is prepared for:

  • Federal funding audit requirements and Uniform Guidance updates
  • State charitable registration and reporting
  • IRS Form 990 preparation
  • Donor-restricted fund compliance

Early planning helps avoid surprises during audit season.

3. Strengthen Internal Controls

Hybrid operations have changed how financial controls work. Year-end is a good time to update:

  • Documented processes and approvals
  • User access and system permissions
  • Fraud risk assessments
  • Data backup and recovery procedures

Improved controls reduce risk and support smooth operations.

4. Review Restricted and Unrestricted Funding

A healthy funding mix is essential for sustainability. Before year-end:

  • Confirm all allowable costs have been assigned to grants
  • Identify restrictions that can be released
  • Review upcoming reporting deadlines

This review can uncover financial flexibility heading into 2026.

5. Prioritize Donor Stewardship

Donors expect transparency and clear impact. Strengthen year-end engagement by:

  • Updating your annual impact messaging
  • Sending timely acknowledgements
  • Reinforcing how funds support mission outcomes

Effective stewardship now builds stronger donor relationships in the year ahead.

6. Evaluate Technology and Efficiency

Consider whether your systems support timely, accurate decision-making. Many nonprofits are investing in:

  • Cloud-based accounting platforms
  • Integrated CRMs
  • Automated workflows
  • Real-time dashboards

Technology improvements can streamline operations and enhance visibility.

7. Engage Your Board with Clear Year-End Insights

Provide your board with a year-end snapshot that includes:

  • Financial performance highlights
  • Emerging risks
  • Strategic priorities for 2026

A well-informed board is better equipped to guide organizational direction.

Year-end offers nonprofits a chance to strengthen financial resilience and clarify the path forward. With intentional planning and informed decision-making, organizations can enter 2026 ready to advance their mission with confidence.

The nonprofit team at Dean Dorton is here to support your year-end review, audit needs, and strategic planning. Reach out to learn how we can help your organization thrive.

Article Autumn Hines

Nonprofit organizations face unique vulnerabilities to fraud. While focused on their charitable missions, many nonprofits operate with limited resources, staff, and oversight, creating an environment where fraud can flourish undetected. According to the Association of Certified Fraud Examiners’ (ACFE) 2024 report, nonprofits incurred a median loss of $76,000 due to fraud and were more frequently fined by authorities for noncompliance related to fraud than other types of organizations. 

The Vulnerability of Trust

From employees who embezzle funds to criminals who exploit disasters for profit, charitable organizations are vulnerable to many types of fraud schemes. Perpetrators use various methods to deceive donors and charities, threatening the ability of these organizations to carry out their philanthropic missions. 

Nonprofits often operate on a foundation of trust, but this very trust can become a liability. The recent case of Feeding Our Future highlights how vulnerable charitable organizations can be. In this massive scheme that defrauded the U.S. government’s child nutrition program of $250 million, the organization’s founder and others diverted funds meant to feed children during the pandemic to purchase luxury items, real estate, and international travel. 

Common Fraud Risks in Nonprofits

Nonprofit organizations face both internal and external fraud treats:

Internal Threats

Charities face risk from different directions, with threats from both internal (i.e., insiders) and external parties. Common insider fraud schemes include: 

  1. Misappropriation of funds: According to BDO’s U.K. Charity Fraud Report 2024, 50% of charity fraud cases detected involved staff, volunteers, members or trustees, and 40% of fraud was due to misappropriation of cash or other assets. 
  2. False invoicing: Employees may submit false invoices and purchase orders, inflate expense claims, or skim cash from charity accounts. Some might divert mail or award contracts to suppliers who inflate charges in exchange for kickbacks. 
  3. Fundraising fraud: The proceeds from fundraising activities are particularly easy targets for internal perpetrators. An employee might divert funds from donors, misuse restricted donations, or create fictitious expenses to conduct vendor and supplier schemes. 

External Threats

External charity fraud is carried out by individuals or organizations outside the charity and may involve cyberattacks or soliciting funds through fake charities. In 2024, the amount of external fraud in U.K. charities increased from 23% in 2023 to 29%. 

Common external threats include: 

  1. Payment diversion fraud: The most common form of external fraud is authorized push payment fraud, also known as payment diversion fraud, where fraudsters impersonate suppliers, creating or altering seemingly legitimate invoices to redirect funds to their bank accounts. 
  2. Cyberfraud: Fraudsters employ deceptive practices to unlawfully obtain funds or sensitive information via computer attacks. They might impersonate a charity to solicit donations or manipulate financial records to misappropriate funds. 
  3. Disaster-related schemes: Schemes to defraud donors include disaster relief fraud, where fraudsters create fake organizations to divert donations intended for victims of disasters. Other schemes involve veteran and public servant fraud, and animal welfare fraud. 

Why Nonprofits are Easy Targets

Several factors make nonprofits particularly vulnerable to fraud: 

Opportunity is perhaps the most significant factor enabling schemes against charities. Charities might operate on limited budgets and staff, but they make up for those deficiencies with an abundance of trust in employees, volunteers, and the public. 

This trust leads to weaknesses in internal control systems, providing perpetrators an opening to commit fraud and evade detection. In fact, the Charity Fraud Report 2024 reveals that the most significant barrier to preventing fraud in U.K. charities is an overreliance on trust, which 57% of charities identified as a primary concern. 

Other vulnerabilities include: 

  • Limited oversight and insufficient separation of duties 
  • Cash-based fundraising activities that increase exposure to fraud 
  • A culture of trust that can lead to complacency 
  • Operational risks at every stage, from fundraising to fund distribution 

International operations that face challenges like local corruption 

The Value of Expert Evaluation

Bringing in external expertise to evaluate your nonprofit’s internal controls can significantly reduce fraud risk. Professional internal auditors bring several advantages: 

  1. Objectivity: External experts provide an unbiased perspective free from organizational politics or biases. 
  2. Specialized knowledge: Professional auditors like Certified Fraud Examiners (CFEs) and Certified Internal Auditors (CIAs) have specific training in fraud detection and prevention. 
  3. Best practices: Experts bring knowledge of current best practices and standards from across the nonprofit sector. 
  4. Comprehensive approach: Effectively combating insider fraud requires a comprehensive approach with robust anti-fraud controls, investment in technology and cybersecurity, anti-fraud education for staff, continuous fraud risk assessments, and current information about evolving fraud tactics and prevention techniques. 

Key Elements of Fraud Prevention

When working with an external expert to strengthen your nonprofit’s fraud defenses, focus on these critical areas: 

1. Strong Internal Controls 

The most crucial control for organizations is a strong culture that rejects fraud and encourages employees to report suspicious behavior. Charity organizers can teach that stolen funds harm valuable causes, and leadership must set an example by adhering to integrity. 

Building a strong ethical culture within charitable organizations involves several key strategies: leadership modeling ethical behavior, clear policies and a comprehensive code of conduct, ongoing training, open communication, regular audits, and aligning performance metrics with ethical behavior. 

2. Continuous Risk Assessment 

Charities must continuously revisit their fraud risk assessments, understanding that different types of fundraisers — from in-house experts to third-party volunteers — require ongoing oversight. Establishing procedures for identifying and responding to fraud and formulating guidelines for whistleblowers are essential elements for fraud risk management. 

3. Technology and Cybersecurity Investment 

Charities should prioritize investment in technology and cybersecurity to combat fraud. Effective measures include integrating phishing email identifiers, updating policies to align with evolving digital landscapes, implementing comprehensive cyber-response plans, and conducting regular cybersecurity risk assessments. 

4. Anti-fraud Training and Awareness 

According to the 2024 Report to the Nations, nonprofit organizations have the lowest implementation rate of fraud awareness training compared to other organizations in the survey. Many charity organizers, in their zeal for their missions, can develop blind spots for fraud, not considering the possibility that they could be defrauded and thus develop relaxed attitudes toward safeguards and training. 

The work of nonprofit organizations is too important to be derailed by fraud. By bringing in expert evaluation of internal controls, nonprofits can better protect their resources and ensure that funds reach their intended beneficiaries. As noted in Fraud Magazine: “Fraudsters will take advantage of tragedy, lax controls, scarce resources, and generosity. Contributing to worthy causes or working for organizations established to help others and fraud awareness aren’t mutually exclusive — people shouldn’t put on blinders to fraudsters and their malicious intents. Charitable organizations structured with adequate tools, protections, and well-trained staff and volunteers are better able to guard against fraudulent attacks from both outside and within so that those they intend to help can receive the funds they need.” 

About the Author: Jodell Ford Renn is an Associate Director at Dean Dorton, a regional accounting and business advisory firm providing services in audit, tax, technology consulting, and business services. With over 30 years of experience, including over 25 years in management and internal auditing, Jodell is a Certified Public Accountant (CPA), Certified Internal Auditor (CIA), Certified Fraud Examiner (CFE), and holds the CRMA designation. 

Article Autumn Hines

On May 12, 2025, the House Ways and Means Committee released its long-awaited draft of proposed tax legislation. If enacted, this could have the most significant impact on tax-exempt organizations since the Tax Cuts and Jobs Act. Below is a summary of highlights in the proposed legislation.

Increase in Rate of Tax on Net Investment Income of Certain Private Foundations

The draft bill proposes an increased excise tax on private foundations’ net investment income, which could impact grantmaking and the execution of exempt purpose activities.

  • 1.39% in the case of a private foundation with assets of less than $50,000,000
  • 2.78% in the case of a private foundation with assets of at least $50,000,000 and less than $250,000,000
  • 5% in the case of a private foundation with assets of at least $250,000,000 and less than $5,000,000,000, and
  • 10% in the case of a private foundation with assets of at least $5,000,000,000

Modification of Excise Tax on Investment Income of Certain Private Colleges and Universities

A tax would be imposed on the net investment income of an “applicable educational institution”:

  • 1.4% in the case of an institution with a student endowment in excess of $500,000 and less than $750,000
  • 7% in the case of an institution with a student endowment in excess of $750,000 and less than $1,250,000
  • 14% in the case of an institution with a student endowment in excess of $1,250,000 and less than $2,000,000, and
  • 21% in the case of an institution with a student endowment in excess of $2,000,000

See our article on how this proposed tax bill could impact colleges and universities for a more in-depth explanation of terms.

Unrelated Business Income Increased by the Amount of Certain Fringe Benefit Expenses for Which Deduction is Disallowed

The proposed bill would include qualified transportation fringe benefits and parking facilities disallowed under IRC section 274 in an organization’s unrelated business income for the year. This provision was initially included in the Tax Cuts and Jobs Act and was subsequently repealed.

Name and Logo Royalties Treated as Unrelated Business Taxable Income

The proposed bill would include the sale or licensing of an organization’s name or logo as an unrelated trade or business regularly carried on by the organization.

1% Floor on Deduction of Charitable Contributions Made by Corporations

The proposed bill would include a 1% floor on corporate charitable deductions and allow corporations to carry the unused tax benefit forward 5 years, which could help increase charitable giving.

Reinstatement of Partial Deduction for Charitable Contributions of Individuals Who Do Not Elect to Itemize

While the standard deduction was increased, which could impact individuals’ ability to deduct charitable contributions, the proposed bill reinstates the deduction for those who do not itemize. The deduction would be reduced from $600 to $300 ($150 for married filing separate and single filers).

Termination of Tax-Exempt Status of Terrorist-Supporting Organizations

This provision would allow the Treasury to revoke the exempt status of organizations deemed to provide “material support or resources” that support terrorist activities.

While the above provisions are just some highlights, there is other proposed legislation that may impact tax-exempt organizations, such as an extension of excise tax on executive compensation for employees earning over $1 million, changes to the excess business holdings rule for private foundations, updates to the exclusion for publicly available research income, termination of certain energy credits, and other individual and business income tax provisions.

Although the bill is in draft format, we will watch closely as it moves through Congress. If you have any questions about how the proposed legislation may impact your organization, please contact your trusted Dean Dorton advisor.

Article Autumn Hines

The recently released draft of the House Ways and Means Committee’s proposed tax bill included a significant impact on colleges and universities. The 2017 Tax Cuts and Jobs Act imposed a 1.4% excise tax on the investment income of an “applicable educational institution.” The proposed bill expands the excise tax, as detailed below.

  • 1.4% in the case of an institution with a student endowment in excess of $500,000 and less than $750,000
  • 7% in the case of an institution with a student endowment in excess of $750,000 and less than $1,250,000
  • 14% in the case of an institution with a student endowment in excess of $1,250,000 and less than $2,000,000, and
  • 21% in the case of an institution with a student endowment in excess of $2,000,000

Applicable Educational Institution

An “applicable educational institution” is described as an eligible educational institution (as defined in IRC section 25A(f)(2)):

  • Which had at least 500 tuition-paying students during the preceding tax year,
  • More than 50% of the tuition-paying students of which are located in the U.S.,
  • Which is not a state college or university or a qualified religious institution, and
  • The “student adjusted endowment” of which is at least $500,000.

Student Adjusted Endowment

“Student adjusted endowment” means the aggregate fair market value of the institution’s assets (determined as of the end of the preceding tax year, other than those assets used directly in carrying out the institution’s exempt purpose) divided by the number of eligible students of the institution. An eligible student meets the requirements under Section 484(a)(5) of the Higher Education Act of 1965.

The institution’s net investment income is determined under rules similar to the rules of IRC section 4940(c).

The proposed bill also includes the aggregation of related organizations. A related organization is defined as any organization that:

  • Controls, or is controlled by, such institution,
  • Is controlled by one or more persons who also control such institution, or
  • A supported organization (as defined in IRC section 509(f)(3)) or an organization described under IRC section 509(a)(3).

Although the bill is in draft format, we will watch closely as it moves through Congress. If you have any questions about how the proposed legislation may impact your organization, please contact your trusted Dean Dorton advisor.

Article Autumn Hines

The financial stability of any K-12 school directly impacts its educational mission. Now, more than ever, academic institutions need tools that provide visibility and help plan for the future. Effective accounting systems should balance core financial functions with specialized reporting needs unique to educational institutions. Selecting appropriate accounting software is a crucial decision that affects the administration, teaching staff, and students.  

So, what are the things K-12 schools should be looking for in an accounting system? 

Cloud-Based Accessibility

You need financial tools that work wherever you are. Cloud-based solutions give you secure access from your office, home, or even while traveling to that education conference. This means your administrative team, department heads, and board members can all see the financial information they need when they need it. 

Multi-Dimensional Reporting

Let’s face it – school finances can be complicated. K-12 schools have complex financial structures that require sophisticated reporting tools. Effective accounting software should offer multi-dimensional reporting across: 

  • Departments and programs 
  • Campus locations 
  • Restricted and unrestricted funds 
  • Grants and endowments 
  • Capital projects 

This functionality is essential to allow schools to track how resources are allocated and maintain compliance with donor restrictions and reporting requirements. 

Real-Time Visibility

You can’t manage what you can’t see. Key stakeholders need accurate, up-to-date information to make informed decisions and ensure financial sustainability. Your accounting software should give you: 

  • Dashboards that you can customize for different roles 
  • Educational-specific performance indicators 
  • Quick comparisons of budget vs. actual spending 
  • Financial metrics based on enrollment 
  • Analysis of per-student costs 

With these tools, you’ll spot trends early, address problems quickly, and make decisions based on live data. 

Process Automation

If you’re part of a small admin team, you probably wish you didn’t have to do the same repetitive tasks over and over. Accounts payable and receivable, bank reconciliations, and expense management are all vital, but they take time. Automating these routine tasks reduces the likelihood of errors and frees time to focus on mission-critical activities. 

Integration Capabilities

Your finances are interconnected, so your accounting software should be, too. You need it to integrate with things like: 

  • Fundraising tools 
  • Tuition management software 
  • Payroll 

When these systems communicate, you eliminate duplicate data entry, improve accuracy, and get a complete picture of your operations and finances. 

What to Consider When Choosing

As you evaluate different options, look for software that addresses these key requirements. A solution like Sage Intacct checks all these boxes – providing education-specific functionality, scalability, appropriate access controls, strong security, and measurable ROI. The right accounting platform will become a foundation that supports your financial operations and educational mission, giving you the insights you need to help your school thrive.