Nonprofit Accounting Resources: BDO and CBIZ MHM

BDO

BDO Alliance USA is an association of more than 800 independent accounting and professional service firms. BDO’s website provides access to its collected nonprofit and education industry resources at https://www.bdo.com/industries/nonprofit-education. Materials cover both accounting and organizational management and leadership topics, and include guides, articles and blog posts, and an annual survey of nonprofit executives.

BDO offers several guides for nonprofit organizations, with three focusing on accounting-related matters. “Effective Audit Committee Guide” is a 64-page document that provides specific rules, guidelines, and recommendations for nonprofit audit committees. It covers why audit committees are important, who should be on an audit committee, what is the mission of the audit committee, and many specific topics such as what services the auditors are not allowed to provide. It is essentially a training manual and is a must-see resource for CPAs to provide to organizations that they advise nonprofits (https://tinyurl.com/43vxksfw). “FASB Financial Reporting Guidance” is a helpful resource that presents a webpage with links to a collection of external articles, videos, and podcasts; BDO blog posts; and articles (https://tinyurl.com/msxarswe).

“Indirect Cost Rate Tools” (https://tinyurl.com/32z8mbms) includes a downloadable 12-page PDF guidebook and an Excel template. The guide presents a framework for determining an overall indirect cost rate for projects associated with grants. Basic definitions of direct costs, indirect costs, and allocated shared costs are provided. Appendix 1 of the guide is a table of common costs for nonprofit organizations, with a designation for each if it is generally considered to be a direct or an indirect cost; Appendix 2 covers examples of personnel and shared cost allocations. The Excel spreadsheet includes columns for direct costs, indirect costs, shared costs allocations, and assignment of unallowable costs.

BDO’s Insights offers access to firm produced articles and blog posts on a variety of topics targeted to the nonprofit audience, including technology issues (https://tinyurl.com/35jz8pfn). As an example, “4 Considerations for Nonprofits Planning to Embrace AI” (April 17, 2024) addresses the organizational benefits or volunteer coordination, donor management, program development, and personalized communication (https://tinyurl.com/4y5hyzuj). Nonprofits should begin with a comprehensive strategy when approaching the adoption of artificial intelligence tools. The four recommendations given are: build familiarity with technology tools, proactively address concerns and risks, plan out the organization’s AI implementation goals, and begin with easy-to-manage tools that can lead to a successful implementation.

Several articles and blog posts address the Office of Management and Budget (OMB) Uniform Guidance (2 CFR 200.303) requirements. “Back to Basics: the Foundational Concepts of Grants Management and Compliance” (February 29, 2024) covers five essential OMB compliance procedures (https://tinyurl.com/msvy5k7p). These include: project-based accounting, cost treatment and allocation, personnel costs, purchasing and procurement, and subrecipient monitoring. The article provides an excellent take-away with recommendations of specific best practices for each of the five issues, such as evaluating an organization’s accounting and internal control systems.

BDO produces an annual survey of 250 nonprofit executives that addresses the top issues facing nonprofit organizations. The “2023 Nonprofit Standards Benchmarking Survey” is presented in downloadable sections on the survey hub webpage: Industry Overview, Health and Human Services Orgs, Higher Education, Public Charities, INGOs, Grantmakers, and Over $75 Million (https://tinyurl.com/34y2ebw5). The section summaries run around 20 pages, and include topics such as an executive summary, an overview of the segment, financial performance, technology and cybersecurity, ESG initiatives, human resources, what’s ahead for organizations, and participant demographic statistics. The overview section indicates that participants’ three top priorities for the next year are digital transformation, reducing costs, and seeking new sources of revenue and funding. Almost all reporting organizations have expanded or shifted their mission, and approximately half expect to provide more information on their ESG strategies.

CBIZ MHM

CBIZ, Inc. (Century Business Services) is a professional firm that provides business consulting, tax, and financial services. It acquired the tax and consulting practice of MHM (Mayer Hoffman McCann P.C.) in 1998. MHM retained its audit, review, and attest services, and partners with CBIZ to meet client accounting and consulting needs (https://tinyurl.com/avpbyamj). One of the firm’s industry specializations is not-for-profit and education, and it provides several helpful resources on its website (https://www.cbiz.com/accounting-tax/industries/not-for-profit-education).

The firm conducts an annual Not-for-Profit Pulse Survey to assess current trends and patterns in the industry (https://www.cbiz.com/2024-not-for-profit-pulse-survey-report). The 2024 Survey report runs 14 pages and examines the challenges faced by nonprofits, such as fundraising, revenue optimization and diversification, facilities strategies, and management of expenses, debt, and risk. Many are turning to artificial intelligence and other technologies to manage their operational efficiencies, as well as increase their capabilities. Although prior years’ surveys reported anticipated changes in the organizations’ program offerings, this activity appears to have slowed, with 60% of respondents reporting consolidation and stabilization.

CBIZ is offering a four-part “Future Ready Not-For-Profit Series” of two-hour webinars addressing technology issues for nonprofit organizations, and recordings and slides are available for the two presentations that have already taken place. “Not-For-Profit Cybersecurity Risk Seminar: Strengthening Digital Defenses” from September 2023 (https://tinyurl.com/5695c82k) addresses cybersecurity to meet grant requirements, as well as to combat specific threats. It also offers best practices to meet privacy rules and reduce cyber insurance costs.

“Empowering Not-For-Profit Leaders to Leverage AI” from February 2024 (https://tinyurl.com/3esn29ww) explores the use of artificial intelligence, such as ChatGPT for nonprofit activities. The webinar addresses the use of AI to automate routine tasks, to enhance prospect research and fundraising strategies, and to improve strategic decision-making through data analytics, among other benefits. Importantly, the presenters also discuss ethical considerations and aligning the use of AI with organizational values.

Following up on the topic of ethical dilemmas, “Five Policies Your Not-for-Profit May Want to Consider” (https://tinyurl.com/3xt6xp8s) is a short article that discusses the importance of well-designed corporate governance policies for nonprofits. The authors specifically recommend policies for document retention, whistleblower protection, conflicts of interest, gift acceptance, and employee compensation. For nonprofits, gift acceptance includes non-cash and in-kind contributions, and policies must also provide for alignment with the organization’s mission and vision, as well as be practical for its operations.