Our View from

Canal Street

Our View from

Canal Street

Not-for-profits in MA. We’re sorry.

by | Apr 30, 2024 | Blog, Not For Profit

It’s not easy being a not-for-profit. It’s certainly not easy being one in the Commonwealth of Massachusetts.

Most not-for-profits are stretched thin, working hard to deliver on their mission with limited financial and human resources. This operational hazard is compounded here in Massachusetts as the gross revenue thresholds are considerably low to require a review of financial statements (gross revenue between $200k and $500k) and gross revenue exceeding $500k requires an audit.

In accounting speak, assurance services include audits and reviews (as well as compilations). Put simply, a CPA firm provides an opinion on the statements in review and audit engagements that is relied upon by users of the statements (the public in the case of not-for-profits, or their bank, etc.) An audit provides the highest level of assurance followed by a review with compilation providing the least level of assurance. To learn more, click here.

A review or an audit can be a drain on the human resources, and even more so, on its financial resources. What’s more, due to independence rules, the same accounting firm that may assist an organization with their books, budgets, or other management tasks, cannot perform the review or audit, which requires many not-for-profits in Massachusetts to work with not just one accounting firm, but two.

LCW CPAs, we feel for not-for-profits; of which there are thousands in Massachusetts who work hard to do so much good, while being burdened.

Delivering on your mission

To abide by the regulations, we recommend the following to our not-for-profit clients:

Maximize the ROI on specific roles: don’t hire a full-time CFO, controller, or accountant. Retain a part-time CFO or comparable level of expertise and experience on a fractional basis. Leverage available outsourced bookkeeping services and hire a generalist for the office to manage the day-to-day responsibilities.

For the majority of not-for-profit organizations, it is unlikely the work demands a full-time, seasoned leader. With a fractional relationship, you are wisely eliminating the significant overhead costs of office space, employee benefits, and a full-time salary. It is likely that fractional accounting services can meet your needs and provide the requisite insight and analysis that your organization will benefit from.

While you need to build and maintain two relationships – for the review or audit services and the accounting and tax services — fractional resources are a wise decision to put your limited financial resources to work for the organization.

At LCW CPAs, we are committed to protecting our clients’ hard-earned money and that certainly includes our not-for-profit clients who work even harder in the Commonwealth to support their mission. We are happy to assist either as a not-for-profit’s Outsourced CFO, or as their independent CPA firm performing their review or audit.

Learn more about our managed accounting services including Outsourced CFO services and bookkeeping.

Learn more about our services for not-for-profits. If you have outgrown your accountant and are assessing other options, reach out to us.

Contact us.