Nonprofits Need Special Acct Attention

From churches to youth organizations to the local chambers of commerce, nonprofit organizations make our communities more livable places. Unlike for-profit businesses that exist to generate profits for their owners, nonprofit organizations exist to pursue missions that address the needs of society. Nonprofit organizations serve in a variety of sectors, such as religious, education, health, social services, commerce, amateur sports clubs, and the arts.

Nonprofits do not have commercial owners and must rely on funds from contributions, membership dues, program revenues, fundraising events, public and private grants, and investment income.

Our intent is to merely introduce some of the basic concepts that are unique to nonprofit accounting and reporting that are required by the Financial Accounting Standards Board (FASB).

We will not discuss the accounting that is similar to that used by for-profit businesses. If you are not familiar with accounting for businesses or you wish to refresh your understanding, you will find free explanations, quizzes, Q&A, and more at Accounting Topics.

Accountants often refer to businesses as for-profit entities and to nonprofit organizations as not-for-profit entities, or NFPs. We will be using the more common term nonprofit instead of not-for-profit.

Again, this is a very brief introduction to nonprofit accounting. There are many different types of nonprofits, including governmental nonprofits, which we will not address.