Not For Profit Sector

How different can NGO Finance & Accounting be to for profits? Ironically, rules of debit and credit remain the same. However, perspectives on objectives, measurement and compliance parameters are entirely different compounded with conventional NGO practices of hiring low wage accountants with their own constraints of competencies and the consequent challenges of utilizing the Finance & Accounts function to direct and grow the noble causes of the NGO.

The fundamental difference being accounting for trusteeship is the ability to measure and disclose how each rupee or the collective funds of donors charity has been applied to obtain the best social or community impact. This onerous fiduciary trusteeship role can best be performed by:

  • Transparency through disclosure of key financial statements on their websites as public documents
  • Adoption of Fund Based Accounting concepts in their Accounting databases and transaction accounting to demonstrate that the exact wishes of donor funds form the basis of it’s application.
  • Disclosure of NGO operating performance classified under the three main aspects viz Program Costs, Fund Raising costs and Administrative Costs.
  • Disclosure of the periodic quantitative and qualitative social, community or mission parameters to demonstrate achievement of purposes and progress.
  • Disclosures of important compliance conditionalities under Sec 80G, Sec 35 AC of the Income Tax Act, Sec 25 and Licensing conditions under the Companies Act, FCRA utilization under The Foreign Contributions and Regulations Act or for that matter Grant utilizations and compliance to conditions of the Grantor.

At Resolve, on engagement we commence with an as-is analysis from MIS formats, compliance due diligence, accounting structure review, processes and practices being followed with key measurement parameters and offer alternate solutions. This could vary from:

  • Consultancy services on Accounting study with or without implementation.
  • Management Audit.
  • Completely outsourced operating services or a mixed model of partly in-house team guided by our team.