Accounting focuses on responsible measurement, oversight, and management of a wide variety of financial information. This intrinsic connection to financial matters means the profession is often associated with for-profit businesses, as well as the work of Certified Public Accountants in preparing tax returns for individuals. However, accounting is just as vital in government departments and nonprofits. These organizations have limited financial resources that need careful management for long-term stability and success in their underlying missions. Students interested in earning an accounting degree online should make sure to understand the potential career options in nonprofit accounting, and the major issues and rewards that come along with not-for-profit accounting.
How is accounting for nonprofits similar to the for-profit sector?
In many important ways, government and nonprofit accounting roles and responsibilities are very similar to those at for-profit businesses. Many of accountants’ basic tasks remain the same when employed by a not-for-profit organization. They will still assess and review various matters of financial concern, develop and compile reporting on the current fiscal position of a nonprofit and potential future needs, assemble information to share with stakeholders, and take on many other familiar types of accounting work. Filing tax returns and maintaining necessary records are still core needs that accountants in the organization will have to address.
The major differences between for-profit and nonprofit accounting work emerge in terms of specific standards used to manage various financial concerns, some nonprofit accounting positions and their salaries, and the advantages of working for nonprofits that some accountants find especially attractive.
How nonprofit accounting and for-profit accounting stand apart
While nonprofit accounting basics are very similar to those seen in the for-profit business world, there are some important issues that should not be overlooked by students with a potential interest in this type of accounting. One recent development that serves as an example of the differences between these two worlds of accounting is the Federal Accounting Standards Board’s recent release of a new revenue recognition model, according to the Association of International Certified Professional Accountants. While the change affects all types of organizations, it has some important consequences in the not-for-profit world. Because many nonprofits have economic interactions with donors and supporters that include elements of both an exchange interaction and a contribution, such as paying for tickets to a fundraiser event, nonprofit accountants will have to make some adjustments to their approach to recording revenue. Similarly, a change to FASB financial presentation standards means nonprofits have to provide more information about the oversight of any liquid resources. These changes tie into universal accounting principles, but reflect how work in the nonprofit sector can bring unique needs and considerations.
Beyond variations in the way accountants must approach their work, due to significant differences between businesses and nonprofit organizations, are career path and salary considerations. In very broad terms, the public sector often doesn’t offer the same level of financial compensation as the private sector. These considerations can vary greatly from one situation to the next, and may be substantial or so minor as to not even be a consideration when accountants consider a series of job offers. The Houston Chronicle says, for example, that senior accountants at nonprofits earn roughly between $50,000 and $60,000 each year. That’s noticeably less than the U.S. Bureau of Labor Statistics median pay recorded for accountants and auditors as a whole, at $70,500. Some other potential issues include higher stakes due to the nature of the nonprofit’s mission, the potential for more modest office spaces, tools, and perks, and fewer resources available to support key work. While not all nonprofits face these concerns, and a variety of companies in the for-profit world also encounter them, they are still important considerations.
This discrepancy in pay can be balanced by a number of other factors that some current accountants and prospective students may find especially desirable as they consider careers in nonprofit organizations. Going to work each day for an organization with a primary focus of supporting the public good is a powerful motivator for some professionals, including accountants. Even though an accountant at a nonprofit likely won’t focus on developing outreach efforts themselves, they know that their work directly supports those efforts.
Other benefits include working with a group of like-minded people who also have a commitment to the nonprofit’s mission and work environments that can be more casual and flexible than corporate accounting positions. One other advantage that’s seen more frequently in nonprofits than large corporate entities is an ability to climb the ladder of seniority more quickly, as long as performance is strong and consistent, due to fewer employees and more opportunities to play a major role during pivotal moments.
Starting your accounting education at the University of Alabama at Birmingham
The University of Alabama at Birmingham offers an immersive online Bachelor of Science in Accounting program that mixes an in-depth accounting education with exposure to a number of other topics in the world of business, from information systems to business communications. A greater understanding of how organizations operate as a whole can be especially valuable in nonprofits, where staff are often asked to perform many duties and contribute whenever possible on major projects and not only in their primary role. Additionally, students seeking out an accounting degree online from UAB enjoy a fully asynchronous learning environment that allows them to work toward their degree on their own schedule while addressing any personal and professional obligations they may also have. To learn more about the program, get in touch with an enrollment advisor today.