With an online Bachelor of Science in Accounting, you’ll have a wide range of job opportunities to pursue. If you have a philanthropic spirit and are eager to work with an organization that gives back, nonprofit accounting work may be an ideal career route.
As you’ll see in this overview of accounting in the nonprofit world, there are many ways to follow your passions while pursuing a rewarding career in accounting. Here, you’ll learn about the average nonprofit accountant salary and the main job responsibilities of some of the top accounting positions in the nonprofit world.
What Does a Nonprofit Accountant Do?
In the most general sense, a nonprofit accountant is an accounting professional who specializes in helping nonprofits accomplish nuanced financial and bookkeeping objectives specific to that type of organization. But the actual roles and responsibilities of someone in this field can vary significantly.
As the Internal Revenue Service (IRS) explains, U.S. tax code specifies nearly three dozen different types of tax-exempt organizations. These range from the more well-known 501(c)(3) charitable organization category to the less common 501(c)(7) social club and 501(c)(10) fraternal society. The needs of each organization will vary, but there is a common denominator in how they are required to handle taxes.
All nonprofit organizations are unique in that the government allows them to carry out activities that provide benefits to the community and advance social welfare without paying taxes required of for-profit companies. Parties who donate money to charitable groups are eligible for tax breaks themselves, but these funds must be used in accordance with strict guidelines. Therefore, a staff accountant at a not-for-profit organization has an important role in keeping all financial activities in compliance to ensure that the entity maintains its nonprofit status.
What Financial Statements Do Nonprofits Issue?
While for-profit accountants focus on generating balance sheets and financial statements outlining cash flows, owners’ equity, and profits and losses, nonprofit accountants have a slightly different focus.
According to Paychex and the Houston Chronicle, typical financial statements issued by nonprofit organizations include:
- Statement of financial position (a nonprofit’s version of a balance sheet)
- Statement of activity (also known as a statement of income)
- Statement of cash flows
- Statement of functional expenses
- Change in net assets
Like their peers in the for-profit world, not-for-profit accountants will implement generally accepted accounting principles (GAAP) in all activities.
Can a Charitable Organization Pay Its Staff?
The nonprofit designation might make it sound as if an organization can’t pay its employees. However, the opposite is true. Nonprofits can consist of small teams of just a few paid workers or even several thousand staff members on the payroll. Of course, volunteers often play an important role, but paid staff members work to keep the organization running as well.
As The Balance explains, “Both state law (which governs the nonprofit incorporation) and the IRS (which regulates the tax-exempt status) allow a nonprofit to pay reasonable salaries to officers, employees, or agents for services rendered to further the nonprofit corporation’s tax-exempt purposes.”
The important thing to note is that a nonprofit must not overpay its employees. This would have more of a benefit to the worker than to the community or cause the nonprofit claims to serve, and an organization can lose its nonprofit status by offering excessive compensation to employees. For this reason, the typical nonprofit accountant salary will typically be in line with the market value of the specific role, but will not exceed it.
What Is the Average Nonprofit Accountant Salary?
In the nonprofit sector, the salary of an accountant varies based on location, years of experience, and employer. However, salary estimates can help you determine what to expect as you enter the profession.
May 2019 salary information from the U.S. Bureau of Labor Statistics (BLS) indicates that accountants and auditors across all industries earn median annual salaries of $71,550. This includes everyone from entry-level auditors to seasoned Certified Public Accountants (CPAs), across the private and public sectors. The lowest 10% of earners saw earnings below $44,580 while the top 10% made more than $124,450.
Below, you’ll learn more about specific accountant salaries related to various jobs in the nonprofit accounting world.
5 Nonprofit Accounting Careers to Consider
As you take the first steps toward an accounting career by earning an online Bachelor of Science in Accounting, keep in mind what type of jobs you may be interested in pursuing — both after graduation and after gaining years of experience in the field. Here are several roles to consider that offer some of the most promising nonprofit accountant salary averages.
1. Accounting Manager
Accounting managers are mid-level to senior accountants. Generally, at least five to seven years of work experience is expected for this type of role. It might not be a role you can enter immediately after graduation, but it’s certainly one you can pursue as you build your career.
Like their peers in for-profit environments, nonprofit accounting managers are responsible for overseeing the day-to-day operations of other accountants. A senior accountant will develop systems and procedures to help the nonprofit work as efficiently and effectively as possible. For instance, they will ensure financial data is processed correctly and backed up securely.
Additionally, someone in this role may be in charge of generating periodic reports and consulting with other organizational managers. From a compliance standpoint, an accounting manager will also work to keep the nonprofit institution in line with all applicable regulatory requirements. This can be an attractive role for anyone interested in streamlining operations and taking on a leadership position.
According to data points collected by ZipRecruiter in October 2020, the median nonprofit accountant salary for someone in a managerial position is $91,500. Professionals in this role can earn anywhere from $61,000 to $127,000 per year.
Nonprofit organizations are granted special concessions when it comes to paying taxes. They don’t pay property tax, sales tax, or taxes on income. Furthermore, charitable donations to the organization offer substantial tax breaks to the donor. Given the significance of these measures, such organizations are typically under a heavy amount of scrutiny and must adhere to a strict set of guidelines to keep their nonprofit status.
For this reason, nonprofits often engage internal auditors. These professionals help to regulate the organization’s cash flow and establish a sound, compliant paper trail for all transactions and accounting activities. They will also provide executive leadership and the board of directors with the assurance that there are measures in place to reduce the risk of fraud or accounting errors that could jeopardize the organization.
Nonprofits operate within strict but evolving regulatory environments, and it is the auditor’s responsibility to keep the organization up to speed and in compliance so it can continue doing valuable work for the community.
According to Glassdoor, as of October 2020 the median salary for a nonprofit tax-exempt audit manager is $90,005, with potential earnings ranging from $70,000 to $115,000.
3. Budget Analyst
Whether a nonprofit receives funding from a government agency or major gifts from philanthropic citizens, budgeting is a critical component of successful operation. Accounting is the core discipline that allows nonprofits to report donations, grants, and other income and accurately budget for operating expenses. Without a solid budget in place, an organization can’t finance and plan out its charitable work.
The budget analyst must understand the intricacies of how money moves within the organization to generate a budget all stakeholders can follow. In a nonprofit setting, a budget analyst will rely on the development department to meet fundraising goals. They will also work with program and project managers to gain an understanding of the funds required to carry out the organization’s mission. Additionally, executive leaders will count on budget analysts to generate the reports needed to inform strategic planning efforts.
Unlike the managerial positions discussed here, budget analyst is a role you may be qualified for upon graduating with an online Bachelor of Science in Accounting. Depending on where you are in your career as a budget analyst, you can expect to see an average salary of $76,540, according to May 2019 data from the BLS. Although the lowest 10% of budget analysts earn less than $50,230, the top 10% make at least $116,510.
4. Financial Analyst
While the budget analyst is focused on internal cash flow, the financial analyst combines knowledge of the nonprofit’s operations with knowledge of market activities in general. The goal is to ensure the organization makes sound financial decisions.
A financial analyst will help top decision-makers choose smart investment opportunities, manage endowments, monitor investment portfolios, and grow new streams of revenue. As such, someone in this role is entrusted with a great deal of responsibility when it comes to supporting the financial well-being of the organization.
As Indeed reports in October 2020, nonprofit financial analysts can earn an average annual salary of $72,281. Earnings can vary significantly, with entry-level professionals making close to $30,000 and top earners making $149,000.
5. Grant Accountant
The grant accountant is an especially important member of a nonprofit accounting team, since a significant part of a nonprofit organization’s revenue can come from grants. Someone in this role will focus entirely on the post-award administration and accounting responsibilities as related to grants.
A grant accountant will help decision-makers understand how to appropriately utilize funds in adherence to any guidelines and stipulations associated with the specific grant. They will account for all grant-related activities and produce reports for stakeholders as needed. Moreover, the grant accountant will help gather evidence that the grant has been successful, which will have an impact on how likely the nonprofit will be to receive future funding of a similar nature.
As Glassdoor’s September 2020 data indicates, the median nonprofit accountant salary for a professional working with grants is $62,494. Earning potential for a grant accountant ranges from $44,000 on the low end to $81,000 on the high end.
Interested in a Career in Nonprofit Accounting? Get Started with an Online Bachelor’s Degree
At present, job advertisements in nonprofit accounting require candidates to come prepared with at least a bachelor’s degree in accounting, according to the BLS.
An online Bachelor of Science in Accounting from the Collat School of Business at the University of Alabama at Birmingham can set you up for success in an accounting career. Not only will you be prepared with a strong accounting and business foundation, but you’ll have the skills and confidence to tackle the unique challenges of the nonprofit sector.
To learn more about earning an online accounting degree, connect with an enrollment advisor today.