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Jul 27 2021

Bookkeeping for Nonprofits: Best Hiring Practices

Bookkeeping for nonprofits is essential for maintaining day-to-day data entry of revenue and expenses. Let’s explore best hiring practices.

Bookkeeping for Nonprofits: Best Hiring Practices - araize.com

What is bookkeeping for nonprofits?

Every dollar that comes in and every dollar that goes out must be recorded. It is the role of a nonprofit bookkeeper to record revenue and expenses. They are also responsible for making general payments and deposits. Many small to mid-size organizations will delegate payroll processing to their bookkeeper.

A critical aspect of their job as a nonprofit bookkeeper is to allocate costs by program, administrative and fundraising also known as functional accounting. A bookkeeper’s tasks are not as complex as a nonprofit accountant’s responsibilities.

Nonprofit bookkeeping requirements and salary

A bookkeeper is not required to analyze transactions. Their background lacks the education and training to handle this. Their focus is to record the data so the accountant can analyze this and perform more complex functions.

Typically, a bookkeeper for a nonprofit organization works in coordination with a managing or executive director. They are responsible for performing a variety of nonprofit bookkeeping duties, including financial record keeping and transactions, such as accounts payable, accounts receivable, and general ledger. Ideally, they will have some experience with nonprofit accounting software or spreadsheets.

Below are some common skills necessary to qualify them for the role as a nonprofit bookkeeper:

  • Prepare, record and distribute checks to contractors and vendors.
  • Generate and submit 1099s.
  • Manage accurate records, include contracts, invoices, receipts and deposit slips.
  • Enter revenue and expenses in nonprofit accounting software system.
  • Reconcile bank accounts and provides reports to financial staff monthly.
  • Maintain organized filing system: files invoices, reimbursements, insurance information and other financial records.

Education requirements for a bookkeeper are generally a high school diploma or an associate’s degree in bookkeeping or business from a community college. Some bookkeepers go further and become accredited through a professional organization.

According to ZipRecruiter, the national average for a Non Profit Bookkeeper Salary is $37,243 per year at $18 per hour.

Nonprofit Accounting Course - araize.com


Nonprofit Accounting Course: Learn essential skills to strengthen accountability and avoid costly mistakes. Get in-depth training on fund accounting, budgets, financials and more.


Nonprofit bookkeeper vs nonprofit accountant

A nonprofit accountant requires a minimum of a four-year college education with a degree in the field of accounting. Accountants often opt for certifications to improve their credibility, such as taking the CPA exams to become a certified public accountant.

The bookkeeper and accountant work in tandem. Bookkeepers typically handle the data entry work, while the accountant handles the analysis of the data.

How to hire a nonprofit bookkeeper

There are several options for nonprofits to hiring:

  • Outsource
  • Dedicated full-time
  • Part-time
  • Intern
  • Volunteer
  • Arrange for in-kind donation of services

There are some benefits for outsourced bookkeeping for nonprofits, which can save overhead expenses:

  • Get an expert in the field rather than save money and bring in an inexperienced bookkeeper.
  • Get an unbiased trained bookkeeper who has worked with other nonprofits. As a third-party worker, you get an objective opinion and resources for growing your nonprofit.

When hiring an in-house bookkeeper, keep the following criteria in mind:

  • Determine their level of experience with nonprofit bookkeeping.
  • Make sure they understand the distinct differences between nonprofit accounting and for-profit accounting.
  • Previous experience is a plus when it comes to getting up to speed quickly recording pledges, donated goods and services and restricted donations.
  • Since they will be handling finances, prospective bookkeepers need to be screened for ethical and criminal backgrounds.

Schedule a FastFund Online Demo: Learn more about our unique software approach to nonprofit accounting, payroll and fundraising.


Bottom Line

It is critical to hire someone with the proper training, education and experience in bookkeeping. Making a bad hiring decision can jeopardize your nonprofit mission and standing. If you do not know the best way to begin your search, contact an accountant that specializes in nonprofit accounting to help you find the right hire.

Want to read more? Check out these insightful articles:

  • Criteria for Hiring a Skilled Nonprofit Accountant
  • Functional Accounting: Guide to Classifying Expenses
  • Nonprofit Compliance: Best Practices for Maintaining Status
  • Why Smart Hiring Practices Can Prevent Costly Nonprofit Accounting Errors
  • Nonprofit Treasurer Duties: Guide to Finding the Right Person
  • Nonprofit Accounting: Guide to Financial Statements Management
  • FastFund Accounting: General Ledger
  • In Kind Donations: Guide to What Nonprofits Need to Know

We value your opinion! Feel free to leave comments or suggestions.

Written by Joseph Scarano · Categorized: Accounting for Nonprofits · Tagged: Accounting Software for Nonprofits, bookkeeper for nonprofits, bookkeeping for nonprofits, Fund Accounting, Nonprofit Accounting, nonprofit bookkeeper, nonprofit bookkeeping

About the Author

Joseph Scarano is the CEO of Araize, Inc., developers of cloud-based FastFund Online Nonprofit accounting, fundraising and payroll software solutions to help your nonprofit become more transparent, accountable and sustainable.

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