By many measures grantmakers and grantees work closer today than at any other time in American philanthropy. In none-too-distant times, the latter saw the former only as a means of fiscal support. And the former frequently was more than willing to wash its hands of the latter once the check was cut. But donors and grantees have since learned that working together is beneficial: Donors can provide much-needed capacity-building by providing support and advice on operations and budgets, among other critical areas. The book-publishing world has responded with volumes aimed at helping nonprofits better handle the day-to-day activities of running the business side of their organizations. A number of these works deal with accounting. Two of the more recent publications—Streetsmart Financial Basics for Nonprofit Managers and Not-for-Profit Accounting Made Easy—are representative of the range of options available to donors who want to provide grantees with more information on effectively handling their books.
Thomas A. McLaughlin’s Financial Basics for Nonprofit Managers from the Streetsmart series of how-to business books is an example of how these books can be done well. With a deft hand McLaughlin breaks the topic down into easily understandable themes: analysis, accounting, operations, and control—the four-legged stool that bears the weight of accurate financial reporting. Each theme is derived from the author’s understanding that nonprofits operate under different financial circumstances than their for-profit counterparts.
In explaining this difference, McLaughlin explains the book’s premise that sound financial management—and not ethics or fund raising—is the key ingredient to a nonprofit’s long-term success. “Organizations created to change society,” McLaughlin says, “themselves become resistant to change unless managed otherwise.”
The book’s strength is its emphasis on hands-on advice. McLaughlin’s audience is nonprofit managers with little or no accounting experience, and he never forgets this. Because he acknowledges this inexperience, he has an excuse to write what is basically an Accounting 101 Handbook, thereby laying an information base upon which he builds some good hands-on accounting advice. McLaughlin takes his time, giving his audience a chance to absorb the bedrock stuff and take a breather before moving on. He waits until chapter 6 before tackling the accounting issues that are specific to nonprofits.
Think of this book as a USA Today special report that happens to be 215 pages long. All in all, it’s a good read and a helpful take on the unique challenges nonprofits face in the financial accounting arena.
Warren Ruppel’s Not-for-Profit Accounting Made Easy is an informative work that could use a steady dose of the anecdotes and personal observations that make McLaughlin’s book so comparatively readable.
There’s little doubt that Ruppel is an able, experienced accountant. The problem is he writes like one, too. That said, if you keep pumping coffee into your system or read Ruppel’s tome after a power nap or two, you can take some useful advice from the book; for instance, the way the author walks his readers through formerly unfathomable terrain like the basic financial statement. In the financial statements chapter, Ruppel provides some good background information on the link between nonprofits and financial statements. He also uses a healthy enough supply of sample financial statements that almost any nonprofit manager can link one to his situation.
If only Ruppel had displayed as much dedication to the audience as he did to the material.
For donors interested in improving their grantees’ accounting abilities, there’s an important lesson to take from these two books: Many “good” books are available, but works that will appeal to, be read by, and be understood by your grantees are relatively rare. Choose wisely.