Developing a practice attractive to not-for-profit organizations

by Jeffrey S. Forman, CPA

As CPAs, we’re often called upon to help businesses and individuals turn a profit, so it might seem that developing a practice attractive to not-for-profit organizations is counterintuitive. If your goal is to maximize income for your practice or yourself, a full roster of not-for-profit organizations clients would not be ideal.

On the other hand, while a 501(c)(3) organization is mission-based, there’s no reason for you to lose money by taking them on as clients. Even with the somewhat lower fees you may need to charge organizations for your services, you can earn a good living from working with them. Especially during times of economic turmoil, they tend to provide a steady income, since they’re often viewed as a necessary community safety net and usually continue to receive funding.

The best part of working with not-for-profits, however, though, is the reward – you’ll be helping with a worthwhile cause at the same time. Unlike for-profit businesses, many not-for-profits have not invested in the latest accounting, data management, and billing systems or in the personnel to implement them. Then, too, organizations receiving federal funds must conduct annual audits with stringent requirements, yet they may not have anyone on staff for the job. They genuinely need the kind of assistance you can provide.

Ready to start “giving back?” Here are a few strategies to help attract not-for-profit clientele:

• Change your focus. The primary difference between the for-profit and the not-for-profit is in mindset. Not-for-profit clients are not strictly focused on bottom-line results, and even if they were, the public, the IRS, and all the organization's stakeholders would question the organization’s adherence to its mission. So while the leadership at for-profit companies looks for financial consultants with expertise, not-for-profit leaders look not just for expertise but also for those who have a sincere interest in their organization’s mission and a genuine drive to serve.
  
  
• Education and training. Obviously, it’s imperative for you and those in your practice to take the appropriate continuing education courses to gain a complete understanding of the accounting, auditing, and tax requirements affecting 501(c)(3) organizations. Without the technical knowledge, you won’t be able to help, and you could actually harm, the organization.
  
  
• Learn as much as you can about the types of organizations that interest you the most. Find out what type of funding the organizations receive, who their funders are, and what types of services they provide. You and your staff should also become involved with them as volunteers and board members to become familiar with their operations and to gain the necessary insight into the not-for-profit world view.

Above all, though, remember that, as different as the for-profit and not-for-profit perspectives can be, they share a common need to apply good business principles to survive and thrive. Maybe taking on not-for-profit clientele may not be such a big change after all.

Jeffrey S. Forman, CPA, is a member of the Ohio Society of CPAs and principle of Forman & Associates Consulting, LLC, a Columbus, Ohio-based firm that provides financial consulting services to behavioral healthcare organizations. He can be reached at 937.409.5190 or jforman@jeffformanconsulting.com.

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