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Is It Time for Nonprofits to Accept Cryptocurrencies Like Bitcoin for Donation and Payments?

Traditional nonprofit financial management may look askance at Bitcoin, Ethereum, LiteCoin, Dash and other cryptocurrencies, but love them or hate them, crypto is here to stay. It provides a secure alternative to traditional currency and can be tracked and monitored in a public, transparent way.

What Is Cryptocurrency?

Cryptocurrency began in 2009 with the release of a white paper that outlined Bitcoin, the very first cryptocurrency. Bitcoin is now just one of hundreds, perhaps thousands, of blockchain-based ‘coins’ that transmit value through proof of work, proof of stake, or other forms of blockchain mining.

Blockchain technology itself is more than cryptocurrency. Blockchain is a continually growing record that consists of blocks of code. Each block, once confirmed, is permanent and unalterable. It is a decentralized record in that the code that powers a blockchain is held on multiple computers worldwide. Most blockchains are public and open for verification and build-outs. One of the most famous blockchains aside from the one that powers Bitcoin is Ethereum. The Ethereum blockchain is used to build something called smart contracts, which are contracts that eliminate the need for third party verification.

If you think this is all just a passing fad, think again. While the run up of Bitcoin prices is reminiscent of other financial bubbles in the past such as the real estate or internet stock bubble, blockchain technology is now being used to test recording real estate deeds and records in Sweden, secure email communications through a company called Envilope, and enable secure, transparent records in many areas including healthcare, real estate, and more.

Cryptocurrencies and Nonprofits: Expanding Donations

Nonprofits can expand their donation avenues by accepting Bitcoin and other cryptocurrencies. To do so, you’ll need to open an account on a recognized cryptocurrency exchange. Since there is no official registration of exchanges akin to the stock exchange, you will need to do additional due diligence to find some of the better-known exchanges.

Legitimate cryptocurrency exchanges have a KYC or know your customer process in place to verify identification. Expect it to take 7 to 10 days to complete the KYC process.

Once your nonprofit is registered with an exchange, it has a wallet address. Wallet addresses are the public code, usually in the form of a QR code graphic or a long string of letters and numbers, that funds are transferred into. Once transferred, the transfer cannot be reversed. The exchange will deduct a percentage of the overall fee once the currency is in your virtual wallet. You can then exchange cryptocurrencies into dollars or other currencies and transfer that amount into your bank account.

For nonprofit financial management, be sure to keep accurate track of all financial transactions on cryptocurrency exchanges. Taxation laws and reporting laws around cryptocurrencies are constantly changing and evolving, and you may need your records handy to comply with the law when it comes time to reporting income. As of 2014, the IRS considered cryptocurrencies as property for tax purposes, but  recent statements make it sound as if they are leaning towards regulating it like a security. Clear guidance is still lacking.

Using Cryptocurrency as a Marketing Tactic

Lastly, consider targeting specific individuals or groups who may wish to donate using Bitcoin. Fortunes have been made over the past decade thanks to the stratospheric rise in BTC value and other currency values. Create and build a list of cryptocurrency leaders and solicit donations through direct, personal outreach.

Millennials and Generation Y and Z individuals are all more comfortable using cryptocurrencies than their older counterparts. These young people may already own Bitcoin or other coins and wish to use them for donations. If your nonprofit accepts cryptocurrencies as donations, you can send specific promotions to this demographic and include that QR code to make donating easy and fast for them.

Accepting cryptocurrency as a donation may seem far-fetched but many nonprofits are experiencing the benefits of this new technology-facilitated money. It’s secure, irreversible from the donor’s side, and fairly easy to set up to accept. Why not give it a try?

Beck & Company

Since 1987, we have helped many nonprofits in the Washington D.C. area and along the Eastern seaboard with their accounting and financial management needs. We provide audit, tax, accounting, and consulting service that addresses all aspects of a small to mid-sized nonprofit organization’s business. Contact us or call 703-834-0776 x8001.

Cultural Intelligence, the New Frontier in Nonprofit Financial Management

First there was intelligence quotient (IQ) then emotional intelligence. Now, there’s cultural intelligence. Nonprofit financial management success must include all three in today’s connected world to be successful.

Different Types of Intelligence

The original IQ tests or intelligence quotient was derived as a test for army soldiers in the early 20th century. The same pioneers who brought you IQ tests developed things like the SAT test and other aptitude tests. These early data scientists believed that nearly every personal characteristic could be measured and quantified.

Peter Salovey and John D. Mayer coined the term ‘emotional intelligence’ in 1990 to describe an individual’s ability to  “monitor one’s own and others’ feelings and emotions, to discriminate among them, and to use this information to guide one’s thinking and action”.  David Goleman, a writer for The New York Times, popularized their work in a book released in the 1990s, and the term became common parlance or shorthand for the ability to read and utilize emotional information in conversation.

Today, add to that a new term: cultural intelligence. Cultural intelligence refers to an individual’s ability to recognize, interact with, and respond appropriately to people of other cultures.

In the world of nonprofit financial management, cultural intelligence is rapidly becoming as important as emotional intelligence. While intellectual giftedness and intelligence is widely recognized as a desirable attribute, without emotional and cultural intelligence, those with high IQs tend to be like Sheldon Cooper on the television show “The Big Bang Theory” – smart, able to do their work easily, but difficult to live, work, and interact with on a daily basis without wanting to tear your hair out.

Examples and Benefits of Cultural Intelligence

Every one of us hails from a unique culture. That culture may be white, suburban, and middle class, Jewish and upper class, or Chinese immigrant. Each culture brings with it a series of cultural norms in dress, behavior and attitude that when understood and respected, can serve as an icebreaker in the business world.

Take the example of two job candidates for a position in nonprofit financial management. Both candidates are white women who hail from middle class backgrounds. But Candidate A has traveled widely during and after her college years, spending time working on volunteer projects in Haiti, the Dominican Republic, and Thailand. Candidate B does not have that richness of cultural exposure or interaction. Which candidate is better for nonprofit financial management in an organization that interacts on a global basis?

If your staff consists primarily of people from a homogenous culture and interacts only with people of the same culture,  Candidate B may be perfectly suitable. Candidate B, to be fair, may have a deep and abiding respect and admiration for other cultures, too. But Candidate A has actually lived, worked, and spent time in other cultures, immersing herself in their traditions and norms. She may more easily fit in a meeting with people from Caribbean, Central American and Asian cultures.

All people can learn to be aware of other cultures and respect their norms. Most people know, for example, that in Jewish culture, men wear yarmulkes inside the synagogue and that Amish people prefer not to have their pictures taken. Respect for each culture means wearing appropriate clothing when entering a house of worship and adhering to the ‘no picture’ rule if you happen to drive by an Amish barn raising on your next trip through Pennsylvania, Indiana, New York or Virginia Amish country.

Practical Application of Cultural Intelligence

Respect is fine and a welcome attribute. But what is the practical application of cultural intelligence?

In some instances, it creates bonds of respect between individuals. Those who demonstrate respect for other cultures, such as dressing conservatively when visiting Middle Eastern countries or not making eye contact in an Asian business meeting, may bridge the gap more easily between colleagues. This creates common ground, shared understanding, and the basis of trust for future business dealings.

Inside your nonprofit organization, you are likely to encounter people from many, diverse cultures. We live in a world where cultural identity and embracement is the norm rather than the exception; we live and work in the United States in an immigrant culture, one that is more likely to find a place for those who dress, look, or behave differently than the standard culture.

Those who possess cultural intelligence will be far better equipped to make business connections and handle themselves gracefully across all cultures. Combine that with high IQ and strong EQ, and you’ve got a winning combination for success.

Beck & Company

Since 1987, we have helped many nonprofits in the Washington D.C. area and along the Eastern seaboard with their accounting and financial management needs. We provide audit, tax, accounting, and consulting service that addresses all aspects of a small to mid-sized nonprofit organization’s business. Contact us or call 703-834-0776 x8001.

Federal Tax Withholding Update

Beck & Company provides accounting and tax service for nonprofits, and as part of our services, we offer informative updates on IRS tax regulations. Updates from the IRS this year include a new W-4 form and a new withholding calculator. It is important for you to investigate these and other IRS updates and inform your nonprofit employees so that they can make informed judgments on their personal withholdings.

Withholding Changes and the New Calculator

The Tax Cuts and Jobs Act made significant changes to tax law including increasing standard deductions, increasing the child tax credit limit, removing personal exemptions, limiting or discontinuing certain deductions and changing the tax rates and brackets.

How do you know if you should double check your withholding? Anytime you have a major life change, such as marriage, divorce, widowhood, new children or similar changes in marital or family status, it is time for a withholding checkup.

Others who should check their withholding amounts by using the new IRS withholding calculator include:

  • Individuals with two or more jobs at the same time or who only work for part of the year.
  • Individuals with children who claim credits such as the Child Tax Credit.
  • Individuals who itemized deductions in 2017.
  • Individuals with high incomes and more complex tax returns.
  • Anyone who works more than one job.

There are certain instances when the withholding calculator may not be adequate to help you assess your taxes. In this case, you should speak with a tax advisor. Situations that may be too complex for the withholding calculator include people with capital gains, those who owe an alternative minimum tax, and self-employed people.

The new withholding calculator asks people to estimate how much they will make in 2018. It also asks questions about other items that may affect taxes. It’s easier to use if you have a recent pay stub handy. The information on your recent pay stub helps you determine how much you are currently withholding and any potential changes you may need to make in the current year.

Of course, the new IRS withholding calculator is only as accurate as the information that you enter. If you enter incorrect information, you won’t get accurate results. Use your best judgment and when in doubt, speak with your tax advisor or an accountant.

W4 Forms

IRS form W-4 helps your employer to withhold the proper amount of taxes from your pay. Nonprofits and those working for nonprofits must withhold and pay proper individual and employment taxes. Being a “not for profit” or having “tax exempt” status does not mean that employees are tax exempt or that an organization is exempt from reporting proper taxes. If a nonprofit has such a designation, it means that the organization does not to pay certain taxes. The people working for the nonprofit must still pay applicable employment taxes.

What to Do if Withhold Information Has Changed

If your withholding information has changed, it is time to update your W-4 information. Human resources managers should be ready to help employees update W-4 information and assist them with any questions they may have regarding the new tax law changes, withholding, and other payroll and personnel requests.

Anytime changes affect income taxes, it’s time to check your withholding. Checking your W4 now may save you from the inconvenience of under or over-paying employment taxes.

Beck & Company

Since 1987, we have helped many nonprofits in the Washington D.C. area and along the Eastern seaboard with their accounting and financial management needs. We provide audit, tax, accounting, and consulting service that addresses all aspects of a small to mid-sized nonprofit organization’s business. Contact us or call 703-834-0776 x8001.

Washington DC Nonprofit Advisor Recommends GDPR Privacy and Data Checkup

As Washington DC nonprofit advisors, we try to help all of our clients nationwide keep up to date with changes in regulations throughout the nonprofit world. One such regulation is GDPR. This European regulation takes effect in May 2018 and will update data and privacy regulations throughout the European Union, the most sweeping changes since 1995.

Although you may be an American-based nonprofit organization, no one is exempt from GDPR. That’s because the rules apply not just to companies and organizations located within the EU but also to any business entity – for profit or not for profit – that interacts with EU citizens. In today’s global, internet-based world, that opens the door for anyone with a website to fall under GDPR’s requirements.

What, you may wonder, would happen if you just ignored it? After all, you’re not an EU citizen, and your organization is licensed and registered in the United States…well, the penalty for not adhering to GDPR is severe ranging from a warning to fines that could range in the six or seven figures.

GDPR looks confusing on the surface and it is indeed complex. Washington DC nonprofit advisors to the rescue! Let’s break it down into the important parts nonprofits need to know, understand, and act upon to comply.

Data Collection, Storage, and Privacy

Most of the GDPR regulations focus on personal data collection, privacy, and storage. Data breaches must be reported within a 72-hour window and people must give explicit consent to data collection. Data that falls under GDPR collection rules includes:

  • Name
  • Photos
  • Email addresses
  • Social media posts
  • Medical information
  • Bank details
  • IP address

As an organization that may interact with EU citizens, you are required to:

  • Obtain consent that is “freely given, specific, informed, and unambiguous” prior to collection of personal information from a data subject
  • Restrict data collection to specific, explicit, and legitimate purposes
  • Limit data retention to requirements for business purposes
  • Provide data processing transparency
  • Maintain data security, confidentiality, and integrity
  • Adhere to breach notification requirements
  • Designate a Data Protection Officer
  • Perform a data protection impact assessment

People whose data you have collected have the right to:

  • Access their data
  • Object to the use of their data
  • Be forgotten (have their data erased)
  • Rectify their data
  • Receive their data and transmit it to another controller

Tips to Help Nonprofits Comply with GDPR

All nonprofit organizations should take GDPR seriously. Although you may not purposely target EU citizens in your marketing efforts, the regulations are so all-encompassing that it is better to be ‘safe rather than sorry’ and take care to adhere to GDPR as best as you can. It’s also just basic smart marketing and good best practices for data security, privacy and control.

You can take the following steps to help meet GDPR regulations:

  1. Identify all interactions and potential interactions with EU citizens. This may include website contacts, email signups, and Eu groups with whom you interact.
  2. Review all places where you collect data. This includes website data, analytics, and even plugins that may collect data from visitors on your website.
  3. Adjust and revise the terms and conditions on your website. Don’t have terms, conditions and privacy policies posted? Now’s the time to add them. Make the navigation to view them prominent and top or at most, second-level, so that anyone seeking them can find them easily.
  4. Review emergency plans and action plans to handle data breaches. Again, if you don’t have such plans in place, now is the time to create them. Data breaches aren’t a question of “if” but “when”; cybercriminals love to target nonprofits and view them as easy targets. Lock the barn door now before the proverbial horse escapes.
  5. Send a permission-reminder email to your email marketing list. This is a notification that you are updating permission and asking once again for explicit permission to send promotional materials to your contact list.

These are small, simple steps to take to comply with the spirit of GDPR. Even if you do not conduct business in the EU and have no intention of doing so, GDPR should be considered best practices for permission-based communications moving forward.

Beck & Company, Washington DC Nonprofit Advisor

Beck & Company are Washington DC nonprofit advisors and consultants. Since 1987, we have helped many nonprofits in the Washington D.C. area and along the Eastern seaboard with their accounting and financial management needs. We provide audit, tax, accounting, and consulting service that addresses all aspects of a small to mid-sized nonprofit organization’s business. Contact us or call 703-834-0776 x8001.

Nonprofit Financial Management: Segmentation for Smarter Marketing

Nonprofit financial management includes ideas that can help you increase income from donations, events, and charitable giving. Segmentation, a concept borrowed from the world of for-profit marketing, can help you market smarter, achieve better results, and reduce marketing costs.

What Is Segmentation?

Segmentation refers to evaluating the characteristics of an email or mailing list and grouping people together according to similar characteristics. Marketing outreach can then be directed at smaller groups according to their unique interests or characteristics.

Why Segment?

Think about your current mailing list. It’s probably a mixture of long-time “friends” of the organization, new donors, and everyone in between.

But these groups need different information from you. Longtime friends of your organization or donors may welcome updates on programs while newcomers may need to learn more about your basic services. Others may be interested in specific programs or initiatives.

If you send the same information to all groups, you run the risk of people growing bored with the information you send because it doesn’t feel relevant to their needs. The more you can speak to your individual constituents through segmented and targeted communications, the better you will engage them. The more engaged someone is in your organization’s mission and activities, the more likely they are to donate to it in the future.

How to Start a Segmentation Program

First, you’ll need software that can be updated to include segmentation models. That’s usually accomplished by adding a simple field to each address record that can be keyed to reports so all people in each segmentation group can show up in the same cluster.

Begin with the data you do have on your constituents. You currently have addresses, so you know their location. You may be able to segment communications around location-based activities such as volunteer days, charity events, or other locally-based activities. This enables you to send mailings or invitations only to those who live near the event, and perhaps garner a better response rate by targeting those most likely to attend.

Another concept is to link the amounts donated to an actual situation to show donors how their money impacts the cause they care about. Since your records may indicate how much people have donated, you can segment by donations like this:

“The $50 you donated last week will pay for veterinary care for one cat or dog at our shelter. Thank you for your compassion towards shelter animals.”

“It costs $500 to train a service dog for our veterans. Your generous donation of $100 put us a big step closer to helping a deserving veteran get the help he needs. Thank you.”

“Each family who comes to us has a simple need: food. Your $25 donation puts a bag of groceries into a family’s hands. We can’t do it without you.”

In each case, the segmentation was around tiers of giving. Donors were grouped into $25, $50, $100 and up tiers and messages could then be tailored to each. By showing people how their gift impacts the cause they care about, you make it more personal and give donors a good feeling about their support.

A/B Split Testing

Another technique you can use after implementing a simple segmentation strategy is called message testing or A/B split testing.

In this marketing methodology, you create one message (A) and test the response against an alternative message (B). You then measure the response to decide whether A or B produces the best results.

Over time, you can test variables such as the message, the timing, or the design of the marketing materials to see which, if any, of these elements, impact the results. For example, by testing a known email design (A) against a new design (B) and measuring the results against the results you know you get for A, you can see if the revised design of B improves the response rates.

Nonprofit Financial Management Strategies from Beck & Company

Since 1987, Beck & Company has helped many nonprofits in the Washington D.C. area and along the Eastern seaboard with their accounting and financial management needs. We provide audit, tax, accounting, and consulting service that addresses all aspects of a small to mid-sized nonprofit organization’s business. Contact us or call 703-834-0776 x8001.

Nonprofit Financial Management Tips for Buying Software

Part of nonprofit financial management is ensuring that your organization’s funds are spent prudently. That includes, of course, both saving where it matters and spending on what counts. When it comes to software, you may be saving a penny to spend a dollar later if you cut too many corners.

You can purchase software on a budget. The key is to use a streamlined process for software selection. There are many software choices for nonprofits today to help them with everything from accounting to grant management. Some software provides comprehensive, all-in-one management; others allow for easy integration of additional packages so, as funds become available or needs change, you can update and upgrade your software.

The Software Selection Process

The software selection process for any organization begins by ascertaining the need. Why do you need this software?

A few reasons why you may need to upgrade your software include:

  • We’re spending too much time on manual tasks such as updating spreadsheets when software could simplify that task.
  • We are making mistakes because we do everything manually.
  • We are spending hours to record activities and build reports on grants, donations, and other updates when we could run such reports with the push of a button.
  • Our current software is obsolete, no longer supported, or unable to run on new equipment.
  • We have maxed out our user license and cannot add any more.

These are all excellent reasons for upgrading your software.

Can You Scrimp or Should You Splurge? Rush or Take Your Time?

You probably have a budget in mind for your purchases. Before going shopping for new software, there are a few more questions you’ll need to ask yourself:

  • Will the new software be deployed through the organization?
  • Will this software change how our organization functions in any significant way?
  • Will shifting to this software take time or additional investments?
  • Will we need to send people for special training to manage this software?

If you answered “yes” to one or more of these questions, then you may be looking at a more significant investment of time, money, and resources for your software selection process.

Any software that will change how you conduct your business, or software that requires additional investments of time or resources, should be selected based more on quantity than cost. That’s easy to say, we know, but important to mention. If you skimp on the investment or rush to pick a package for your organization, you may come to regret your choice.

New Software or Make-Do Software?

Another important question is whether you actually do need new software or whether you can make do with the software you have. Often, an organization will buy new software when a package they already own may have the functions they need—they’re just not aware of them.

Start by making a list of the reasons why you want to buy new software. Then, take an inventory of what you have now. Can any of the software packages or subscriptions you currently have add the functions you need?

Ask Other Nonprofits

Another step to take is to ask other nonprofits what software they are using. It helps to get a sense of which products other, similar organizations have chosen and why they like or dislike them.

Online studies can also help you find software that meets your organization’s needs. Idealware, TechSoup, and Nonprofit Matrix provide resources to assess nonprofit software.

Pick Your Package and Test It

Once you’ve decided on the package that meets your needs, imagine how you’ll use it in your daily work. Gain consensus among the people and departments who will use it if it meets most of their needs.

Few software packages meet 100% of the needs of an entire company, and this is where you may need to compromise on certain features. Once you’ve chosen the package, purchase it. Ask about support, training, and warranties, and return policies if you feel it just doesn’t meet your organization’s needs after you’ve given it a fair trial.

Buying software can be a scary process if you’re investing your organization’s hard-earned money into the unknown. By taking these steps and doing your due diligence, you’ll be able to find great software at an affordable price.

Looking for Software? Beck & Company Can Help

We offer nonprofit accounting audit services, financial management, accounting, tax and other consulting services to help nonprofits thrive. This includes software selection.

Since 1987, we have helped many nonprofits in the Washington D.C. area and along the Eastern seaboard with their accounting and financial management needs. We provide audit, tax, accounting, and consulting service that addresses all aspects of a small to mid-sized nonprofit organization’s business. Contact us or call 703-834-0776 x8001.

Nonprofit Accounting Audit Services: Are you Ready for the Change?

Changes are coming, and nonprofit accounting audit services must be ready to answer the questions that arise from these changes. We’re talking about the changes to net asset classifications, part of FASB Accounting Standards Update No. 2016-14 Not-for-Profit Entities.

Although the effective date of the new changes was December 15, 2017, the new standards must be implemented by December 31, 2018, or fiscal years ending June 30, 2019. All the relevant requirements must be implemented the same year, so if you haven’t gotten started yet … now’s the time.

The Major Changes

There are seven major changes impacting nonprofits because of the FASB update. These include:

  1. Change the number and type of net asset classifications from three down to two
  2. Updated and improved disclosure relating to both classes of net assets
  3. Additional disclosure required as it pertains to qualitative and quantitative liquidity aspects
  4. The choice to eliminate indirect cash flow reconciliation when direct method cash flow is used instead
  5. Required presentation of both natural and functional classification of expenses, as well as enhanced disclosure of expense allocation methodologies
  6. Change in presentation and disclosure requirements for investment expenses
  7. Complete removal of the “over-time” release method for restrictions relating to long-lived assets

Not sure where to start? The most significant change for many nonprofits it the shift from classification of three net assets to two. The changes were intended to clear up any confusion on how to categorize funds. But, in addition to the changes in net asset classifications, there are also enhanced disclosure requirements in place, so both must be donated at the same time to fully comply with the changes requested in this update.

An Example

Let’s assume you have board restricted funds. You will still need to disclose the amount of board-restricted funds versus net assets without donor restrictions. Although you do not need to remove underwater endowment from net assets with donor restrictions, you do need to disclose the fair asset value.

Enhanced Disclosure

The guidelines also suggest enhanced disclosure. By improving disclosure, you’ll help your nonprofit tell its story better, and help the public better understand how the monies are being apportioned and spent.

If you’d like examples of how to do this, AICPA provides several links to fictitious examples to showcase the best practices needed for disclosure and compliance with other aspects of ASU 2016-14.

More Resources on ASU 2016-14 from Beck & Company

That’s a lot to remember but, fortunately, Beck & Company has been sharing updates along the way about many of these topics.

See below for more information:

  1. Net Asset Classification changes – a detailed article on the changes in net asset classifications and what this might mean for your nonprofit.
  2. Categorizing grant revenues – how the changes to the ‘over time’ release method may impact assets.
  3. Additional clarification on FASB update and a summary of changes ASU 2016-14 call for in many nonprofits.

Nonprofit Accounting Audit Services Can Help

We’ve done our best to provide information about these impending changes in a timely fashion. If you still need assistance, Beck & Company can help. We offer nonprofit accounting audit services, accounting, tax and other consulting services to help nonprofits thrive.

Since 1987, we have helped many nonprofits in the Washington D.C. area and along the Eastern seaboard with their accounting and financial management needs. We provide audit, tax, accounting, and consulting service that addresses all aspects of a small to mid-sized nonprofit organization’s business. Contact us or call 703-834-0776 x8001.

Nonprofit Financial Management and Blockchain: How Blockchain Is Impacting the Nonprofit Sector

You may wonder what nonprofit financial management and blockchain have to do with each other. After all, isn’t blockchain part of that new-fangled thing called cryptocurrency that everyone is talking about— bitcoin, ethereum, and all that jazz?

Blockchain is indeed the technology undergirding the new economy fueled by cryptocurrency but it is also a powerful method of creating a transparent, secure, and permanent record. Blockchains can be built to create new currencies but they can also be used to securely transfer records, demonstrate transfer of ownership, and many other applications.

Forbes reports 35 uses of blockchain as examples of how blockchain is reshaping such disparate industries as healthcare, banking and finance, and even nonprofit. The Israeli government, for example, is collaborating with Microsoft to create a blockchain for managing bank securities. And, lest you think that the nonprofit sector isn’t interested in blockchain, Bitgive is a new blockchain that seeks to give donors greater transparency around how their donations affect outcomes.

Just as the invention of the combustion engine forever changed transportation so, too, will blockchain forever change how transactions are made. Nonprofit financial management is just one area that will eventually adapt to the new model of transparency, security, and authenticity fueled by the blockchain.

What Is Blockchain?

Blockchain is an open, distributed ledger. Anyone can see transactions on a blockchain. Transactions must be accepted by consensus, distributing the authentication of transactions across multiple parties. No one person can alter the blockchain; once a transaction is recorded and authenticated, it is permanently recorded.

What’s the Appeal?

If you’re still scratching your head trying to figure out how blockchain impacts nonprofit financial management, we don’t blame you. It’s one thing to conceptually understand an unalterable, immutable chain of transactions, and another to understand how it applies to your daily world in the nonprofit sector.

The main appeal of blockchain is trust. The security and transparency inherent in the blockchain bring a level of trust to transactions unheard of in the past. Because every transaction on a blockchain must be verified through a process called consensus, transactions cannot be forged.

Transactions are also time and date stamped so all parties involved in the transaction can quickly and easily see when it was made and confirmed.

Enhanced Trust Is a Plus for the Nonprofit Sector

The area where blockchain has the best potential to make a splash in the world of nonprofit financial management is in donor relations.

Millennials now make up the largest demographic—larger, even, than the Baby Boomers. They are also very interested in supporting the causes championed by their favorite nonprofits.

This is also a demographic which values trust and transparency. Public trust in nonprofits is currently on shaky ground with 49% of donors complaining that they don’t know how nonprofits spend their money.

The transparency and traceability inherent in the blockchain model appeal to millennials. Many are already familiar with blockchain and are open to new technology. Using the blockchain, nonprofits can demonstrate a permanent, immutable record of how donations were received and used.

Reporting Time Saved

Another advantage of using blockchain to track donations in nonprofit financial management is the time that can potentially be saved with government or grant reporting. Many nonprofits receive funds from entities that require frequent reports.

The blockchain model saves the need for reports by providing an open yet secure record. Entities can immediately check the blockchain’s time and date stamps to see transactions. They do not need to wait for reports to be filed. That saves time and effort on both your side and theirs.

Clearly, blockchain is in its infancy. There’s a lot more to it than one article can cover, but now you’ve got an idea of how blockchain may impact the nonprofit segment. It’s worth following as it develops into a more fully fleshed out model for the nonprofit world.

Beck & Company

Beck & Company is an independent certified accounting firm specializing in nonprofit organizations. Since 1987, we have helped many nonprofits in the Washington D.C. area and along the Eastern seaboard with their accounting and financial management needs. We provide audit, tax, accounting, and consulting service that addresses all aspects of a small to mid-sized nonprofit organization’s business. Contact us or call 703-834-0776 x8001.

Washington DC Nonprofit Advisers Offer Interview Tips

As Washington DC nonprofit advisers, we are often asked if we know of any potential candidates for open positions among our nonprofit clients. Networking, as you know, is one of the oldest and most trusted methods of finding great people for open positions. But, there are other ways in which you can find the best person for an open position. Pre-interview preparation is one of the most important tasks we recommend to our clients when they claim they can’t find great talent for their open jobs.

What is pre-interview preparation? As the term implies, it’s doing your homework before the candidate walks through the door or picks up the phone to begin the interview. Here, our Washington DC nonprofit advisers offer tips to help you prepare for candidate interviews.

Consider Past History When Preparing for Interviews

Every organization has their share of stories—the great candidate who turned out to be a nightmare, the star player who quit after one day, the great candidate who ended up being not so great.

Before you even begin the new hire recruiting process, take time now, as a team, to talk about those mistakes. It’s not about blame or shame. Rather, it’s about finding some commonalities behind the mistakes.

For example, were you rushed into making a hiring decision? Like buying a house or a car, rushing through the decision often leads to disastrous consequences that are difficult, although not impossible, to rectify.

Did you check references? Many candidates sail through the interview process because they have a professional appearance and are practiced at answering in just the right way to offset any questions. Checking references may open other avenues of questioning that can get to the real person behind the shiny, perfect facade.

Bring together a group of managers from your organization to talk about the new hires that worked out well and those that didn’t. Seek common problems, situations, or reasons why people didn’t work out. This will point you in the right direction to fix the problem now, before you go through the hiring process again.

Plan for Each Interview

Set aside time to research each candidate and think through the questions you’d like to ask them before the interview begins. A question guide, created in conjunction with the human resources department, can be a useful rubric to start an interview.

Online research may bring to light any issues with the candidate’s reputation or work ethic. Google searches, LinkedIn profiles, and other techniques can help you verify information or get a better idea of questions to ask potential employees.

Don’t skimp on the interview process. Although phone interviews are a great first step to narrow down the pool of suitable candidates, in-person interviews are the gold standard for finding the right fit for your team.

Ask Open-Ended Questions

Make sure you ask plenty of open-ended questions to get a feel for the person’s character and problem-solving abilities. Open-ended questions do not allow for a simple “yes” or “no” answer.

Some examples of open-ended questions include:

  1. Tell me about yourself.
  2. Tell me about your career goals.
  3. Share an example of a problem that you experienced at your last job and how you solved it.
  4. What would you do if faced with [common situation at the nonprofit?]
  5. What do you know about our organization?
  6. What attracted you to this job?
  7. Where do you see your career going five years from now?

Learn to Read Body Language

Body language is a controversial subject, but many believe that we communicate just 7% of our intention through words. That leaves 93% through tone of voice and body language. Some simple body language cues include:

  1. Expressing nervousness by fidgeting, flushing, or playing with hair, pencils, etc.
  2. Indicating a false answer by averting the eyes, looking down, or raising the voice.
  3. Looking at the clock or watch and sighing repeatedly as a sign of boredom or tension.

Positive body language indicators include “mirroring” in which the candidate mirrors the interviewer’s body language, thoughtful answers that reflect an engaged and neutral tone of voice, eye contact, and a firm handshake. Keep in mind that these cues may shift with cultural differences. What is considered professional behavior in New York may differ from perceived professionalism in Bangkok.

Read the Resume and Cover Letter

You’d be amazed at how many hiring managers fail to read through the entire resume or cover letter of a candidate. Reading through both may provide you with icebreakers (“You enjoy kayaking; how interesting. Tell me more.”) or commonalities that can put the candidate at ease (“I see you went to Duke University, too.”)

Although there’s no perfect way to find great candidates, with a little preparation, you’ll improve your chances of finding the right person from among the applicants at your doorstep.

Washington D.C. Nonprofit Advisers

We’re Washington D.C. nonprofit advisers with a passion for the world of nonprofit organizations. We offer consulting, accounting, auditing, and other services to help nonprofits grow and thrive. Contact us today.

Washington DC Nonprofit Advisers Say: Keep Your Data Safe

As Washington DC nonprofit advisers, we are concerned by the growing threat of cyber-attacks and data breaches among our nonprofit clients.

Since 2005, 110 nonprofit organizations in the United States have reported data breaches. At first glance, that may not seem like many; it works out to a little less than 10 per year.

However, you certainly don’t want your organization to be that unlucky one that finds out hackers have accessed their donor files, credit card information, and other confidential notes. In fact, some information contained in nonprofit databases is downright scary.

While your data breach may not be as simple as one in the United Kingdom in which an unencrypted memory stick containing confidential patient data was lost, any data breach can result in serious consequences. Companies can be fined, face lawsuits, and lose donor and member trust.

There are many steps that your nonprofit organization can take to safeguard donor data. Not all steps are time-consuming and costly; many are simple, common sense approaches to data management that are within the reach of any size nonprofit organization.

Six Steps to Keep Data Safe

  1. Know what data you collect: Start by understanding the data collected by your nonprofit organization. Do you collect donor data, membership data, or data on those receiving your nonprofit’s services? These are all potential sources of data breaches. Take an inventory of all your data sources now. Don’t forget volunteer and employee data too, including social security numbers, names, addresses, and email information.
  2. Find out where all the data is stored: That sounds easier than it looks. Data may be stored on multiple servers, clouds, or a combination of on-premise servers and off-premises clouds. Look for copies and backups kept on memory sticks (see the U.K. breach, above) and external hard drives.
  3. Classify the data: Develop data classification lists based on the sensitivity of the data. Some data may be highly sensitive, such as credit card information, health records, or social security numbers. Other data is less sensitive because it is easily found in the public domain—addresses, for example.
  4. Create data policies: A data policy lists guidelines around who may view, access, store, and utilize data. It should also include details on how data is backed up and updated.
  5. Build an emergency plan: In the event of a data breach, what are the steps you will follow to lock down the remaining data, alert those affected, and safeguard against future breaches?
  6. Train staff: Take the time now to update written policies regarding data use. Train your teams on how to safeguard and protect data. Also train them on basic internet security practices, such as avoiding phishing scams and viruses.

Consider Data Protection Insurance

If your nonprofit organization handles extensive personal data or highly sensitive data, you may wish to consider specific insurance to cover against data theft, losses, and cyber-attacks. Such insurance can provide you with peace of mind so, in the event of a data breach, you will have specific coverage to help your organization recover and repair the damage.

No one likes to think about cyber threats, data breaches, and the ramifications of lost or stolen data. However, given that most experts believe the incidences of cyber-attacks against nonprofits will rise, it’s a smart move to take steps now to protect yourself. An ounce of prevention is worth a pound of cure.

Beck & Company

We are Washington D.C. nonprofit advisers, consultants, accounting professionals and CPAs with a passion for helping nonprofits thrive. We can assist you with accounting, audits, and nonprofit technology questions. Contact us today for assistance.