A firm with little experience with the complex world of nonprofit accounting can cost you dearly. Failing to screen candidates fully and jumping at the lowest-cost alternative is a recipe for failure. Here's why:

Overlooking Nonprofit Expertise: Choosing a provider without experience in nonprofit accounting can lead to errors in fund tracking, grant management, and compliance. Consider a firm that advertises its nonprofit expertise. Ideally, the provider would work exclusively with nonprofits; however, enough experience is the key.

Focusing Only on Cost: Prioritizing the cheapest option often sacrifices quality, leading to costly mistakes. The right outsourcing firm can fully replace an entire accounting department. Remember that even if they charge the same as your gross wages, you avoid the labor burden, taxes, benefits, etc. This can cost as much as 25% of wages. Suppose the cost of your employee(s) is $75,000. If the accounting firm charges the same, $75,000, the nonprofit will save close to $20,000 in overhead. The firm's quote will likely come in at less than $75,000 (in this example).

Neglecting References and Reviews: Failing to check client testimonials or references can result in choosing an unreliable or poorly suited provider. My experience is that most nonprofits wait until the last minute to search for an accounting partner. Being inclined to pick the first firm that seems competent and friendly can put the organization in a precarious position. Give the process time to screen qualified candidates fully.  

Some might describe the fiscal side of a nonprofit as equally critical as the mission itself. After all, without accountability, the opportunity to continue the mission might be in question. Don't make these mistakes.