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Best Practices in Providing Accounting Services to Tax-Exempt Organizations

By Justin Reid, on September 13th, 2019

The Bonadio Group has one of the largest tax-exempt practices in New York State, staffed by a dedicated team of CPAs and other seasoned professionals who have backgrounds in accounting and auditing, risk and internal controls, management consulting and organizational governance, serving a range of large and small tax-exempt organizations with a wide variety of missions. We sat down with Justin Reid, CPA, partner in the healthcare/tax-exempt team to learn more about the unique aspects of providing accounting services for tax-exempt organizations and how The Bonadio Group is making a difference in this area.

Q: As Bonadio’s team leader in the Buffalo office for the healthcare/tax-exempt team, what is unique about your role, as well as your team’s role?

JR: The fact that my client base is completely comprised of tax-exempt organizations is very unique when compared to that of other accounting professionals. This means I don’t spend any of my time working with for-profit entities and I don’t do taxes for clients – strange that an accountant doesn’t do taxes, but it’s the truth! I’ve built the last 10 years of my career around the tax-exempt market and I supervise a team of 15 that spends 95 percent of their time on tax-exempt organizations. Each team member is required to attend over 80 hours of comprehensive, focused training annually, including a course that covers the latest compliance issues and challenges for our clients.

Q: What are some of the common challenges your tax-exempt clients are facing today? How is your team helping address them?

JR: Lately, it all comes down to the three C’s – collaboration, cooperation, consolidation. It’s no secret that funding agencies (primarily governmental units) want to deal with fewer providers. Simply put, these agencies don’t want to pay multiple organizations to do the same things, so mergers and acquisitions are becoming increasingly common. How our clients respond and prepare now will determine where they end up in the future (the acquired, the acquirer, or neither) so our goal is to help our clients with strategic planning. The boards running these organizations have limited time and resources, as well as members who may not have strong financial backgrounds so we’re there to provide our counsel based on what we know about the organization and the industry environment overall.

Q: Funding is, of course, top of mind for any non-profit organization. How do you help your clients navigate the challenges associated with securing the money to achieve their missions?

JR: We aren’t so much involved in the fundraising or grant applications themselves (though we can refer our clients to reputable grant writers) but rather in helping our clients navigate the recent changes in how they’re being paid. When an organization wins a grant for a big project, the money doesn’t necessarily come in right away so the board struggles to decide if they should dig into their lines of credit or investment portfolios to get started and to hire the necessary staff to work on the project. However, that borrowed money incurs interest, so ultimately a part of the grant or accumulated surpluses then has to go toward the interest as well, which means less money flowing into the community the organizations serves. We help our tax-exempt clients navigate these decisions and look at the longer term financial picture. As simple as it sounds, we help these organizations think of themselves as a business and plan accordingly.

Q: Why would you recommend that tax-exempt organizations give you and your team a call?

JR: On top of the financial planning support we provide as clients work around the three C’s and more funding challenges, we also help tax-exempt organizations remain in compliance with all federal, state and local regulations that may impact their operations. For example, the Uniform Guidance procurement requirements recently underwent some major changes and any organization expending federal funds needs to understand and comply with the new regulations or face major penalties down the road.

As I mentioned, our team is fully dedicated to tax-exempt clients, we monitor all types of issues and make our clients aware of the steps they need to take to maintain compliance and succeed financially, working toward the ultimate goal of helping these organizations better serve their communities and fulfill their missions.

To learn more about The Bonadio Group’s tax-exempt division, visit:

This material has been prepared for general, informational purposes only and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. Should you require any such advice, please contact us directly. The information contained herein does not create, and your review or use of the information does not constitute, an accountant-client relationship.

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