Accounting That Protects Your Mission
Nonprofit accounting requires a different mindset than for-profit business. Donor restrictions, grant compliance, and public reporting obligations demand specialized expertise to keep your organization in good standing and your mission on track.
Schedule a Consultation
Tell us how we can help and we'll be in touch within one business day.
How can we help?
Understanding Your Industry
Cloonan & Associates provides accounting, tax, and advisory services tailored to the unique needs of nonprofit organizations. We help charities, foundations, associations, and social enterprises maintain accurate fund accounting, prepare Form 990 returns that withstand scrutiny, comply with grant reporting requirements, and produce financial statements that give boards and donors confidence. Our goal is to handle the financial complexity so your team can focus on the work that matters.
Common Challenges We Help Solve
Fund Accounting Complexity
Nonprofits must track resources by fund, separating unrestricted, temporarily restricted, and permanently restricted net assets. Each grant, donation, and program may require its own accounting treatment, and mistakes in fund classification can misrepresent your financial position to donors and regulators.
Grant Compliance and Reporting
Government and foundation grants come with specific spending rules, reporting deadlines, and documentation requirements. Failing to properly track grant expenditures or missing a reporting deadline can result in returned funding, disqualification from future grants, or audit findings.
Board Reporting Requirements
Board members need clear, accurate financial reports to fulfill their fiduciary responsibilities. Many nonprofits struggle to produce timely statements of activities, statements of financial position, and budget-to-actual comparisons that non-accountants can understand.
Form 990 Accuracy and Transparency
The Form 990 is a public document that donors, grantmakers, and watchdog organizations use to evaluate your organization. Errors, inconsistencies, or missing schedules damage credibility and can trigger IRS scrutiny. Accurate preparation requires careful attention to compensation reporting, program descriptions, and governance disclosures.
Donor Restriction Tracking
When donors give gifts with specific purposes or time restrictions, your accounting must track those restrictions and release them only when conditions are met. Commingling restricted and unrestricted funds, or spending restricted gifts on unauthorized purposes, violates donor intent and can have legal consequences.
Maintaining Tax-Exempt Status
Nonprofits must continuously meet IRS requirements to maintain their 501(c)(3) or other tax-exempt status. Excessive unrelated business income, private benefit issues, political activity, or failure to file Form 990 for three consecutive years results in automatic revocation.
How We Help
Services for Nonprofit Organizations
These are the services most commonly used by businesses in your industry.
Nonprofit Accounting Services
Nonprofits face accounting requirements that differ significantly from for-profit businesses. We provide fund accounting that tracks restricted and unrestricted resources, grant compliance reporting, preparation support for Form 990, and financial statements formatted for board presentations and donor communications. Our goal is to give your leadership team the financial clarity they need to advance your mission.
Learn MoreNonprofit Tax Services
We prepare Form 990, 990-EZ, and 990-PF returns for nonprofit organizations, ensuring accuracy, completeness, and compliance with IRS requirements. Our service includes reviewing your functional expense allocations, governance disclosures, program service accomplishments, and compensation reporting. We also advise on unrelated business income tax (UBIT) issues and help you maintain compliance with the rules that protect your tax-exempt status.
Learn MoreFinancial Statement Preparation
We prepare professional financial statements including profit and loss statements, balance sheets, and cash flow statements. Depending on your needs, we can provide compilation or review-level reports. Our statements are formatted for clarity and include the detail that lenders, investors, and management teams need to make informed decisions.
Learn MoreBudget Development & Review
We help small businesses create realistic, actionable budgets tied to their actual financial performance. Our process includes building annual operating budgets, setting revenue and expense targets, and establishing a regular cadence of variance analysis and forecasting updates. The result is a financial roadmap that helps you manage cash flow, allocate resources, and make confident decisions throughout the year.
Learn MoreRegulatory Compliance Advisory
Regulatory compliance is not just a big-company concern. Small businesses face requirements from federal, state, and local regulators that can carry significant penalties for noncompliance. We conduct compliance reviews, assess your internal controls, identify process improvements, and help you build systems that keep you in good standing. Our approach is practical and proportionate to the size and complexity of your business, giving you confidence without unnecessary burden.
Learn MoreCommon Questions
Frequently Asked Questions
What is the difference between a compiled, reviewed, and audited financial statement for a nonprofit?
A compilation is the most basic level, where the CPA presents your financial data in proper format without providing assurance on its accuracy. A review involves limited analytical procedures and inquiries, providing limited assurance that no material modifications are needed. An audit is the most rigorous, involving detailed testing of transactions and internal controls, providing reasonable assurance that statements are free of material misstatement. Many grants and state registration requirements specify which level you need. We help you determine the appropriate level and prepare accordingly.
How do we properly track restricted vs. unrestricted funds?
Every donation and grant must be classified at the time of receipt based on whether the donor or grantor imposed restrictions on its use. Your accounting system should maintain separate fund codes or classes for each restriction category. When restricted funds are spent for their intended purpose, a journal entry releases the restriction. We set up your chart of accounts and fund tracking to ensure restrictions are properly recorded, monitored, and released, and that your financial statements accurately reflect the balance of each fund type.
What happens if our nonprofit does not file Form 990?
If a tax-exempt organization fails to file its annual Form 990 (or 990-EZ or 990-N, depending on size) for three consecutive years, the IRS automatically revokes its tax-exempt status. Revocation means donations are no longer tax-deductible for donors, and the organization may owe income tax on its revenue. Reinstatement requires filing a new application, paying applicable fees, and potentially paying taxes for the period of revocation. We ensure your filing is completed accurately and on time every year.
Do nonprofits need to worry about unrelated business income tax?
Yes. If your nonprofit earns income from a trade or business that is regularly carried on and not substantially related to your exempt purpose, that income is subject to unrelated business income tax (UBIT). Common examples include advertising revenue, rental income from debt-financed property, and certain partnership interests. There are exemptions for volunteer-run activities, donated goods sales, and activities conducted for the convenience of members. We identify which revenue streams are subject to UBIT and file Form 990-T when required.
How should our nonprofit handle in-kind donations?
In-kind donations of goods should be recorded at fair market value on the date received. Donated services are only recorded if they require specialized skills (legal, accounting, medical) that would have been purchased if not donated. You must send donors a written acknowledgment for contributions over $250, and for noncash contributions over $5,000, the donor typically needs a qualified appraisal. We help you establish policies for valuing and recording in-kind gifts, and we ensure proper disclosure on your Form 990 and financial statements.
Can you help us prepare for a grant audit or single audit?
Yes. Nonprofits that spend $750,000 or more in federal awards in a fiscal year are required to have a single audit under the Uniform Guidance. We help you prepare by organizing grant expenditure records, verifying compliance with each award's specific requirements, reviewing your internal controls, and assembling the supporting documentation auditors will request. For organizations approaching that threshold, we also advise on whether it makes sense to adjust grant spending timing to manage audit obligations.
Related Industries
We Also Work With
Local Government & Public Entities
Cloonan & Associates provides accounting and advisory services to municipalities, townships, special districts, and other public entities. We specialize in governmental fund accounting, GASB compliance, grant management, and the financial reporting requirements that public entities face. Our work helps your finance team maintain accurate records, prepare for audits, and produce reports that satisfy state oversight agencies and inform public stakeholders.
Learn MoreMedical & Dental Practices
Cloonan & Associates works with physicians, dentists, and practice owners to bring financial order to the business side of healthcare. We handle the nuances of insurance billing reconciliation, multi-provider compensation models, and the specific tax strategies available to healthcare professionals. From solo practitioners to multi-location group practices, we provide the accounting and advisory support that lets you focus on patient care.
Learn MoreE-Commerce & Online Businesses
Cloonan & Associates helps e-commerce sellers, SaaS companies, and online service providers manage the unique financial complexities of doing business on the internet. We handle multi-state sales tax compliance, inventory cost accounting, payment processor reconciliation, and the tax planning strategies that help online businesses retain more of their revenue. Whether you sell on Amazon, Shopify, your own platform, or a combination, we build the financial infrastructure that supports sustainable growth.
Learn MoreReady to Work With a CPA Who Understands Your Industry?
Schedule a free consultation. We will review your situation, explain how we can help, and give you a clear picture of what working together looks like.