A clearer pathway to CPA licensure vital to the financial health of Minnesota nonprofits
March 20, 2024 | Guest Author
The Minnesota Council of Nonprofits (MCN) appreciates the work of the Minnesota Society of CPAs (MNCPA) and their partners to
broaden the pathways to CPA licensure, which in turn will help ensure that nonprofits: 1. Have independent partners to provide financial oversight and remain financially transparent for the public; and 2. Can find, afford and sustain the specialized talent needed to lead essential work well and move their missions forward.
In Minnesota, nonprofits represent 14% of our state’s economy, partnering with government agencies and philanthropy to nimbly meet the needs of our communities. The work of nonprofits is often invisible, yet critical to our day-to-day lives. From childcare to theaters, bike paths to civic engagement, secure housing to after school programs, nonprofits address complicated and intersectional needs of our people every day, often with limited capacity and resources. MCN’s most-recent
Current Conditions report relays that, since 2020, hundreds of nonprofits have reported demands for services have continued to rise, while donations have become stagnant or on the decline.
There are more than 4,500 Minnesota nonprofits required by law to conduct an external audit every year.
Funders expect nonprofits to operate with strong financial management and independent auditors understand the need well. Yet, “overhead” costs — such as hiring and supporting talent, fundraising, and creating and maintaining strong internal financial procedures, among others — are too often underfunded, devaluating the critical work of running an effective business. In fact, core mission support from philanthropic organizations and government entities is rare, an estimated 21-23% of foundation grant funding goes toward general operating support.
As recruitment of talent in specialized fields (such as finance, human resources, development and finance) becomes more difficult in a highly competitive job market, nonprofits are facing a shortage of affordable accountants, auditors and CPAs able and willing to take them on as clients from conducting independent audits to providing back-office accounting support. The current shortage of CPAs has hit the nonprofit sector especially hard because nonprofits cannot easily increase their funding to pay higher rates for the CPAs that are available, and nonprofits are generally not lucrative clients when compared to for-profit entities.
Yet, as a sector that is highly regulated and held accountable for transparency, nonprofits need financial partners for their expertise and, most importantly, to maintain the public trust needed to meet their missions.
In order to maintain and grow that public trust, nonprofits must have strong board oversight, including regular review of organizational financials, conduct yearly audits (if applicable), file appropriate tax forms and meet all regulatory requirements. Nonprofits need strong financial partners, and ensuring more talent is entering the field contributes to long-term sustainability and competitive fee structures more attainable to smaller nonprofit organizations.
MCN sees a need to grow the talent field specialized in nonprofit finance, as applying and reporting for funding with private and government sources continues to be one of the key pain points for organizations. With these challenges and emerging needs in mind, we strongly support the work of MNCPA and
their partners to broaden the pathways to CPA licensure.
Nonoko Sato is the executive director for the Minnesota Council of Nonprofits (MCN), the largest state association for nonprofits in the United States. She oversees MCN’s strategic response to organizational and sector challenges through public policy and advocacy, responsive and educational programming, and sector-wide research.
Topics: Legislative & Government Affairs, Regulation, Staffing, Professional Certification, Government, Education, MNCPA Programs & Activities
Guest Author
The MNCPA occasionally requests people in or connected to the accounting profession to provide their insights for MNCPA Perspectives.
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