It’s no secret that effective financial management is critical to your nonprofit’s long-term success. From properly allocating revenue to thinking critically about costs and building reserve funds, managing your resources allows your organization to first work toward financial stability, then plan for future growth.

While your nonprofit should have dedicated financial professionals on its team, there are several different ways you can fill the necessary roles. In particular, many organizations debate whether to hire (or leverage outsourced services for) an accountant or a controller because there is some overlap between their duties. However, their jobs aren’t exactly the same, and different nonprofits benefit from working with each professional.

In this guide, we’ll dive deeper into the positions, qualifications, and responsibilities of nonprofit accountants and controllers to help your organization make an informed decision about who to hire. Let’s get started!

Nonprofit Accountant

Nonprofit accountants focus primarily on financial analysis and reporting. To do their jobs effectively, they need at least a bachelor’s degree in accounting or a related field, plus a Certified Public Accountant (CPA) certification. If your organization is looking for an internal accountant to hire or an outsourced firm to partner with, specialization in nonprofit accounting is essential because they’ll understand your unique situation and reporting requirements more deeply.

Some of a nonprofit accountant’s key duties include:

  • Reviewing all of your organization’s accounts. If you work with an accountant, you’ll typically have a second professional—a bookkeeper—who enters basic data into your accounting system. Your accountant will come in behind them to check that all information is recorded correctly, categorized according to your chart of accounts, and aligned with your bank statements.
  • Balancing transactions. Bookkeepers typically only record single-entry transactions (i.e., those that have either a debit or credit value, not both). However, some financial activities require double-entry tracking (i.e., both a debit and credit value), particularly in-kind donations that have value but result in a net zero gain in cash for your nonprofit. Accountants manage these more advanced double-entry systems to ensure accuracy.
  • Compiling and analyzing financial statements. All nonprofits have to create four reports each year that organize and summarize their financial data: the statements of activities, financial position, cash flows, and functional expenses. Your accountant will pull these statements from the data in your accounting system and evaluate them to help the rest of your team better understand your organization’s financial situation.
  • Preparing for audits. Some nonprofits are required to undergo independent financial audits, while others choose to conduct them for additional clarity on their strengths and areas for improvement. You’ll need to compile various documents and clean up your accounting system in preparation for an audit, which your accountant can assist with.
  • Filing tax forms. Your accountant will complete your nonprofit’s annual Form 990 filing to maintain compliance with IRS regulations for tax-exempt organizations. As an employer, your organization also has to issue individual W-2s and 1099s to each of its employees and contractors respectively, and your accountant will make sure these forms are completed correctly and sent out by the January 31 deadline each year.

Accountants also complete other compliance-related and data analysis tasks as needed, but these are their major responsibilities. They’ll typically work closely with your bookkeeper and report their results to your organization’s leadership team.

Nonprofit Controller

According to Jitasa’s guide to this role, “A nonprofit controller is an experienced professional who manages key financial functions for a tax-exempt organization. Their duties typically span all stages of nonprofit financial activities, from planning and day-to-day operations to analysis and reporting. The controller position essentially combines the duties of two other nonprofit financial roles: accountant and chief financial officer (CFO).”

To that last point, nonprofit controllers typically spend some of their time doing the accounting tasks described above, and the rest doing the strategy-oriented tasks that would otherwise fall to a CFO (on your organization’s leadership team), such as:

  • Budgeting. Although creating your nonprofit’s annual operating budget is a team effort that often spans multiple departments, your controller will take the lead on projecting your organization’s revenue and expenses for the upcoming fiscal year. They’ll also develop budgets for other initiatives at your nonprofit, such as fundraising events, grant applications, new program launches, and capital campaigns.
  • Policy development. When you bring on a controller, they’ll either assess your nonprofit’s current fiscal policies and procedures handbook and recommend improvements to it, or create one from scratch if you don’t have one. They’ll ensure you have guidelines in place for managing gift acceptance, conflicts of interest, expense reimbursement, and staff compensation, among other financial activities.
  • Strategic planning. As Aly Sterling Philanthropy explains, financial sustainability is a pillar of an effective nonprofit strategic plan, since you’ll need to continue operating your organization while raising and allocating funding to accomplish your other long-term goals. Your controller will provide valuable input on this pillar and help keep your nonprofit on track financially while executing your strategic plan.
  • Staff management. Since all of these analysis, reporting, and strategic tasks are a lot for one person to take on alone, controllers will often oversee a finance team or committee so they can delegate manual duties and focus on higher-level work themselves. For example, when preparing for an audit, your controller might have other finance team members review data and compile documentation. Their role will be to answer questions, track progress, and check that everything is in order at the end.

Because of this last responsibility, you should hire a controller with strong leadership skills, and previous management experience is also a plus. It’s also important to hire someone whose professional background is in nonprofit finance, and while a CPA certification isn’t technically required for this role, it is strongly recommended.

Should My Nonprofit Hire an Accountant or a Controller?

The answer to this question depends on your organization’s needs:

  • If your top priority is improving analysis and reporting, you need help with the nitty-gritty of nonprofit finance, and you want someone who will work alongside just a few other financial professionals, hire an accountant.
  • If you’re focused on financial strategy, need big-picture management skills, and want someone to oversee a larger team, hire a controller.

Whichever route you go, make sure your accountant or controller doesn’t just have the skills, education, and expertise to do their job well, although those factors are important. The right professional will also collaborate effectively with your existing team and be passionate about your mission so their financial work can contribute to your entire organization’s efforts to make a difference in its community.