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Junior League vs Nonprofit Accounting: A Distinctive Approach

Accounting is a vital thread for all nonprofit organizations, including Junior Leagues. However, it’s significant to know that all threads are not woven same.

In the realm of nonprofits, accounting practices of Junior league stand out as a distinctive approach. Let’s delve into unique approaches that shape accounting and financial management of Junior Leagues and Nonprofit organizations. From accounting year to budget preparation, we will uncover all threads that set junior league accounting apart. But before that, we will grasp the unique nature of Junior Leagues.

Being a proud junior league member, you are committed to promoting voluntarism, developing the potential of women and improving communities through the effective action and leadership of trained volunteers. Though the purpose is exclusively educational and charitable, you need robust financial management to support your organization’s mission.

To keep your tax-exempt status and earn donor trust, you are responsible for the preparation and fair presentation of financial statements in accordance with accounting principles generally accepted in the United States of America. This includes the design, implementation, and maintenance of internal control relevant to financial statements.

Demystifying Junior League Accounting Dynamics

The accounting intricacies of Junior Leagues, originating in 1901 and now spanning 295 chapters across the United States, Canada, Mexico, and the United Kingdom, demand bespoke approach. Let’s explore key things to keep in mind for Junior League accounting, making it distinctive from other nonprofit organizations.

July to June Accounting and Reporting Year

For Junior Leagues, the fiscal year-end is June 30. You need to collect W-9s for your vendors and ensure financial reports are up to date for filing IRS form 990.

President and treasurer are responsible for the day-to-day accounting as well as strategic planning for the League, partnering with the Financial Committee to help educate members on League finances. You appoint them on a yearly rotation basis to ensure the following:

  • Prepare monthly statements of Income & Expense, Balance Sheet, or other reports as necessary.
  • Monthly reconciliation of bank accounts.
  • Reconciliation of all balance sheet accounts.
  • Maintain costs by program and/or grant designation.
  • Enter payroll information into accounting system.
  • Maintain deposit and vendor files by fiscal year.
  • Monitor release of restricted funds.
  • Present financials to senior management on monthly basis.
  • Prepare periodic reports as required by Executive Team, Board and Funders (e.g., county, state, and private philanthropic organizations).
  • Maintain fixed asset inventory and depreciation.

The calendar year works well for many nonprofits. The accounting and reporting year concludes on December 31st, and they hand over documents to CPA for the preparation of the annual informational return. However, other organizations choose for a fiscal year ending on April 30th.

Accrual Accounting Method

You record revenues when they are earned or pledged. And expenses are recorded when they are incurred. Basically, you follow “Matching Principle.”

Under this method, adjustments like member dues owed to your organization but never paid, left over t-shirts and cookbooks, and more affect your statement of activities and statement of financial position.

On the other hand, most nonprofits operate on a cash basis accounting because it is easier to understand and requires less experience.

Annual Board Meeting

Your annual meeting is held after the end of the fiscal year, June 30, or on the date decided by the directors. However, regular board meetings and reporting are held on a quarterly basis.

Unlike regular meetings, annual meetings are dedicated to important matters like, evaluating the executive director’s performance, electing new board members, setting your budget, reviewing your financials, evaluating your programs’ achievements, and reviewing your policies.

In contrast, most nonprofit organizations and their Board are free to decide the timings of Annual Board Meeting, depending on the governance and operational cycles.

They may also have board meetings monthly, bimonthly or bimestrial, and quarterly. For instance, the Futurecare foundation follows a calendar accounting year, having a bimestrial board meeting.

  • January – Executive performance review and financial review.
  • March – Review of Form 990 and program review.
  • May (Annual Meeting) – Elections and legal compliance.
  • July – Review mission and board’s composition, appoint and authorize committees, delegate duties, discuss board training and development.
  • September – Risk management, fundraising, networking, and organizational communications policies.
  • November – Budget and programmatic plans.

Budget Preparation

Budget preparation takes at least three months before the end of the fiscal year. So, you mostly start preparation in April to ensure that the budget is approved by the board of directors before the start of the new fiscal year.

You estimate various sources of revenue that come in mainly through membership dues, renting apartments located on the top floors of Headquarters, and investment accounts, so you can plan expenditures to create plans for better fulfillment of your mission.

Here is a budget snapshot of Junior League:

Category Budgeted Revenue Category Budgeted Expenses
Dues and Fees $381,898 AJLI/ODI/Board Training $63,053
Building – Apartments $58, 537 Leadership Institute/D&T $39,615
Finance Accounts $93,311 CAC and CPCs $55,690
W&M – Holiday Shops $127,795 Community Grants $105,000
W&M – Tossed & Found $116,997 Membership Development and Recruitment $14,210
W&M – Friends $42,125 Sustainers and Archives $4,695
W&M – Kitchen Tour $32,095 Communications & PR $21,790
W&M – Corporate Sponsors/Marketplace $23,825 Personnel & Administrative 465,723
Total $883,708 Total $107,642

SourceJunior League of Washington

Nonprofits following calendar year start preparation on budget in October to allocate resources effectively, plan projects ahead of time, set better goals, communicate effectively with stakeholders, forecast upcoming expenses, and ensure accuracy. Nonprofit budgeting encompasses both expenses (Administrative, Programming, and Fundraising expenses) and expected revenue for a set period of time (Grants, General donations, Monthly giving, In-kind donations, and corporate giving).

The Better Business Bureau recommends that nonprofits spend no more than 35% of their funding on fundraising efforts and spend at least 65% on programs.

As we conclude, it is clear that Junior league accounting is unique in several ways, particularly in accounting year, chosen methods, annual board meeting, and budget preparation. When you understand how these organizations vary, you can better identify the differences in priorities between these organizations and allocate funds more effectively.

By John Bugh

John Bugh is Chief Revenue Officer for Pacific Accounting and Business Services (PABS), responsible for the strategic direction, planning, vision, growth, and performance of the company’s marketing, branding, and revenue streams.

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