If you are part of the third sector, you probably already know that accounting is essential to ensure efficient management. After all, this is the process responsible for ensuring transparency in organizations and facilitating the search for resources and financial investments.

However, many entities still ignore this issue and end up losing the trust of potential donors and volunteers.

Therefore, if you are not sure about the importance of the process or do not understand why you should worry about it, the CodeBlog team has listed some reasons to pay attention to this factor and some tips to optimize it.

Follow along with the reading and check it out:

Why is accountability essential in the third sector?

Undoubtedly, being cautious and concerned about an entity's financial statements is a way of showing people more seriousness and transparency.

Taking into account that third sector entities depend on the assistance of third parties, such as government resources and donations from the population, it is a fact that they need, much more than a for-profit organization, to pay more attention to finances, salary payments, and accountability in general.

When an NGO or an OSCIP fails, for some reason, to carry out appropriate accounting management, it is seen as “less trustworthy”, both by the population and by government bodies, and is directly harmed by the reduction in receiving resources and donations.

5 tips to optimize accounting in the third sector

1. Good planning is mandatory!

Take advantage of the year that has just begun and draw up detailed planning of the activities that will be carried out by the organization throughout these 365 days.

Then, calculate the direct budget needed for each project and analyze the possible sources of resources.

It is also necessary to put on paper the amount to be spent on hiring people, purchasing materials, equipment, etc.

With these notes in hand, it is much easier to make prior budgets with different companies and increase the chances of getting good proposals. Do not forget to ask for the invoice (NF) of any purchased item and remember to keep track of the budget throughout the year.

2. Separate your accounts

Although this tip seems obvious, the truth is that many managers still insist on doing the opposite. So, it doesn't hurt to reinforce: never mix your personal accounts with those of the institution! This is a crucial point to maintain financial organization and the transparency of the developed projects.

Furthermore, it is also interesting to separate the values by cost center to simplify the identification of what is revenue, what is expense, and what is the origin of each payment. This way, if you are questioned about any value at any point, you will know how to answer easily and objectively.

3. Stay on top of legislation

Law 13.019 regulates partnerships between the public administration and third sector organizations and integrates some rules for the transfer of financial resources.

It is of utmost importance that any manager of an entity deeply knows the legislation governing the third sector and knows about the regulations that include the need to sign a collaboration term between the parties and disclose the obtained financial resources transparently, as well as the work plans that will be executed.

4. Any financial statement must be carried out assertively

If no one in the organization has the necessary knowledge to perform the financial statements, the most appropriate thing is for this process to be executed with the help of a specialist. After all, it is essential that it is fully based on Brazilian Accounting Standards.

Within the Third Sector, there are some specific points, such as the absence of profitability. Therefore, in cases of any positive result, it must be recorded as a surplus. In contrast, negative results are seen as a deficit.

However, this information can only be calculated and identified in the report if the manager makes all payment records and keeps the invoices (NFs) throughout the year.

5. Financial statements must be public

Undoubtedly, accounting in the third sector aims, first of all, to ensure the transparency of the actions developed by the entities, since the money invested comes from government agencies or donations from individuals, who have not only interest, but also the right to know how the money or resources were used.

To demonstrate the benefits obtained from donations, try to create monthly reports that reveal the accounting information and the result of each project developed by the entity. Then, forward the data to the donors and, if possible, publish the reports on a website, so that everyone can discover the advantages and results achieved by your organization.

6. Count on technology!

The use of technological instruments is an excellent ally to help organize finances and the entire accounting process of the third sector. Several platforms exist to provide a continuous flow of information and facilitate the control of expenses, revenues, and budgets.

In fact, Codebit is a public cloud provider AWS (Amazon Web Services) and a specialist in developing solutions for the third sector.

Want to find out how to improve the processes in your organization? Then click here, get in touch with us, and discover all the available tools to meet your demand.

Otherwise, keep an eye on Codeblog. Soon, we will have many updates here.

A big hug, and see you in the next post!