Passion Turned Profession · Book V · Money handled
Nonprofit Budgets and the Overhead Myth
A board does not need to understand accounting. It needs four answers, and most organizations cannot produce them.
14 chapters · 134 pages
What it is
Organizations rarely close because they ran a deficit. They close because on a particular morning there was not enough money in the account. A surplus and a cash position can point in opposite directions for months.
This is the book on holding it. Bookkeeping that survives the third year. Restricted and unrestricted, the two most consequential words in nonprofit finance and the ones founders usually learn after they matter. Fund accounting without an accountant. Internal controls in an organization of three people. And reserves, with the argument for holding them.
Then the public half: presenting a financial statement to a room without notes, the audit-or-review question that small organizations commonly answer expensively, Form 990 as the first document a serious funder reads, and overhead. Every incentive in the sector encourages understating that figure, and the incentives are wrong.
Every restricted dollar is a promise. Unrestricted money is the only money that is actually yours. Book V · Nonprofit Budgets and the Overhead Myth
What this book assumes
That money is arriving. Raising it is Book Four.
Every chapter
14 chapters, and what each one does.
Every chapter, with the sentence it opens on.
- 01
The Four Questions
A board does not need to understand accounting. It needs four answers, and most organizations cannot produce them.
- 02
Bookkeeping That Survives Year Three
Every organization outgrows its first system. The question is whether it does so gracefully or in a single catastrophic weekend.
- 03
Restricted and Unrestricted
The most consequential two words in nonprofit finance, and the ones founders learn about after they matter.
- 04
Fund Accounting Without an Accountant
You do not need to learn accounting. You need to learn one idea, applied consistently.
- 05
The Budget as a Plan
Most nonprofit budgets are a document produced annually for a board and consulted never. A budget is supposed to be a set of decisions.
- 06
Cash Flow Kills
Organizations do not close because they were unprofitable. They close because on a Tuesday there was not enough money in the account.
- 07
Internal Controls When There Are Three of You
This chapter is not about dishonesty. It is about the fact that a system with no checks will eventually be blamed for something that did not happen.
- 08
Reserves
The argument against reserves is that the money should be spent on the mission. The argument for them is that an organization which closes serves nobody.
- 09
Reading a Statement Out Loud
You do not need to prepare financial statements. You need to be able to explain yours to a room, without notes, in four minutes.
- 10
The Audit, the Review, and Which One You Need
Most small organizations buy the wrong level of assurance, and a meaningful number buy one they are not required to have.
- 11
The 990 Is Not a Tax Form
It is a public document, indexed and searchable, and it is the first thing a serious funder reads about you.
- 12
Overhead, Honestly
Every incentive in the sector pushes you to understate this number. Almost every incentive is wrong.
- 13
The Treasurer Who Is Not an Accountant
Your board is legally responsible for financial oversight and is usually least equipped for it. That is a solvable problem.
- 14
Handing It Over
The bookkeeper is usually the first back-office hire, and the handover determines whether you gain a capability or lose visibility.
Two more lines from inside
From the manuscript.
The dip is visible eight or ten weeks before it happens, which is the difference between a decision and an emergency.
Book V · Nonprofit Budgets and the Overhead Myth
A low overhead ratio describes either an efficient organization or one that has not yet noticed what it is missing, and no reader can tell which from the number alone.
Book V · Nonprofit Budgets and the Overhead Myth
-
What this book assumes
That money is arriving. Raising it is Book Four.
Each subject is treated once, in the book that owns it. Where an answer belongs elsewhere, you are given the chapter reference.
Get the complete set
All ten books, plus the toolkit.
Passion Turned Profession is available as a complete set for $149: all ten books in PDF and EPUB, plus the forty documents printed in Book X as editable Word files. The books are not sold separately.