While you may not think about it every day, it is an ever-present threat, and thousands of Americans have fallen prey. 

In 2019, the Federal Bureau of Investigations (FBI) received an average of 1300 complaints of account fraud per day, resulting in over $3.5 billion in losses. Bank fraud occurs in many ways, from identity theft to cyber-attacks, romance scams, check-cashing, and government imposter scams. 

While there is no way of guaranteeing that your accounts will be 100% safe, the tips highlighted in this post can help protect your accounts against fraud.

#1 - Check Your Accounts Regularly Online

The ability to access your accounts online is a good and bad thing. Good in that it means you can access your funds from any place as long as there is an internet connection, and bad in that it becomes so much easier for hackers to access your account.

But there are other benefits to accessing your accounts online; it allows you to monitor activities on your account regularly, which is critical for fraud prevention and catching fraudulent activity before it causes extensive damage. You can also go further to activate e-notifications of any activity on your accounts. 

#2 - Use Strong Passwords

Unfortunately, most people avoid complicated passwords because they do not want to stress over remembering them. As a result, people tend to use simple-to-crack passwords or one password across all accounts. This means that if a hacker can crack your social media profile password, they have access to all your accounts, including online banking. 

The best approach to passwords is making them as non-obvious as possible and having a unique password for every account. It doesn't have to be overly complex. Only ensure that it is not something anyone can guess. Also, make sure you use a good mix of numbers, symbols, caps, and small letters to make it as non-obvious as possible. If memorizing passwords is too much of a hustle, consider using a password manager. 

#3 - Consider Two-Factor Authentication

Having two layers of defense on your accounts is better than one, so consider adding a layer of protection to your accounts through two-factor authentication. You may have seen two-factor authentication at work when logging in to your Google account from a different device. Often Google will send a prompt to the devices that are already signed in and only allow access on the new device if you answer the prompt on the other devices. 

Two-factor authentication for your bank accounts works in the same way. Every time a person logs in, you receive a code on your phone or email, which you then use to access your account. This approach ensures that only you can access your accounts since only you can access the sent code.

#4 - Beware of Public Wi-Fi

Almost every public place you visit, from your coffee shop to your favorite restaurant to your local, will have free Wi-Fi. The problem with open Wi-Fi is that cybercriminals can use the loopholes in the connection to access sensitive information from your online activity. 

If you are streaming content or reading a blog, there is no harm in using an open network. But if your activity involves logging in to your accounts, public Wi-Fi is not for you unless you have installed VPN on your devices. 

#5 - Update Your Apps Regularly 

Software update notifications can be nagging. But if the updates have anything to do with the apps you use to access your funds, you may want to change your approach towards them. 

The primary purpose of updates is to seal loopholes that hackers may utilize to commit fraud. So failing to update your software exposes you to hackers, which is avoidable by allowing timely updates. So, if you haven't permitted updates in the near past, it's time you go through your apps to ensure that every sensitive app on your device is updated.

Today, perhaps more so than previously recognised, nonprofits have garnered immense support from the civil community, as the internet and social media enable them to share their causes more frequently and to a wider audience. 

According to The NonProfit Times, a leading publication and media outlet for nonprofitable organisations, 2021 contributions totalled more than $484.85 billion, with 67% coming from individuals alone, a significant increase from the 33% it represented at the start of the century in 2000. 

As society and younger generations look to become more vocal around the causes and communities nonprofits serve, the more than 1.5 million American nonprofits - that employ around 10% of the American workforce, and contribute roughly 5.4% to the nation's GDP - will only increase their impact and empower them to advance their mission. 

Although nonprofits do make a difference in our civil society, whether it’s through the programmes they orchestrate or the support they offer, regulatory factors regarding taxation and accounting still require nonprofits to adhere to strict protocols outlined by the federal government and the Internal Revenue Services (IRS).

Luckily for the 27 types of nonprofit organisations, there are specific rules that guide them on their tax-deductible contributions and nonprofit accounting. 

To make sense of this whirlwind of information, this simple guide looks to help add more clarity for accountants, and non-accountants that have found themselves working for a nonprofit. Here’s a simple look at the basics for beginners. 

Nonprofit Tax-Exemption Status

Seeing as nonprofits conduct efforts on a charitable basis, with most of the donations and proceeds going towards fulfilling the organisations' mission, a majority of these groups and organisations will generally be exempt from paying federal taxes. 

Organisations are only exempt if they meet requirements outlined by Publication 557 on Tax-Exempt Status released by the Department of the Treasury and IRS. 

With no direct ownership, shareholders or investors, nonprofits are required to fulfil certain requirements to keep their nonprofit status - and this is where nonprofit accounting becomes a crucial part of their operations. 

A Short Summary Of Nonprofit Accounting 

Oftentimes referred to as fund accounting, nonprofit accounting records all financial and monetary accounts held by the organisation. 

Seeing as all nonprofits are different, the fund accounting system works to keep track of income and expenses to help ensure organisations can achieve their goals and adhere to regulatory conditions. 

Nonprofit accounting can include some of the following: 

• Setting up a budget 
• Analysing financial records and statements
• Recording transactions such as in-kind donations 
• Managing various bank accounts 
• Performing bank reconciliations 
• Fund accounting and bookkeeping 

Simply put, nonprofits will need to appoint a treasurer or accountant that will help to balance the books and keep track of funding accounts. 

Setting up a budget 

Just like with for-profit businesses and companies, a budget helps to determine how profits will be used to achieve certain goals, and how the money will be allocated accordingly. 

For nonprofits, a budget may look somewhat different, as they generate income from donations and other forms of charitable causes. This means a budget will usually have an expected income and expenses. 

The expected income and expenses will outline where money will be coming from, whether it’s through corporate contributions, in-kind donations, voluntary work, or other programmes. At the same time, expenses will help keep track of where nonprofits are spending money including payroll, programmes, and events. 

Analysing financial records and statements

The second part of fund accounting is making sure to analyse financial records and statements the nonprofit incurs during the financial period. As with regular businesses, financial records and statements help to keep track of all income generated by the organisation, where it was spent, and how it got there. 

For the sake of accounting and taxation purposes, nonprofits must make use of digital tools that will help them manage and control their financial statements more seamlessly. Ultimately, these statements act as a way to keep a record of all accounts, and expenses a nonprofit generates over time. 

Recording transactions

As mentioned, financial statements can play a big part in the overall funding account management procedure and seeing as many nonprofits will oftentimes receive in-kind donations and voluntary aid, these will need to be recorded as well. 

In-kind donations are those that are acted upon by a person or company as a gesture of goodwill. For example, if a photographer says that he will assist with new portraits and photographs for the organisation's website, the nonprofit will need to record the in-kind donation in their statements. 

The nonprofit will have a separate account in its accounting ledgers for all in-kind donations and will record a receipt based on the fair market value of the donation. Thus saying, if the photographer charges $550.00 for 100 photos, the nonprofit will record the $550.00 as an in-kind donation. 

Managing various bank accounts

Smaller nonprofits may have one or two bank accounts at the beginning, but over time, as the organisation grows, different bank accounts will be required for different activities. 

Some nonprofits may have a regular check account but will have a separate savings account for emergencies. Some financial institutions offer tailored checking accounts for nonprofits that act as regular business accounts but have been customised for nonprofits. 

It’s not a smart idea to have a singular bank account from which all transactions are conducted, as this makes accounting practices increasingly difficult and complex. 

Performing bank reconciliations

Both individuals and businesses tend to perform bank reconciliations when it comes to filing annual taxes. A bank reconciliation is simply checking to see whether transactions completed on a specific bank account line up with those recorded on the financial statements. 

The bank reconciliation helps to keep track of purchases and expenses that may be exempt from tax, or which are filed and accounted for differently. 

Fund accounting and bookkeeping

Then finally, fund accounting and bookkeeping are where most nonprofits will start to organise their financial and monetary statements or transactions in one place. 

Instead of having different ledgers that help to keep track of the various transactions completed by the nonprofit, some organisations tend to make use of automated software and computerised programmes to help keep all their financial proceedings in one secure place. 

Additionally, it’s advised that nonprofit organisations make use of some form of bookkeeping and accounting services that are tailored to their needs and their tax-exempt status. Not only does it help them ensure more financial credibility, but it enables them to align their financial proceedings with their missions and regulatory factors. 

To Finish Off 

We know that nonprofit organisations play a massive role in our general community and civil society, acting as a voice for disadvantaged communities across the world. While it’s true that these organisations can make a difference, regardless of their mission, they must align their accounting and financial position with the regulatory factors outlined by federal authorities. 

Nonprofit accounting may seem like a tumultuous challenge at first, but once a person gets used to the ins and outs, it becomes almost instinct for people to keep better track of their financial situation.