When CPAs embark on volunteer efforts they might find the not-for-profit world a little different than what they encounter in for-profit sectors.
It is common for CPAs to “give back” and volunteer in the not-for-profit (NFP) sector. This is important, not only for the success of nonprofit organizations but also for the personal growth of CPAs and the accounting profession. But as CPAs embark on these volunteer efforts they might find the not-for-profit world a little different than what they encounter in for-profit sectors. Two important traits that are prevalent in the nonprofit community are optimism and altruism.
Certainly, optimism is a trait that is common among many people CPAs work with. The late Daniel Kahneman (winner of the Nobel Prize in Economics in 2002) wrote in his book, Thinking, Fast and Slow, that optimism is the engine of capitalism. Optimists, he says, are the “inventors, the entrepreneurs, the political and military leaders.” At the same time, Kahneman notes that small businesses have a 65% chance of failing within five years. Optimists have the confidence to begin a business knowing those odds and yet believe they have the persistence and skills to beat the percentages. As Kahneman explains, optimism can be a mixed blessing: someone can have too much optimism, resulting in failed businesses.
The same general principles of optimism apply to the not-for-profit sector, but the difference is most people do not go into the nonprofit world for financial success. They usually enter this arena for a different purpose, an altruistic one. They often believe people will rally around their good intentions and that their not-for-profit can make a real difference in the world. Unfortunately, their optimism can also lead them to believe they can actually run an organization better than, or at least as well as, other people, often to the organization’s detriment.
Not-for-profit organizations can and do fail, and those entering the nonprofit sphere often quickly realize a lack of financing and funding can often be crushing. And by crushing we mean not only to the continued existence of the organization, but also to the very vision and mission of the organization. CPAs know the many consequences of running out of money and what it can mean to an organization. And it is precisely in this void, financial management, where CPAs can make a big difference. We have the skills to help the founders of nonprofits properly finance their calling and do responsible budgeting. We can help eliminate financial uncertainties and reign in the overexuberance of altruistic managers.
Altruism, as noted above, is another powerful trait within the not-for-profit world. An altruistic attitude more or less aligns with those who just want to do good overall. Connecting to an employee’s sense of altruism – particularly by working with a favored nonprofit – hopefully leads to higher employee engagement and productivity. Volunteers (and donors) gain a sense of altruism by performing acts that may reduce their own well-being in order to help others. These acts may include donating time, services, or money. A reduction in personal savings or free time in order to help others arguably reduces a donor’s well-being. But giving time, talent, or treasure (donations) to a charity from one’s internal motivation and sense of identity will provide a “warm glow” feeling or sense of additional utility (to use an economic term).
These are good for your employees and your company. Employees tap into their optimism and altruism to assist those with similar feelings. Your encouragement and participation reflect well on you among your employees (retention benefit) and the community (business benefit). Your employees understand that optimism and altruism alone can’t support a budget, but they want opportunities to give back and contribute to the greater good. Encourage their efforts.
Heather Kuhns, MBA, DBA, is an assistant professor of practice in management at the Moravian University School of Business and Economics in Bethlehem, Pa. She teaches across marketing, management, and leadership disciplines. Kuhns also is owner/chief inspiration officer of zenspire communications, a boutique agency specializing in branding, social media strategy, and communication planning. She can be reached at kuhnsh02@moravian.edu.
Mark Koscinski, CPA, DLitt, is an associate professor of accounting practice at the Moravian University School of Business and Economics, where he teaches undergraduate and graduate accounting courses. Koscinski has worked for a Big 4 accounting firm and also held various executive positions at privately held and public companies. He can be reached at koscinskim@moravian.edu.
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Statements of fact and opinion are the authors’ responsibility alone and do not imply an opinion on the part of the PICPA's officers or members. The information contained herein does not constitute accounting, legal, or professional advice. For actionable advice, you must engage or consult with a qualified professional.
