Running a non-profit in Portland is a labor of love. But passion doesn’t pay the bills, and it certainly doesn’t satisfy the IRS.

In the for-profit world, a dollar is a dollar. In the non-profit world, a dollar might be “Restricted for the Youth Program,” “Temporarily Restricted for 2027,” or “Unrestricted for General Operations.”

If you spend a “Restricted” dollar on rent, you haven’t just made a bookkeeping error—you may have broken the law.

At Bridgetown Bookkeeping, we understand that your “Statement of Financial Position” is more than a balance sheet; it’s a trust signal to your donors. Here is how we help Executive Directors navigate the minefield of Fund Accounting, Grant Compliance, and Oregon DOJ regulations.

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TL;DR: The Non-Profit Compliance Checklist

The Concept	The Mistake	The Fix
Fund Accounting	Using one checking account mentally.	Use Class Tracking in QuickBooks to separate “Restricted” funds from “Unrestricted” funds.
Functional Expenses	Dumping everything in “Admin.”	You must allocate costs into 3 buckets: Program, Management, and Fundraising. Donors want to see high Program spend.
In-Kind Donations	Ignoring donated goods.	Services (legal/accounting) and goods (computers) must be recorded as Revenue and Expense at fair market value.
Grant Tracking	Booking the check immediately.	If a grant has “Conditions” (e.g., “You must serve 500 meals”), it is Deferred Revenue until you do the work.
Oregon CT-12	Filing only the 990.	Oregon requires a separate CT-12 filing with the DOJ. Missing this can get your solicitation rights revoked.
UBIT	“We are tax-exempt.”	Income from unrelated activities (like advertising in your newsletter) is taxable Unrelated Business Income.

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1. Fund Accounting: The “Buckets” Strategy

The biggest difference between you and a coffee shop is Restrictions.

Donors often say, “Here is $10,000, but you can ONLY use it for the Shelter expansion.”

• The Mistake: Depositing that $10,000 and seeing a high bank balance, thinking you can pay payroll.
• The Reality: You have $10,000 in cash, but $0 in usable operating funds.
• The Fix: We set up your Chart of Accounts to track “Net Assets with Donor Restrictions” vs. “Net Assets without Donor Restrictions.” When you spend the money on the shelter, we perform a “Release from Restriction” journal entry, moving the funds so your P&L tells the true story.

2. Functional Expenses (The Pie Chart)

When a donor looks at you on Charity Navigator, they look at one ratio: Program vs. Overhead.

• The Goal: You want ~75% of expenses to be “Program Services” (The Mission) and <25% to be “Management & General” (Overhead).
• The Problem: Many non-profits accidentally classify everything as Admin because it’s easier.
• The Fix: We allocate your expenses accurately.
  • Example: The Executive Director’s salary. If she spends 40% of her time running the soup kitchen and 60% on admin, we split her payroll cost 40/60. This legitimately boosts your “Program” ratio.

3. Grant Tracking: “Exchange” vs. “Contribution”

Not all money is a donation.

• Contribution: “Here is $5,000 because you are great.” (Recognize Revenue immediately).
• Exchange Transaction (Grant): “Here is $5,000 to feed 100 people. If you don’t, give it back.”
  • The Trap: If you book the full grant as income in January but do the work in June, January looks profitable and June looks like a loss.
  • The Fix: We record conditional grants as Deferred Revenue (Liability). We recognize the income only as you spend the money on the program. This matches revenue to expenses.

4. In-Kind Donations (The Phantom Revenue)

Did a lawyer donate 10 hours of pro-bono work? Did a tech company donate 5 laptops?

• The Rule (GAAP): You must record these as Revenue and an offsetting Expense.
• Why bother? It makes your organization look bigger. A $500k non-profit looks more stable to a foundation than a $300k non-profit, even if the cash flow is the same. We help you value and book these “Phantom” transactions correctly.

5. The Oregon CT-12 (The DOJ Requirement)

The IRS Form 990 is famous, but the Oregon Department of Justice Form CT-12 is the one that bites locals.

• The Law: Every registered charity in Oregon must file the CT-12 annually to maintain its status to solicit funds.
• The Risk: If you miss this filing, the DOJ can revoke your ability to ask for donations.
• Bridgetown’s Role: We prepare the CT-12 alongside your Form 990, ensuring the “Total Revenue” and “Net Assets” match exactly between the two forms (a common trigger for audits).

6. The “Board Packet” (Translation Service)

Your Board of Directors is likely made up of passionate community members, not accountants.

• The Mistake: Sending them a 40-page standard QuickBooks “Detail Report.” They won’t read it.
• The Fix: We create a “Board Dashboard”:
  • Cash on Hand (in months).
  • Budget vs. Actuals (Variance Analysis).
  • Restricted vs. Unrestricted Cash.
  • This one-page summary lets the Board make governance decisions without getting lost in the weeds.

7. Unrelated Business Income Tax (UBIT)

“Tax-Exempt” doesn’t mean “Tax-Free.”

If your non-profit engages in a “Trade or Business” that is not related to its exempt purpose, you owe tax on that profit.

• Examples:
  • A museum selling souvenirs (Related = Tax Free).
  • A museum selling advertising space in its newsletter (Unrelated = Taxable).
  • A church renting out its parking lot to a nearby stadium (Unrelated = Taxable).
• The Form: If you have >$1,000 of UBIT, we must file IRS Form 990-T. We monitor your revenue streams to catch these taxable events early.

8. Internal Controls (Preventing Fraud)

Non-profits are high-risk targets for fraud because they often rely on volunteers to handle cash and checks.

The “Two Sets of Eyes” Rule:

• Never let the same person open the mail (checks) and make the bank deposit.
• Never let the person who signs the checks reconcile the bank account.
• Bridgetown’s Role: Since we are an external third party, we reconcile the bank account. This creates a permanent segregation of duties—a huge “Green Flag” for auditors and grantors.

9. Form 990: Your Marketing Brochure

Most non-profits treat the Form 990 as a tax return.

The Reality: It is a public marketing document. Major donors and foundations pull your 990 from GuideStar before they write a check.

• The Strategy: We use Schedule O (the narrative section) to tell your story. instead of just “Program Service Expenses: $50,000,” we write: “Provided 3,000 hot meals and 500 nights of shelter to at-risk youth in Multnomah County.”
• The Result: Your tax return becomes a fundraising tool.

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Your Mission Is Our Business

You focus on changing the world. We focus on keeping the lights on.

At Bridgetown Bookkeeping, we speak the language of “Grant Deliverables” and “Board Governance.” We ensure your financials are transparent, compliant, and ready for your next big grant application.

Ready to clean up your Restricted Funds?