Guide to Writing an RFP for Nonprofit Accounting Services

With a nonprofit practice that stretches across the U.S. and includes a wide range of nonprofit types and sizes, we’ve seen hundreds of Requests for Proposal (RFPs). In this guide, our nonprofit team provides insights on writing an effective nonprofit RFP.

The goal of any RFP should be to find a service provider who checks all the boxes, but who also looks outside those boxes for ways to provide value and contribute to the success of your organization’s mission.

Many nonprofits are, understandably, focused on service provider fees. We provide some tips and thoughts around the importance of fees and how to make the most of the cost estimates you ask for and receive. There are other questions that nonprofits would benefit from asking in an RFP that we don’t see quite as regularly. Those questions can be instrumental in the success of your provider selection.

Why is the RFP Process Important?

The answer may seem obvious, but well-written RFPs aren’t just important in helping your nonprofit find the right partner; they’re also important from a governance perspective. As public charities, nonprofits are expected to exercise fiscal discipline. 

The RFP process helps nonprofits determine that they’re paying an appropriate fee for the service in question. This is a key element of board governance for nonprofit organizations. The proposals also help determine the appropriate scope for the audit, highlighting differences in the thoroughness of the fulfillment of deliverables (audit and Form 990, for instance). And finally, RFPs are integral to finding an accounting firm that meets all your needs while providing a team you enjoy working with and in many cases, value beyond compliance.

10 Tips for Creating an Effective Nonprofit RFP

Below, we’ve outlined 10 tips for nonprofits to follow as they create and distribute their RFP. 

1. Ensure Alignment Between the Board Audit Committee and Management

There are two key stakeholders in the creation of an RFP: the financial leaders of the organization and the board subcommittee tasked with managing the process from a governance perspective.

What do we mean by alignment? Determine if you’re seeking something in a new firm that your current firm lacks. Has there been CPA staff turnover from year-to-year? Are there delays in getting a response to calls and emails? Do you receive your audit and Form 990 timely? Are you taking on a large capital campaign or are you struggling with an issue and need an accountant that can serve as an advisor? Having these conversations prior to issuing an RFP will allow you to include related questions in your RFP and ultimately should help you make a more informed decision.

Both groups should be equally involved in the creation of the RFP. While the financial leaders of the organization (the CFO, Controllers and Executive Directors) might be primarily concerned with day-to-day financial operations, the board or other subcommittee is responsible for ensuring the nonprofit organization fulfills its governance requirements. 

While, in most instances, the board will be the final decision maker on which audit firm to work with, having both groups of stakeholders involved in the drafting of the RFP and conversations around final selection ensures alignment before and after the accounting firm is selected.

2. Be Clear on the Purpose of the RFP

Nonprofits typically issue two types of RFP: one to check the market rate for services and one to find a new accounting firm. Be upfront about the purpose of your RFP to avoid wasting everyone’s time.

If your organization is happy with its current firm and is only interested in gauging what comparable firms might charge, there’s no point in spending countless hours pulling together a detailed RFP. Equally, there’s no sense wasting a firm’s time and having them craft a detailed proposal you have little intention of accepting. Remember, accounting firms choose their clients as much as their clients choose them, so it’s important your nonprofit has a reputation for operating the right way.

If your organization is serious about switching to a new firm, invest the time in creating a more comprehensive RFP. Be clear internally about the reasons you’re switching to a new firm and use that as part of your evaluation criteria for assessing the firms that submit proposals.

3. Use a Template (But Only as a Starting Point)

Many nonprofit organizations use templates to develop their RFPs. These templates ensure that your nonprofit strikes the balance discussed in the previous points and includes all of the basic information providers must consider when submitting a proposal. This can significantly streamline the process of creating an RFP.

It’s important to note, however, that a template should only be used as a starting point. Customizing this template and tailoring it to the unique needs of your organization and the given project is key to your success. Failing to spend adequate time adjusting a template, even if you’re using a previous RFP your organization has issued, may result in you receiving proposals that do not serve your process well.

4. Include an Appropriate Level of Detail

A great RFP has an appropriate level of detail (not too much, and certainly not too little), both on the organization and in the form of information requested by provider participants.

An RFP should have an executive summary, information about the mission and purpose of your organization and a clear description of the scope of services that should be included in the proposals. 

Additional sections to include are the criteria by which you plan to evaluate proposals and other information that would help you make an informed decision. In our experience, requesting details on each firm’s experience serving nonprofits (both in depth of organizations served and length of time), the nonprofit experience of individual team members and proposed timelines for each engagement is imperative.

 Additional information can include whether and how much first-year costs differ from future years, whether you want a one-year or multi-year quote, how the firm determines charges for phone calls and email time and the availability of other expertise to your organization that may be helpful in the future.

Use prior experience with accounting firms to determine any additional information that would be helpful in making your decision. Be clear in your requests, to avoid unnecessarily redundant emails and calls from prospective firms.

5. Send the RFP to Accounting Firms with a verifiable nonprofit practice.

As we mentioned in number 4 above, it is important to understand the depth of expertise and bench that accounting firms you send your RFP to offer in this specialized area. You can save yourself unnecessary reviews of proposals if you do legwork on the front end and send RFPs only to firms that have a solid reputation for working with nonprofits.

To identify these firms, consider the following approaches:

• Asking colleagues with other nonprofit organizations for referrals to accounting firms.
• If you have a trusted advisor or banker, or if any of your board members are in this role, ask them for referrals. Reaching out to trusted advisors, bankers, or board members who may have valuable referrals.

The advent of remote working technologies means that firms can now serve clients equally well whether they’re across the street or across the country. Look beyond the borders of your community or even your state and include firms in other areas that have demonstrated nonprofit expertise.

In our experience, accounting firms who have deep experience serving nonprofits bring added insights and benefits to what is often perceived as compliance-only work.

6. Issue Your RFP as Far in Advance of the Audit as Possible

The RFP process itself might take four to six weeks. Firms need adequate time to understand your RFP, meet or speak with you, prepare and submit their proposal. 

Send your RFP to the firms you’re considering working with well in advance of when you aim to begin the audit. Many accounting firms schedule work out several months ahead of time. That doesn’t mean you can’t be slotted into these schedules on short notice, but it’s always best to take a proactive approach and leave plenty of time for the work to be done. 

Start with your deadline date and work backward from there. Audits can take several weeks, particularly if it’s your first audit with a new firm. And because firms typically schedule out their work several months ahead of time, you’ll want to decide on the audit firm you want to work with at least four months before your submission deadline. Your RFP should clearly communicate any requirements your nonprofit has around the timeline of the audit.

It is helpful to follow up with a call or email to the recipient of each RFP to ensure that they received the RFP. It is not unheard of for an RFP to get lost in the mail (literally) or if issued via email, to land in a spam filter, unseen by the intended recipient.

7. Be Responsive to Proposing Firms

Issuing an RFP should be the beginning of a dialog between you and the firms you’re interested in working with. Be transparent about your timeline for receiving proposals, presentations if planned,  and making a decision. Set a schedule to meet with audit firms who have questions about your RFP. 

Sometimes, organizations have a process wherein every proposing firm is required to submit questions to a single contact at the organization. The contact gathers and answers all questions and provides cumulative questions and answers to every firm.

While this can level the playing field by ensuring each firm has the same information, it is important to note which firm asks which questions. The depth of their interest in your organization into and beyond the financial statements can reveal a deeper level of interest and understanding of your needs and expectations.

8. Request Formal Presentations by a Final Few (usually 3) Firms

Meeting proposing firms also allows your team to get a feel for the depth of experience that the auditor will bring to the engagement. By meeting with the team and listening to the questions they have, you’ll better understand their domain expertise in serving organizations like yours.

Offer virtual and in-person presentation opportunities, even to firms out of state. At Smith + Howard, we believe that while remote work is easily as effective as in-person work, establishing a personal connection in a proposal presentation can be an important first step in developing productive rapport and understanding that is so important to your organization’s satisfaction.

9. Weigh These Factors (at a minimum) in Your Decision

• Did the firms follow your RFP in order and completely? Not only does this help the board and leaders make an “apples-to-apples” comparison of each RFP element, but it also demonstrates attention to detail and thoroughness by the proposing firms.
• Did the firms meet the deadline for submission?
• Did they connect with you to dig deeper, ask questions or get clarification on your needs, expectations, financials and/or mission?
• Did they clearly demonstrate their nonprofit expertise at the firm and team levels? Was there a firm that differentiated itself in terms of expertise?
• In presentations, how was the chemistry between the accounting team and those present from your organization?
• Did the accounting firm listen to and respond appropriately to questions that arose during the presentation?
• Were they easy to communicate with during the proposal process? How responsive were they if you had questions?
• How do fees between the final firms compare? Is the difference significant and/or overcome by other factors, such as reputation for responsiveness, meaningful expertise or even the firm’s willingness to support your organization in ways outside of the accounting engagement?

10. Move Forward

Once you’ve decided which firm you’d like to work with, promptly communicate this to every firm that submitted a proposal. It’s considered best practice to close the loop and to let firms know why they weren’t chosen. Be honest in your feedback. At Smith + Howard, we take very seriously constructive, honest feedback provided to us, win or lose.

Keep the lines of communication open with your new firm, so that the process can start (and finish) on time.

At the close of the first audit and Form 990 if applicable, provide feedback to the accounting team on what went well and what could be better for the next audit or tax form.

Smith + Howard: Accounting, Audit and Tax Professionals for Nonprofit Organizations

The leaders and board members of your nonprofit are heavily invested in the success of the organization. Taking time to tackle these 10 steps for a successful RFP process will help ensure that you work with a qualified accounting firm and maintain the confidence of your community in the organization’s governance and fulfillment of its mission.

At Smith + Howard, our nonprofit audit team has significant experience working with all kinds of nonprofit organizations, including social welfare organizations, arts and culture institutions, independent schools, associations and more. If you’re looking to create an RFP for your nonprofit, but aren’t quite sure where to start, our team is here to help. Simply reach out today to request an RFP template or learn more about our accounting, audit and tax services for nonprofit organizations.