Accounting Obligations for Nonprofits

Most nonprofits in France are required to maintain proper accounting records when applicable.

Which nonprofits have accounting obligations?

Accounting requirements and financial disclosure apply to several types of nonprofits:

• nonprofits receiving annual public funding exceeding €153,000;
• nonprofits carrying out economic activities and meeting at least two of the following three criteria:
  • annual revenue or resources exceeding €3,100,000;
  • total balance sheet assets exceeding €1,550,000;
  • workforce exceeding 50 employees (enhanced accounting requirements — not detailed here — apply to nonprofits with more than 300 employees and annual revenue or resources exceeding €18,000,000).
• nonprofits engaged in commercial, taxable activities;
• nonprofits funded by local authorities for more than 50% of their budget or for more than €75,000;
• nonprofits receiving public funding exceeding €23,000, which must sign an agreement and submit a standardized financial report as defined by the decree of October 11, 2006;
• nonprofits recognized as being of public utility;
• approved joint bodies;
• nonprofits seeking approval from a public authority and, as a result, subject to an agreement setting the terms of that approval (unless a law specifies those terms);
• nonprofits whose sole purpose is assistance, charitable work, or scientific or medical research, and recognized as such by decree;
• nonprofits managing healthcare and social sector facilities;
• nonprofits of general interest receiving funds through intermediary nonprofits;
• organizations that appeal to public generosity;
• political groups and electoral campaign financing associations;
• nonprofits engaged in commercial activities and subject to standard tax regulations;
• nonprofits that issue securities;
• sports groups organized as nonprofits with special status, and sports federations.

These nonprofits are required to:

• establish a chart of accounts in compliance with the general chart of accounts and its nonprofit-specific adaptations;
• maintain the following records:
  • a journal in which entries are recorded chronologically on a day-by-day basis, along with any subsidiary journals;
  • a general ledger made up of the nonprofit's accounts, into which journal entries are posted;
  • an inventory book listing all assets and liabilities.

Annual financial statements must be recorded in this inventory book each year.

Other nonprofits are not subject to these chart of accounts requirements. That said, maintaining good accounting practices still benefits any organization.

Why keep track of your accounting?

Even if your nonprofit has no legal obligation, we strongly recommend maintaining rigorous accounting practices.

Here's why:

• Transparency: publishing your accounts gives your members and donors the ability to see that the nonprofit's finances are being managed properly;
• Management: only regularly maintained accounting allows nonprofit leaders to monitor and control the organization's operations. It's an essential tool for ensuring long-term sustainability and driving growth;
• Grant applications: sound financial management makes the grant application process much smoother and more confident.