What Nonprofit Organizations Should Include in an RFP for a CPA Firm

If your nonprofit aims to hire a new CPA firm, it’s crucial you understand how to create an effective request for proposal, or RFP. An RFP is a document that describes a specific business or project need and invites potential vendors to submit proposed solutions.

An experienced CPA is a vital partner for nonprofit organizations, providing experienced guidance in all sorts of areas, from improving cost efficiency and reducing budget constraints to identifying and mitigating financial risks. Whether your organization needs to hire a CPA firm to perform your nonprofit audit or is looking for assistance in outsourcing part of your finance/accounting function, the RFP process is central to finding the right partner.

A thorough RFP allows nonprofits to clearly define the scope of their needs and outline the challenges they face. With these details, qualified providers can more accurately propose solutions and generate accurate quotes that help nonprofit leaders make a decision and move forward. A high-quality RFP enables nonprofits to find experienced partners to work with at a competitive rate, and also ensures all parties are aligned on the scope of the relationship.

What Is An RFP?

An RFP is a document that describes the scope of a specific project. The organization that creates the RFP will share it with qualified vendors, who will then submit proposals for the organization to review.

Effective RFPs are detailed, specific and often take some time to write. But done well, it’s a time investment that can pay off for nonprofits, who frequently face unique resource constraints in the service of their mission.

Let’s look at a hypothetical example. Imagine a social services nonprofit that provides a wide range of services to underserved individuals in their local community. The organization receives federal funding and, as they have expanded, needs to secure a single audit for the first time.

Although it’s a significant time investment, they craft a detailed RFP to solicit bids from CPA firms. The RFP provides a comprehensive overview of the scope of the project, allowing CPA firms to determine whether they’re able to fulfill the project and generate a quote for their services. The RFP also tells the CPA firm critical information about the type of organization requesting services.

The nonprofit sends the RFP to several CPA firms and receives proposals back from a number of firms with varying levels of experience conducting single audits. The nonprofit’s management (or sometimes a board audit committee) can now assess these proposals before selecting the most appropriate option. It’s a relatively smooth process – and all of it was made possible by the high-quality RFP.

If you’re new to the RFP process, it can be challenging to identify what and how much information to include. However, as the above example illustrates, navigating this process is essential in securing external support that will help your organization go from strength to strength.

Next, let’s explore the essential components of a carefully constructed RFP.

Components of a Well-Crafted RFP

Well-written RFPs are clear and detailed. That way, anyone who reads the RFP can understand the project comprehensively.

While every RFP is unique (having been created for a specific purpose and audience), several fundamental components should be included every time. These ensure that the most critical information is present and easy to find.

You may need to adapt these sections to communicate your needs more clearly. If so, ensure the final RFP is as logical and organized as possible. This will limit the clarifications necessary for your vendor candidates and streamline the process. It may also impact the structure of the proposals you receive, as they often mirror the structure of the RFP they’re responding to.

Executive Summary

An RFP executive summary introduces the organization and is an overview of the entire RFP.

It should include:

• A brief introduction to the nonprofit and its mission
• An overview of the project, including the problem it needs to solve and desired outcomes
• Project scope and requirements, including specific services, products or solutions needed
• Basic evaluation criteria
• Unique selling points that might entice a vendor to work with you
• Key challenges the vendor should be aware of

In other words, the executive summary touches on everything in the RFP at a high level, sharing a high-level overview of the project.

Organization Background and Mission

This section should communicate everything your prospective partner needs to know about your organization, especially if that information could impact the project.

If you’re submitting an RFP to a CPA firm, essential information could include:

• The history and mission of the nonprofit
• Amounts and types of revenue
• Audit schedules and details from prior audits
• Timing of fiscal years
• The duration of the project cycle
• Number of employees
• Unique details like funding sources and investments

Scope of Services

This section should describe in detail the specific nature of the project, including:

• The goal or problem that needs to be addressed
• Specific areas of focus (e.g., grants and endowments)
• The services requested (e.g., a financial statement audit, nonprofit outsourced accounting, or assistance with preparing Form 990 and other elements of nonprofit tax)

At a minimum, listing the services required is essential. However, the more detail you add to an RFP, the more relevant the responses your organization receives. For example, nonprofits could explain the potential impact of the issue they want to address, why each service is needed, and how it would contribute to the overall success of the nonprofit’s mission.

As a rule, nonprofits generally do not have to worry about providing too much information. This is because experienced CPA firms like James Moore have the experience to discern the most pertinent information.

Conversely, if important details are missing, negative consequences include:

• Delays in receiving proposals due to clarifications
• Changes to project price, scope and timeline after engagement

Proposal Specifications

This section outlines what each proposal should include and how it should be organized. It ensures that each proposal submitted is uniform and can be compared more easily.

The details here vary depending on what the nonprofit wants to see. Examples of specifications that may be requested here include:

• What data points to include in the firm description (such as staff size and areas of competency)
• Background information, such as a list of clients, types of projects engaged and example results
• Team composition, including which partners would be involved in the project and their experience
• Specific details about the proposed solution (e.g., tools, processes, formulas, etc.)
• Details about quality control and external oversight
• Timelines and pricing

Evaluation Criteria

This section explains how the nonprofit will compare and choose between their selected proposals, with factors such as:

• Experience and competency (such as experience with nonprofit auditing and required qualifications)
• Quality controls (e.g., external quality control reviews the firm has undergone)
• Communication and reporting styles
• Conflicts of interest
• Values and culture (such as a commitment to social responsibility)
• Cost and value considerations

Understanding the evaluation criteria will help CPA firms craft a more targeted proposal.

Other Sections As Needed

The above components are not an exhaustive list. In most cases, a nonprofit will expand upon it with additional sections, depending on which information you need to share. For example, a Q&A section is a helpful way to include details that do not fit into the rest of the RFP.

Many RFPs also create dedicated sections for proposal deadlines, submission instructions and contact information.

What Happens After the RFP Is Submitted to the CPA Firm?

Once an RFP is submitted, interested firms begin to review it. Nonprofits may also submit RFPs directly to CPA firms they’re interested in working with. (You can submit an RFP to James Moore here.)

In many firms, the relevant experts will review the audit together with the firm’s marketing team. For example, suppose an education nonprofit needs a financial statement audit. In that case, partners and other CPAs who belong to the audit and/or nonprofit teams will be involved. Often, team members with experience serving similar clients will be brought into this process. Together, this group formulates their proposal in response to the RFP, including their recommended strategy, services and other considerations.

If the RFP is missing key details, the firm may reach out to the nonprofit organization for questions and clarifications.

Every nonprofit organization evaluates the proposals they receive in a slightly different way. Some nonprofits have an established formal evaluation process, including a dedicated team, a proposal meeting and a grading system. Others have a relatively simple review process.

Some organizations make their decision based on price with few other considerations. However, this may lead to the elimination of better-qualified candidates or cause the nonprofit to receive poorer quality service. While cost is of course an important variable, it’s best to take a holistic approach and consider other factors like the experience and qualifications of potential vendors.

At this point, the nonprofit may accept their preferred proposal as is or negotiate with one or more candidates before signing an engagement letter.

Make an Impact With James Moore & Co. Nonprofit Accounting & Advisory Services

While writing nonprofit RFPs may seem intimidating, creating them is an essential process that helps nonprofits find the professional support they need to ensure they can continue to sustainably invest in their mission.

Detailed, specific and organized RFPs help nonprofits receive informative, relevant and high-quality proposals.

By working with a sophisticated nonprofit accounting firm like James Moore, you can access a team of CPAs with deep familiarity with your service area and direct experience auditing nonprofits like yours. You’ll benefit from high-quality audits and targeted scrutiny on your highest-priority areas of concern.

To learn more about how James Moore can help you set your nonprofit up for success, contact an advisor or submit an RFP directly through our website.

All content provided in this article is for informational purposes only. Matters discussed in this article are subject to change. For up-to-date information on this subject please contact a James Moore professional. James Moore will not be held responsible for any claim, loss, damage or inconvenience caused as a result of any information within these pages or any information accessed through this site.