Scaling up accounting in the face of exponential growth
We can talk about our accounting and controllership services… or you can read about the results. See what we did for an area nonprofit!
Challenge
A longstanding nonprofit client of James Moore had been leasing their facility. We suggested they negotiate with their landlord to buy the property, enabling them to allocate grant money towards depreciation expenses. However, most financial institutions offer loans with terms ranging from 20 to 25 years — and the cost of the loan exceeded the amount the nonprofit could offset through their grant's depreciation allowance.
Solutions
James Moore served as a liaison between the nonprofit, financial institutions and engineering experts. We educated lenders about the grant process specific to nonprofits and persuaded them to offer loan durations of 25-30 years. This extended timeframe enabled our client to align its loan cash flow with depreciation.
We also connected the nonprofit with an engineer skilled in conducting cost segregation studies. Typically, a building is depreciated over a span of 39 years. However, a cost segregation study allows for accelerated depreciation schedules, such as five, seven or 15 years. This allowed the nonprofit to allocate higher depreciation costs to their grants, aligning with the cash flow requirements set by the lender.
Results
By purchasing the building, the nonprofit utilized grant money to offset depreciation expenses. Had they remained tenants, they would still be incurring rental costs today — likely at a rate higher than their initial payments. Having successfully paid off the loan and gained ownership of the building, they can now redirect those funds to expand services and initiate new community programs.
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