Humane societies, animal shelters, and other nonprofit animal rescue organizations often require specialized accounting due to the nature of their activities. These organizations may take in homeless animals, provide veterinary care and re-homing services, and/or work with local municipalities to provide animal protection, licensing, and control services. While every organization is different, there are certain financial concerns unique to Humane Societies and animal shelters.
Some states have specific requirements for licensing and operating animal shelters, rescues, and sanctuaries. For example, the state of Colorado requires animal facilities to apply for a license, undergo inspections, and follow strict guidelines to ensure the health and well-being of animals in the organization’s care. If you are launching a new nonprofit organization, be sure to check your state regulations and comply with all requirements.
Insurance is important for any nonprofit organization to carry, but especially for animal shelters. Working with animals has inherent risks, and you want to be sure your organization is protected if any accidents occur. Depending on the size and nature of your organization, you may need to budget for general liability insurance, workers’ compensation insurance, and director & officer (D&O) liability insurance.
Donations provide crucial revenue for animal shelters. You’ll need to carefully track donations that are restricted (for specific activities, like veterinary care) versus unrestricted donations that can be used for general operating needs. If your shelter accepts in-kind donations of pet food, toys, or other supplies, you must account for the value of the non-cash donation.
In addition to donations, animal shelters often take in revenue from adoption fees. But that alone is unlikely to be enough to sustain the regular operations of your nonprofit. Look into alternative sources of revenue, such as animal boarding, training and grooming, or contract services. And don’t forget that income from activities unrelated to your nonprofit mission may be subject to income tax – so don’t get caught by surprise!
Many nonprofit organizations struggle to maintain a steady cash flow, but animal rescue organizations must have the financial ability to feed and care for their animals at all times. A shelter can’t simply stop feeding their animals until the next donation comes in. It’s extremely important for to monitor your cash flow carefully and build up your reserves to help make it through lean times. Animal shelters may also consider stockpiling certain supplies for emergency situations or establishing a line of credit to draw on if necessary.
Property & Equipment
When you think of a Humane Society, you might envision a building with kennels, offices, play areas, and veterinary equipment. But not every animal rescue organization owns or operates a brick-and-mortar facility. Some organizations are completely decentralized, utilizing a foster system for sheltering and re-homing pets. However, if your organization does own property and equipment, you will need to account for these assets, maintain a depreciation schedule, and be responsible for paying all associated property taxes.