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3 Reasons Nonprofits Need to Stop Managing by Spreadsheet

Posted in: Nonprofit November 7, 2016

Stop Managing by Spreadsheet – In the business world, financial systems (both technology and processes) take priority. For example, when a venture capital or other funding organization invests in a business, they insist a proper financial accounting solution be in place.

Stop Managing by Spreadsheet Likewise, when a new CEO takes over an organization the very first person he or she meets with is the CFO. A CEO wants to thoroughly understand the financial health of the company.

What does this have to do with nonprofit organizations?

Appropriate financial solutions and processes should be as much of a priority for nonprofit leadership as it is for their counterparts in for profit enterprises.

In 2015, the Stanford Social Innovation Review published an article that asked the question “Is Excel Making Your Nonprofit Mediocre?” Fast-forward to today and the sobering reality is that many nonprofits are stunted by over-dependence on spreadsheets.

Here are 3 reasons managing by spreadsheets is a bad for your organization:

1. Spreadsheets are error-prone
2. They are inadequate for the needs of the organization
3. Talent is wasted on creating and maintaining spreadsheets

Stop Managing by Spreadsheet because: Spreadsheets are error-prone

Intacct recently commissioned a research paper from Ventana Research that showed nearly 1 out of 4 spreadsheets included format errors (19%), over 1 out of 4 spreadsheets included formula errors (26%), and over 1 out of 3 (35%) included data errors.

With the acute demand for transparency and accountability from funders, donors, and other stakeholders – the risk posed by spreadsheet errors is a real threat to eroding the trust factor necessary for funding. If there are questions about the veracity of your numbers, very little can be said to overcome the doubt that accompanies inaccuracies.

Stop Managing by Spreadsheet because: Spreadsheets are inadequate for the needs of the organization

As the Ventana Research suggests, spreadsheets, “when used inappropriately can be a barrier to effective processes in finance departments.” The report goes on to say, “Opting for software-driven automation to replace manual spreadsheet-based tasks enables more rapid delivery of financial performance information by providing reliable data in a continuous flow.”

Investing in nonprofit accounting software is a big decision for any nonprofit and requires weighing the investment against other priorities. However, the affordability of today’s systems leveraging new technology has made it easier for nonprofits to modernize their accounting departments. Budget-friendly, subscription pricing has made acquisition and implementation of an appropriate accounting solution for nonprofits practical and achievable.

Stop Managing by Spreadsheet because: Talent is wasted on creating and maintaining spreadsheets

Transitioning to a nonprofit accounting system will benefit the accounting department in a profound way. But the impact doesn’t stop there. The entire organization will see the benefits.

When you are managing by spreadsheet, collecting, entering, and compiling data, which then must be manually formatted for period-end reporting, consumes so much of your time. This leaves little or no time for analyzing the data let alone fulfilling requests for additional reporting.

Chances are, managing by spreadsheet has become a practice in other areas of the organization as well. Because program managers can’t get timely access to financials, they have created their own spreadsheets for managing grants and budget to actual spending. Every spreadsheet that exists in the organization is evidence that a more appropriate financial accounting system is needed.

This is a gross misuse of the organization’s talent – talent that could be put to better use to fulfill the mission of your organization.

Seeking a better solution

If it’s been a while since you’ve explored the accounting software solutions available to nonprofits, you’re in for a pleasant surprise. Cloud-based technology has made your options more affordable, easier to implement, less expensive to maintain, more reliable, easier to use, and has enriched the presentation of data through user-defined dashboards and dimensional reporting.

Let us show you how your accounting department can become less burdened by manual processes and more effective through automated processes that free you up to do more strategic work on behalf of your organization.

Also, be sure and take a look at the Nonprofit Software Selection Journey and take advantage of the tools we have made available there.

Intacct White Paper Download

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