5 Trends for Nonprofit Finance Directors
Positioning your organization to fulfill its mission. Doing more with a lean accounting staff. Staying on top of regulations and standards. Providing critical reporting. Maintain a solid financial position. Nonprofit Finance Directors have a lot on their plates.
The volume and pace of work will only increase. What are successful Finance Directors and their organizations doing to meet the challenge? From our work with hundreds of nonprofits across the country, here are five trends we are seeing:
It’s not cost effective for staff to spend time on manual processes. It’s even more wasteful and inefficient for Finance Directors to be mired in manual procedures. The organization simply can’t afford to have professional doing the low-value, repetitive activities that, with the right fund accounting software solution, could be automated. Your knowledge and talent is better directed at strategic challenges and as an advisor to other department heads and the executive team. Another problem with manual processes is that eventually you will not be able to outrun the lava.
If you haven’t investigated fund accounting solutions in a number of years, you should consider taking a look at what’s available. Cloud technology has made robust solutions more affordable. One of the things we do for the nonprofits we work with is to help them determine their Total Cost of Ownership (TCO) and the timeframe in which they can realize a Return on Investment (ROI). Going through this exercise quickly dramatizes how much more effective and efficient accounting departments can be when equipped with the right solution.
2. Integration and Best of Breed
Since most nonprofit organizations don’t have a long-term information technology blueprint (let alone an IT department), software solutions for specific functions (for example, online giving or tuition management or fundraising/donor management) have been purchased and implemented with little consideration about whether or not they would work together.
At the time the applications were purchased, they were purchased to do a specific job and they did the job well. However, without integration, combining information from different systems into one report or several reports, necessitated exports, spreadsheets, and manual workarounds.
Today, nonprofits are looking to cloud-based software solution because integration is easier with cloud technology. Each department can still take advantage of best of breed application, and with the open architecture of the cloud, integrate a variety of systems to the financial accounting system. Not only is reporting easier, but tracking outcome measurements becomes easier when all systems used to manage a program are integrated.
The cloud represents the most impactful innovation since software applications came off mainframes and onto the desktop in the mid ‘80s and early ‘90s.
Like the revolution decades earlier, today’s deployment of applications residing in the cloud means significant cost savings for today’s nonprofits without sacrificing needed application functionality.
When we sit down and map out the cost for organizations considering the cloud, most of the time there are dramatic savings gained. Using SaaS (software as a service) means that once an organization has implemented the cloud solution, their only cost is their monthly subscription. They no longer have costs associated with maintaining servers and annual software maintenance and support fees. Even better, they no longer have the disruption that comes from annual upgrade implementations. With the cloud, every time you log in to the software, you are logging into the most recent version of the software.
When it comes to the cloud, we recommend Intacct. Intacct guarantees up time, utilizes state-of-the-art server farms with a level of security that previously only the largest of corporations could afford.
Your data is routinely backed up and stored. You no longer have to take the time to schedule, perform, and store back ups – freeing you up to spend more time on more pressing and strategic matters.
4. Presentation, presentation, presentation
When it comes to transparency the ability to present relevant information in a powerful and precise way is crucial. Being able to present that information automatically is even more powerful.
Monitoring the metrics that matter as a part of any managers daily routine, dramatically improves the effectiveness and efficiency of your nonprofit’s programs.
Imagine the ability to draw key metrics from a variety of systems and incorporate them in a real time dashboard by program and make them available to those managing the programs. The executive director can have a dashboard with one set of metrics, program managers can have a dashboard with a custom set of metrics for their specific programs, and accounting can monitor a dashboard with yet another set of numbers. The right cloud solution can deliver all of that information for each of those internal clients. Simply set it up once and key personnel are supplied with the information they need.
Usually it’s not just the accounting department managing a library of spreadsheets. Often program managers create their own spreadsheets in order to better manage their area of responsibility. With information being delivered directly from the system, many people throughout the organization are able to save time and act from more accurate and up-to-date data.
Periodic reporting can be executed and distributed with a simple click. We like Intacct because its dimensional reporting makes special reporting requests easier to accommodate with faster turnaround time.
Most organizations have plenty of data. What they don’t have is the ability to easily compile and format the data into a report or presentation format. If your accounting software does not facilitate this, make sure that the next accounting solution you implement does. The benefits for accounting are numerous and the benefits spill over into other areas of the organization as well.
5. Strategy over tactics
It’s impossible to scale manual tasks with limited human resources. That’s why savvy nonprofit organizations recognize that the most powerful lever they can pull is technology. The demands for information are only going to increase. Your internal team desires more information to better manage their responsibilities. Externally, there are always new requirements, regulations and standards that must be accommodated. The good news is the needed technology is affordable. Cloud-based systems do not require a tandem investment in IT resources.
More importantly, use of modern technology allows finance directors and other organization management to be more strategic and less task oriented. Instead of spending the bulk of your time compiling and creating reports, you can spend your time analyzing the information contained in the reports. It’s a ripple of efficiency and effectiveness that results in better stewardship, increasing the likelihood of additional grant awards, greater transparency, and ensured compliance – all of which are welcome outcomes in any nonprofit organization. Perhaps the most compelling result is the impact on your mission – better service delivery to constituents or the ability to increase the number of constituents served.