Nonprofit Financial Management and Technology: Are You Using Your Tech Well?

What would nonprofit financial management be without technology? We rely on our systems to help us manage reams of data streaming into the organization. From traditional accounting to donor relations, data is what makes our world go around.

Yet with all the data that we have, are we really using our technology to its fullest extent? A new survey indicates that no, we might not be…there may be room for improvement in how nonprofit financial management teams use their technology.

Data-Drive Improvements – for Real?

Salesforce research gives us a glimpse into how nonprofits use their technology and data. This survey of 461 nonprofit executives found that just 53 percent feel they collect enough program data, and among that percent, fewer still feel capable or able to utilize it properly. Only 27 percent prioritized data management, and 25 percent prioritize program delivery and technology execution and improvement.

Considering how often executives hear the term “data-driven improvements” it’s no wonder they feel at a loss when it comes to using data within their organizations. Many of these executives received little or no formal training in data and analytics in their careers. Nonprofit financial management leaders learn accounting and finance, no data analytics, as part of their career path.

Automation Is Lacking in Nonprofits

Another area where technology improvements lag is in automation, specifically, automating donation impact measurement and improvement. Only 8 percent of nonprofits surveyed have wholly automated their donation impact measurement and reporting. Five times as many nonprofits still use manual methods for measuring impact.

Time to Change: Steps to Automate Now

Consider the many ways in which automation has changed our lives for the better. A simple example is the humble word processing program, the descendant of the typewriter. Make a spelling error on a typewritten sheet, and you have to rip it up and fix it. Automate spellcheck on a new word processing program, and the computer catches and corrects the mistake before you can blink – or send the embarrassing error out to hundreds of people on your mailing list.

The study’s conclusion is depressing – nonprofits aren’t using automation well. How can nonprofit automation be improved?

A few areas where improvements may be easier to implement than others include:

  1. Automate your forms: Many nonprofits are drowning in paper-based forms. Use cloud-based tools like Google Forms to create online forms that save paper and time for everyone.
  2. Use automated programs to manage email lists: Automated email marketing tools are easy to find an inexpensive. They can help you keep your email list clean and update plus provide great data on subscribers, open rates, and click-through rates to help you improve your marketing.
  3. Examine the automation features in your nonprofit accounting programs. Many financial management and accounting programs offer automated features like backups, payable and receivable reminders, and other tools. Use these features to help save time.
  4. Look through all of the software you currently own. Assign someone to each software package and ask them to learn the ins and outs of it. Then, compare notes. What automation features are available that you aren’t using in your existing packages that you may be able to use?
  5. Consider new software for nonprofit management. Although you may have good software now, more modern software often comes with simpler features for data, reports, and integration. Speak with nonprofit consultants and advisors to find out more about how automation can work in your favor.

The for-profit world has long since discovered that automation saves time and money. What could your nonprofit do if it saved money on operations? Invest in more programs to support its mission, most likely. Now’s the time to find out how automation, either within the systems you already own or in systems yet discovered and purchased can help you be more efficient and better at your work.

Beck & Company

Beck & Company is an independent certified accounting firm specializing in nonprofit organizations. Since 1987, we have helped many nonprofits in the Washington D.C. area and along the Eastern seaboard with their accounting and financial management needs. We provide audit, tax, accounting, and consulting service that addresses all aspects of a small to mid-sized nonprofit organization’s business. Contact us or call 703-834-0776 x8001.

Nonprofit Financial Management – Encouraging Positive Changes

Nonprofit financial management folks tend to be leaders. These are the ones who ensure that the bills get paid, the lights stay on, and the mission gets funded, all the while keeping the beans counted and clean so that the public places its jaded trust into the organization’s mission and vision. All well and good.

But what if it’s not just the public who’s jaded? What if your organization faces changes, albeit positive changes and everyone within is feeling a tad bit jaded?

Numb to Change

The CEO called everyone in the organization down to the conference room. He brandished a book. “We’re going to follow this model, and we’re going to transform the organization!” he shouted.

He waited for the applause, the enthusiasm. Instead, he received silence. A few yawns. A few people are glancing at their watches.

What happened? It’s change fatigue or an organization that’s been through the “next greatest leadership thing” cycle too many times.

Many organizations find themselves fatigued from too many changes happening too quickly. High turnover rates, problems that create a turbulent environment, a new marketing plan, a consultant brought in to fix things are all positive steps in the right direction, but if they happen too frequently, skepticism leads to shrugs. Employees may not believe that this time, things will change for the better.

They become numb to change, fatigued by newness, and ready to ignore it all until the dust settles down.

Re-Ignite the Excitement

As part of your role in nonprofit financial management and as a leader in your organization, part of your job is to support change. It can be difficult, especially if an organization has just passed through troubled waters.

But re-igniting the fire of excitement starts at the top. It begins with you. It starts with your CEO and spreads to you in your role in nonprofit financial management and to others in communications, donor relations, and more.

Here’s how you can help others get behind changes, embrace excitement, and say an enthusiastic YES to new plans and directions facing your nonprofit.

  1. Acknowledge the past. Whether it’s an old board stepping aside for fresh members, a new CEO unrolling marketing plans, or donor relations unveiling a campaign to court gifts and grants, it’s okay to acknowledge that things may not have worked out in the past. Don’t sugar coat or feel you have to be Pollyanna. Everyone makes mistakes. Recognizing the cause of the staff’s apathy goes a long way to fixing it.
  2. Share the information widely within the organization. Make sure that everyone knows the plan and understands their part in it, no matter how small.
  3. Secure buy-in for organization-wide plans from all senior leads. Nonprofit financial management leaders should be on board as should communications, donor relations, human resources, operations, and all other team leaders.
  4. Remind everyone of the need for change and that the status quo is no longer an option. Change only occurs when people are motivated to move beyond their comfort zone. People can get comfortable even when things aren’t going well; they get comfortable complaining but remaining mired in what’s holding them back. Change can be uncomfortable. Reinforcing the need for change and the positive benefits of change from the top down in the organization is a vital step for successfully re-igniting your nonprofit.

Change isn’t easy. When employees have a ‘been there, we’ve done that’ attitude, it’s important to be the leader they need and inject your energy and enthusiasm into the plans and programs. If doing what you’ve always done keeps getting you the same results, it’s time for a change. Nonprofit financial management personnel can be the leaders for positive change.

Beck & Company

Beck & Company is an independent certified accounting firm specializing in nonprofit organizations. Since 1987, we have helped many nonprofits in the Washington D.C. area and along the Eastern seaboard with their accounting and financial management needs. We provide audit, tax, accounting, and consulting service that addresses all aspects of a small to mid-sized nonprofit organization’s business. Contact us or call 703-834-0776 x8001.

Nonprofit Financial Management Topics: Is the Overhead Ratio Model Obsolete?

Nonprofit financial management courses and books often lean on the old standby of the overhead ratio model to judge the efficiency of the nonprofit.

But what if we told you that new research indicates that the overhead ratio model may be outdated? It may actually be a weak measurement of nonprofit efficiency.

Here’s why.

Are We Basing Nonprofit Work on Outdated Notions?

Much of the way our modern business culture functions is based on fairly outdated notions stemming from the industrial revolution. For example, the factory model of mass production may be outdated in an era in which computers can offer mass customization, and the internet provides nearly limitless choices for consumers.

This notion transfers to the world of nonprofit financial management, too. In the business world, the old idea of managerial efficiency stems from the definition of “turning inputs into outputs.”  To measure efficiency, many nonprofit analysts use the overhead ratio. The overhead ratio compares the ratio of overhead expenditures to total expenditures.

New research published in the journal Nonprofit Management and Leadership points out that this is actually a poor judge of efficiency for nonprofits.

Researchers from the University of North Carolina’s Public Administration program examined the literature of efficiency in the nonprofit world and realized that this is a flawed model. Unlike a factory, in which efficiency may indeed be judged by the ratio of inputs to outputs, nonprofits must measure their spending differently.

The overhead approach largely ignores the mission of nonprofits, how they utilize their expenditures, as well as inputs other than typically quantifiable inputs. Nonprofits can also increase their overhead ratio without decreasing efficiency. For example, buying grant management software may significantly improve efficiency if it allows the nonprofit to produce more (obtain more grants) even if the overhead expense increases from the software purchase.

The old overhead model just doesn’t cut it anymore for the modern nonprofit.

Don’t Get Rid of the Overhead Model Yet, But Evaluate It Differently

It’s still too early to get rid of the overhead model entirely. Even the IRS cites the overhead model in many of its documents for nonprofits.

However, instead of relying solely on overhead ratios as a judge of efficiency, consider using a different model. Financial ratios, when taken into account with program completion and success ratios, may be a better metric by which nonprofits should be judged.

Let’s take as an example a nonprofit whose purpose is to provide medical services for the homeless. Their inputs are donations, but how do you measure their outputs? By the number of projects they conduct or complete?

You can’t put a price on human lives or health. The number of people screened for diabetes may be one metric of “output” but the greater the “outputs,” the lower the efficiency, according to the old scale. Meanwhile, donors judge the nonprofit not by how tightly they cling to their money but by how many people they help.

A much better method by which to judge such a nonprofit is how well they used their funds to accomplish their mission. If their funds went towards clinics, medicine, and care for the homeless, for example, then their expenses will be high, but their efficiency may also be high if they use their personnel and resources wisely. The purchase of a new mobile health clinic may be a significant expense, but if it enables them to reach 20 times more people, it is indeed a sign of improved efficiency.

Nonprofit Financial Management Always Changing

It just goes to show that the world of nonprofit financial management is always changing. What we once took for granted as an established fact – the method of measuring nonprofit efficiency – may require rethinking. Nothing, it seems, is ever written in stone, especially when it comes to nonprofit financial management.

Beck & Company

Beck & Company is an independent certified accounting firm specializing in nonprofit organizations. Since 1987, we have helped many nonprofits in the Washington D.C. area and along the Eastern seaboard with their accounting and financial management needs. We provide audit, tax, accounting, and consulting service that addresses all aspects of a small to mid-sized nonprofit organization’s business. Contact us or call 703-834-0776 x8001.

Avoiding Issues of Fraud (or Perceived Fraud)

Among the many issues covered in discussions of nonprofit financial management, the issue of fraud, or avoiding the appearance of fraud, can be distressing. No one likes to think of their nonprofit falling into the ‘fraudulent’ category.

Yet GuideStar recently announced that they have rescinded their Seal of Approval for five charities that violated their policies for transparency.

The FTC investigated complaints against charities purporting to use donations to help veterans. Among these charities investigated, 100 received notice of legal action. GuideStar took it a step further and examined the 100 under legal notice and found that five had earned their Seal of Approval. They published a list of the charities for which the Seal has been rescinded along with the reasons for the change.

Among the many reasons stated are nonprofit financial management issues related to fraud or incidents that give the appearance of fraud even if the charity isn’t doing anything wrong per se. According to GuideStar’s report, charities were cited and censured for the following reasons:

  1. State regulators found that the charity had misrepresented its financials.
  2. The organization had dissolved but had not notified GuideStar.
  3. State regulators ordered the organization to cease activities.

Charities obtain a Seal of Transparency after adding information to the GuideStar site. Charities are required to disclose with honesty and integrity their financial information and other information that adds to their public profile. The concept is simple: honest, complete information informs the public and helps the public make an intelligent decision about where and how to donate their money.

What the GuideStar and FTC Findings Tell Us About Nonprofit Fraud

Nonprofit financial management includes the prevention of fraud. The information obtained from the FTC review and the subsequent GuideStar article tells us a lot about issues pertaining to nonprofit fraud.

First, most of the fraud discovered wasn’t necessarily someone stealing money from the nonprofit, although that could be happening too. Instead, it was all around disclosure and failure to either disclose where and how the funds were being used or the activities of the organization.

Another problem was taking in money for an activity but then spending it elsewhere. Nonprofits who receive restricted funds, for example, that are earmarked for a specific project or program by the donor cannot spend them on anything other than what they were apportioned for in the first place. You can’t receive money for a scholarship for athletes and spend it to build a tennis court on campus, for example.

Nonprofits Have a Duty to the Public

Nonprofits have a duty and responsibility to the public, to their donors and constituents to be open, honest and transparent about their financials. It is then up to the public whether or not they choose to continue donations.

Some of the nonprofits receiving scrutiny from the FTC may be doing nothing wrong, but the perception of wrongdoing lingers. Why? It’s all in the financials. If the financials are poorly presented, if money isn’t categorized properly and if there is insufficient details included in the financial statements and annual report it can seem as if the nonprofit is trying to hide something.

This is where hiring a nonprofit accounting audit service can help. Professional nonprofit accounting audit services understand the changes to the FASB rules, for example, and can help you streamline net asset categories as well as assign the proper “nature” to expense items. The right amount of detail, the proper categorization and similar nonprofit financial management tasks undertaken during an audit can help clarify and communicate information in ways that help rather than hurt your nonprofit’s status.

If you’re ready to examine your nonprofit’s financials or you need nonprofit accounting audit services, contact Beck & Company today. We’re an independent certified accounting firm offering accounting and tax services for nonprofits, nonprofit financial management, auditing services and more. Since 1987, we have helped many nonprofits in the Washington D.C. area and along the Eastern seaboard with their accounting and financial management needs. We provide audit, tax, accounting, and consulting services that address all aspects of a small to mid-sized nonprofit organization’s business. Contact us or call 703-834-0776 x8001.

Year End Accounting Tips and Advice

Year-end arrives faster than the Christmas decorations in the local big box store, and as part of your nonprofit financial management duties, you should start thinking about auditing services and year-end close now.

Some nonprofits end their fiscal years on June 30th, particularly nonprofits in the education sector; those in healthcare and other industries may be on a typical corporate calendar with the year-end December 31. For those whose bell will toll the close of the books as the ball drops in Times Square, now is the time for you to start thinking about nonprofit accounting audit services and all the things you need to tidy up the financials for year-end close.

Are You Ready for FASB Compliance?

Remember that new FASB guidelines affect asset categories, liquidity reporting, and expense reporting. Have you chosen where to move items that are in the third category of net asset classifications that’s going away? Now is a great time to start those discussions.

Liquidity is an area often confused by folks in the nonprofit world. Nonprofit financial management includes cash management; liquidity refers to having enough cash on hand to satisfy outstanding debts and obligations that may arise within a short period of time. Many nonprofits have a positive net balance but lack liquidity because their assets are tied up in restricted funds or grants. Be sure you have enough cash on hand to pay those bills that arise at year end.

Lastly, expense reporting is changing with the nature of the expense, like a line item, appended to your expenses. Take a look at typical expense categories and develop your own line items as needed.

This isn’t an exercise simply to satisfy FASB. The way that you depict your finances through the end of year report can tell a powerful story that encourages donations and support for your mission. With the right message, you’ll have an easier time courting donors and securing funds.

Plan for End of Year Nonprofit Financial Management

Take time now to plan for your end of year close and reporting needs.

  1. Relay key dates such as the last date to submit year-end invoices to accounting to everyone in your organization.
  2. Request that reimbursement receipts and reports are turned in with plenty of time for processing. Set a date now and circulate it among your staff to ensure everyone is aware of it.
  3. Catch up on data entry tasks to ensure payables and receivables are up to date.
  4. Review where your organization will present year-end financial results. Will it be at the typical board meeting or published on a site such as Charity Navigator or GuideStar? Consider their deadlines and requirements as well.
  5. Leave adequate time in the schedule for printing and mailing. Publishing an annual report requires several weeks for writing the reports, graphic design, and printing if you send it to a commercial printer. Mailing at 3rd class nonprofit rates also takes two to three weeks depending upon mail volume. With increased mail volumes around the holidays, leave plenty of time for mailing out reports.

If you are feeling overwhelmed by end of year nonprofit financial management requirements, consider nonprofit accounting auditing services. Some nonprofits are required by federal, state, or local jurisdictions to provide fully audited financial statements. Others reach a specific financial threshold that triggers an audit requirement. Regardless, all nonprofits benefit from a thoroughly audited financial statement.

Professional nonprofit accounting audit services can help your organization tell its story through financial statements in ways that are easily understandable to the public and donors. A strong, clear, and compelling story goes a long way in supporting the achievement of your mission and vision.

Beck & Company

Beck & Company is an independent certified accounting firm offering accounting and tax services for nonprofits, nonprofit financial management, auditing services and more. Since 1987, we have helped many nonprofits in the Washington D.C. area and along the Eastern seaboard with their accounting and financial management needs. We provide audit, tax, accounting, and consulting services that address all aspects of a small to mid-sized nonprofit organization’s business. Contact us or call 703-834-0776 x8001.

5 Steps Nonprofits Can Take to Prepare for Giving Tuesday

Among the many nonprofit financial management tips Beck & Company has shared over the years, perhaps none can make such an impact as preparing now for Giving Tuesday.

What is Giving Tuesday? It’s the Tuesday immediately after Thanksgiving. Started in 2012 by the 92nd Street Y and the United Nations Foundation, the event began as “hashtag activism” or the use of hashtags to spur people to action. It’s often abbreviated as #GivingTuesday.

The purpose of Giving Tuesday is to encourage people to give to their favorite charities. After the lavish Thanksgiving meal and the debauchery of Black Friday shopping, consumers are encouraged to focus on something meaningful in their lives: giving to their favorite nonprofits.

That might mean your organization…if you prepare now.

As nonprofit financial management tips go, this is an important one: take steps now to make  #GivingTuesday successful.

Five Steps to Prepare for Giving Tuesday

If you were throwing a party, you’d take time to clean your home, polish the silverware, set out the best food and drink you could afford, and generally prepare the entire place from top to bottom to receive your guests in style.

Well, the same goes for GivingTuesday. Now is the time to polish your website, social media channels and more to attract donors and encourage generosity on this important day for nonprofits.

Last year, nonprofits raised $274 million thanks to Giving Tuesday. Smart nonprofits didn’t just sit back and hope for the best – they took action steps to prep for the big day. You can, too.

  1. Update your website and donor page: Make sure that your website is spic and span. Update text, keywords, calendars, and photos. Pay particular attention to your homepage and your donor page. Add a hot button or large, attractive button on the home page that enables people to donate quickly. Test your donor page and make sure that it is working properly.
  2. Improve your social media presence: Giving Tuesday began as so-called hashtag activism. A hashtag is a symbol (#) followed by a word or phrase without space (#GivingTuesday) that enables quick searched on a topic on social media. Take time now to update the header, about, and donation links on your social media pages.
  3. Plan your campaign: Create memes, social media messages and posts now for Giving Tuesday. Get them ready now so that when November arrives you won’t spend the Thanksgiving holiday working but enjoying time with family and friends.
  4. Cue up the posts: Begin three to four weeks before Giving Tuesday to alert your follows and donors that you will be participating in Giving Tuesday. Many may not be aware of the date or aware that you plan to participate in the event. Include updates in your social media posts, on your website, newsletter and in other places. Get stories ready too that share your mission and vision in photos and text; these motivate people to give and help them to understand how their donation impacts your constituents.
  5. Begin posting: The weekend before Giving Tuesday, start increasing the number and frequency of posts mentioning the charitable event. Include the hashtag #GivingTuesday and links to your donor page. On the day itself, increase the frequency of posts and share stories, tips and information about your charity’s mission, vision and purpose.

 #GivingTuesday is just one aspect of nonprofit financial management to pay attention to but an important one during the holiday season. Many people donate to charities as part of their annual gift-giving. Ensure that your charity is front and center by getting everything ready now for Giving Tuesday.

Beck & Company

At Beck & Company, we help nonprofits thrive. We have extensive experience and a tradition of creative thinking, technical expertise, and a collaborative spirit that can help your nonprofit achieve its goals. Whether you want to increase donations for #givingtuesday or support through transparent accounting practices, we can help. Contact us today or call 703-834-0776.

Home Owners Associations Nonprofit Financial Management, Part I

In this two-part series of nonprofit financial management tips, we’ll take a look at Home Owners Associations (HOAs) and their governance, financial responsibilities, accounting and tax requirements. When people think of HOAs, they rarely consider that these organizations, established for the maintenance and governance of a cooperative building, are typically registered as nonprofit, tax exempt organizations. As such, although they behave like a corporation rather than a charity, they must follow the accounting and tax guidelines established by the state in which they are incorporated.

Here, in this first of a two-part series on HOAs and nonprofit financial management, we’ll take a look at the financial responsibilities as well as the duties of the HOA board when it comes to financial management and accounting. In our next article, we’ll look at accounting and tax needs of HOAs and how your HOA might benefit from professional accounting and tax service for nonprofits.

What Is a Home Owners Association?

A Home Owners Association (HOA) is a legal entity established for the maintenance of a housing development, property, apartment building or condominium. The HOA’s purpose is plan, build, and maintain the property.

Most HOAs are incorporated as nonprofit organizations. As such, they are bound to state laws governing corporations and nonprofits. Members typically pay dues, or assessments, which are used for the maintenance of the HOA. The HOA develops rules and guidelines for members that govern how their property may be maintained.

For example, an HOA governing a housing development may enact rules about when people put their trash out on the curb for pickup. Residents in the housing development may need to call for special pickup of large items such as couches, furniture, or appliances. To put such items out on the curb before without calling for special pickup may incur fines or warnings to the homeowner. The reason for this is that the housing development residents have all agreed, through their HOA board representation, that to view large discarded furniture or appliances at the curb detracts from the appearance of the development. The HOA board, consisting of representatives from the residents living in the HOA, agrees upon the rules governing the property.

Financial Responsibilities of HOAs

As with any other nonprofit board, officers and directors of the HOA are legally obligated to act in the best interests of the members. This is a fiduciary obligation, or the obligation of someone entrusted with the care of money or property.

There are two broad duties that go along with fiduciary obligation:

  1. Upon their election to the board of a common interest development, directors become fiduciaries with powers to act on behalf of the association.
  2. As fiduciaries, directors are held to a higher standard of conduct and have two primary duties: (i) duty of care, and (ii) duty of loyalty.

Duty of care refers to the obligation of someone to act in a responsible manner, with the watchfulness, care and prudence that a normal person would make under similar circumstances. Duty of loyalty means that officers and directors in a company must be free from a conflict of interest.

Insurance Coverage

The HOA should provide Officers and Directors Insurance for their Board. As with a corporate for-profit board, this is a courtesy that should be extended to protect the members when they act in their capacity as directors of the HOA board.

Financial Review and Analysis

Part of the HOA’s job is to provide financial oversight. This nonprofit financial management means that the HOA board:

  1. Creates and budgets their income evenly over a 12-month period. Budgets are essential to ensuring adequate cash flow to meet the HOA expenses.
  2. Keep receivables less than 3%, which is a sign of a healthy cooperative board.
  3. Review and pay accounts payables promptly to avoid debt or late fees
  4. Make other nonprofit financial management decisions as they pertain to the charter of the HOA

Additionally, HOA boards should fund studies for the development and future of the cooperative. Such studies may include planning, renewal, and major repairs.

The financial management and duties of a Home Owners Association board are very similar to that of a typical nonprofit board. In Part II of this two-part series, we’ll take a closer look at accounting and tax needs for nonprofit HOAs.

Beck and Company: Nonprofit Financial Management Expert

At Beck & Company, we have extensive experience and a tradition of creative thinking, technical expertise, and a collaborative spirit that can help your nonprofit achieve its goals. From accounting and tax service for nonprofits to consulting on issues impacting nonprofits today, Beck & Company can help. Contact us today or call 703-834-0776.

The Secret to Obtaining Grants for Nonprofit Financial Management Success

Many professionals in the world of nonprofit financial management rely upon grant funds to maintain their operating budgets (and other budgets, too.) If your organization depends heavily on grants, it’s time to find out what funders REALLY look for in a nonprofit. The better you can align your grant application to what they are looking for, the more you increase your chance of a successful award.

A report entitled Social Solutions: Foundation Report Study examined the metrics by which foundations and granting organizations determine which nonprofit organizations to awards funds. The results offer insights into what foundations and granting organizations really look for when they review your applications. Get ready for a few surprises; their responses are eye-opening.

Three Surprising Considerations for Funding

Those responding to the survey agreed almost unanimously on the main consideration for granting an award: IMPACT.

98% of those responding to the survey picked “impact” – as in the award they gave would make an impact on the project or people – as the most important consideration for funding.

In second place is MISSION. How well does the nonprofit state its case that its mission aligns with the foundation or granting organization’s objectives?

Lastly, nonprofit legal status is cited as the third most important consideration. This may be surprising to many but foundations are inundated with applications from organizations who either lack legal status as nonprofit organizations or who fail to provide the requisite proof of their status. In that case, their application may be immediately discarded, putting them out of consideration for any grant funds.

How Can You Evaluate Impact?

Impact wasn’t even questioned as THE most important thing the granting organizations looked for in the applications from nonprofits. But how do they measure impact? Impact is measured against the following criteria:

  • Outcomes
  • Detailed data
  • Consistency to mission
  • Outputs
  • Community
  • Financials
  • And other criteria

Other things that can demonstrate the impact that your nonprofit makes are clear reporting and strong community outreach. Both are seen as a sign of commitment and higher impact.

Communications around both project and organizational goals are also important. Funders want to be sure that nonprofits are utilizing their grants in ways that help them achieve their state mission. Public-facing communications, good annual reports and other marketing materials help the granting organizations see that communications are important to your nonprofit.

The Importance of Detailed Reports

Nonprofit financial management includes the preparation of the annual report and other documents These reports are deemed very important by foundations and granting organizations, so taking the time to ensure that yours are error-free and clearly written is vital.

Reports from your nonprofit to the foundation after a grant is received are equally as important. The foundation is comparing your reports to your application to see how well you’ve matched your stated objectives to what has actually occurred. And of course, they want to know how their money has been spent, and what potential impact it has made.

Donors Prefer Stories

No matter what the size of the foundation or granting organization, all preferred to see stories (82%) over other forms of reports. Stories paint a great picture of how funds have made a difference A variety of documents ranging from spreadsheets to narratives can all tell the story of how the funds were used, but it’s up to you to frame the narrative.

Start Early to Prepare Your Report

Nonprofit financial management professionals understand the importance of early and thorough preparation. It’s never too early to think about how you are going to prepare a grant report.

Consider all of your options when you receive grant funds. You may want to photograph or videotape events, record individual stories of who was impacted by the foundation’s gift and more. This information can fill out the report so that your organization is well-prepared to respond to a foundation’s request for information.

Get Your Paperwork Ready

Lastly, about that nonprofit status – have copies of your incorporation papers and nonprofit status ready to add to the grant application. Don’t leave them out. Foundations must have them to verify that your organization can make a legitimate claim to nonprofit status. Keep several photocopies on file for occasions when foundations want hard copies and add a scan to a shared drive so that others in the company can add it to their foundation applications when needed.

Takeaways for Nonprofit Financial Management

In sum, granting organizations and foundations respond best to:

  1. Nonprofits who have their paperwork in order – including proof of nonprofit status and incorporation
  2. IMPACT statements and tracking so that you can prove how their gift is making a difference
  3. Clear, concise reports that demonstrate 1) communication to the public and 2) communication back to the foundation on how money is spent
  4. Stories to show how the funds are fulfilling your mission
  5. Thoroughness

All of this is within your power to provide to the foundation offering grants. With additional work and preparation, you’re well on your way to improving your ability to secure more funds.

Beck & Company

Beck & Company is an independent certified accounting firm offering accounting and tax service for nonprofits, nonprofit financial management, auditing services and more. Since 1987, we have helped many nonprofits in the Washington D.C. area and along the Eastern seaboard with their accounting and financial management needs. We provide audit, tax, accounting, and consulting service that addresses all aspects of a small to mid-sized nonprofit organization’s business. Contact us or call 703-834-0776 x8001.

Measuring Outcomes in Nonprofit Financial Management

For-profit organizations have shareholders and others who demand to see the return on investment, but how can you measure outcomes in nonprofit financial management? The key is to broaden the definition of measurement and the scope of what you can measure to include the impacts that matter most to your nonprofit’s stated mission.

Measure the Good

Yes, financial metrics are important. Where would nonprofit financial management be without measuring income versus expenses and other financial measures of success?

Yet that’s not all there is to it when it comes to the nonprofit world. Nonprofits are also judged by how well they fulfill their mission. GuideStar and Impact Genome Project are two organization that are helping to measure such an impact.

GuideStar recently launched GuideStar Platinum. This is a platform in which nonprofits can self-report on metrics. About 20 percent of the more than 12,000 metrics shared on the GuideStar platform represent impact-based outcomes. The rest are other metrics that each individual nonprofits deem important.

Mission Measurement curates the Impact Genome Project, which offers a unique window into research on nonprofits.  Impact Genome aggregates over 10,000 research items. It seeks to identify patterns of what is working in the world of nonprofit financial management, nonprofit management and more. If it can identify what works, the thinking goes, nonprofits can also avoid what does not work.

Data, Data Everywhere – Is It Really Important to Nonprofits?

Why bother with data?

Data represent facts. It’s easy to measure certain outcomes. You can quantify how many donations were entered into last year’s books, how many dogs were saved from the animal shelter, how many meals were given out at the soup kitchen.

Outcomes data is now entering the world of nonprofit financial management. It’s currently used in medicine where many hospitals now chart both quantitative data (the number of patients who attended a seminar on smoking cessation) and the outcomes (how many patients returned for follow up a year later and had quit smoking). Both measures offer useful information, but together, they help hospitals understand how effective their programs are within the local community.

Nonprofits can also measure outcomes data. A nonprofit animal rescue can measure both how many dogs were adopted out to loving homes as well as how many spay/neuter vouchers were actually used by the local community. Both measures can help them gauge how well they’ve moved towards their goal of reducing the number of unwanted pets locally.

As a nonprofit financial management professional, your organization may turn to you for leadership tracking both quantitative data and progress towards achieving the mission or outcomes measurement. Think about how to accomplish this with the resources available and work on a plan to start measuring both activities and outcomes.

Data Reassures Donors

Donors need to see that their gifts are going towards the fulfillment of the mission. Without such clarity and insight, donors may feel suspicious about the nonprofit. Nonprofit financial managers would be wise to provide as much transparency as possible to donors.

One organization, GuideStar, helps provide this information to the general public. GuideStar data enables donors to:

  • Research potential nonprofits
  • Read their financial reports
  • Understand how well their money is spent to support and sustain the nonprofit mission
  • Review leaders, salaries, money spent on overhead and more
  • Read answers from the nonprofit on specific initiatives
  • Contact the organization

Nonprofits that provide quantitative, as well as qualitative answers to these questions to groups like GuideStar, provide transparency to their potential donors. Donors look for metrics they can understand before giving money. They want to see not just quantity, but quality.

Data Needed Now

Both GuideStar and Impact Genome Project rely upon data. Now is the time to talk to your team about the systems you have in place to collect data. If these systems are antiquated, poorly maintained, or collecting dust, find out why. It may be time to buy new software to track important data and outcomes. Your donors and constituents depend on it.

Beck & Company

Beck & Company is an independent certified accounting firm offering accounting and tax service for nonprofits, nonprofit financial management, auditing services and more. Since 1987, we have helped many nonprofits in the Washington D.C. area and along the Eastern seaboard with their accounting and financial management needs. We provide audit, tax, accounting, and consulting service that addresses all aspects of a small to mid-sized nonprofit organization’s business. Contact us or call 703-834-0776 x8001.

Nonprofit Financial Management and Millennials – Can You Manage Both?

Nonprofit financial management positions are starting to be filled by Millennials, and whether you love or hate them, they are the largest demographic to enter the workforce. They even surpass the notorious ‘Baby Boomers’ for the sheer volume of people in the workforce. Chances are good you’ll either meet or manage a Millennial – or be managed by one – very soon.

Defined as the demographic born between 1977 and 1995, these are the young people who came of age at the turn of the last century. They can’t remember a time before cable television, the internet, or cell phones. And although a lot of myths surround them in the workforce, painting them as alternatively lazy and creative, they are neither. Like all demographic groups, these are generalizations.

The specifics for nonprofit financial management is that Millennials offer a lot to your workforce. If you can learn to manage them wisely and in ways they respect, you’ll add terrific talent to your nonprofit organization.

Millennials Need Coaching – But They Might Not Ask for It

Like other young people entering the nonprofit financial management work, Millennials may need coaching on the job. But unlike other demographics, the independent-minded Millennial is unlikely to ask for it.

Many of these young people never worked while going to school. They went straight from high school to college and then they end up at your nonprofit organization. This changes their attitude and behavior in the workforce. They may have an accounting or marketing degree and have the book learning to do their jobs, but they lack the professional mindset, attitude and behaviors that many young people in generations past acquired through part-time jobs flipping burgers, ringing a cash register at the mall, or waiting tables.

Even such simple things as showing up on time and how to answer a telephone professionally may need to be taught to this group. That may sound like a stretch but think about it. Those minimum wage jobs many of us held while going to high school taught us simple things like how to show up for work on time, wear professional attire or a uniform, answer the phones, and greet customers. Without that work experience, there’s a gap in simple knowledge that many among the older generations take for granted.

Here’s how to deal with it, simply and kindly: set expectations, never assume that Millennials are making mistakes out of ill will, and teach, coach and mentor. Be prepared to offer basic workforce training, if needed, and have the young worker shadow an experienced person to pick up on the attitude and behaviors that you want to see at your nonprofit organization.

Millennials are used to group projects and gladly accept group-related coaching, so pairing up a mentor with Millennials can work well. Don’t take anything for granted with your Millennial staff members. Spell out clear expectations and gently guide them toward success.

Loyal Employees

You’ve probably heard that Millennials job hop frequently and worry that this means they won’t stay with nonprofit financial management work for a long time. The truth is that Millennials aren’t disloyal; their loyalty is average or above average. What they loathe is boredom.

Boredom drives many Millennials to switch jobs frequently. To prevent this, make sure you provide your younger employees with challenging tasks. Switch up their work and let them come up with projects that benefit your nonprofit.

Technology, Anyone?

Millennials are often rumored to be tech-dependent, but they aren’t necessarily dependent. It’s more accurate to say they are aware of technology and comfortable with its use. They may turn to instant messenger apps or their cell phones before they think of sending an email or a fax (which can seem archaic to them!).

If your nonprofit handles sensitive materials, be sure to review procedures with Millennials to ensure HIPAA compliance, for example or other necessary legal compliance. They may not know they can’t share information on social media or that instant messengers are a poor replacement for phone communications.

Millennials aren’t an exotic species. Rather, they reflect the times in which they grew up, just as you do and the generations before you did. Respect their point of view and working style and you’ll find them an asset to nonprofit financial management.

Beck & Company

Beck & Company is an independent certified accounting firm specializing in nonprofit organizations. Since 1987, we have helped many nonprofits in the Washington D.C. area and along the Eastern seaboard with their accounting and financial management needs. We provide audit, tax, accounting, and consulting service that addresses all aspects of a small to mid-sized nonprofit organization’s business. Contact us or call 703-834-0776 x8001.