Tag: nonprofit financial management

Nonprofit financial management comes with inherent stressors. Tax time, budgeting time, and end of year accounting can call for some long meetings and late nights. While we like to think we are all as productive as we can be, the fact remains that our days are filled with interruptions that can lead to lost productivity rather than increased productivity.

Experts tell us it can take up to 20 minutes to refocus after an interruption to our thoughts. Think about all the interruptions during your average workday. Phone calls, emails, text messages, instant messages, and people showing up unexpectedly at your desk with urgent needs are all interruptions that can break concentration and slow productivity.

Now, add onto that the late nights of tax preparation season, the long days during budgeting cycles, and other potential business activities that add to your work and you will quickly see why reducing stress and improving productivity in nonprofit financial management is essential.

Five Tips to Reduce Stress and Enhance Productivity

We’ve reviewed the best stress management and productivity advice around to develop this list of nonprofit financial management stress relievers, productivity enhancers, and all around helpful hints.

1. Plan: Even though some people insist they cannot plan their days because of work interruptions, planning ahead tends to take a lot of stress off people. Knowing the work you need to accomplish this week, the people you need to speak with, and the other work that takes priority during the workweek helps you fit it into the week’s activities. Even if you are interrupted during the day, you can return to your list and plan and pick up where you left off.
2. Turn off instant messages: Turn off the instant messenger apps unless they are absolutely essential to your workplace. Constant dings, pings, and other sounds and flashing messages break your concentration and make it difficult to return your focus to the task at hand. Pick one channel such as Skype, Slack, or another messenger for your team and teach them to use it only for emergencies.
3. Schedule time to review and respond to emails: The average employee receives 200 emails a day. We can almost guarantee that just a handful of those emails are truly deserving of a response. To that end, don’t feel obligated to respond to every email immediately. Instead, set aside three time periods—9 a.m., 12 noon, and perhaps 3 p.m.—to respond to emails. This is usually adequate for the majority of nonprofit financial management tasks.
4. Set office hours: Set specific periods during the day when your door is open to interruptions. Use this time as your planning period or to review materials and make it the time when you can be interrupted. Then, set aside other times when you wish to be undisturbed. By making this schedule public, you’ll manage interruptions and block them into specific time slots.
5. Prioritize: Push the work that will get maximum impact to the top of your list and let everything else flow from there. You may not be able to get to everything you wish to accomplish in a day, week, or month but if you can prioritize around maximum impact work, everything else should fall into place more easily.

Technology as the Servant, Not the Master

Lastly, make sure that the technology available to you is your servant, not your master.

• Learn how to use any time-saving features on it but do not feel obligated to use every feature all the time.
• Turn off notification sounds, pop-ups, or other alerts during your focused time periods.
• Use calendars and scheduling apps to manage your time.
• Automate whatever you can to enhance your time.
• Delegate any manual or routine tasks, when possible, to technology.

With a few adjustments such as these, you may feel less pressured and stressed and more in control of your time. Nonprofit financial management includes many days when unforeseen events, meetings, calls, or tasks take you away from your plan, but there are also days when working your productivity plan will help you do better 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 includes managing not just the money but the people. As part of the leadership team at your nonprofit organization, you’ll be in charge of hiring new employees (especially ones intended for the accounting and finance departments) as well as meeting other potential employees. You’ll also work with broad, diverse teams across the organization—some of which may include millennial employees.

According to AICPA, millennials now make up the largest portion of the United States workforce. Millennials are the generation born between 1977-1995. There are 83 million of this generation in the workforce, making it likely you’ll be working with someone from the millennial group soon.

This is a group that thinks differently from Baby Boomers and Generation X employees. If you are in a senior management position, you are likely from among those generations of people born after 1945 (Boomers) and after 1965 – 1977 (roughly the dates for Generation X). Each generation is shaped by their life experiences, cultural experiences, and family experiences, with specific traits shared among many members that tag them by their group.

AICPA has put together a list of points to help you manage millennials in the workplace. This group, more so than other groups that came before it, values autonomy and mission-driven organizations. This makes them perfect fits for the nonprofit world. Let’s take a look at some of the characteristics of millennials in the workforce.

Long-Term Employment? Think a Year

Our parents and grandparents valued long-term employment and the stability this brought to their paycheck, lifestyle, and families. This generation believes that 13 months or more is long-term employment. Their parents lived through many of the employment upheavals of the 1990s and early 2000s which, unfortunately, made long-term career stability a thing of the past.

If you desire to have these employees around for longer than 13 months, make it a point to engage them in the work early on. Help them feel motivated and inspired by the organization’s mission. This may help develop the loyalty you prize and the career goals they prize.

Control Is Big

Control is big with this generation. They like to run the show and think like entrepreneurs. They prefer to control their workflow, schedule, and environment as much as possible.

As you work with millennials, consider how much autonomy you can give them. It’s probably not a big deal to be more flexible with their work schedule. Allowing some work from home or flex time may benefit all. But, control over the work process may be a point in which you do not wish to compromise. Pick your battles and provide as much autonomy to the workers in this generation as you can.

They’re Used to Grown-Ups Doing Things for Them

A contradiction with control is their need for others to do things for them. On the one hand, they dislike being told what to do, but on the other, they are used to their parents doing quite a lot for them.

Avoid falling into the trap of acting like the parent around them and picking up the slack when they do not perform job duties. Instead, mentor, coach, and advise them on how they can do it for themselves. By empowering them, you’ll help them achieve their potential.

The Good News: This Is a Generation that Values Lifestyle Over Career

The good news among this generation is they value lifestyle over a career. They’re accepting of diversity and will bring new, fresh thoughts to your organization. This includes the area of nonprofit financial management.

Perhaps more importantly, they are passionate about a cause that matches their lifestyle. This makes them seek positions at nonprofits whose mission aligns with their goals and values. You’ll find that once this generation commits to your organization, you have a passionate, motivated employee.

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.

 

A new study published by Bill Meehan and Kim Jonker indicates that nonprofit financial management has a greater impact on how nonprofits are viewed by the public than previously thought. The study, The Stanford Survey on Leadership and Management in the Nonprofit Sector, penned by “friends” of the GuideStar organization, outlines seven areas which the study’s authors call “the engine of impact.” Several of these points, when taken together, point to nonprofit financial management’s role in the leadership of an organization.

The Seven Engines of Impact and Their Role in Nonprofit Financial Management

We know that nonprofit financial management can make or break an organization. Sound financial management provides a sturdy base from which a nonprofit may fulfill its mission. Without responsible financial management, nonprofits—like their for-profit counterparts—may cease to exist.

Among the seven “engines of impact” cited in the study, several can be taken together under the umbrella heading of nonprofit financial management. Let’s take a closer look at each, but especially those that impact nonprofit financial management.

1. Mission
2. Strategy
3. Impact Evaluation
4. Insight and Courage
5. Organization and Talent
6. Funding
7. Board Governance

Among the seven, most directly or indirectly intersect with the world of nonprofit financial management. The survey’s authors found that among the 3,000 nonprofits they surveyed, most—if not all—fell short in at least one area. Successful nonprofits were strong in all seven.

Supporting Your Nonprofit: Improving the Engine of Impact

The good news is, according to the survey results, more than 80% of nonprofits fell short in one or more of the seven areas. The bad news is your nonprofit may be among that large majority.

Board governance, funding, and impact evaluation—three key areas of nonprofit financial management—were cited among 50% of respondents as areas in which they fell short.

How does your organization measure up? The survey’s authors put together a questionnaire which you can fill out online at the link cited above to assess your own nonprofit.

If you find your organization comes up short, there are quite a few things you can do to improve:

• Work with an outside consultant: A CPA firm specializing in nonprofit organizations can help you assess your financial status and suggest direct improvements to benefit its health.
• Use software: Software to help track, manage, and assess fundraising activities, donor communications, and general organizational management can be helpful to add a layer of accountability to your organization. Many nonprofit accounting software packages include good reporting capabilities, which can transform data into useful information that will help finance and non-finance personnel alike manage their work better.
• Engage the board in direct conversation: If you feel that board governance is an area in which your nonprofit falls short, build an action plan with your board, along with directors and other key stakeholders, to improve stakeholder engagement. How can you engage in conversation with your board so they feel both empowered and invested in the activities of the organization?

There’s no magic to improving nonprofits. A concerted, focused effort, based on an evaluation of major criteria such as those outlined in the seven points presented in this study, can help you improve your nonprofit and build a stronger organization that can best serve your constituents.

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.

 

As part of our ongoing efforts to help you with nonprofit financial management, we’d like to share information on the recent FASB update. As you may recall, FASB issued Accounting Standards Update No. 2016-14 Not-for-Profit Entities, the first major change to Statement #117 since 1993. The feedback is in, and the changes took effect starting on December 15, 2017. It’s time to get up to speed and get your team ready for these changes. Are you ready?

The Impacts of FASB Statement #117

The changes begin to impact financial statements starting in 2018. The standards should be implemented during the calendar year 2018 or by the end of the fiscal year 2019.

The impacts on nonprofit financial management are as follows:

1. Net assets are now two classes instead of three. The three classes of net assets—unrestricted, temporarily restricted, and permanently restricted—are going away. Instead of three, there are now two. The two classes, moving forward, are net assets with donor restrictions and net assets without donor restrictions. You may be thinking, “Wait, this isn’t new!” and you’d be right. Many nonprofits have already moved into these two categories since few used all three. However, this is now the standard. You may need to tweak or update your current net asset classes to adjust for this change.
2. Enhanced disclosure relating to both classes of assets. Additional disclosure requirements apply to governing board designations, appropriations, or similar actions. If it results in self-imposed limits on the use of resources without donor restrictions, you may need to add additional disclosures. Some reading this may have already voluntarily disclosed information in the past, and that’s great. Now everyone is being held to the same standard and asked to document everything.
3. Additional disclosure related to qualitative and quantitative aspects of liquidity. This change impacts nonprofit disclosures related to how you manage liquidity to meet short-term cash demands. This may impact how you handle reserves, cash management practices, and anything that influences how cash is handled to meet short-term demand. The nature of financial assets, limitations, and other important facts must be disclosed.
4. You can now eliminate indirect cash flow reconciliation when direct method cash flow is presented. The direct method is preferred by many for-profit entities and, while not a requirement, has gradually become the standard. It is generally easier for the average person to understand. As such, nonprofits would be smart to adopt it. Under the new guidelines, if the direct method is presented, presenting indirect reconciliation is optional.
5. Required presentation of both natural and functional classification of expenses and enhanced disclosure of expense allocation methodologies. The goal is simply to improve comparability across not for profit financial statements by addressing differences in practice.
6. Show the nature and function of each expense in the same location. Functional expenses, which show the natural and functional categories of the expense, should be shared in the same location. It doesn’t matter if it’s in the notes or on the page, just put them near each other.
7. Report investment returns net of external and direct internal investment expense. You’re no longer required to report the amount of investment expenses. All nonprofits are now asked to report investment returns as net of external and direct internal investment expense. By making this a guideline that now applies to all nonprofit financial management, it helps make comparisons easier across all nonprofit entities.
8. Changes to restrictions on gifts. Right now, unless a donor states specifically how a gift can be used, you can use that gift for long-term assets. Now such restrictions must be released when the long-lived asset is used instead of a service. If your nonprofit used to release over time, you’ll see a bigger impact than others.

 As with all changes to FASB standards, it’s a good idea to speak with a CPA or an accounting for nonprofit firm. Beck & Company is a certified public accounting firm serving the greater Washington D.C. area and the Eastern seaboard. We offer consulting services, auditing, and software selection to help nonprofits with their accounting needs. Contact us today for more information or assistance.

Among the trends affecting nonprofit financial management, technology, and its resultant impact are top of mind as organizations work toward their goals. Technology is changing rapidly, with new advances from the for-profit world pushed into the nonprofit world almost as soon as they arrive. It is these advances that are changing operations, accounting, and yes, nonprofit financial management. Here’s a look at several major trends that will enhance nonprofit financial management now and in the future.

Artificial Intelligence (AI)

It’s not the rise of the machines exactly, but close. AI, or artificial intelligence, is making inroads into nearly every aspect of life today. You may not even be aware of the AI all around you. The chatbots that answer your questions on a favorite website or the phone tree at the bank may both be powered by AI bots that combine machine learning with language sensitivity to perform amazingly complex tasks.

Nonprofit financial management may soon include AI in some capacity. Although bots won’t take the place of a smart CFO or director of finance, they can be used for all sorts of clever things, including common accounting tasks.

AI isn’t good with gray areas, so skilled financial managers will still be needed, but it is rapidly becoming an indispensable technology and one that will soon be part of the nonprofit world.

Cybersecurity

If your nonprofit hasn’t been affected by a cyber-attack, phishing scandal, virus, or another cyber crime, consider yourself lucky. Most aren’t so lucky. The Nonprofit Quarterly reports that cyber-attacks are on the rise. In just one example, a small nonprofit was hacked and had their data held for ransom—to the tune of $43,000. The same article previously cited reported that in Los Angeles, a hospital had their data held for $14,000 ransom. If that doesn’t alarm you, it should. When criminals go after hospitals and small nonprofits, you know they will stop at nothing.

Data contained on your nonprofit’s computers can be corrupted, stolen, or held for ransom. It’s not just customer or donor data that’s at risk. Vendor data from your accounting systems can also be stolen and resold.

Many nonprofits do not have someone on staff who specializes in cybersecurity. They can’t afford it. In that case, finding someone trustworthy to outsource cyber security is essential for your security, growth, and peace of mind.

Cloud Computing

Dovetailing on the topic of cyber security is cloud computing. Cloud computing offers greater security for the average company or nonprofit. They also offer shared storage space, shared costs for software, and greater access to software than most companies can afford on their own.

Cloud software includes both nonprofit accounting and nonprofit financial management software, as well as software to help you track and manage grants, donations, donor relations, membership groups, and more. Cloud offers mobile interfaces, so it goes with you, and it offers more access to better software. It’s worth taking a close look at cloud computing for your nonprofit organization.

Technology Now and Later

Technology changes rapidly, and it can feel overwhelming when you must keep up with it. If you aren’t sure what to add to your tech slate now or if you should wait for later, speak with the experts at Beck & Company.

We are a certified public accounting firm that serves the nonprofit world. We keep our finger on the pulse of software related to nonprofit services, so we can guide our clients into wise choices for now and the future.

Trends come and go, but technology is here to stay. Choose the right technology to support your organization’s growth and fulfillment of its mission.

Beck & Company

Beck & Company is a certified public accounting firm serving the greater Washington D.C. area and the Eastern seaboard. We offer consulting services, auditing, and software selection to help nonprofits with their accounting needs. Contact us today for more information or assistance.

Part of having strong nonprofit financial management at your organization is having the right leader in place. Hiring a great CFO can take a good deal of weight off your CEO’s shoulders. The CFO manages, plans, allocates, and develops budgets and financial materials to responsibly manage an organization’s finances. With a strong CFO in place, you have the right nonprofit financial management to build a strong organization.

When to Hire a CFO

Some organizations may not have a current CFO. Instead, the director, president, or other general manager wears the CFO hat. At some point, the budget of nonprofit financial management becomes too great, and you may feel that hiring a CFO is in order.

It’s time to hire a CFO when …

• The Executive Director, CEO or President is bogged down with too much work and cannot handle critical financial tasks in time. Finances are too important to be left for a free moment. Instead, you need someone who can devote time to the tasks needed to guide the financial management of the organization.
• The organization’s finances have grown to be complex, requiring someone in the leadership chair who understands nonprofit accounting. Nonprofit financial management is its own discipline, requiring someone with the knowledge, skills and experience to adequately manage the task.
• The Board of Directors feels a layer of oversight and leadership is needed to manage the accounting needs of the organization. They may see the problems listed above or conclude independently that the organization needs a CFO.

A CFO can bring unique expertise to the organization. With the right CFO in place, he or she can:

• Provide strategic, high-level perspective to the organization’s finance and accounting needs.
• Expand the organization’s capacity to manage its finances as it grows in size and complexity.
• Reduce excessive workloads in the areas of finance, administration, real estate, technology, or legal for the Executive Director (ED) and/or the Chief Operating Officer (COO).
• Supplement the skills of the controller or other finance team members.
• Coordinate with the ED and COO to make decisions that benefit the organization from a financial perspective.

Finding CFO “Right”

Finding the right CFO takes time. As with any hiring decision, rushing into hiring the wrong person for the right reasons can be disastrous. Leave yourself plenty of time—weeks or even months—to build the job description and begin the search process.

The first task is to create a job description outlining the desired characteristics of the CFO. Focus on the necessary core capabilities, strengths, and experiences. It’s imperative that a non-profit CFO has experience with nonprofit financial management.

Look for the following skills and attributes in a potential CFO:

• Deep, rich understanding of non-profit budget models, contracts, and regulatory requirements
• Demonstrates passion about the organization’s mission
• Produces detailed and precise work
• Exemplifies strong listening and perspective-assessment skills
• Communicates well, in a transparent fashion
• Exercises good judgment in the midst of ambiguity

The right CFO must also get along well with the CEO and other leaders. Because the two will work closely together, if they don’t get along or don’t feel entirely comfortable with one another, the tension will eventually turn into a nonworking relationship. A good partnership and chemistry between the two means a solid working relationship.

Options to Find the Great CFO

While hiring a full-time CFO is a great solution for many mid-sized and all large non-profit organizations, many are too small to afford or need a full-time CFO. If your organization falls into that category, there are several things you can do to afford to hire a CFO.

One idea is to hire an interim or temporary CFO. No one earns the title of CFO without building an extensive body of knowledge and experience. Bringing someone into the role on an interim or fractional basis gives the Executive Director and the organization immediate access to the many lessons learned over the course of their career, at significant cost savings.

Lastly, have you considered hiring a specialized nonprofit accounting firm? Nonprofit accounting firms may be a great substitute for a full time CFO, either temporarily or permanently. Beck & Company offers nonprofit accounting, auditing, and consulting, along with nonprofit financial management services, to help your nonprofit thrive.

Even if you cannot find a terrific CFO right away, having a company like Beck by your side means you will have the best support for nonprofit financial management. It can be hard to find a great full time CFO. Finding a strong consulting firm and nonprofit auditing firm isn’t difficult. Contact Beck & Company.

Beck & Company

Beck & Company is a certified public accounting firm serving the greater Washington D.C. area and the Eastern seaboard. We offer consulting services, auditing, and software selection to help nonprofits with their accounting needs. Contact us today for more information or assistance.

For those responsible for nonprofit financial management and accounting services, here is a brief update from the Financial Accounting Standards Board (FASB). FASB is in the process of improving, clarifying, and enhancing recognition standards for grants and contracts by nonprofits. While the comment period is now closed, it bears noting that the recommendations made to FASB will be taken into consideration with other feedback as they prepare enhanced guidelines.

Nonprofits Seek Clarity on Grant and Contract Revenue Recognition

Government grants and contracts tend to cause confusion among nonprofit financial management when it comes to revenue recognition. Many nonprofit leaders aren’t sure when to recognize such revenue, or revenue recognition is inconsistently recognized and recorded.

To provide further clarity, FASB is hoping to provide an update on the proposed Accounting Standards Update (ASU), titled Clarifying the Scope and Accounting Guidance for Contributions Received and Contributions Made. The commenting period ended November 1. New guidelines are forthcoming.

Proposed ASU Changes                                                                     

The biggest proposed change is differentiating between contributions (nonreciprocal transactions) and exchange (reciprocal) transactions. Under the new guidelines, it is likely more grants will fall into the contributions category.

The proposed framework indicates that if a grant is an exchange transaction, revenues should be recorded in accordance with Revenue from Contracts with Customers. Details on this may be found in Topic 606 or other applicable topics.

Grants, on the other hand, are determined to be contributions and should be recognized as revenue for not for profit entities under Revenue Recognition Subtopic 958-605.

All grants must be evaluated individually, and a designation made for each. Grants can be considered exchanges if the value received is commensurate with the services rendered. Then, it is categorized as an exchange or reciprocal transactions.

The good news is that the ASU includes plenty of examples to help nonprofits determine whether grants are nonreciprocal or reciprocal transactions.

Handling Conditional Contributions

A conditional contribution is a grant that comes with strings attached—conditions that must be met for the grant to be considered fully received. Grants without barriers or considerations may be unconditional.

Typical considerations or conditions include:

• Goals that can be measured, such as matching grants, levels of service, or other items that can be measured or quantified;
• A stipulation that specific conditions must be met for the grant;
• Something limiting how the funds can be spent;
• Additional actions that would be required to be taken by the recipient organization in addition to the activities that it would normally pursue.

Where there are gray areas, FASB recommends treating them consistently in the manner that makes the most sense for your nonprofit. As with many nonprofit financial management topics, common sense often takes precedence when situations do not easily fit standard guidelines.

If a grant can be considered a contract with a customer, then the specifications in Topic 606 should be followed.

New Guidelines Deadline: 2019

The good news is the changes do not affect prior quarters in any way, so you don’t need to change anything prior to 2019. For more details, please visit FASB.

The new recommendations will go into effect on or around December 31, 2019, for the fiscal year ending in 2020. That may seem like a long way off, but for nonprofits dealing with a lot of grants that fit these categories and descriptions, it may be prudent to take steps now to conform to the new guidelines. Of course, changes may be made to the recommendations based on feedback received by FASB.

If you are unsure of how to adhere to the new guidelines, how to categorize grants or funds, or just need help with your nonprofit financial management and accounting needs, contact Beck & Company. We offer an array of accounting services for nonprofits to help you manage your resources so, by improving your margin, you fulfill your mission.

Nonprofit Financial Management at Beck & Company

Beck & Company is a certified public accounting firm serving the greater Washington D.C. area and the Eastern seaboard. We offer consulting services, auditing, and software selection to help nonprofits with their accounting needs. Contact us today for more information or assistance.