Increased competition, tighter regulatory controls, more scrutiny among donors, and much, much more; nonprofit organizations and charities continue to face challenges affecting them now and in the future. With all of this combined, the role of a finance chief—or any leadership position at a nonprofit—can be a daunting task. So what can your organization do to ensure a bright future?
A recent Intacct blog series highlighted the top three things nonprofits need to focus on in order to strengthen the health, influence, and sustainability of a nonprofit organization.
Effective Measurement and Reporting Outcomes
With donors and constituents more engaged than ever, having higher expectations of nonprofits, and having more information readily available, your ability to effectively communicate outcomes could be a defining factor in the success or failure of your organization.
In a competitive environment that includes more competition, professionals moving from the for-profit sector to nonprofit, and higher expectations from donors and regulators, nonprofits are in a dynamic environment that poses challenges for growth.
Measuring and reporting outcomes is a hot topic in the nonprofit space. Donors and grantors have higher expectations. Often, gifts and grants come with stipulations for performance because the givers want to ensure that their dollars are getting the greatest possible return on investment. Government funding, as well, has strengthened compliance reporting and performance expectations.
This means that finance leaders (and leadership in general) at nonprofits need to be able to report upon a multitude of outcomes quickly and accurately, while still communicating that these outcomes were achieved. Intacct author Joan Benson recommends starting small and make progress towards more robust outcome measures:
The key is not to get too overwhelmed with the ‘who, what, where, and when.’ Start with the basics – based on your vision and mission. Balance your approach with both program outcomes and financial/operational performance.
While measuring and reporting outcomes may require extra effort now, the interest and engagement that this expectation brings is a great thing in the long term for the nonprofit community—as it will bring significant benefits to organizations, donors, constituents, and communities.
For more information on outcome metrics and how Intacct helps nonprofits communicate them, click here.
Diversifying Funding Sources
As mentioned above, competition is changing the way nonprofits operate and leaders at these nonprofits think. With this increased competition comes a need for different funding to provide a sustainable look toward the future—all while planning for an expected increase in output.
This is where offering in-depth outcome measures can help you secure new funding, find new sources of funding, or even increase funding from existing sources. Your potential donors have more options than ever, and it’s important for them to realize that you’re the best one for their money now and in the future.
Intacct author Joan Benson highlights four new sources of funding to look at as you pursue growth:
- Social Finance: Social Finance is an approach to mobilizing capital that delivers a social dividend and an economic return to achieve social and environmental goals.
- Impact Investments: Impact Investments are investments made into companies, organizations, and funds – with the intention to generate measurable social and environmental impact alongside a financial return.
- Program Related Investments: These are defined as investments made by foundations to support charitable activities that involve the potential return of capital within an established time frame. PRIs include financing methods commonly associated with banks or other private investors, such as loans, loan guarantees, linked deposits, and even equity investments in charitable organizations, or in commercial ventures for charitable purposes.
- Social Enterprise: The standard definition of social enterprise is applying commercial strategies to maximize improvements in human and environmental well-being, rather than maximizing profits for external shareholders. Nonprofits are starting to leverage this strategy as they seek to create earned income to increase their sustainability and funding strength.
For a full list of definitions and insights on diversifying your funding as a nonprofit organization, click here.
Focusing on What Matters, Automating the Rest
It’s always important to remember that your cause should be at the top of mind. However, there are many laborious tasks that stand between you and supporting this cause.
Every single thing that can be automated—purchasing, preparing for an audit, closing the books, managing travel and expenses, etc.—is a small cut that takes away from your ability to give back. This is where it pays to have a plan and know what to automate. As you define your goals, priorities, and strategies in the year ahead, select some best practices to implement in your organization. Define, track, and measure results so that you can identify your savings and efficiency gains.
Learn Even More: Saving Money and Offering More Transparency in the Cloud: Webcast January 26
Join us for a complimentary webinar where nonprofit accounting experts will discuss the benefits of using a cloud financial management solutions including delivery of accurate and timely reporting, easier access to data, and automated processes that help reduce daily overhead.
This webinar, scheduled for January 26, 2017 1:00ET will highlight the top pain points facing nonprofit finance teams and how automated processes and reporting can transform your organization. Learn how you can have greater efficiency and managerial visibility so you can drive down costs while fully pursuing your organization’s mission.
Presenters Brian Dietz and Brent Neitz will discuss the benefits of using a cloud financial management solution including
- Delivery of accurate and timely reporting
- Easier access to data
- Automated processes that will help reduce daily overhead and position your organization for greater efficiency, greater growth, and, ultimately, greater success.
Click Here to Register for How Nonprofits can Save Money and Provide Financial Accountability with the Cloud.