Lisa Sherman, CPA – Director of Accounting Outsourcing Services

Financial health is important to every organization, but non-profits face unique challenges due to their funding, operations and purpose. Yet, those who focus on their financial health are looking ahead to ensure they can continue their critical work and improve efficiency.  

How can you improve your organization’s financial health? Consider investing in technology. With the right systems in place, you may find ways to transform operations and allocate more funds toward program-related activities.  

Start with the foundation of your non-profit – financials. Is your accounting software supporting your goals? Is it giving you the data you need to make decisions? Do you struggle to access key reports?  

Common Non-Profit Financial Reporting Problems

  1. Financial reports are historic and focused on the past. Systems are unable to show accurate, current financials.  
  2. Ad-hoc reporting requests take time to build and deliver, posing a challenge for quick decisions based on current financials.  
  3. Key systems and applications struggle to – or don’t – integrate, which may lead to duplicate data entry and errors. Team members may spend too much time pulling reports from multiple systems, then gathering and structuring the data in Excel to compile presentable financials. Preparing for board meetings may be stressful.  
  4. Reporting challenges and poor internal controls prevent organizations from showing the beneficial impact of grants and donations. These limitations may negatively impact future funding.  
  5. Department or program managers create their own reports outside of the financial system. Employees don’t have a clear picture of their programs or initiatives, nor the organization’s overall financials.  

These reporting issues pose serious problems to your organization. How can you adjust if you can’t detect problems as they happen? How can you validate community, donor and volunteer support? How can you make the right decisions with gaps in your financials or months-old reports? How do you ensure the non-profit is financially healthy and sustainable?  

In addition to reporting limitations, the not-for-profit industry is battling variability in revenue/funding, staff retention, regulation and legislation, donor engagement, rising overhead costs and decreasing margins. Investing in modern accounting or ERP software could provide the infrastructure and information to overcome and address those challenges.  

Benefits of Investing in Your Financial Infrastructure

  • Understand your non-profit’s existing operating reserves and better position the organization for any economic downturns. Prepare to meet increased need amidst financial stressors.  
  • Confidently report on how grants and donations are allocated back to donors. Demonstrate the outcomes of their contributions. This feedback may strengthen donor relations and increase future funding.  
  • Access current financial reports, enabling executives and key stakeholders to make informed decisions when it matters most.  
  • Improve operational efficiency and maintain adequate funding. Dedicate more resources toward program-related activities.  
  • Increase financial literacy among staff. Allow your internal leaders to view financials for their programs/departments and understand how it impacts the entire organization.  

As you begin to think about the technological improvements you could make, the list may become lengthy and span many departments. However, it’s a worthwhile endeavor that could lead to a significant return on investment.  

Prioritizing technology investments to improve operational efficiency, enhance the delivery of programs and services and strengthen your financial health could mean longevity for your organization. After all, you’re in business to solve problems and deliver much-needed services to your community. Focusing on your organization’s financial health allows you to do this critical work today and well into the future.  

Doeren Mayhew’s non-profit CPAs welcome the opportunity to help you find the right accounting solution for your organization. Contact us today to get started. 

If you want to learn more about how to improve your financials, read the eBook “Secrets to Gaining Visibility into Non-Profit Financials.”