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Jan 09
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Major Nonprofit Trends for 2024 – With Some Surprises

By | Nonprofit | No Comments

The cheering from the crowds in Times Square barely faded away before the trend pieces hit the internet. This is one of them. However, unlike anything you’ve read before, these trends for 2024 are focused on nonprofit organizations. We’ve followed the major news stories of the past several months to bring you a glimpse of what we believe to be the most significant trends of the new year for nonprofits. Most affect human resources and management. Which of the following do you think are most applicable to your organization?

Five Trends for the New Year Affecting Nonprofits

  1. Unionization
  2. Remote Work and Management
  3. Shortage of Experienced Executives
  4. Reporting Improvements
  5. AI

Trend 1: Unionization

The Hollywood screen writer’s strike of 2023 brought the notion of unionization to the forefront of public consciousness once again. Formerly the purview of manufacturing, the notion of workers banding together to ensure fair treatment has now percolated through all industries—including nonprofits. And while the writers’ strike was more about fair payment and ensuring their intellectual property was respected, nonprofits are also facing rumbles from their workforce. Most of these rumbles come from workers who feel their requests for additional resources aren’t being met. Management—and Boards— may recognize the need for additional help, but with the current economic environment, many managers have asked staff to wait for added resources. Whether or not this waiting period ends with a further push for unionization or not remains to be seen, but the signs are there that even nonprofits may find themselves discussing the pros and cons of unionization soon.

Trend 2: Remote Work and Management

Since the start of the pandemic, the topic of remote work (and management) has been a permanent fixture in the news. Whether its companies announcing they’re moving back on campus or workers demanding more flexible arrangements, remote work has increased and is here to stay.

Nonprofits should embrace this trend. Not only is remote work better for workers, but it can also be better for organizations, too. Organizations can tap into a wider employee pool by offering remote work options. Workers who never considered joining a nonprofit may be open to it if they view remote work options as a bonus.

Online project management systems, daily check ins, and better virtual communication through instant messaging apps and cloud-based software can all make remote work a seamless and effective option for nonprofits.

Trend 3: Shortage of Experienced Executives

Baby Boomers have retired, or will retire soon, and Gen X is following quickly on their heels. Additionally, many people in positions of leadership are experiencing significant burnout. Fewer want the added responsibility of executive positions. This has led to a shrinking pool of experienced people willing to lead nonprofits. If you’re recruiting for senior leadership positions this year, allow extra time, as it can be tough to find the right candidate. As always, consider grooming qualified candidates from within—the more you provide a stable promotion track and help employees gain the necessary skills for leadership, the better your organization will be.

Trend 4: Reporting Improvements

Gone are the days when some organizations tweaked their reports to allow some “flexibility” in financing. With both an emphasis on audits and modern computing, fuzzy reporting logic is a thing of the past. Instead, look for improvements in reporting including enhanced accuracy, greater accountability, and improved analytics thanks to affordable cloud computing and public demands for transparency.

Trend 5: AI

Artificial intelligence (AI) burst into public consciousness last year, and it continues to dominate headlines. The explosion and proliferation of generative AI tools has made them more accessible than ever, but should your organization avail itself of these innovations? There are many ethical, legal, and similar considerations around the smart use of generative AI. If your organization doesn’t have an AI policy in place, it’s time to think about one. Your board and legal advisors may wish to weigh in on the ethical and legal aspects of utilizing public generative AI tools, such as ChatGPT, and ensuring that proprietary information isn’t compromised in the tool. Because what ChatGPT ingests in the form of content or queries becomes its property, not yours. This is just one small example of the many gray areas surrounding this new tool, and one which your organization must consider before employees start using it without guidance. So, for the new year, consider guidelines for employees in the use of external AI tools, and whether adding AI-based platforms to your software stack can be a help or a hindrance.

Move Ahead with Confidence into the Future

As we move ahead into the new year, we look forward to the future. Even if some of these trends are unsettling, one thing is certain: nonprofits continue to add valuable contributions to society and to the economy. Each of these trends may contribute more than first meets the eye. It’s all in how you look at things.

Welter Consulting

Welter Consulting bridges people and technology together for effective solutions for nonprofit organizations. We offer software and services that can help you with your accounting needs. Please contact us for more information.

Dec 20
0

The Benefits of Data-Driven Audits

By | Accounting, Audit, Nonprofit | No Comments
person at laptop doing audit, interacting with virtual data file screen

The annual audit offers nonprofits an unbiased third-party analysis of their finances. It also assures the public, based on the auditor’s report, that funds are being accounted for correctly.

But many audits are conducted on a routine basis. Auditors often perform the same analysis year after year. Others may focus on areas that have little impact on the overall audit but are easier to see, or things they deem vital, but which may not have a significant impact on the organization.

A data-driven audit, on the other hand, focuses on data from the trial balance and general ledger to conduct a robust risk assessment. From this risk assessment, the auditors then tailor their approach and methodology to identify and assess risk areas. The resulting audit leverages data from both prior years and the current year to present a clear, robust picture of an organization’s financial health and risk areas.

Data-Driven Audits Require the Right Tools

If data-driven audits are so helpful, why aren’t more auditors performing them?

Organizations and auditors need the right tools to perform data-driven audits. This includes financial and accounting software that can provide ready access to current and prior year finances, as well as software to perform complex analysis of the data. This type of analysis cannot be completed easily using a calculator or spreadsheet; auditors who offer data-driven audits typically work with nonprofit software and databases to crunch the numbers they analyze later.

The Benefits of Data-Driven Audits

Data-driven audits provide many benefits. These include:

  • Enhances efficiency: Leveraging software and tools to perform data analysis reduces the auditors’ hands-on time with the finances. They can use their time more efficiently to focus on risk identification and assessment.
  • Improves outcomes: Risk identification enables nonprofits to take remediation steps for improved outcomes. Auditors can review 100% of the information because the initial analysis is completed using technology.
  • Reduces risk: Auditors who do not leverage data-driven audits may miss crucial information because they rely upon sampling techniques rather than a deep-dive into the entire database. Data-driven audits analyze everything, thus reducing the risk of missing something important in the audit.

Supports Remote Audits

Another benefit of using data-driven audits is that most of the technology used to gather and analyze data is cloud-based. Cloud systems enable remote access, meaning that the auditors do not have to spend as many days onsite with you as in the past. They can pull data remotely, analyze it, and focus on findings. This provides a more efficient and cost-effective audit, giving both nonprofits better results and saving auditors time.

With the current accounting employment shortage, in which fewer people seem to be entering the accounting profession, there will likely be a shortage of experienced auditors soon. However, by using technology, auditing firms can increase the amount of work they do, while providing better service and more detailed analysis to nonprofits. This can offset some of the accounting labor shortage.

No Need for a Big IT Department to Benefit from Data

Another benefit to using cloud-based accounting and finance software is the ease with which organizations can add it to their tech stack. Unlike site-based systems, which may require special hardware and personnel to maintain and manage them, cloud-based systems are accessed through the internet. The software provider takes care of maintenance, updates, and security. No special hardware or software is needed to use them either, thus enabling you to continue using the hardware that you have.

Added Value with Few Drawbacks

Data-driven audits add so much value and have few, if any, drawbacks. Not only can they cover more transactions than a traditional audit, but they also help auditors more easily focus on possible risk areas. With the right technology in place, nonprofits can reap the benefits of big data even with limited budgets.

Welter Consulting

Welter Consulting bridges people and technology together for effective solutions for nonprofit organizations. We offer software and services that can help you with your accounting needs. Please contact us for more information.

Dec 13
0

How to Accommodate Neurodiversity in the Accounting Team

By | Accounting, Nonprofit | No Comments
people at table with laptop and ERP accounting dashboard printouts

According to Harvard Health, neurodiversity refers to a spectrum of neurological differences among people with autism and other conditions. Neurodivergent people demonstrate unique strengths and challenges.

However, many workplaces shy away from hiring neurodivergent individuals. With the continuing debate over a shortage of people entering the accounting profession, many companies are rethinking their hiring practices and finding ways to welcome neurodivergent people to the accounting team. Here are several ways in which nonprofits can hire from this community with confidence.

Reach Out to the Autism Community

As part of your organization’s hiring practices, you probably have connections with local universities, for example, to be part of job fairs and other recruiting efforts. The same type of networking can help you hire from within the autism community. Such groups or organizations that offer support to people with autism may also have career centers that look for placement opportunities. Share your job notices and hiring criteria with them and encourage people with autism to apply.

Allow for Accommodations

Many autistic people thrive in the workforce with simple accommodations, but such accommodations are not one size fits all. Ask what the person needs to feel comfortable and do their job well. Often, it’s as simple as reducing distractions: allowing them to wear noise canceling headphones or work in corner cubicle that limits distractions. Most accommodations can be easily made without disruption to other workers.

Find an Internal Champion

Perhaps you think it’s a great idea to expand the hiring pool by tapping into neurodivergent communities but others within your organization think differently. Find a champion to support your efforts. A champion refers to someone at the senior or executive level who can lead the change from the top. With the help of a champion, you can more easily lead change from both the management and senior levels in the organization and convince more people to welcome people with different abilities.

Benefits of Hiring Neurodivergent People

Are there any special benefits from hiring neurodivergent people? In the accounting profession, yes!

Many people with autism excel at pattern recognition, and an important aspect of many accounting tasks is recognizing when something deviates from the norm. Of course, this is a generalization, and people have unique skills, but neurodivergent people do think differently—and it’s this strength that can make a great difference to your organization. Encouraging people with different ways of thinking and seeing the world to be part of the accounting team can lead to improved work and better outcomes overall.

According to the CDC, about 2.2% of the United States population is on the autism spectrum. This figure does not include other diagnoses within the neurodivergent community. While it may not seem like a big number, it is likely that you know at least one or two people who have autism or who have children with autism. Having autism doesn’t mean someone can’t work. It simply means they think differently and possibly process information and sensations differently. And while this may make it challenging for them in some areas, it may make them perfect for the accounting profession. Don’t avoid hiring neurodivergent people. There’s a wealth of untapped talent within the community that may benefit your organization.

Welter Consulting

Welter Consulting bridges people and technology together for effective solutions for nonprofit organizations. We offer software and services that can help you with your accounting needs. Please contact us for more information.

Dec 06
0

Three Common Nonprofit Board Governance Mistakes

By | Nonprofit | No Comments
board meeting at office table

Mistakes happen. That’s why they put erasers on the end of pencils. But some mistakes are harder to erase than others. These include common mistakes that nonprofit boards make in their governance. And while there are certainly more than three possible mistakes to be made, the following list includes the ones most consultants see—and the ones that are the most easily corrected. If you see yourself and your board in this list, take steps now to correct mistakes before they turn into big problems.

  1. Failing to Comply with Legal Statues and Laws

All corporations must work within a legal framework, and nonprofits are no exception. Laws pertaining to employment, taxes, fundraising, and reporting are just some of the legal issues nonprofits must navigate in their daily operations.

Failing to comply with these laws is more than just a headache. It can lead to financial penalties, lost reputation, and lost confidence in the organization. Board members may also be held liable, if only in the court of public opinion, for failing to follow the law.

Your nonprofit board must fully understand the laws governing nonprofit operations and comply with them. Take time to ensure that board members are fully briefed on any discussions pertaining to legal hot button issues: employment, fundraising, human resources, payroll, and more. And, when in doubt, consult with a professional to ensure you are following best practices and the letter of the law.

  1. Ignoring Fiduciary Duties

Board members have an obligation to perform their fiduciary duties with care. This means ensuring that financial reporting and possible conflicts of interest are handled ethically and legally. Ignoring these duties may expose a nonprofit organization to significant risks.

When board members lack a comprehensive understanding of their fiduciary duties or don’t take them seriously, it can lead to mismanagement of financial resources, conflicts of interest, and decisions that deviate from the organization’s mission and harm its long-term viability. Neglecting fiduciary duties has the potential to erode trust among stakeholders, jeopardize funding opportunities, and may even result in legal repercussions for both the organization and its board members.

Take time to fully brief the board on their fiduciary duties. Establish training that covers both the legal duties (#1) and fiduciary duties (#2) to ensure that the entire board is aware of what’s required of them and the seriousness of failing in their duties.

It may be helpful to establish an ethics code, one that clearly spells out what is considered a conflict of interest. This can ward off many potential problems within the board.

  1. Lack of Financial Oversight and Controls

Financial oversight and control refer to the day-to-day handling of the organization’s finances. While such matters are typically left to a controller, CPA, or accountant or department, the board has ultimate responsibility for the organization’s money. Without proper oversight and controls, fraud may result, leading to legal action, lost reputation, and even the demise of the organization.

To ensure your board is carefully watching the organization’s finances, consider appointing a finance committee. Under their leadership, establish financial policies and procedures. Regularly review financial statements and engage an independent auditor. Consider providing additional financial literacy training to board members to ensure everyone has shared knowledge of what it means to properly develop and monitor a budget and the finances for a nonprofit organization.

Nonprofit Board Governance Success: It’s in Your Hands

Boards make mistakes, but with the right approach and mindset, you can prevent many of them. Education, training, and adequate knowledge offset many possible problems. Communication and collaboration also help prevent mistakes. Your board’s success is in your hands, so take steps now to help them do their job to the best of their ability.

Welter Consulting

Welter Consulting bridges people and technology together for effective solutions for nonprofit organizations. We offer software and services that can help you with your accounting needs. Please contact us for more information.