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Technology Trends to Make Outcomes Measurement Easier

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“For-profit organizations report income; nonprofits report outcomes.”

This quote, attributed to Peter Fortenbaugh, ED Boys and Girls Club of Peninsula, sums up a perfect response to the claim that nonprofits should act more like for-profits. By their very nature, nonprofits cannot act the same way. They must report on the outcomes of their work. Reporting profits doesn’t matter as much as what they’ve achieved. To do so, nonprofits need to measure and track results.

But how do you go about measuring outcomes and tracking dollars to outcomes?

New technology trends in the world of nonprofits are shaping both how nonprofits track their work and how they measure outcomes. Grantors, funders, and donors demand greater transparency and accountability from the nonprofits with which they work. Tracking and sharing data is one step towards transparency; measuring outcomes is a step towards accountability.

What Is Outcome Measurement?

Outcome measurement in the nonprofit environment measures the effect a specific program has on the participants in that program. It is an approach that measures the social impact of a nonprofit’s work. Unlike for profits which judge progress by profits, nonprofits judge their progress by the impact of their work. Nonprofits may seek to have a positive margin at the end of their fiscal year but margin isn’t the goal of their work. Rather, doing good with the money they have, no matter how they define good, is the goal. Outcomes measurement takes into account this unique difference and focuses on the effect of the nonprofit’s work.

Technology Trends that Support Nonprofit Work and Outcomes Measurement

Several technology trends are likely to help nonprofits track dollars to outcomes. These include:

  1. Unified systems: When systems are unified or integrated, the data each contains may be shared among them. By having a unified system in place, nonprofits can more easily apportion funding towards specific programs and outcomes. They can ensure that budgets apportioned for special projects are spent on that project. More importantly, unified systems make it easy to run reports for donors, grant organizations, and other stakeholders. It takes just seconds to click on a report in a unified system and requires no manual data entry to run the appropriate reports to showcase program outcomes.
  2. Measuring infrastructure costs: By measuring the true cost of infrastructure, the costs can be deducted from program costs, thus aligning the true program costs with outcome measurement. Systems and programs to manage infrastructure costs, tied to accounting and finance programs, help nonprofits measure costs and outcomes accurately.
  3. Donating technology: Technology companies, seeking to make a difference, are donating to nonprofits at unprecedented rates. Pro bono services and equipment donated to nonprofits, but especially to traditionally under-served communities, is a growing trend.

Building a Smart System to Measure Outcomes

As you consider outcome measurement, review your current technology uses and needs. Consider working with a nonprofit consultant to evaluate what your nonprofit might need to better measure outcomes.

There’s a noticeable link between transparency within nonprofits and their ability to generation donations and secure grants. A nonprofit that is able to provide clear, consistent data demonstrating success in achieving most or all of their goals and delineating how their funding was used, is much more likely to get grant funding renewed. Reports to the public that showcase results and money spent to achieve such results also encourage donation. By integrating and aligning software and systems, you’ll be able to gather a complete picture of your organization’s finances, achievements, and outcomes more easily, and provide them to a public hungry for honesty and transparency.

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 Welter Consulting at 206-605-3113 for more information.

The Changing Role of the Financial Professional Part III: Critical Skills for Accounting Leaders

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Welcome back to our three-part series on the Changing Role of the Financial Profession. In Part I, we looked at what’s driving changes. In Part II, we looked at just one of those drivers, automation, and how it can be used to your advantage. In Part III, we’ll look at how the evolving role of technology is changing the critical skills needed for accountants and what skills organizations look for among its finance and accounting leadership.

Automation Changes Everything

As we’ve seen in Parts I and II, automation changes everything in both the for-profit and not for profit world. Automation enables organizations to save time, streamline processes, and access real-time data. Cloud-based finance and accounting systems, fundraising and donor management systems, and new grant management software enable organizations to simplify and automate many processes.

Organizations that once tracked grant applications using cumbersome spreadsheets, for example, can now use grant management systems to monitor applications, resources, deadlines, and status of grants. What was once a complicated process that involved plenty of cross-referencing links in multiple documents can now be accomplished easily through one central database.

The same goes for accounting and financial management software for nonprofits, such as Abila MIP Fund Accounting, which can track revenue, expenses, and margin to ensure that funding meets the demand for program services. With such automation at your fingertips, you can spend the time you used to take to manually update systems to work with program directors and others on their budget needs as well as other projects.

The Skills You Need to Succeed in Today’s Nonprofit Accounting World

Given that automation now takes over many of the tasks accounting and financial professionals once performed in the nonprofit workplace, what skills are now in high demand?

  • Data analysis: The ability to analyze data and offer insights offers many opportunities for accounting professionals to lead in the context of nonprofit decision making. Not everyone can review financial data and understand the ramifications of specific decisions, for example. An accounting and financial professional can offer invaluable advice and insight into data found in the financial systems and guide others based on that information.
  • Communications: In addition to the ability to review and interpret crucial financial information, accounting leaders must be able to articulate their findings to non-financial professionals, especially in the context of nonprofit leadership. Financial information comes under scrutiny at board meetings, constituent meetings, and internal staff meetings which requires an accounting and finance professional who can explain to the average person exactly what the data means and its impact upon the organization.
  • People skills: “People skills” are often thought of as secondary ‘soft skills’ in the accounting and finance world. But emotional intelligence, cultural intelligence, and other people skills set leaders apart from the rest. They help professionals lead with compassion and empathy, and motivate and inspire others to achieve their best. Today’s nonprofit accounting and financial leaders must have strong people skills to achieve success with their teams.
  • Technical abilities: You may work for a large organization with a dedicated IT department or a small nonprofit where you are the IT department. In both cases, you’ll still need technical abilities to navigate new software, assist with software selection, and utilize your current systems to their fullest capacity. Nonprofit accounting and finance leaders must have at least passing familiarity with the current slate of software available to help manage all aspects of finance and accounting, including membership, donations, grants, and more.

The nonprofit world’s technology evolves alongside that of its for-profit business counterparts. With the ever-expanding array of technology available to nonprofit accounting and finance leaders, all skills – quantitative, qualitative, and management skills – will be needed to help organizations remain cutting-edge and relevant for years to come.

In case you missed it:

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 Welter Consulting at 206-605-3113 for more information.

The Changing Role of the Financial Professional Part II: Automation Experts

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Welcome back to the second of our three-part series on the changing role of the financial professional. As new technology evolves, such as accounting and financial management software, fundraising and donor contact management systems, and more, financial professionals may wonder what the future holds.

In Part I of this series, we talked about what’s driving these changes: constituent demand, artificial intelligence, and improved automation. Today, we’ll take a look at one of these change drivers: automation. How is automation changing the way accounting professionals work? How can automation be used for added constituent and organizational value?

Automation, a Driver and Enabler of Change

It’s difficult to recall a time when automation wasn’t present in the workplace, but not too long ago, many automated processes we take for granted were once manual tasks. Bank tellers once tallied up a customer’s account by hand, manually adding sums as they made deposits and entering the amount with pen and ink into a portable ledger eventually known as a bank book. Now, the computer updates in seconds what took the teller minutes to do; and a receipt from the teller’s terminal provides us with the proof we’ve made a deposit and our current balance. We can look up our bank balances online, write checks and pay bills, and all with the touch of a button.

Automation now provides accountants with simple, push-button technology to update many critical systems at their nonprofit. For those still using spreadsheets to provide financial data, it’s time to rethink spreadsheets and manual data entry and consider automated accounting and financial management software for a nonprofit.

Such software not only saves time, as in our bank teller example but prevents mistakes. Consider how easy it was years ago for those old-fashioned bank tellers to make addition mistakes and end up accidentally shortchanging or perhaps crediting customers with too much. The same thing happens in a spreadsheet, only the spreadsheet perpetuates the mistake as it potentially carries the error over into multiple formulas, columns, charts, and graphs!

Automated systems take away much of the potential for error. They seamlessly gather data from different sources, updating in the background. Cloud-based systems offer the ability to connect websites with financial systems so that sales of membership materials, books or periodicals, or donations can be accepted online. The system automatically updates the ledger, providing you with immediate and timely updates on the financial status of the organization. That’s a compelling reason to embrace automation.

More Time to Add Value

Another area in which automation can help accounting leaders is by freeing up valuable time to attend to more critical duties in your organization.

An accountant who no longer has to add up every penny in the general ledger has the time to think critically about budgets, expenses, and program needs. They have the time to advise department managers on cost-saving measures, work with the marketing team on donor campaign data, and are generally more available to help all staff. The result is an accounting leader, not just a manager, but someone who has the time to advise, consult, and add significant value to the daily workings on the nonprofit organization.

AI and Machine Learning

As the world turns automates ever more, new software will use machine learning and artificial intelligence (AI) to remember and act upon common data needs as well as to retain and recall frequently required items. New systems offer voice-activated commands, simple remembered queries, and customized interfaces based on what the system ‘learns’ from its interaction with you and your team.

We’re at the beginning of a new era in the world of automation. As software evolves, the role of the accounting professional evolves alongside it. In Part III of this three-part series, we’re going to take a look at the skills that accountants need in this ever-changing world of technology. Check back soon for our new article.

 

 

 

In case you missed it:

The Changing Role of Finance Professionals in a Digital World: Part I

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 Welter Consulting at 206-605-3113 for more information.

The Changing Role of Finance Professionals in a Digital World: Part I

By | Technology | No Comments

In this Part I of a two-part series, we examine the changing role of nonprofit finance professionals in the digital world.

Financial professionals worldwide are witnessing one of the most significant changes to their profession since the introduction of the automatic calculator. Technology, and especially automation, is tackling more important tasks than ever before.

But just because many of the tasks that used to be performed in the finance and accounting departments are being automated, doesn’t mean the role of financial director, auditor, or CPA will be obsolete. The opposite is true! The roles are evolving and growing, not dissolving, and with them comes a new challenge for today’s nonprofit financial managers.

What’s Driving the Change?

Change doesn’t occur in isolation. It’s driven by a variety of factors, including individual choices, business decisions, marketplace factors, and the pace of innovation.

Technology follows these changes and adapts, evolves, and incorporates new factors based on what people demand and need. For example, nonprofit accounting and finance software automates many of the processes that once dominated the accounting department. With such software, you can reconcile monthly bills, set reminders for invoices, and update accounts quickly and easily.

It hasn’t replaced accountants. Instead, it’s made the accountant’s job easier. Accounts can now spend time reviewing figures and interpreting them, consulting with staff to make important decisions about budgets and how funds are spent, and weigh in on decisions that impact the overall organization.

Time that was once spent keying numbers into spreadsheets can now be devoted to understanding and interpreting the numbers for other people in the organization. With a better understanding of the numbers, new action plans can be formed that benefit the organization and its constituents.

Customer Empowerment

Who are your customers? They are the people you serve (constituents) as well as donors, members, and the public. Anyone who interacts with the services or goods you provide is the customer.

Technology is transforming interactions with customers into what’s been dubbed “customer empowerment.” Customers demand faster, personalized service. Other industries provide them with unique experiences and special services. They’re starting to expect that from nonprofit organizations, too.

Although as a financial director you may interact directly with customers, your work indirectly affects how they experience the organization. Donors, for example, may expect personal thank you letters.Tracking their donations using accounting and finance software, then acknowledging their impact on the organization and sending receipts for tax purposes customized to their needs may be something you and your department can do.

Artificial Intelligence (AI) and Nonprofits

Although AI sounds like it’s a bunch of robots running the show, it’s a term for computers that learn, build, and grow. AI can be used to set reminders for bill payments, analyze research to develop new and better products, and much more.

The Brookings Institute states that nonprofits are showing a greater interest in machine learning, AI and data, and analytics. And why not? With this level of data and analysis, nonprofits can provide better services and do more to fulfill their mission. Peter Drucker once said, “What gets measured gets managed,” and the same holds for nonprofits.

Nonprofit financial professionals may find themselves part of teams analyzing new software or technology that incorporates AI, data and analytics, or creating parameters for data-led programs and projects. They may become part of the selection team for new software to run the marketing lists or power donation campaigns. No longer are they relegated to spreadsheets and ‘bean counting.’ Instead, they’re counting pixels and probabilities and helping to solve complex problems for their organizations.

The role of the nonprofit financial professional has evolved considerably over the years. Technology continues to drive much of the changes that we see and will continue to do so for the foreseeable future. In next month’s installment, we’ll take a look at how technology drives the hiring process in the nonprofit environment. Check back our next article.

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 Welter Consulting at 206-605-3113 for more information.