Monthly Archives

August 2019

Alleviate Nonprofit System Scrutiny with True Fund Accounting

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A recent article in the NonProfit Times states that nonprofit hospitals that figure out how to absorb Medicare payments may do better than others. Hospitals have been under the microscope in the past year as more information has been uncovered surrounding their billing practices. With a greater push towards transparency in pricing, hospitals face greater scrutiny around their billing practices.

Yet charitable hospitals face the same pressures that for-profit hospitals face. The Affordable Care Act, for instance, requires nonprofit hospitals to assess the needs of their communities once every three years and to offer financial assistance to patients who need help paying their bills. Given that costs continue to rise along with demand for service, that’s a tall order.

Senator Chuck Grassley (R – IA), chairman of the Senate Finance Committee, has asked the Internal Revenue Service to monitor whether nonprofit hospitals are indeed meeting their charitable obligations. He has also stated he intends to launch a probe into the situation to ensure that hospitals who qualify as nonprofits are indeed acting as such.

You may wonder how this affects your nonprofit organization. You may run an educational nonprofit, or an arts foundation, not a hospital. Why would anyone scrutinize your accounts and activities?

The time may be coming when all nonprofits face additional scrutiny. Greater access to information has alerted the public that nonprofits must fulfill their missions with the margin that they make. The public wants to know that their donations to charitable organizations goes towards their mission, not a mansion for the CEO or a Board member.

True fund accounting can help alleviate this level of scrutiny on your organization. Download our free white paper on the 10 Reasons Why Nonprofits Need True Fund Accounting Instead of a Commercial Accounting System here to better understand this topic.

What Is True Fund Accounting?

True fund accounting is software purpose-built for nonprofit organizations. Unlike typical “off the shelf” small business accounting software, true fund accounting software takes into account the unique blend of funding sources fueling most nonprofits.

While a for-profit company may also have multiple funding sources, they generally do not have the complexities of tracking funding back to its source at the level of detail required of most nonprofits. For example, a shoe retailer may account for revenue from its retail store chains and from its e-commerce site.

A nonprofit organization may have dozens of revenue sources, each with its own requirements. For example, an education nonprofit that is affiliated with a university may have several funding sources, each with different stipulations on how the funds may be spent. Grant funds from a large, private donor may be earmarked for particular programs while money from product sales may be spent on any and all operating costs.

This level of complexity is quite common among nonprofits and one reason why typical small business accounting packages and spreadsheets don’t work well for nonprofit accounting. True fund accounting takes into consideration the many variables at a nonprofit and the different ways that money may be tracked, spent, carried over, and more. The Chart of Accounts for a nonprofit may require multiple dimensions to fully understand it, and only true fund accounting accommodates this level of complexity. Typical accounting software cannot provide the appropriate level of detail most nonprofits need.

True Fund Accounting Helps Avoid the Spotlight

Senator Grassley mentioned scrutinizing hospital spending to ensure they aren’t dodging their mission as nonprofits – to provide healthcare to the vulnerable.

By using a true fund accounting program to track how the nonprofit hospital manages its payments and services, the hospital could publish its results and allow public scrutiny on its documentation. The Senator might find that the multi-dimensional approach to the chart of accounts provides the level of detail needed to allay fears that the hospital isn’t fulfilling its mission. It could document the facts it needs to placate the senators investigating its activities and assure the public that its charitable status remains intact.

No one likes the IRS knocking at their door. With increasing demand for transparency in hospital pricing and other nonprofit organizations, it’s time to pre-empt any arguments about financials by using true fund accounting. Find out more about true fund accounting systems from Welter Consulting.

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.

Three BIG Mistakes Organizations Make Asking for Donations – and Fixing The Mistakes with Donor Management Software

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Does your organization raise money primarily through individual donations? If so, when is the last time you reviewed how team members are asking for donations – and whether or not it’s effective?

These three mistakes can detail or slow any donor giving campaign. Take a moment now to review your organization’s donor campaigns and fix these mistakes before they negatively impact fundraising.

Mistake #1: Lack of communication about marketing activities

Susan sends out emails on Monday. John plans a direct mail campaign while Lynn is busy with social media activities. The team doesn’t find out until Friday’s staff meeting what each person has been working on and discovers that each one spent hours creating templates, adding graphics, and crafting the right copy to ask for donations.

What if the team members could have pooled their resources and shared them? Just knowing that an email, direct mail campaign, and social media blast was going on in one week, and that many resources could be shared among these tactics, would have helped all three people save considerable time. The email blast could have been shared on social media; text from the direct mail letter may have made a great template for the email.

A lack of communication and coordination among team members conducting donor campaigns is the biggest mistake on the list. It wastes time and money, duplicates efforts, and potentially annoys donors if they receive frequent or repetitive communications.

Mistake #2: Using separate software to track activities

Susan, the person in our example above who sends emails, uses a commercial email marketing platform to send her messages out. She manages the email list within that software platform.

John painstakingly adds mailing addresses to an Excel spreadsheet. He keeps the sheet in good order, and hands it off to the mailing house to affix address labels to the direct mail packages.

Lynn also uses spreadsheets, but tracks the messages she sends out in Excel. She tracks the messages sent, when, and from what channel they are sent.

What’s wrong with this picture? While this team may be using the software available to them, they aren’t using it efficiently. None of their systems communicate with each other, so they do not have the opportunity to share data and resources. And no one appears to review the results of their marketing efforts to find out what’s working and what can be improved.

A single donor management and contact management system would make their efforts much easier and more effective.  Such systems integrate with nonprofit accounting systems and share contact information across multiple platforms. John, Lynn, and Susan could easily track not just their efforts but the results, and measure it to find out what worked so they can repeat successes and avoid failures.

Mistake #3: Using personal email addresses to send donor requests

Staff and volunteers may not realize how unprofessional it looks to send donor requests from a personal email address. Not only does it look unprofessional, but it may also compromise your personal email address if the recipient’s contact book is hacked.

Instead of using personal email addresses to send out donor communications, at the very least, professional addresses from the organization should be used. Many donor contact management systems send mass emails from an @ email address so that your private email address is hidden.

Fix It Fast with a Donor Management System

If you recognize any of these mistakes occurring in your organization, it’s time to fix it, and fix it fast, before one mistake lowers your chance of achieving your fundraising goal. Discover the many donor management systems available to you. Contact Welter Consulting  for more information on how your organization can benefit from donor management systems.

Not Winning Enough Grants? We May Know Why

By | Grant Management | No Comments

How’s your batting average these days? We’re not talking about baseball, although since it’s summer, you’re forgiven if your thoughts turned to the diamond and the outfield.

We’re talking about your grant application batting average, or your ratio of wins to losses. How is your organization progressing towards its grant goals for the year?

If the answer is, “You don’t want to know” then we encourage you to read on…because we might just know what the problem is and how you can fix it.

It’s Not You, It’s the Grant Guidelines

Grant guidelines may be crystal clear or clear as mud. Yet, depending on your industry and focus, you may be stuck applying to those muddy waters. It’s up to you to gain clarity  on them and to approach grant writing as scientifically as possible.

Many organizations prepare grant guidelines as if those seeking funds understand their jargon and have a window into their thought process. They may use legacy forms and language, failing to update the grant guidelines for today’s problems and nonprofits. Or, they may prepare the guidelines with a committee who throws everything, including the kitchen sink and the bathtub too, into the application. The resulting languages reads like a confusing stew of wishful thinking.

As nonprofits who rely upon grant funds, it’s up to you to decipher whatever you are presented with in order to apply for funds. A few tips:

  1. If the grantor offers a conference call to potential applications in which to ask questions, attend it. You may not have to ask your questions – someone already on the call may ask exactly that question which is on your mind. By attending the call, you can listen to the conversation and discussions and glean insights into the thinking process behind the grant.
  2. Keep accurate notes of past years’ applications. A good grant contact management system, for example, can help you track information uses for last year’s grant so that your current application isn’t re-inventing the wheel.
  3. Join groups gathered to provide input to the grantors when they develop the language for their applications and forms. This provides valuable input to ensure jargon-free, logical grant applications.
  4. Ask questions, if you can. If the application offers contact information to ask questions, do so.

And If You Prepare Grant Applications…

If you’re on the other side of the desk preparing grant applications, the nonprofits of the world would like to ask a favor. Please make application instruction clear!

It’s not that organizations don’t want to submit the appropriate paperwork and documentation. They do. But if you make the instructions a study in obfuscation, you’ll only make it harder on yourself when it comes time to review the applications. It frustrates nonprofits and it frustrates those reviewing the applications who may complain, “Why can’t we get a decent grant application?”

Provide explanations and examples of what you’re looking for, too. Terminology varies from organization to organization. What may be clear to you may be very confusing for the person writing the grant application. Simple examples, illustrations, and guidelines save a great deal of time for all.

Organize, Then Write

Lastly, for those who are still wondering why their batting average for grant wins remains low, consider how better organization around the application process may help. Many grant writers plunge into their applications without stopping to organize their paperwork and build an outline of their pitch.

Take time to focus on the grant information. Read it several times and ask for feedback if you’re unclear. Gather background information and paperwork. Then, write. Be sure to align your organization’s mission and values as well as provide specifics about programs that the money will be applied to so that the granting organization sees how their funds will be used. These simple tips will help you improve your awards to hit a home run.

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.