Monthly Archives

June 2022

How to Use Empathy Mapping to Better Understand Constituents

By | Nonprofit | No Comments
the word empathy and various other blocks being held by a person's hands

Empathy mapping is a new term—and a new approach—to understanding people’s experiences. The purpose is to understand the perceptions and experiences of a particular group so well that you can think, feel, and completely empathize with them, knowing them so well that it is like knowing yourself. By undergoing an empathy mapping exercise, you’ll be able to immerse yourself in the thoughts, feelings, and experiences of a discrete group and thus empathize with them better.

Market researchers have used empathy mapping to understand target audiences for the sole purpose of improving their marketing messages. Now, the concept of empathy mapping is spreading to leadership development as well as other endeavors to build trust, understanding, and alignment among different communities.

If the concept intrigues you, here’s how you can make a start at empathy mapping and, by doing so, better understand what your constituents may need. The results can be applied to improving programs, services, and other deliverables to those served by your nonprofit.

What Is Empathy Mapping?

Empathy mapping is a tool that asks pertinent questions about a discrete group of people. By answering these questions, one gains insight into the group’s thoughts, feelings, motivations, desires, and needs. This, in turn, can fuel improved programs and services for a nonprofit, as well as help improve marketing communications and messaging to the target group. When you truly understand what people feel or desire and what motivates them, you can tap into it with powerful messages.

The Empathy Mapping Process

To engage in the empathy mapping process, first identify the target group. It must be clearly defined. Do not put two or more groups of people together even if you believe they are similar; look at each group separately. For example, an education nonprofit dedicated to helping students get to college may wish to map each school grade as a separate cohort. Starting with high school seniors, they can empathy map seniors (1), juniors (2), sophomores (3), freshmen (4), and so on, down to whatever grade level they deem appropriate, to better understand the motivations, thoughts, needs and desires of each group.

Empathy mapping focuses on four key questions:

  1. Perception: How does this group perceive the world around them?
  2. Action: How do they interact with the world around them?
  3. Feeling: How do they feel? What emotions are they experiencing?
  4. Needs: What are their wants, needs, and goals?

Answers to these questions are then written down in a so-called map, which then forms a picture of the group as a whole. If the answers aren’t known or easily extrapolated, they can be asked of the group.

Group Exercise

Empathy mapping can often be more effective when done as a group exercise. The combined knowledge, experience, and insights from a group offers more depth to the final empathy map.

To perform the exercise in a group, gather together in a conference room and divide a whiteboard into four sections with the headings Perception, Action, Feeling, and Needs. Pass around pens and sticky notes. Ask people to participate by asking the question then having them answer on the sticky note. They can then affix the note to each column. At the end of the exercise, work as a group to write up the statements summarizing the feedback. The emerging picture may surprise you with its clarity and fully fleshed out picture of the target group.

Empathy Mapping Application Methods

Once you’ve created an empathy map, the next step is to use it to refine and enhance your program areas and marketing messages.

  • Use the information about wants, needs, and feelings to fine-tune your programs and services to the target markets’ needs
  • Refine messaging and communication to address fears
  • Restate perceptions and offer alternatives

Everyone wants to feel heard and respected. By using empathy mapping, you’re moving in the right direction to help constituents feel you understand them in a meaningful way.

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.

Top 3 Challenges Faced by Nonprofit CFOs

By | Accounting, Accounting Software, Nonprofit | No Comments
woman standing at desk looking down at laptop computer

Nonprofit CFOs face many challenges, but the following three may not be ones that immediately come to mind. We often assume that our own challenges are unique—that no one else suffers from spreadsheet overuse, for example—or other organizations are more efficient than we are. But we can tell you from experience that nonprofit CFOs all face similar challenges. And the solutions to these challenges are similar, too.

Challenge 1: Over Reliance on Spreadsheets

Spreadsheets are everywhere. They are easy to use and come with most office productivity suites. Most accounting and financial professionals know how to use them and are very comfortable with them. They enable nonprofits to get their accounting up and running quickly. We’re not knocking spreadsheets, but if your organization is past the startup phase, it’s time to think beyond spreadsheets and look for a more robust accounting solution.

They are myriad problems with using spreadsheets for complex accounting functions. Problems include:

  • Unless cloud hosted, spreadsheets are single user, meaning that only one person at a time can work with a spreadsheet. They must be emailed after updates.
  • Working with complex financial analysis across multiple spreadsheets can be extremely time-consuming and difficult.
  • Formulas are notoriously finicky—one mistaken input and suddenly the whole sheet is off. Worse, mistakes multiply if copied and pasted, making it very hard to find and fix them.
  • They aren’t secure. You can password protect a spreadsheet in some programs, but they can be shared and accessed easily. A compromised password can make them accessible. A computer virus can make them completely inaccessible. They are very risky.

Solution: Transition Your Team to an Accounting Program

It is vital to transition your team away from spreadsheets as soon as possible. Cloud accounting software made specifically for nonprofit organizations provides the structure and resources needed to handle the complex needs of nonprofit finances.

Sage Intacct is an excellent cloud-based accounting program for nonprofits. It offers a cloud-based solution that requires no special hardware to run. The chart of accounts can handle the often-complex reporting needs of nonprofits, and it includes multiple nonprofit-specific accounting functions, such as grant management, FASB accounting accommodations, and more.

Challenge 2: Reports Take Too Long to Produce

Another challenge many nonprofit CFOs face is producing accurate and timely reports. This challenge often goes together with reliance on spreadsheets which produce only limited reports.

Accurate and timely financial reports enable nonprofit managers to make smart decisions about using organizational resources. Without insight into the finances, managers lack an important piece of information.

The solution is to find a good nonprofit accounting program that enables on demand reports. Flexible, customized reporting would be ideal, since managers can then run the reports they need. Automating your accounting will shift the burden of producing reports from the CFO and enable more self-service reporting.

Challenge 3: Billing mistakes.

Nonprofits using spreadsheets often fail to account for their employees’ time properly. They may under- or over-count billable hours, miss expense reports, and generally struggle to adequately track billable time and projects. This can result in a significant shortfall over time and a huge, missed opportunity.

Using Sage Intacct and/or a time tracking software can help you more accurately track such expenses. And, by aligning staff time with specific programs, you can judge how effective specific programs are and whether such time is being used wisely.

Financial Software for Nonprofits

Although spreadsheets can adequately handle basic accounting, they quickly become inefficient as a nonprofit grows. The recent trend towards cloud accounting software has added additional value to software licenses, making them more affordable than ever. If the challenges outlined in this article resonate with you, we invite you to explore Sage Intacct or other cloud accounting solutions through 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.

2022 Updates to GAAP Standards

By | Accounting, FASB, Nonprofit, Uncategorized | No Comments

person using calculator at desk with spreadsheetsWe typically report on changes to GAAP standards as they arise. This year has been a particularly active one with numerous changes impacting leases, gifts in kind, reference rate reform, and costs associated with cloud computing. Below are the highlights; for specifics, see the linked information.

Topic 842: Lease Standards

FASB 842

Although the standard was presented six years ago, it must now be fully implemented for all entities reporting on a GAAP basis for calendar year 2022 and fiscal years ending in 2023. The accounting standards for lessors has not changed. However, there are several changes for lessees which must be included on the balance sheet.

Lessees’ commitments and rights can now be recognized on the balance sheet as a liability for the total payments made throughout the term of the lease. The “right to use” the asset can also be recognized as a liability on the balance sheet.

Lease classifications have also changed. Instead of operating and capital leases, they are now to be classified as operating or financing.

Topic 958: Gifts-In-Kind

Update 2020-07

Effective for all entities for calendar year 2022, reporting after June 15, 2021, there are changes to reporting gifts-in-kind (GIK). The standard to determine whether something is a gift hasn’t changed, but the reporting requirements have been updated.

You will need to disclose specific information for each category:

  • Your organization’s policy for gifts-in-kind.
  • Potential donor-imposed restrictions on GIK.
  • How you arrived at the value determination and fair market value.
  • Whether GIK was monetized or utilized.

For more information, please read: An Overview of Gifts—In-Kind

Reference Rate Reform

Topic 848

ASU 2020-04

LIBOR, or the London Inter-Bank Offer Rate, has been the norm since the 1980s as a reference rate for interest. Now, however, it is being retired as a point of reference. This change is effective March 2022 through December 2022 and impacts many loans, leases, and derivatives.

The current GAAP requirement is that entities analyze whether a change in interest rate for a loan is a debt modification or debt extinguishment. This is time-consuming and can be quite complicated. Refer to ASU 2020-04 for helpful tips to make the transition easier and smoother.

Cost Associated with Cloud Computing

ASU 2018-15 Subtopic 350-40

This change is effective for nonpublic entities for the calendar year 2021 and fiscal years ending in 2022. Entities may choose to apply it either prospectively or retrospectively.

Cloud computing software is used on a licensing arrangement. Either the license is a subscription or a license. Licenses are usually recorded as an intangible asset for the software license and a liability for remaining payments due. For subscription-based cloud software, it is expensed as incurred.

For more information on this topic, read: New FASB Cloud Computing Standard Reduces Complexity.

Need Help Navigating GAAP Changes?

If you’d like some assistance navigating these GAAP changes, we’re here to help. We can also assist you with choosing the right nonprofit software to make accounting, including following accepted best practices, and implementing changes to your general ledger and overall accounting software.

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.

What Nonprofits Can Learn from For-Profit Companies

By | Nonprofit | No Comments

No margin, no mission. It sounds like common sense, but many nonprofits seem to think that if they make a profit—a margin—and if they have a healthy balance sheet, they’re doing something wrong.

Being a nonprofit organization does not mean making zero profit. It does mean that all profit is made with an eye toward fulfilling the mission of the organization. The more margin that is made, the more the organization can invest in their programs and the staff and infrastructure that supports them.

Take your cues from the for-profit world and adopt these tips to improve your nonprofits’ profits—money that can be used to support the very mission for which your organization exists.

Five Lessons for Nonprofits from the For-Profit World

  1. Know your “why” and share it consistently and clearly.

In the for-profit world, marketers speak about knowing the why: why the company exists and why the world needs its products. Nonprofits know their why but often fail to share it consistently and clearly with constituents and donors. Make sure you follow the basics of brand marketing in all your organization’s communications by consistently and clearly articulating your organization’s mission and how it fulfills its mission.

  1. Embrace marketing concepts.

Marketing simply means raising awareness, and all organizations need to raise awareness of their services. Learning the basics of digital marketing (websites, search engine optimization, email marketing, social media marketing) and using them to your organization’s advantage is integral to its success. Embrace marketing techniques such as segmentation and others as proven and effective means of raising awareness, generating interest, and inspiring action.

  1. Treat donors like customers.

Customers expect service from the companies they patronize, and if they fail to receive the expected service, they go elsewhere. The same holds true for donors. If they do not receive an expected response from the nonprofits they patronize—awareness, recognition, thanks—they give elsewhere. Keep in touch with donors the way you would customers of a store, sending thank you notes, updates, and more to stay in touch. Don’t take them for granted!

  1. Invest in technology.

For-profits know that investing in state-of-the-art technology gives them a competitive edge. The same can be said for nonprofits. The wise use of technology can improve program and service delivery, save time and effort in operations and accounting, and increase efficiency. The initial investment in modern technology can improve all areas of your organization.

  1. Focus on attracting the best employees.

Some very talented people work at nonprofits, but many talented individuals avoid working at nonprofits because they fear giving up perks or benefits associated with the for-profit world. Conduct a benefits survey across comparable for-profit and nonprofit organizations in your area to ensure your benefits package is on par with for-profits vying for the same talent. And, like the for-profit world, be sure to invest in your people. Offer training, educational programs, and more to aid in their professional development. While it may seem like a small thing, it means a lot, especially to those who wish to advance in their careers.

A nonprofit that fails to make margin each year cannot achieve its mission. Learn how to increase revenue from the for-profit world so your organization doesn’t just survive but thrives.

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.