Monthly Archives

April 2025

Apr 24
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Best Practices for Nonprofit Excellence, Part 2: Finances and Fundraising

By | Accounting, Fundraising, Fundraising Software, Nonprofit | No Comments
meeting with a person up front talking to others seated at table, finances and fundraising

Welcome to Part 2 of our series of best practices for nonprofit excellence—finances and fundraising. Without enough margin, you won’t be able to fulfill your organization’s mission. That’s why learning about the best practices in finance and fundraising goes hand in hand, because it’s not just money in (fundraising) but managing that money (finance) that ensures a robust budget for a nonprofit.

Nonprofit Financial Management Best Practices

Donors, members, and granting institutions have entrusted funds to your organization so that it may carry out its mission. These gifts represent trust – trust in your nonprofit, its management team, employees, volunteers, and board. To win and keep this trust, you must use nonprofit financial management best practices.

Budgeting

Of course, you are using best practices for budgets, including updating the budget periodically. The board should review the annual budget and discuss any questions or concerns with leadership. It’s important that the board fully understands how the organization derived its numbers and how the expenditures relate to achieving program—or organization-wide goals.

Internal Controls

Another financial management best practice is to ensure the organization has good internal controls in place. These controls involve implementing measures such as segregation of duties, where different individuals handle recording, approving, and reconciling transactions to prevent errors and fraud. Nonprofits should also establish clear policies for financial authorization, requiring approvals for significant transactions to maintain accountability.

Regular reconciliations of financial records, such as bank statements, with internal accounts help identify discrepancies early. Additionally, conducting periodic audits—both internal and external—can ensure adherence to established policies and uncover potential issues. By safeguarding assets, maintaining accurate financial records, and upholding industry standards, nonprofits can foster stakeholder trust and effectively pursue their mission.

Financial Management Software

Another best practice is to have good nonprofit accounting software. This system can save a great deal of time and effort by accurately tracking revenue, expenses, payroll, and more. The reporting features found in nonprofit accounting software also make it easy to generate reports you can share with the board and donors for clear and transparent communications. If you’re currently managing your finances using spreadsheets or small business software, you’ll find switching to nonprofit accounting software like night and day in terms of its efficiency and usefulness. Adopting nonprofit accounting software is definitely a best practice to incorporate into your organization.

Fundraising Best Practices

There’s more to fundraising than promotion. Fundraising should also include processes, procedures, and guidelines about how funds are raised, acceptable contributions, and how to handle gifts in kind.

Transparency and Accountability in Fundraising

A few years ago, several nonprofits made the news for high overhead spending. Their overhead and fundraising costs seemed to the public like an extravagance. However, the public’s negative reaction was probably based more on lack of transparency than on expenditures. Always be transparent with the public about your expenses: share reports and updates with the board, donors, members, and the public. This level of accountability demonstrates a high degree of trustworthiness as well as good financial stewardship.

Pay Your Fundraisers

If your organization subcontracts fundraising to an external person or company, always pay them a reasonable fee. Do not offer a percentage of money raised as their payment. It is considered a best practice to pay directly for these services rather than to ask the subcontractor to take a percentage of the gross.

Monitor Fundraising Practices

One best practice often overlooked among nonprofits is to monitor fundraising activities and ensure that you follow all the required rules and regulations for your state. These vary according to where your nonprofit is registered, so take time to understand them. For example, in Washington state, if you are using a commercial fundraiser, the relationship must be disclosed in your fundraising materials. Fundraisers must also follow additional requirements for phone solicitations, mass distributions, and collection containers or vending machines to ensure accountability and compliance with state regulations.

Ready to Implement Best Practices?

It may seem overwhelming to read articles like Part 1 and Part 2 in our series and see so many areas for improvement. Every organization has some areas to improve. Choose your starting point on the area that will experience the greatest impact from the changes. Whether it’s improving transparency with the public about your expenditures or exploring nonprofit accounting software, making big changes starts with today’s small step. 

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.

Apr 22
0

Best Practices for Nonprofit Excellence, Part 1: Governance and Accountability

By | Accounting, Nonprofit | No Comments
person at laptop and holding a tablet - nonprofit and other for overlay, finance and accountability

Welcome to the first in a two-part series where we will examine best practices for nonprofit excellence. In our first article, we’ll look at governance and accountability. Then, in Part 2, we’ll examine Financial Management and Fundraising.

Governance and Accountability Best Practices

Nonprofit boards of directors are stewards and guides of the organization’s direction and finances. They set policy and should actively support the organization’s mission by approving adequate funding, providing direct oversight to leadership, and evaluating the effectiveness of the organization’s programs and how well these programs achieve its mission.

Choose Board Members Carefully

However, the effectiveness of a board depends upon its members. There are several best practices for developing strong, effective, committed nonprofit boards. These practices include recruiting board members who reflect the constituency you serve. While the entire board may not be a perfect reflection of your constituency, it should at least reflect the majority of the people you serve.

You should also strive to find board members who are as deeply committed to your mission as you are. Board members should have a passion for your organization’s work.

Board Responsibilities

Board members should have a comprehensive understanding of their roles and responsibilities to the organization and the public. This can be achieved by providing a clear set of expectations and responsibilities, access to bylaws, articles, and other key organizational documents, an introduction to the organization’s work, and continuous opportunities to engage in discussions and review their duties.

Members must also fully comprehend their legal and fiduciary responsibilities, ensuring the effective execution of their duties in key areas. These include strategic planning, policy approval and periodic review, annual evaluation of the executive director’s performance and compensation, succession planning, determination of compensation structures, preparation of annual budgets and revenue plans, oversight of financial procedures, management of risks, and compliance with nonprofit financial filings and regulations.

Governance Frameworks

Boards should convene at least six meetings annually and expect regular attendance from members. A consistent meeting schedule helps board members remain actively engaged and accountable for their responsibilities. Term limits on board participation encourage a healthy influx of new ideas and perspectives. 

Boards should adopt practices that maximize participation, including providing accommodations for remote or electronic participation during meetings, deliberations, or decision-making. 

Committees are an important part of governance. A committee structure enables a board to function effectively by creating smaller working groups with specific goals. 

Choose your board chair carefully. This person presides over meetings, oversees committees, and ensures all board members have access to the documents and materials they need to be effective. Like a good CEO or president, board chairs must be good leaders and communicators, able to run effective meetings, gain consensus among members, and listen to differences of opinion. 

Accountability

Lastly, as part of governance and accountability, ensure that your organization follows best practices related to compliance with laws and regulations. For example, filing IRS Form 990 and the organization’s annual report is an essential part of nonprofit compliance.

Your organization is accountable to more than just the IRS. It’s accountable to its donors, members, or constituents. Ensuring that annual reports, audited financial statements, and other reports of how your organization manages its finances and achieves its mission are also part of nonprofit best practices. Prioritizing donor communication is a best practice worth following. 

Next: Financial and Fundraising Best Practice Ideas

We hope you enjoyed Part 1 of this series. Next up, we’ll share financial management and fundraising best practice ideas. 

For more fresh ideas and best practices to implement at your organization, subscribe to our newsletter or read our blog.

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.

Apr 16
0

Cybersecurity Priorities for CFOs

By | cyber security, Nonprofit | No Comments
two people in front of laptop, lock overlay to represent cybersecurity measures for CFOs

The recent flurry of FBI warnings against new malware, ransomware, and other cybersecurity threats should have every CFO on edge. Nonprofit databases may contain sensitive data such as personally identifiable information, health records, and more that attract attacks. And, if you think you are immune because your organization is small (and therefore, in your mind a lesser target), think again: cyber attacks against nonprofits grew by 30% in 2024.

Given this information, what cybersecurity priorities should you focus on? The following list offers general guidance. In addition to this information, it may be prudent to speak with your IT director, managed services provider, or technology consultant so that you have a sound plan to protect your valuable data.

Four Cybersecurity Priorities for Nonprofits

The most pressing cybersecurity issues facing CFOs today include ransomware threats, human error, third-party access, and ensuring systems are updated.

Ransomware Threats

Ransomware typically enters a system through users clicking infected links. So-called phishing attacks spoof, or fake, a well-known website, such as Amazon, a bank, or another trusted and frequently used site. The user may be taken to an infected page or prompted to enter login credentials by clicking the link. This can then infect their computer and possibly the entire network. The ransomware encrypts data, effectively locking it until a ransom demand is paid.

Human Error

Most ransomware enters systems through human error. Clicking the wrong link, entering credentials without considering the validity of the request, or downloading infected material all puts your company at risk.

New attacks are even more sophisticated. Some include text messages and phone calls from someone purporting to be from IT asking the user to reset their password. The “IT person” asks the employee for their password to “verify it.” This enables the caller to log into the system themselves, reset the password, and begin whatever crime they want to commit. Some companies report their executives as the target, with the criminals contacting executive assistants and pretending to be helping the CEO with their password reset.

In all cases of human error, the criminals rely on human psychology to trick their victims into making mistakes. They present a sense of urgency, often hinting that something dire will happen if the victim doesn’t respond quickly. Or, they pretend to be a trusted colleague, such as an IT person, to fool the end-user.

Third-Party Risks

With the rise of cloud computing, it’s easier than ever to allow others to access your system. Auditors, for example, are often given access to accounting and financial systems so they can complete some of their work offsite. You may have vendors who access shared cloud drives, instant messaging apps, or other systems. Each person outside of your company who can access your system represents another potential risk.

Operating Systems and Software

Outdated software and operating systems pose a security risk. Criminals exploit known vulnerabilities. Systems that aren’t updated or patched are akin to leaving the front door of your house wide open to let a burglar inside.

Your team must ensure that all operating systems and software are updated whenever the system vendor makes patches or updates. This includes operating systems (like Windows), software (nonprofit accounting software, donor relationship management, and others), and even websites.

Systems that are no longer supported by the vendor should be replaced. For example, Microsoft has announced it is ending support for Windows 10 on October 14, 2025. While computers running Windows 10 will continue to work, Microsoft will no longer issue security patches, leaving machines running version 10 potentially vulnerable to attack. Updating the operating system to Windows 11 ensures that as new vulnerabilities are discovered, you will receive the appropriate updates and patches to address them.

Addressing Cybersecurity Challenges

This list is just the start of a much bigger list of potential cybersecurity risks and challenges that CFOs face. To address them, consider creating a cyber risk and proactive protection plan that addresses common pain points such as:

  1. Keeping abreast of the latest ransomware attacks and communicating information to employees.
  2. Frequent training and awareness programs to help employees identify possible phishing attacks.
  3. Addressing third-party access by reviewing who has access to what and removing permission once the need is gone.
  4. Working with IT to identify and update vulnerable points within your systems and platforms, including a schedule to update aging software and equipment.

As a CFO, you are entrusted with a great deal of responsibility. You are one of the organization’s leaders who knows and understands the risks. But you are also in an excellent position to address these and other emerging threats.

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.