Monthly Archives

May 2025

May 21
0

Why Your Nonprofit Needs a Financial Risk Assessment

By | Accounting, Accounting Software, Budget, Nonprofit | No Comments
person at desk with notebook, pen, and laptop and graphs showing high/low waves for risk assessment

A financial risk assessment is an annual audit of many areas of your organization’s financial preparedness and stability. Such an assessment looks at many areas of your company, including the overall management, human resources, facilities, finances, accounting, sales, information systems, and more. Here is why a financial risk assessment is vital for a healthy nonprofit.

The Purpose of a Financial Risk Assessment

Everything in life involves risk. That includes running a nonprofit. A financial risk assessment examines the current state of your business and identifies potential risks. It’s only after identifying risks that you can take action to address them.

You can conduct your own financial risk assessment; however, many find that obtaining outside assistance from their CPA, a nonprofit consultant, or another similar professional is helpful. Often, we are too close to our own business to see potential risks clearly. An outside perspective can cut through the familiarity of the everyday and see the gaps that we often miss.

Benefits of a Risk Assessment

A financial risk assessment provides many benefits to nonprofits by enhancing their overall operations and safeguarding their missions. It helps organizations identify potential risks, such as fraud or inefficiencies, ensuring that their funds and resources are managed effectively to achieve their goals. By addressing these vulnerabilities early, nonprofits can streamline their operations and make better use of their resources.

Conducting regular financial risk assessments builds trust among donors, board members, and the community. It demonstrates a commitment to sound financial practices, which can attract and retain long-term supporters. Additionally, these assessments ensure that nonprofits comply with legal and regulatory requirements, minimizing the risk of penalties or reputational damage.

Finally, a financial risk assessment equips nonprofits to navigate uncertainties like economic shifts or changes in funding sources. By preparing for these challenges, organizations can maintain their focus on their mission and continue to deliver meaningful impact.

Costs of Avoiding a Risk Assessment

Perhaps you’re thinking, “This is all well and good, but we’re so busy! We just don’t have time to stop and do a comprehensive assessment.”

Do you have time to address a big risk, like a cyber-attack? What about a trip and fall accident because you haven’t assessed the risk of a worn carpet in your reception area?

It’s like owning a car—do you ignore the knock in the engine until the car breaks down, or do you take it to a mechanic to get it checked out?

The costs of avoiding a financial risk assessment may include:

  • Mistakes in the balance sheet, such as liabilities not properly recorded or other mistakes that can muddy the financial picture, can be time-consuming to fix later.
  • Failing to conduct a physical inventory on a regular basis can lead to adjustments, negative equity, and other problems.
  • Missing or poor internal controls can lead to employee theft or mismanaged funds.

There are many more areas where failing to conduct a risk assessment can lead to problems. As you can see, it’s always better to prevent problems than to spend time later fixing them.

Other Benefits of a Risk Assessment

Other than avoiding scary problems, there are many more benefits derived from conducting a comprehensive risk assessment. The assessment can help you build your strategy, setting the stage for thoughtful decisions about where to invest for risk mitigation and where to step out in growth. It may also uncover untapped potential and lead to productive discussions about how your organization can expand.

Start Now

Don’t wait until the end of the year planning to conduct your assessment. You can start now. Pick one department or area of the company, such as finance or operations, and come up with a list of questions. Ask yourself what is working, what isn’t working, and what may be improved.

This is where working with an outside consultant can help. We’re happy to discuss your plan of action and the next steps for financial risk assessment and management.

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.

May 14
0

Understanding AI: A Guide for Nonprofits

By | Nonprofit | No Comments
person at laptop with AI overlay

Artificial intelligence (AI) seems to be everywhere these days. Whether it’s a featured news story or a new platform offering the latest and greatest in AI automations, this technological advancement is changing nearly every facet of business. And that includes how nonprofit organizations manage everything from fundraising to writing job descriptions.

With 58% of nonprofits stating that they are using AI as part of their communications and 68% using it for data analysis, AI has every indication of becoming a standard productivity tool for organizations. Here’s what your nonprofit needs to know about AI: what it is and how to use it safely and effectively.

What Is AI?

AI, or artificial intelligence, is a computer program that gives machines the ability to mimic human thinking. AI-based programs excel at analyzing data, processing information, and drawing conclusions.

Machine learning is a term often coupled with AI. Machine learning refers to the process by which an AI tool incorporates new information or “learns” from the questions, feedback, and information fed into the model. The two terms, AI and machine learning, are not synonymous, but are often used together (AI/ML) to distinguish the newer type of AI, called generative AI, from another model called predictive AI.

GenAI versus Predictive AI

If generative AI uses machine learning to generate new responses, what is predictive AI? As the name suggests, this AI model is often used to analyze data patterns and predict action based on patterns.

 A good example of predictive AI is found on large retail websites. This is how websites analyze your search terms and patterns, or previous purchases, and suggest other products you might like. That’s predictive AI in action.

Another example is right at your fingertips – your smartphone. If you’re texting and the phone “suggests” words or phrases, inviting you to tap to fill them into your note, it’s using predictive AI to guess your next word or phrase.

AI Tools for Nonprofits

It may be helpful to think of AI as another coworker, albeit one that doesn’t take the last donut in the break room. AI cannot replace people, but it can perform many tasks. Some programs that incorporate useful AI tools that nonprofits may wish to test include:

  • ChatGPT, Microsoft Copilot, or Gemini: These tools can draft simple text and offer suggestions to improve existing text. You can use them to help craft social media messages, emails, or reports. (Please note: never use “free” versions of these tools for confidential or proprietary company information. Only the paid versions keep the information ingested into the AI private. Others incorporate the data into their machine learning repository, potentially exposing confidential data.)
  • Grammarly: Grammarly is a great tool to help you polish written drafts. It checks grammar and spelling but also offers feedback to improve clarity. It can also be added as an extension to Google Chrome and seamlessly provide feedback when you’re working on Google Docs.
  • Canva: Do you do your own graphic design? Canva is an easy-to-use design program that offers templates for everything from flyers to social media posts. You can upload your logo and brand colors to a folder and keep them handy for use. The AI tools within Canva provide a free AI image generator, and its AI suggestion tool can be used to improve designs.
  • Donor Search AI: Remember how great AI is at analyzing data to find patterns? Donor Search AI uses this principle to improve your donor outreach efforts. It analyzes response patterns, campaigns, and more to recommend the best time for donation campaigns. Other tools found within the Donor Search suite help with fundraising and channel communications.

Which AI Tools Should You Choose?

The list above only scratches the surface of what’s available. New tools seem to arrive daily, with more and more designed for nonprofits. Select the AI platform that helps your organization achieve its goals. As we said at the start of this article, think of AI as a coworker. If you could hire another person, what would that person do? Graphic design, donor campaigns, or something else? That will help point the way to the best platforms for your organization to invest in to maximize the potential of AI.

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.

May 09
0

What You Need to Know About Executive Orders

By | Corporate Culture, Nonprofit | No Comments
Executive Orders

While President Trump may not have signed the most Executive Orders out of all U.S. Presidents (that honor goes to Franklin D. Roosevelt), he has certainly made headlines with a flurry of orders limiting funds to various organizations, including institutions of higher learning and organizations funding nonprofits. If you are following the news closely, you know that it can be challenging to sort myth from fact when it comes to the impact of Executive Orders. Here, we sort through how these orders impact nonprofits, and what the President can—and cannot—do with the stroke of a pen.

Executive Orders Cannot Limit or End 501(c)(3) Status

One persistent myth is that the President, via an Executive Order, can limit or end an organization’s 501(c)(3) status. This is definitely a myth; the IRS governs 501(c)(3) status, and any changes to the rules regarding this must pass through a vote of Congress.

So, although the president may limit funds designated for organizations, he cannot strip that organization of its nonprofit status for any reason, including its adherence to diversity, equity, and inclusion policies.

DOGE May Investigate Nonprofits Receiving Federal Funding

Another rumor circulating in the nonprofit world is that DOGE, or the Department of Government Efficiency, may begin investigating nonprofits that receive federal funding. This is unproven but could potentially be true in the upcoming months.

Blocks on Grants to Organizations That Focus on International Issues

Washington State has a high percentage of nonprofits that focus on international issues. There are rumors that the President will sign an Executive Order blocking funding from such organizations. If your organization’s mission encompasses such work, it is vital to watch the news and watch for any such orders that may impact your work. You may also wish to get involved now to make your feelings known (see the end of this article for action steps you can take to make your voice heard).

Orders Targeting Specific Nonprofits

Other orders may be coming that target specific nonprofits, including those linked to climate change activities and specific organizations named by the President, such as the Gates Foundation, the Ford Foundation, and others.

What You Can Do

If you are reading this and researching other Executive Orders that may impact your organization, you may feel frightened or helpless. What can you do to protect your organization, its funding, and its mission?

You can take several steps:

  • Sign an open letter to the President: Coordinated by the National Council of Nonprofits, Public Citizen, State Democracy Defenders Fund, Leadership Conference on Civil and Human Rights, ACLU, and Americans Against Government Censorship, this letter states unequivocally that the President should not have the power to punish nonprofits based on ideological beliefs. You can find the letter here: An Open Letter Rejecting Presidential Attacks on Nonprofit Organizations.
  • Contact Your Congressional Representative: You can contact your representatives and make your feelings known about the impact these Executive Orders may have on the non-profit sector and your organization. Find Your Representative.
  • Prepare Now: Watch this video and read articles such as this one from the Nonprofit Quarterly on how nonprofits can prepare for changes due to Executive Orders.

It is unfortunate that nonprofits must prepare for situations in which their livelihood may be threatened, but this is the reality we are dealing with. Now is the time to understand the rapid changes at the government level and take steps to prepare for any potential impacts on 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.