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Accounting

Jun 01
0

Protecting Your Organization from Cybercrime – The Latest Update

By | Accounting, cyber security, Nonprofit | No Comments

Cyberattacks are up 40% globally in 2026. Nonprofits aren’t immune to the threat; they are also experiencing an uptick in cybercrime. Both large and small organizations have been hurt by cyberattacks. According to U.C. Berkeley’s Center for Long-Term Cybersecurity, a hunger relief nonprofit in Philadelphia lost $1 million to a cyberattack; the International Red Cross experienced the theft of personal data for over 500,000 people it had served.

While you may think your nonprofit is too small to be affected, criminals know that smaller nonprofits are less likely to have robust cybersecurity controls and training in place to guard against attacks. It doesn’t take much to get beyond people’s defenses if they haven’t been trained to watch for threats.

We recommend taking several steps to protect against cybercrime. Just as you make sure you lock the doors of your office each night to keep robbers out, you must also lock the “digital door” to prevent cybercrime. These tips will help.

Evaluate Your Cyber Defense Strategy

Take time now to evaluate your organization’s cyber defenses. These include:

  • Routine updates for software
  • Special antivirus software
  • Training for all personnel to recognize, avoid, and respond to threats
  • Cyber security response plans
  • Cyber liability insurance

Keep All Software Updated

Attackers find and exploit vulnerabilities in existing software. This includes operating systems (Microsoft Windows, Mac OS), applications (Word, Excel, others), and websites. Companies issue updates and patches once these vulnerabilities are known. Keeping all your software up to date prevents many attacks from succeeding by closing loopholes in system code.

Invest in Anti-Virus Software

Sure, your PC might come with Microsoft Defender installed. Or you might find free antivirus software online. But these programs come with limitations. Experts agree that installing an extra layer of protection, an antivirus software package, adds another layer of protection.

Many companies offer antivirus software, including McAfee, Norton, Sentinel One, and others. Check reviews and prices and discuss with your IT consultant which one might work best for your organization.

Fortunately, if you use cloud-based nonprofit accounting and other cloud-based systems, they typically include all updates and update automatically.

Train Your Personnel to Recognize Cyberattacks

While software can help ward against attacks, the best defenders in your organization are your employees. Most cybercrimes happen because people make mistakes. They click on bad links or respond to phishing texts. They download infected software. They inadvertently reveal passwords or answers to security questions that can be used to access accounts.

Create a training plan to help everyone in your organization remain vigilant against phishing and other cyberattacks. This isn’t a once-and-done training; it should be held regularly to keep the information fresh in everyone’s minds. Provide concrete examples of what attacks might look like, and ensure people know the approved process for activities such as downloading software, resetting passwords, and accessing systems.

Cybersecurity Response Plans

Do you have a cybersecurity response plan? Such plans provide your team with guidelines in the event of a cyber breach. For example, what if antivirus software flags a file they just downloaded as infected—do they know how to quarantine and who to report it to?

Working with a nonprofit consultant or your IT director, develop what-if scenarios. Document the steps you’d like your team to take if they believe a data breach or cyber-attack has occurred. Be sure to update these plans annually and include them in your team training.

Purchase Cyber Liability Insurance

Along with workers’ compensation and general liability insurance, smart organizations also purchase cyber insurance. This insurance provides protection against data breaches and cyberattacks. Costs and coverage vary widely, so speak with your insurance agent to determine the package that suits your risk level and needs.

Prevent Cyberattacks Before They Happen

The old adage, “An ounce of prevention is worth a pound of cure,” is definitely true when it comes to cybercrime. No matter how small your organization is, you’re a target. AI has made it easier than ever for criminals to launch campaigns, and they work hard to personalize them to make them seem real. Take steps now to protect 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.

May 21
0

Building Trust Through Numbers: Your Guide to Nonprofit Financial Best Practices

By | Accounting, Nonprofit | No Comments

As the leader of financial planning and accounting at your nonprofit, you have the unique ability to build trust through numbers. Sound financial management best practices ensure your organization has ample margin to support its mission. Clarity and transparency around financial practices builds trust through the numbers, trust that encourages loyal donors or members, and positive public perception. The following best practices for nonprofit financial management can help you improve your financial management skills and engender trust and public goodwill.

Five Nonprofit Financial Management Best Practices

  1. Manage restricted funds carefully.
  2. Track revenue by fund.
  3. Diversify revenue streams.
  4. Create what-if scenarios.
  5. Build a reserve fund.

Manage Restricted Funds Carefully

Knowing, understanding, and managing restricted funds—grants or donations earmarked for specific projects or activities—is critical. Such funds should be tracked to the related activity and reported back to the funding entity. Grants, for example, are often for a very specific purpose, and must be managed exclusively for that purpose. Most granting organizations require regular reports, including financial reports, demonstrating how their funds were used. Noncompliance can have serious tax, legal, and ethical consequences.

Track Revenue by Fund

Tracking revenue by funding type is more than compliance. It’s a positive activity that can help you gauge the income and expenses for each program or activity. Track all income and expenses by funding type to ensure you understand and can report on the position of all activities, grants, and donations. Reporting this information clearly and succinctly to boards, donors, and members helps build trust and clarity around activities supporting your mission and how funds are used.

Diversify Revenue Streams

You’ve heard the old saying, “Don’t put all your eggs in one basket.” Nonprofits would do well to heed this advice. Relying solely on a single major donor or a single annual fundraiser for most of your revenue is a disaster waiting to happen. If the donor decides not to give the same amount (or any amount) next year, you may not have the capital to continue. Or, as some organizations discovered during the pandemic, if a major fundraiser, such as a dinner or event, is canceled, it can severely curtail fundraising.

Instead of relying on one activity or revenue stream, diversify your income. Plan multiple events. Continue fundraising even in times of surplus and put aside money in a reserve or emergency fund (see the last point in this article). Try new events and apply for different grants. Diversified revenue streams build a healthier fiscal base for nonprofits.

Create What-If Scenarios

Conducting “what-if” exercises can help you plan for a range of financial uncertainties. Such exercises are often used in IT to help plan for worst-case scenarios, and they can be adapted for nonprofit financial management, too.

To build what-if scenarios, ask yourself questions such as:

What if our major donor stops giving each year?

What if the annual big fundraising event doesn’t happen?

What if fixed expenses, such as rent or insurance, suddenly go up?

What if we experience a cyber-attack and lose our donor list?

These and other questions can help you explore various possible situations and develop contingency plans. While you can’t predict every possible worst-case scenario, you can think through many common ones and understand the financial ramifications and possible actions to take to mitigate losses.

Build a Reserve Fund

A reserve fund is money set aside for a rainy day. It can be used to fund operational expenses when times are lean or when unexpected dips in revenue threaten to put the organization in the red. Reserve funds can be built gradually, just as financial planners recommend that individuals set aside a small amount each month from their paychecks to fund emergencies such as car or home repairs. Determine the reserve amount you believe your organization may need in an emergency, and work to build a fund that can cover these expenses.

Nonprofit Financial Best Practices Evolve

The basics of good nonprofit financial management remain the same, but the practices surrounding them can evolve over time. They evolve as organizations grow; a startup has different financial needs than a well-established nonprofit. They also evolve as organizations adopt more sophisticated systems, such as shifting from spreadsheets to nonprofit accounting systems to track expenses.

Working with a nonprofit consultant, such as Welter Consulting, can help you see beyond your blind spots and pinpoint best practices to build a sound financial base for your organization. With time, patience, and focus, you can create the solid foundation upon which great nonprofits are built.

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 19
0

From Spreadsheets to Systems: How Automation Transforms Nonprofit Accounting

By | Accounting, Nonprofit | No Comments

Automation sounds like the buzzword of the day, but it is actually a part of a long-term strategy that can free up an accountant’s time in many ways. Most accountants enjoy the challenging puzzle of managing nonprofit finances and helping to shape the strategy of any organization doing work that matters. Yet somehow, there always seems to be more work than hours in a day. With the right automation, you can get more done in less time. It frees up accountants to use their skills in other meaningful ways.

Save Time Through Automation of Manual Tasks

Many daily, weekly, and monthly tasks handled by accountants are repetitive tasks. Things like entering payment information, approving expenses, and reconciling bank statements take time. While these tasks are necessary for the organization’s overall financial well-being, they aren’t particularly challenging tasks.

If you’re using spreadsheets to maintain the organization’s accounts, you know that there are many steps to logging each entry. And with each step, there’s the chance of making a data entry or formula error. Catching mistakes and fixing them gets harder the further you are from where the mistake originated, and it can take hours to untangle a mess made by a single formula error.

Using a nonprofit accounting system and its built-in automations significantly reduces the risk of data entry errors. Although you can make a mistake entering the initial number, if it’s corrected in the entry, the correction flows through the system, so fixing a simple mistake takes a minute instead of hours.

The entire accounting process becomes faster with automation. For example, invoice amounts are automatically posted to the general ledger through software automation, eliminating manual tasks. Multiply this by the number of manual tasks performed through automation in accounting software, and you’ll quickly see how automation saves time.

Better Audit Trails

Another area in which automation improves the entire accounting workflow is in audit trails. Thanks to routine automation, the entire audit trail now happens seamlessly within nonprofit accounting software. Who entered what information and when, and who approved which invoice—each piece of information is now entered into the software and appears in the audit trail. This makes the entire information chain crystal clear and easy to understand for auditors.

Accurate, Real-Time Reports

Generating reports from spreadsheets requires time and skill. First, the information must be pulled from the spreadsheet, sometimes from various worksheets and files. Then, it must be formatted and checked again. Lastly, if charts or graphs are needed, these must be created manually too, with time spent formatting, adjusting labels, and so on.

With nonprofit accounting systems, reports are automatically created at the tap of a button. It’s easy to generate balance sheets, profit and loss statements, and graphs and charts. Often, the reports that come with a nonprofit accounting system are adequate for an organization’s needs, but if they do need reports that aren’t included in the system, additional ones can be added through customizations or integrations with business intelligence software.

Compare the time it takes to generate reports from spreadsheets with the automations inherent in nonprofit accounting systems, and it becomes clear why most accountants prefer using automation.

AI and Automation

One area worth exploring for nonprofits is the use of AI in accounting automation. It’s been a gamechanger for many teams, improving productivity and efficiency. A study from the Stanford School of Business found that accounts that use AI finalize monthly statements 7.5 days faster than those using traditional methods. The same cohort also spent 8.5% less time on routine back-office processing.

Nonprofit Accounting Software – Automation and Efficiency

If you’re looking to improve automation and efficiency, nonprofit accounting systems are worth exploring. Many come with AI enhancements and excellent out-of-the-box reporting functions. They can save you plenty of time on routine tasks and make it easier for auditors to analyze your finances. The right software, whether it is a nonprofit accounting, donor management, or other platform, can significantly improve accounting productivity.

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

Budgeting During Leadership Transition – A Guide for Nonprofits

By | Accounting, Budget, Nonprofit | No Comments

There’s an old saying that the only constant in life is change. Changing leadership at a nonprofit organization can be a time of great opportunity. New leaders bring fresh ideas. However, this can mean shifting priorities and the budgets that accompany them.

Nonprofit financial leaders can help manage some of the uncertainty surrounding leadership changes through smart budgeting practices. These include stabilizing the financial position of essential operations, planning for transition costs, and maintaining flexibility.

Stabilizing Essential Operations

Nonprofit leaders establish organizational strategy and direction. From this basis, budgets and plans are made. When leadership changes, strategy can change too, which means new plans and budgets.

Because times of transition can be turbulent, it is important to bring stability to essential operations. This includes stabilizing core financial fundamentals. Ensure you have a strong cushion to cover operating expenses, such as rent, insurance, and salaries. Budgeting for emergencies is also important, as unforeseen expenses can occur during leadership changes.

One area to pay special attention to when building a stable financial core is new expenses. Try to avoid incurring new expenses during times of leadership changes. These may include adding new staff positions, launching new programs or services, or making major technology investments. Hold everything as steadily as you can until the new leader comes aboard and takes the helm.

Planning for Transition Costs

There’s more to planning transition costs than budgeting for a retirement or going-away party for the old CEO. Although it’s tempting to hurry the search team to find a new leader, it may take some time to find the best person to lead your nonprofit. During that time, an interim or fractional CEO may be required. This can be an unexpected transitional cost.

Another unanticipated transition cost may be search fees. Search fees may include the cost of an executive search firm or travel expenses for candidates who come to your office for in-person interviews. Budget for all anticipated expenses related to filling the leadership vacancy.

Lastly, don’t forget to conduct a compensation review for the leadership position. It may have been quite some time since you benchmarked the compensation for a nonprofit leader in your market and niche. After the benchmarking review, you may need to work with the human resources team to make the salary more competitive to attract the right candidate or adjust the benefits package. Either activity can lead to unexpected costs.

Maintaining Flexibility

Lastly, focus on maintaining flexibility. It’s easier said than done, right? Keeping an open mind and anticipating various scenarios can help you maintain a flexible budgeting approach.

We briefly touched on transitional financial planning—how the position may remain vacant for a while, requiring a fractional or interim CEO, or how a compensation benchmarking study may necessitate raising the salary or benefits package to attract a good candidate. These are great examples of maintaining flexibility during leadership transitions.

Other examples include watching for staff uneasiness with the transition. Staff loyal to the previous leader may be uncertain about their position with the newcomer. Consider how you might approach retention activities and incentives.

Donations may slip during times of transition too. Donors who liked the previous administration’s strategy may wonder if the new leader will do things the same way. They may withhold donations until they can see which direction the organization is headed. You may wish to proactively seek additional revenue sources or cut back on expenses until the transition is complete. This flexible approach also helps build that stable core that is essential to supporting an organization during times of transition.

Change Is Inevitable – Budget Stress Isn’t

Change may be inevitable, but budgetary stress shouldn’t be. A flexible, proactive approach to nonprofit budgeting, focusing on reducing expenses, holding off on new expenses, and planning for some financial uncertainty, is the best way to build a sound budget during the transition to new leadership.

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.