May 05
0

Top Issues for Nonprofits in 2022

By | Accounting, Audit, COVID-19, Nonprofit | No Comments

These issues are top of mind for most accounting professionals, but especially for those leading the accounting function at nonprofits. This year appears to bring with it the continuing challenges resulting from the global pandemic as well as updates from FASB accountants need to know.

COVID-19 Issues Impacting Nonprofits

The economic impact of the government’s actions during the global pandemic are still not entirely understood. In March 2020, the government passed the $2 trillion CARES Act, and a year later in March 2021, the $1.9 trillion American Rescue Plan Act. If you’ll recall from previous articles, the CARES Act provided funds for the Paycheck Protection Program which used the Small Business Administration’s lending program to provide forgivable loans of up to $10 million per borrower. Qualifying businesses could spend this money on mortgage payments, payroll, or other business debts to continue operations.

Additionally, the CARES Act benefitted nonprofits directly by raising the limits on charitable deductions for both those who itemize deductions and those who do not. The government also raised the cap on charitable contributions for corporations. These actions were intended to increase cash gifts to nonprofits, strained by sudden increased demand for their services during the pandemic.

The response to the COVID-19 pandemic remains fluid as the situation continues to change. Many nonprofit accountants, however, still have questions about how to account for CARES Act funds, Payroll Protect Action loans, and more.

We’ve put together a list of resources to help you navigate any remaining questions from the pandemic response as they impact your nonprofit accounting.

Remote Auditing

Many nonprofits may still choose remote audits. To facilitate remote audits, incorporate the following best practices into your organization.

  • Utilize all available technology to share files with your auditors. This may include secure portals for sharing documents or videoconference. If your accounting and finance system allows for guest logins, you may be able to set up a secure login for your auditors.
  • Schedule additional video conferences to confirm supporting documentation. You may also wish to schedule video conferences in advance so that check-in dates are on everyone’s calendars.
  • Provide multiple contact methods to keep communication lines open. A secure instant messenger platform may be set up for the audit.
  • Build additional time into the auditing schedule to anticipate and accommodate potential delays in communication. Remote workers may be logging into their email at various times, which can lead to longer response times.
  • Be vigilant about cybersecurity, especially when sharing financial data.

Other Nonprofit Accounting Concerns

Nonprofits may also have concerns about other aspects of COVID-related accounting.

Cash management issues are at the top of many nonprofit accountants’ minds. Continue to build up operating reserves. Seek cost containment strategies that make sense for your organization.

If internal controls were relaxed during the pandemic, reinstate them when workers return to the office, even if only a handful are back. It’s important to ensure security and good internal controls even during challenging times.

This is also a good time to develop policies around remote work if your organization doesn’t already have them. Many organizations are finding that remote work policies are helping them attract more and better qualified candidates for open positions. A telecommuting alternative is an attractive benefit for many job applicants.

Lastly, be sure to keep your board and other advisors updated on your organization’s financial challenges, opportunities, and threats. Good communication is always essential.

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.

Apr 14
0

Best Practices for Integrating Finance and Fund Development

By | Accounting, Fundraising, Nonprofit | No Comments
group of office workers at table with open laptop showing graphics. Welter logo

Finance and fundraising work towards the same shared goal—maximizing margin in support of an organization’s mission. However, finance is often a separate department, with fundraising housed in grant management, marketing, or donor relations.

Although both can work effectively as separate entities within the same organization, when the teams are aligned, great things can happen. Aligning around shared data resources is a natural way to bring both teams together. Here are several best practices you can implement in your organization to help finance and fundraising improve collaboration around data and information resources.

Best Practice 1: Evaluate Current Fund Development Policies

Finance often acts as the guardian of an organization’s policies, but this can conflict with fundraising when donors wish to give support that is outside the current guidelines. A good example is a fundraising effort that connects a donor who wishes to give a substantial gift to the organization, but the gift is outside the organization’s normal policies. If this happens repeatedly, it may be time for finance and fundraising to collaborate on a policy review.

Often, policies have been in place for years. As the organization changes and grows, its mission changes along with the organization, but policies put in place many years ago haven’t changed. Gift policies, for example, may not encompass new technology that didn’t exist when the policies were written. Finance should provide guidance and collaborate with the fund-raising team to adjust gift and donation policies so they remain in alignment with best practices in nonprofit accounting and governance but still meet existing needs and opportunities.

Best Practice 2: Ensure Finance and Fundraising Understand Data Governance

Who in your organization “owns” the current fund accounting system and its resulting database? Probably finance, and that’s how it should be. But the fundraising team provides data that feeds into the fund accounting database—notably, fundraising campaign pledges, donor information, and gifts and donations that must be accounted for and tracked against funds and programs.

To ensure this tracking is accurate, fundraising and finance must determine who owns what in the data management system. Collaborating on a shared data dictionary, tagging each fund or donation appropriately, and tracking revenue and expenses to the correct fund are important parts of nonprofit accounting and financial management.

Without clean, clear data management, any upcoming audit will be a nightmare of tangled data and unclear information. This can lead to many challenges, the least of which is giving your auditors headaches—and showing discrepancies in your accounting. No one on the team wants this, so be sure to agree on who owns what in the database, how information should be managed, and, in the event of questions, which group has the final say.

Best Practice 3: Improve Communications

Depending on the size of your organization and its company culture, finance and fundraising may or may not interact frequently. What’s your take on this situation? Do the two departments find ways to connect and communicate, or are they frequently at loggerheads with one another?

If you find the two groups are bickering, it’s time for a sit-down. Ask each group to bring their questions, concerns, and challenges to the table. Perhaps employees from each group can shadow the other for a day—a member of finance works in fundraising, and vice versa. This helps each team gain a better understanding of the unique needs, challenges, and benefits the other brings to their work. Often, infighting and silos arise because of miscommunication. Eliminating these miscommunications and encouraging teams to share information freely is a great step

Everyone at the organization wants one thing: to support the mission. To do so, good communication, a shared understanding of job functions, and collaboration on policies and data is essential. With a few simple steps, you can accomplish this in 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 call us at 206-605-3113 for more information.

Apr 07
0

The Three Pillars of Digital Transformation

By | Corporate Culture, Data, Nonprofit | No Comments
smiling woman at laptop computer. Welter logo

“Digital transformation” is one of those buzzwords that seems to be everywhere right now. From e-commerce to manufacturing, everyone is talking about the impact of digital transformation.

The term “digital transformation” makes it sound like a magician is at work behind the scenes. Presto, change, click a switch, and voila—your entire organization has undergone a magical transformation!

If only it were that simple. Organizations undergoing digital transformation may find themselves struggling with new questions if they lack strategy behind their adoption of new technology.

There are three pillars, or core concepts, embedded within every successful digital transformation. We suggest having these three areas addressed well in advance of your digital transformation project to boost its chances of success.

A Clear Strategy and Alignment of Vision

Success doesn’t happen by accident. A successful digital transformation project occurs when the strategy and vision behind the project align with an organization’s clarity of purpose and mission.

What is the vision behind the project, and how does it help an organization fulfill its mission? New technology can improve the organization’s ability to fundraise, track grants, and/or manage fund accounting. These are all worthwhile and noble goals. Map out how the new technology you hope to implement helps you fulfill a goal that is clearly aligned with your organization’s mission, purpose, and vision for the future.

Shared Decision Making Around New Technology

It’s tempting to think the purchase of new technology is an IT-department responsibility. But the best IT departments will tell you that all stakeholders—those who will use the technology daily—are the ones who need to be at the table when creating the technology requirements document and exploring options.

Shared decision-making around new technology is essential to finding the best technology that will meet your organization’s needs. Each stakeholder knows their respective area of business best and can provide the most valuable input into how the technology under consideration will help them do their work better.

Any digital transformation team gathered at your organization should include a representative from each major area of responsibility: accounting, finance, operations, program management, marketing, outreach, grant management, donor management, and more. Let those who will use the technology have a voice in the decision of which one to adopt and why.

Process Changes, Too

The third pillar, or major consideration, when undergoing digital transformation is that technology never lives in isolation. It is the impact of technology on people, processes, and things that makes it such a transformation.

The people in the equation—your staff and stakeholders who will interact daily with the technology—must adapt and change their behaviors to work with the new system. There may be a steep learning curve for some. Routines must change, and with changing routines, come changing processes.

No matter how user-friendly the new technology, processes and people must both adapt to it. Make sure you give everyone the time and space they need to learn to use the new technology. Keep an open mind and be flexible to process changes and adaptations, too.

Are You Ready for Digital Transformation?

You’ve probably seen those ads on television for diet programs. They always show before and after pictures: someone looking sad and overweight in the before picture, triumphant and overjoyed in the after photo. What they never show is the in-between: the daily struggle to make wise choices, the moments of decision that lead to a successful outcome.

Your organization’s digital transformation is also like those weight loss programs. You have a “before” shot now: a problem you need to solve, a process that’s cumbersome or slowing things down, and so on. What you desire is the “after” effect: faster, more productive work. But, to get there, you’ll need to bring together these three pillars of strategy and vision, shared decisions, and adapting process to make it successful.

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.