U.S. nonprofits have come under increased scrutiny from the Internal Revenue Service over the last decade. This level of attention, coupled with the already limited staff and financial resources at many of these organizations, has complicated everyday tasks such as budgeting, forecasting and accounting. CPAs at nonprofit entities now face a wide array of challenges, ranging from the need to build relationships with ever-shifting boards of trustees, to the difficulties of working within tight IT budgets and under close regulatory attention.
What can nonprofit organizations do to shore up their financial processes in this increasingly challenging environment? Getting help with staffing as well as pledge/grant tracking is one place to start. At the same time, accountants also have to examine the tools they're relying on. Are their spreadsheets and desktop applications still cutting it? Or are these programs causing untold hours to be lost each year to manual processes, along with legacy technologies that are inefficient yet seemingly too expensive to replace?
The hurdles that today's nonprofits face
Nonprofit accounting has acquired a reputation as a highly competitive field in recent years, leading AccountingWEB to say that it was "not for wimps." That may be hyperbole, but it has roots in the truth: Nonprofits need any procedural or technological advantage they can get to sustain success and overcome obstacles as they grow. Common hurdles along the way include:
- Budgetary constraints: Nonprofits often struggle with maintaining adequate numbers of personnel and up-to-date IT assets. Funds may not always be available for new hires or hardware upgrades like cutting-edge servers, or even for ongoing maintenance of existing infrastructure.
- Limited access to data: Complex projects such as government-restricted grants require many types of information to be pulled in and incorporated into reports. Unfortunately, it can be painful to corral all the numbers on volunteer hours, donation amounts, etc. due to outdated processes and siloed data sources.
- Reliance on ad hoc requests: Aging, high-maintenance tools naturally require a lot of help desk support from IT. Likewise, finance teams may also call upon IT to help with report generation, an arrangement that often leads to delays and a lot of back and forth.
- Payroll management: Without modern software at their disposal, accountants at nonprofits may be pressed to outsource complex tasks such as payroll management. This can quickly become expensive.
- Grant and pledge tracking: Each one of these activities requires a special kind of attention. Metrics such as deferred revenue have to be carefully monitored to ensure that donations are properly tracked.
"Outdated processes and siloed data sources limit access to important financial data."
The silver lining here is that these problems all have answers in the form of software. Indeed, nonprofits can address many of their biggest challenges head-on by switching from legacy programs, spreadsheets and manual processes to a cloud-based solution that offers automation and savings in spades.
Why cloud financial software makes perfect sense for nonprofits
Cloud accounting software is a powerful efficiency enabler. It gets out of your way and allows you to take on new projects and reconsider your essential workflows. That way, you don't have to be relegated to spending huge chunks of your day doing redundant data entry, calling up IT and/or struggling with your reports.
Payroll management is one area the nonprofits can struggle with.
The benefits of taking up cloud software extend all the way from your nonprofit's technological assets to its overall ability to properly collect and process gifts from donors. A cloud platform offers:
- Easy-to-manage infrastructure: The cloud service provider oversees all maintenance, security and updates. As such, you don't have to lift a finger to upgrade and can avoid costly disruptions to your operations. Your information is also secured, as well as protected by redundant cloud backups.
- Real-time access to data: Snappy application performance and convenient, at-a-glance dashboards make it easier than ever before to view data from multiple sources in real time. No more ordeals with pulling a bunch of reports from different departments and trying to make sense of them on your own.
- Process automation: The intuitive, point-and-click design of tools such as Intacct make it possible to eliminate tons of manual spreadsheet work. Reports can be precisely configured with just a few clicks and set up to run automatically and on a schedule.
"Our process of preparing grant reports has improved dramatically, allowing us to take on more challenging funders such as complicated government restricted grants," stated Michael Mohr, CFO at Women's World Banking. "With Intacct, we know that we have accurate, real-time data to support all kinds of funding, and we can manage greater complexity with the same finance team headcount."
Taken together, these features and benefits make cloud budgeting and forecasting software a perfect fit for nonprofits as they look to streamline their processes and succeed in a tough climate. Financially, technically and procedurally, a cloud solution far exceeds the capabilities of traditional finance applications and spreadsheets.
