The Federal Reserve has continued its relentless interest-rate hikes, inflation remains stubbornly high, and the labor market struggles with the unlikely paradox of massive layoffs and low unemployment. These factors are all contributing to the top concern of non-profits today – decreases in funding (as donors struggle to maintain their historic levels of support) leading to lower spending for operations and programming.
Where will the money come from? And what’s now the best way to spend those funds?
Our Sage Intacct 2023 Non-profit Technology Trends Report – based on a survey of more than 600 non-profit finance leaders spanning human services, education, healthcare, and faith-based organizations – found those leaders are bracing for a far-reaching impact due to economic uncertainty: reduced operations spending (56%), lower program spending (48%), and an increased demand for services (37%). More encouragingly, nearly one quarter of respondents anticipate increases in grant funding in response to economic challenges.
Just as important, who will do the work? More than 45 million American workers quit their jobs in 2021, many searching for an improved work-life balance increased compensation, and a stronger company culture. According to the Council of Non-profits, “what was initially considered a challenge has become a workforce crisis in need of rapid remedy and long-term commitment to overcoming pre-existing problems exacerbated by the COVID-19 pandemic.” That’s why respondents in our research cited staffing shortages as the second-largest external frustration they’re contending with this year.
The watchword is visibility
Whether it’s tracking donations, services utilization rates, or other key performance indicators, the commonality is clear –visibility. Non-profit CFOs need fast and accurate insights to identify and capitalize on the best opportunities to expand and maximize the mission impact. Without that ability to get deeper into the numbers, analyze trends, and respond to challenges, the organization is slow to respond and vulnerable to compliance issues.
However, when that visibility is in place, non-profits can demonstrate excellent stewardship and more effectively appeal to donors to meet critical and emerging needs. Telling the story in clear and compelling ways backed by financial data can make a major difference – particularly in challenging circumstances.
Technology delivers the visibility – and productivity
For many non-profits, technology adoption can be an important strategy for unlocking the kinds of valuable gains needed to sustain and extend the mission during uncertain times. The 2023 Non-profit Technology Trends Report found that most non-profits (43%) use QuickBooks for financial management, followed by Sage Intacct and MIP Fund Accounting. Unfortunately, 72% of them (up from 63% last year) also report that automated financial reporting is their highest priority, followed by the ability to integrate with other systems – neither of which are strong suits for single-user bookkeeping apps. What do they want most from financial reporting?
- Eliminate manual reporting that relies on Microsoft Excel.
- Integrate with critical business systems to gain greater visibility across the organization.
- Combine financial and statistical data to create outcome metrics that help communicate a truer, clearer, and more compelling story to encourage greater funding.
That’s how Vitamin Angels, a public-health non-profit, found $200,000 in logistical savings, enabling it to expand its mission and provide essential vitamins and minerals to an additional 800,000 undernourished pregnant women and children. And it’s how Faith Promise Church, a fast-growing church that doubled in size while keeping staff sizes low and saving $85,000 annually in bookkeeping costs.
And – remember, digital transformation and technology also can have an important impact on the other CFO concern – hiring and retention. When asked how a non-profit’s technology affects the attractiveness of a position, 67% of respondents said they were less likely to accept a position with an organization that relies on outdated on-premises technology. In addition, 74% of them said they were more likely to accept a position at an organization that has adopted modern cloud-based tech.
Technology unlocks strategy
Most importantly, the follow-on benefit of technology is the productivity gains that ripple up and down the org chart of the non-profit. The fact is, in today’s rapid-response world, it is easy to get caught up in the day-to-day work of essential, but mundane, tactical tasks. For non-profits, there always seems to be a lot of work and not enough time or people to do it. Couple this with the need for transparency and accountability to your stakeholders (for example, your board, grantors, and community members), and it’s easy to see why non-profit finance leaders and executives spend a lot of time on routine tasks.
This reality came through in our survey, where 42% of respondents say they spend at least 80% of their time on tactical work. However, for non-profit organizations to thrive in uncertain times, finance leaders must allocate dedicated time to strategic planning. When asked about the desired balance between strategic and tactical time, half of the respondents said they want to spend 50-60% of their time on strategic work. Here are some tips for carving out that time:
Set goals and think big. As a non-profit leader, you set the strategic direction. If you don’t have a strategic plan, start there. The Council of Non-profits has great tools including example plans, agendas, and timelines. Let your mission be your guide and set goals that get you closer to a successful mission.
Delegate. You simply cannot do everything yourself, and you’ll never accomplish your strategic goals without relying on your team and delegating some of the tactical work. Demonstrate trust by relying on your staff.
Leverage modern technology. One way to free more time to focus on strategy is to automate routine accounting tasks. A modern, cloud accounting solution can help in key areas of non-profit finance:
- Fund, grant, revenue, and billing processes
- Month-end closings and consolidations
- Non-profit revenue recognition
- Approval workflows throughout your AP process
- AI-enabled anomaly detection.
We see these challenges and opportunities daily – with the non-profit organizations that we work with. This really captures the concerns and priorities non-profits are facing today. Visibility brings a huge advantage in better and faster decision making and automation allows for greater stewardship and efficiency – contributing to better performance and job satisfaction.
If you’re a non-profit finance leader eager to move beyond the scorekeeper role and become a strategic partner in the organization’s mission, it’s incumbent to do more than painstakingly capture granular financial data. You need to transform that into valuable analyses, reports, and insights for all your stakeholders, from executive leadership and board to donors and funders. That starts with the adoption of more sophisticated technology to give you visibility into financial and operational metrics about programs, outcomes, fundraising, staffing, and more. And with that tech foundation, you’re also on your way to solidifying an organizational culture that embraces organizational intelligence and planning – which ultimately attracts and retains top performers who can make a difference.