How tech solutions simplify the problem and processes in nonprofit accounting.
Imagine your organization gets a multi-year grant from the national science foundation. The lead time on the grant is 6-9 months and you have 2 years to draw down on the grant. Also, the money must be allocated toward the commitments you made in the proposal.
It’s a pretty simple scenario right? For one grant yes, but what is the situation for most non-profits? It’s more like an octopus. You may have an overlap of grants coming in at different times, going out at certain times. Lots of cash coming in is a good problem to have, but you also need to keep track of which money is used for which commitments. How do you manage what you’ve applied for and which are set to expire?
This is an issue that many organizations face, even after years of operating. Wanting to impact a particular problem in the world, yet having to manage your own growing financial confusion.
So if that’s the issue, what is the solution?
The power is in a two-part solution. An accountant, but one who is well-versed in cloud-based accounting software.
What is Cloud Technology?
In the simplest terms it is a multi-use tool that saves all data on a central network rather than a personal device. This makes it accessible to anyone who has permission to access it.
For cloud based accounting software it can help manage invoices, set reminders, track budgets and ultimately centralize all financial information. Essentially, organizing and automating everything in one place. So go out and buy some right? Not quite. According to the IAITAM 37% of software dollars are being wasted by companies.
To make this clearer, most companies waste the money they invest on software because they don’t have time to learn all of the functionalities. Many are subscription based so they pay the first year from day one and their processes only slightly improve. You end up worse off for buying it.
It’s a complex planning problem – if you’re a large company like Google, you have a dedicated department to handle it. As a small non-profit you can’t afford all of the people usually involved in that scenario.
If software is only part of the solution and a large planning team isn’t possible, this is where a good accountant comes in.
With an accountant, specifically one that provides software solutions you’re not just getting your books in order but you’re planning grants, automating processes and reminders, and getting someone who knows which solution is right for your organization. Not to mention has the know-how to implement all of the functionalities.
Let’s take a look at the benefits of this in a bit more detail:
Firstly, putting a process in place to organize all grant activities is one of the best ways that an accountant well-versed in cloud-based accounting software can add value. They can ensure that when developing complex budgets and project planning you’re accomplishing everything you want to with the money as it comes in.
Furthermore it can:
- Streamline the grant application writing process
- Track the status of applications
- Research different grants
- Generate data for meetings
- Keep things on track with reminders and calendars.
These are all things that someone in your organization is spending time on. Imagine automating it and freeing them up for other projects.
501C3 Status for Non-profit accounting
Secondly, an accountant who knows their cloud-based technology solutions can help with your organization’s 501c3 status. The requirements for acquiring and maintaining that status are so complicated that you need some level of sophistication.
Imagine not having a clean audit for 5 years (nightmare scenario). Then, you bring in an accountant who cleans things up. When all is said and done you have clean audits for years to come. Everyone can rest easy when the funds are used in a way they want them to be used.
For people managing something like money which they don’t see everyday, a system allows them to drill-down and find what they need quicker. Most people are pressed for time and aren’t interested in detective work. Having a system put in place simplifies (or eliminates) sleuthing.
They can see an expense they don’t understand, double click, drill-down some more and see the invoice. They figure out what it is exactly.
We all know that in our everyday lives systems make things easier to manage. It’s no less effective for your organization’s tax status.
The Technology Itself
The final (but by no means last) benefit to this sort of solution is the technology itself.
Most systems are:
- Live/Cloud-based Meaning real-time. That means any changes made are there for everyone to see at the same moment.
- Location Independent With a single instance cloud based system which is 100% online, board members can get on wherever they want, whenever they want. (Side note: Some systems say they are cloud-based but really use a bunch of servers. That’s NOT what you want.)
- Customizable Dashboard a dashboard provides a snapshot of anything that may be a priority. For example, if a board member can’t make a meeting, they can get on as soon as books are closed and see what the situation is.
Having a centralized and up-to-date cloud-based accounting system with someone knowledgeable enough to run it is beneficial enough if it brings clarity and convenience to the entire team.
You want to make the world a better place. You want to be down in the trenches lending a helping hand. The financial organization of your company can either supercharge that vision or slow it down.
Why, when there are so many accounting solutions and the people who know how to maximize them to your benefit would you take the time, money and responsibility to come up with a half working system?
Get someone in your corner to organize your books, and do it in a way that creates a well running financial system so your organization can truly make the impact it deserves to make.