5 Biggest Financial Issues Facing Nonprofits [Live from AICPA Not-for-Profit Industry Conference]
The complexities of nonprofit finance continue to grow as more organizations diversify their revenue streams, new compliance rules and regulations are introduced, and management struggles to maintain key personnel.
- According to results of recent polling, the five biggest challenges facing nonprofit financial professionals are:
- Managing the complexity of revenue sources;
- Managing the budget;
- Creating processes to ensure finances run smoothly even if people leave;
- Understanding new laws and standards to ensure compliance; and,
- Communicating with funders and grantors.
These were among the finding from a recent Nonprofit Finance Study shared by Dan Murphy during the AICPA Not-For-Profit Conference in National Harbor, Md. The study, commissioned by nonprofit and association software provider Abila, surveyed more than 400 nonprofit finance/accounting professionals at organizations representing a wide variety of verticals.
- Nearly two-thirds of nonprofit accounting professionals say that compliance has become more time consuming and costly over the last two or three years. Organizations planning to grow expect this burden to increase. Murphy outlined several tips for maintaining compliance including:
- Plan if your nonprofit is expecting significant growth — understand what new compliance regulations may impact your organization as you grow;
- Consult with peers and outside experts when you are unsure how new regulations could affect your organization;
- Invest in technology to maintain proper controls and reporting; and,
- Invest in training for your staff.
Nonprofit finance departments are especially vulnerable to staff turnover. Some 46 percent of respondents said they would be at least somewhat unprepared to continue finance activities if they lost key personnel. Nonprofits with smaller finance departments and those where technology is not used to help maintain compliance were more vulnerable. Maintaining proper documentation of processes and succession plans are critical for organizations of all sizes, Murphy said.