As a business, nonprofits have a unique set of needs and challenges. Nowhere in the business is that more apparent than in financial planning. At the same time, budgeting and financial planning are two of the most important business activities for a nonprofit.
Many nonprofits deal with issues in managing and planning their financials largely because they don’t have access to solutions that can help them overcome these problems. There are, however, ways to solve the five biggest challenges to financial planning faced by nonprofits today.
Lack of clarity
When making decisions, nonprofits need clarity and assurances that the means to back those decisions exist. Unfortunately, with budgeting tools that have a limited scope like spreadsheets, making choices about purchases, hiring, or program spends can be complicated by the budget, not clarified by it.
Budgets should be a tool in your financial toolkit, not an inflexible artifact that can’t guide or advise. Modern and affordable planning and budgeting tools exist that offer easy integrations and automatically update financial data so you have current information at your fingertips.
Can’t afford to be a financial planning “mechanic”
In today’s business parlance, nonprofits are said to “run lean”. For the rest of us, that means nonprofits operate with minimal resources, including team members. While the people running your office of finance may be highly skilled and dedicated, there are still only so many hours in the day. For a nonprofit using spreadsheets or a budget point solution, that means many hours are spent setting up formulas, fixing data errors, inputting information, and digging in to create reports.
Your financial team should be moving you forward, but instead they are “budget mechanics”, always under the hood. Instead of settling for a rigid financial planning solution or one that requires time and specialized knowledge, nonprofits should opt for tools that will automate much of the day to day and easily create dashboards and reporting for data-driven decision making.
Need to create a big picture with small picture tools
While tools like spreadsheets are easily available, and budget point solutions are, on the surface, cost-effective, they are limited in scope and view. For instance, scenario planning in these tools is complicated, if not impossible. What does your financial plan look like if donations suddenly drop? What if there is a delay in government grants? What if a catastrophe causes a sudden need in services?
While what-if scenario planning is a powerful tool for most businesses, it’s absolutely essential for the nonprofit. With scenarios, a nonprofit can rapidly grasp the impact decisions will have on the business, today and in the future. Any financial planning solution that a nonprofit chooses should include simple scenario creation.
IT support is a non-starter
As mentioned, nonprofits run lean. That doesn’t stop with the finance team. Technical resources are also at a premium. So, having an FP&A solution that requires a lot of upkeep – including installation, updates and help desk support – will simply add to IT’s burden. Worse, if your nonprofit doesn’t have dedicated IT resources, a higher-maintenance financial software solution may simply not be a choice.
Software-as-a-service solutions, or SaaS, all but remove the need for IT intervention. These applications are hosted in the cloud, and updates and security are handled automatically by the vendor. Some applications simplify more complex technology options, like integrations with other applications, so nonprofits can get enterprise-grade solutions with minimal IT resources.
Unique business needs, inflexible tools
Both opportunities and disasters are critical decision points for companies, but they are the stock and trade of the non-profit. Add to that the fact that a nonprofit’s financial plan cannot be set in stone, and financial planning and budgeting becomes more complex than some Fortune 500s. Flexibility is key, but the tools typically used for FP&A by nonprofits are anything but.
Software solutions for nonprofit financial planning and budgeting must facilitate frequent change and offer dependable and accurate reporting and direction. Changes must be possible in real-time, and as already mentioned, what-if planning must be easy to accomplish with minimal work.
Conditions are constantly changing in the nonprofit world, and your financial planning and budgeting software needs to keep up. Rigid, complicated, and high-maintenance FP&A software can negatively impact your nonprofit’s ability to pivot and make data-driven decisions. There are affordable solutions, however, that removes the burden from the financial team and others within the business while also enabling fast and forward-thinking planning. With a true financial planning tool that is cloud-based, nonprofits will have the power to continue to change lives.
Centage Corporation’s Planning Maestro is a cloud-native planning & analytics platform that delivers year-round financial intelligence and direct integration with Community Brands MIP Fund Accounting software, redefining how Nonprofits budget, forecast, analyze and report. With Planning Maestro, Centage offers the sophisticated features needed by small and mid-market organizations to integrate budgeting, forecasting, and deep data analysis within one easy-to-use, scalable SaaS solution. For more information on how to modernize your office of finance with intelligent planning, view our product demonstration video, or call 800-366-5111.
