Building and managing an effective budget and plan can be daunting no matter what industry, but financial planning for nonprofits can be particularly difficult. For those dedicated finance professionals working in the nonprofit sector, the myriad of unique industry challenges from managing multiple stakeholders and funding sources, to understanding compliance standards and creating financial processes, add another layer of complexity to the process. And while no industry was spared in the wake of the pandemic, nonprofits were hit hard. 75% report that Covid-19 negatively impacted revenues and funding while one study found 60% of nonprofits encountered situations last year that seriously jeopardized their long-term financial viability.
At the same time, the spirit of giving back remains alive and well and continues to grow as one recent report predicted a 5.7% increase in charitable giving in 2022. To effectively prepare for an influx of donations while adjusting to the harsh impact of the global pandemic, teams undertaking financial planning for nonprofits need more support than ever and can no longer afford to rely on spreadsheet based financial planning.
Modern, automated FP&A solutions, fueled by data-driven insights, streamline time consuming and error prone processes, empowering financial teams to instead focus on value added services and help steer the organization to a healthy future.
Below we outline three key benefits of relying on innovative nonprofit budgeting and planning software, purpose built to eliminate the heavy lifting of the day-to-day financials and free your financial team to focus on how to grow programming and help even more in need.
Benefits of Budgeting Software for Nonprofits
- Improved Efficiencies – Retire the spreadsheet already!
The last two years have proven the power of agility and efficiency in supporting long term success despite uncertainty and disruption. Today’s financial professionals cannot be shackled by the disparate, static and error prone tools of a pre-pandemic world. For far too long, spreadsheet-based financial planning has been the standard.
The time for change is now. Modern FP&A solutions deliver the built-in business logic and financial intelligence needed to easily build and shape an accurate and dependable driver-based budget, in a matter of days. No programming. No formulas. No links and logic to maintain. It’s all automated and GAAP compliant. Imagine no more errors from linking complex formulas and macros across spreadsheets? This is not a lofty goal or far off dream– this option is within reach and available today.
Nonprofit budgeting software also easily enables driver-based budgeting. Driver based budgeting is a process that ties resources and activities to the financials in the budgeting process, works to identify key business drivers and creates models around them. These models link to the operating plan and can help predict how an organization would fare when faced with different variables – across grants, donations, whether funding is the same year over year, delayed or deferred. This level of insight and automation is crucial to ensure efficiencies and sustainability, eliminate the error prone processes of the past and recoup valuable time on the part of your finance team.
- Reduce Costs & Minimize Risk – Scenario & Personnel Planning for the Win!
It’s never been more important for organizations to plan for change – from a simple office expansion to more significantly how to act on new risks introduced by evolving market dynamics. With an innovative scenario planning tool in place, the dynamic link between all key financial statements (profit & loss, balance sheet and cash flow), means all related reports can be created quickly and easily, so the finance team – and executive team – can immediately quantify assumptions and understand how they will affect the financial statements. But understanding the financial impact of decisions is just the tip of the iceberg.
While updating numbers is easy enough in any budget, when you start modifying the structure of the model things get ugly. Just adding an account can cause the plan and budget to fall apart.
Scenario planning analysis with unique built-in business logic and financial intelligence means the finance team can create unlimited scenarios using different models and test the consequences of each, without affecting the current budget or plan. Not to mention, with a modern scenario planning tool in place, your finance team can quickly evaluate various what-if scenarios and stay ahead of risky situations your organization may find itself in.
Further, planning for personnel expenses – the largest budget item at most organizations – at a granular level is made simple through modern planning solutions designed to provide visibility into workforce expenses from salaries to taxes to insurance, with the flexibility to account for seasonality that may require different staffing or resources. Armed with a more detailed personnel budget, finance professionals can better track performance, accurately plan and identify instances when changes are necessary to meet key organizational objectives.
Scenario planning is more critical than ever, allowing organizations to explore financial consequences of alternative business strategies or effectively plan for inevitable market shifts. This is only executed efficiently when the right tools are in place.
- Boost Performance – Data Driven Insights Fuel Better Decisions
Nonprofit organizations are beholden to several stakeholders and often manage multiple programs and funding sources – making reporting complex and often stunting the time it takes to make strategic decisions.
Budgeting and planning software for nonprofits quickly put analytics-based actionable reports and dashboards at every stakeholder’s fingertips to drive faster, more confident decisions. With just a few clicks, anyone with access to the platform can easily build financial reports and analyze, visualize, and present the information in any way they prefer. KPI analysis, data visualization, and slice-and-dice analytics enables a direct line of sight into the organization’s performance – from both high-level including allocation of costs, resources, and staff across various programs and/or funds, to granular viewpoint by individual, group, program, or funding source.
This unprecedented visibility fuels better strategic decisions to support both the long- and short-term goals of the organization.
With capabilities for self-serve analytics to promote self-sufficiency, variance reporting to compare actuals to plan, course correct and reforecast regularly, and a powerful analytics engine to allow drill down visibility into the data, essential to effectively respond to opportunities and mitigate issues, innovative FP&A solutions are cornerstone to effective financial planning.
Financial planning for nonprofits does not have to be cumbersome and stressful. The right tools can make all the difference. Empowering your finance team with innovative technology ensures they can focus on what matters most: helping those in need.
Centage Corporation’s Planning Maestro is a cloud-native planning & analytics platform that delivers year-round financial intelligence. 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.