Back to Blog

Integrating Systems to Reduce Financial Risk for Nonprofits

Nonprofit organizations demand a lot from their software. According to a 2015 survey conducted by Software Advice, a company that provides research and online reviews of fundraising software, nonprofits want greater functionality and tools from their investments. Not only that, they want their fundraising/donor management programs and other platforms to work seamlessly together.

In fact, 57% indicated they wanted their donor management to integrate into their accounting program. “We see fundraising, donor management, and CRM systems naturally morphing into a single system that supports all types of interactions with constituents and fundraising activities,” said Janna Finch, Software Advice’s senior market research associate. “There’s a lot of overlap in what these systems do and how nonprofit professionals use them, so it makes sense that this is happening.”

Financial risk—the greatest danger

Systems that work together can greatly increase efficiency and reduce costs for nonprofits. Beyond that, however, integrated systems provide the greater visibility across your organization that is critical to managing financial risk—a significant area of weakness for many nonprofits.

In their March 2016 report, Oliver Wyman and SeaChange Capital Partners define risk as “unexpected events and factors that may have a material impact on an organization’s finances, operations, reputation, viability, and ability to pursue its mission.” And in a summer 2017 article in Nonprofit Quarterly, the professionals at Community Resource Exchange (CRE) discuss a proprietary framework and tool that considers risk indicators and organizational activities across six operational categories.

One of these is financial, which encompasses risk in the areas of financial practices, performance, oversight and controls, monitoring, and reporting. CRE consultants tested the assessment with 10 New York City nonprofits. Finance was identified as an area of higher risk, with oversight and internal controls as the lowest-scoring subcategory.

Technology plays a big part in this area. The Nonprofit Quarterly article notes: “Respondents report that systems between finance and program generally are not integrated, and moreover, that financial reports are not routinely provided to all departments—presumably program included. This lack of coordination and information flow between two critical organizational functions—not uncommon but of note nonetheless—could result in excess spending and unmet contract milestones (and, ultimately, reduced revenue).”

Finding financial clarity in the cloud

Many nonprofits are using cloud fund accounting software such as Sage Intacct to turn their technology liabilities into assets. For example, Sage Intacct:

  • Automates the tracking and reporting of outcomes and performance metrics
  • Makes reporting quick and easy though through point-and-click functionality
  • Provides real-time visibility across the organization through dynamic dashboards
  • Continually consolidates multiple locations and entities
  • Is built with open API for seamless integration to other solutions

The nonprofit experts at JMT Consulting can help you further manage financial risk by designing and implementing a technology solution that works best for the unique needs of your nonprofit. Contact us today to get started.

Related Posts:
What’s New in MIP Fund Accounting v2020.3
December 11, 2020
What’s New in MIP Fund Accounting v2020.3

The MIP Fund Accounting v2020.3 release will go live on December 14, 2020. This release contains high-quality updates such as reporting enhancements, defect fixes, new tools to provide feedback, and more. Continue reading for more details on what is included in the MIP Fund Accounting v2020.3 release. Updates within this release include: New opportunities to provide feedback:…

The True Costs of Nonprofit Budgeting with Excel
February 23, 2018
The True Costs of Nonprofit Budgeting with Excel

Excel is the go-to reporting and budgeting tool for countless finance teams, including financial planning and analysis (FP&A) professionals. In fact, there are more than one billion users worldwide—that’s about one in seven people! Excel is comfortable and familiar, but for growing nonprofits, it can be a real drag on your budgeting processes and productivity….

How Accounts Payable Automation Can Strengthen Your Business Continuity Plan
May 11, 2020
How Accounts Payable Automation Can Strengthen Your Business Continuity Plan

This post was published as part of our guest blog series by our software partner, AvidXchange, the industry leader in automating invoice and payment processes.​ With today’s reality forcing businesses to quickly implement and put their continuity plans to the test, it’s becoming clear which core processes are critical to maintaining operations. Accounts payable (AP)…

When to Consider Moving Your Nonprofit to a Cloud ERP Platform
October 1, 2020
When to Consider Moving Your Nonprofit to a Cloud ERP Platform

Nonprofits are struggling to adapt to the COVID-19 pandemic, just like everyone else. But they have arguably had it worse than other organizations for several reasons. First, during an economic downturn, charitable donations tend to slow down. Nonprofits with reliable funding sources in normal times are having to make do with limited, sometimes shoestring financial…

 Back to Blog