While some see not-for-profits as softer, less challenging forms of business, they have many of the same operational tasks as for-profit firms. As with for-profit businesses not-for-profits have staff to manage, which comes with payroll and scheduling issues – and many manage volunteer teams as well.
They need to maintain books and accounts, as for-profit businesses do, with the added oversight of board members, government bodies and the general public. NFPs don’t have customers but they do have donors and recipients to manage. While most don’t deal with the complexities of manufacturing or large-scale inventory management, they still need to pay for goods and services and may even sell products part of their mission.
Challenges come when these complex operational needs conflict with limited resources. If a not-for-profit is using outdated software or doesn’t have a budget to pay for expert help, issues can become entrenched. Here’s what that might look like in your organisation.
Too much work, too little time
Time is a precious resource in any business, and in a not-for-profit, it can be particularly scarce. If a disproportionate segment of that time is taken up with operational work rather than the mission of your charity, its not a good sign.
Time consuming manual processes can add up to hours wasted every day, slow, inefficient systems can lead to lost time and frustration for staff or donors, and human error or lack of accurate data can create rework and slow processes even further.
Low budget operations
Most NFPs try to devote as much of their budget as possible to the cause – whether that’s funding research, providing services to the community, or handing out food packages. This can mean limited funds for the back-office leaving you using outdated systems with little expert help and not enough staff to manage things effectively.
Disconnection and delays
The wrong software can be a major roadblock to efficiency. If your organisation is using outdated systems that don’t integrate efficiently or lack the features you need, that can cause a range of issues in your everyday work.
You may be using add-ons or workarounds to get things done – but this often means re-entering data or adding other manual processes.
If your software is outdated, it might struggle to integrate with other systems or need frequent maintenance and updated to keep it functional – which costs more time and money you don’t have.
Lack of visibility and transparency
Transparency is a big issue for NFPs. Many have to answer to a board of directors, meet not-for-profit compliance rules and show the public that they’re not squandering donations. NFPs that receive grants or funding from government bodies must also justify their spending and keep records for tax or audit purposes. Donors need to get receipts so they can claim tax back.
If your NFP doesn’t have access to accurate, accessible, timely data, maintaining this level of transparency can be difficult. If your data is storied across multiple system, for example, you might not be able to quickly grab the information you need on a day-to-day basis – let alone at the end of the financial year or in case of an audit.
Low tech issues
Like commercial businesses, NFPs need to be able to track their work and make changes as needed. If you can’t track donations and other income, see the results of your fundraising campaigns or identify major donors or potential new donors, you won’t be able to make good decisions around future campaigns and donor management. Older tech tools can also make it more difficult to integrate with social media or use data to reach younger donors, which means missing out on a potential pool of income.
NFP finances can be more complicated – and more precarious – than standard businesses. Donations may come in the form of one-off collections, recurring payments throughout the year or through the sale of products or services. Other funding may come from pledges during events or fundraising drives, which need to be followed up and collected later.
There’s also uncertainty – donors can withdraw support at any point, and external factors can affect how much people can donate. Because of this. Its hard for many charities to predict future income and budget accordingly.
Although many NFPs are hamstrung by low budgets and a reluctance to invest in operational tools, this approach can be counter intuitive. Refusing to spend money on back-office tasks can directly translate to less time and money for the mission if staff are forced to play catch-up with older, inefficient systems.
The answer? An end-to-end business management solution designed to meet the needs of your growing NFP
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