Digital finance transformation not only helps non-profits improve stewardship, it also helps them satisfy donor demands. Non-profit finance leaders need to be good stewards of public trust. This means being responsible for ensuring that the resources of their organisation are well protected and used efficiently for the organisation to fulfil its mission.
In the digital age, good stewardship requires a transformation of many manual, paper-intensive processes. For example, instead of financial reports looking back over the past quarter, real-time data is needed to give instant answers to questions and to help non-profits see the bigger picture.
Key challenges nonprofits are facing
The Sage Intacct 2020 Non-profit Technology Trends Research Report recently surveyed non-profit finance leaders about the most pressing challenges their organisations are facing. The top external frustrations cited were:
Increased competition for funding
Economic shifts creating more demand for services
Changes in charitable giving: increase in online donations and crowdfunding
Demand for outcomes measurement
Demand for outcomes measurement is what we would expect to see internally rather than as external frustration. However, funders and donors are expecting to now see this kind of data and performance information. Simply reporting financials no longer satisfies donors’ demands for transparency. They want to see the real impact an organisation is making, in terms of its mission.
When it came to the top five internal frustrations, lack of process automation and organisation efficiency came out on top, closely followed by manual, time-consuming reporting and inefficiencies and delays due to multiple, disparate systems.
These challenges are not only affecting the productivity of organisations in general, but the finance teams specifically. Looking at these reporting challenges, such as lack of integration between systems and lack of automation, it’s clear that digital transformation offers a significant part in solving these problems.
Digital transformation encapsulates much of the technology solution conversations that organisations say are their greatest pain points.
What does digital transformation in finance really mean for non-profits?
Simply put, digital finance transformation moves the needle for mission impact. It is the integration of digital technology into all areas of business, which fundamentally changes how you both operate and deliver value. As an organisation, you have lots of data and information across multiple systems, tools and applications such as donor management, HR and case-management systems. How do you integrate and digitise all of these so that they work together?
As a non-profit, productivity, efficiency and measuring impact is critical. Most non-profit financial leaders spend 75 per cent of their time on routine accounting tasks. Many say they’d like to split their time 50-50 with more strategic endeavours. This is where digital transformation in finance can be of great value, because it offers the ability to automate back-office functions, therefore allowing finance leaders more time to focus on strategy and how data can be used to drive greater mission impact.
Real-time visibility and insights for mission impact
The first step in transforming finance is adopting an easier, more flexible chart of accounts. The traditional chart of accounts in most accounting software tends to obstruct strategic visibility. But there is an easier way. Much like hashtags help you to find data on social media quickly and easily, when applied to a modern financial system, hashtags make an incredibly powerful tool for reporting and visibility.
Dimensions is a tool by Sage Intacct that allows you to visualise and find all the information you need, providing instant answers. It helps you to define, track and slice and dice your data using all the different attributes that are important to your organisation. A financial system should be intelligent enough to know how to categorise all your data in a way that’s easy to find and to give the view of the data that you need at any given point.
Your general ledger is your single source of truth, so how do you dimensionalise that to enhance your data and benefit your organisation?
Enhancing your general ledger is really about adding statistical data and information to your general ledger so that you can have the key metrics that drive your organisation. As well as data points such as your income statement and financial ratios, you also want to add industry-specific metrics that will enhance your UK GAAP data. This offers real-time insights and lets you access the metrics that matter at a click of a button. Some examples are cost per programme per participant or cost per meal served. Having this data helps give a fuller picture and better long-term planning.
Measuring metrics that matter
Enhance your UK GAAP financial data with your organisation-specific non-GAAP statistical data for real-time insight into the metrics that matter for strategic decision-making.
One of the biggest challenges is disparate systems and lack of integrated data. With Sage Intacct, when you’re doing reporting and analysis, all your data is visible in one place. And it’s not just your financials, but your data from different systems such as operational and planning. They can be a mixture of both financial and statistical data; some examples could be fundraising efficiency, such as how much money you’re spending to raise £1, or they could be cost per meal served. The power of this type of digitisation of your data is that you can bring together all parts of the information and get a full picture.
Our dashboards help you to quickly and easily drill down into source documents and ‘point and click’ to filter by specific information such as grants, date parameters, budget to actual and more. Everything is automated and in real-time, making it so easy for your organisation to quickly get at the information you need to see. You can leverage this technology to build different dashboards for different uses and different stakeholders.
Having access to this real-time, enhanced data allows for strategic thinking and decision-making, saving on overhead costs, and improving fundraising efficiency. A great example of how measuring the metrics that matter translates into something tangible is The Community Foodbank of Eastern Oklahoma. It is a small non-profit doing hugely important work in its community, in a rural part of the US. With Sage Intacct, it improved its cash flow by $25,000, which translated to serving 90,000 additional meals.
Elevate your story to attract more funding
Leveraging digital tools leads to greater impact for your mission. How can you use digital tools and data to elevate your story, demonstrate your impact and attract more funding?
Room to Read is an international non-profit focused on literacy and gender equality in education in developing countries. When Room to Read selected Sage Intacct, it implemented it across the globe in all its organisations and it helped it to scale amid its rapid growth. It was able to find savings and benefits of over 25 per cent worldwide. This has allowed it to directly transform the lives of an additional 100,000 children each year. In addition, it reduced its chart of accounts from 56,000 accounts down to just 100 with Sage Intacct – allowing it to get deeper into the detail. It’s now able to pull out data around its donor reporting that it couldn’t touch before.
This example shows the direct impact that digital transformation of your finance systems can have, allowing more time to focus on strategy and delivering mission impact.
How to get the digital transformation ball rolling
The path to digital transformation for non-profits begins with true cloud management technology. Here are some educational resources to help you make the right decision when it comes to digital finance transformation.