It is not easy being an Arizona CFO, particularly for a nonprofit. Nonprofits pursue a mission-first philosophy with their main focus on achieving greater social goals and a sound financial foundation. One of the most challenging responsibilities for nonprofit CFOs is managing a budget with financial constraints. Even though it may be needed, financial management software can sometimes seem like a distracting and risky problem.
Cloud-based Financial Management
Real-time, cloud-based financial management helps nonprofits take advantage of the same functionality, performance, security, and infrastructure that major corporations use. In the mission-driven nonprofit world, accounting and financial management can sometimes be a lower priority. It is not always easy to allocate budget dollars to backoffice infrastructure that does not directly support the nonprofit agenda and harder to find the time and expertise to make it work, and other obstacles may include:
- Capital investment for software and hardware;
- Facilities and expert personnel to implement and maintain the system;
- Lengthy deployment cycles;
- Capacity/scalability; and
- Reliability and/or availability.
These issues are not part of most nonprofit organization’s core competencies, which is why many nonprofits are increasingly turning to new-generation cloud-based solutions to automate financial management. Cloud-based financials enable the application vendor to deliver shared, scalable services that the nonprofit can access over the Internet using a web browser or mobile device.
There is no need to buy, own, license, understand, manage, or control the underlying hardware, software, or data/networking infrastructure that supports the financial infrastructure. Cloud services are typically delivered on a term-based subscription basis, eliminating the need for upfront software licensing fees or major purchases of hardware. The result is cost-effective, anytime, anywhere managed access.
Nonprofit Testimonials on Benefits of Cloud Technology
Jacqueline Tiso, CEO and founder, JMT Consulting Group, acknowledges that “nonprofits want to deliver programs, not buy technology. They typically lag private enterprises in their technology adoption and usage, and hold onto technology longer because they don’t want the expense and the distraction that comes from complex technology implementations. Cloud technology lets them sidestep those hurdles.”
Nikki Jones, Controller, Healthcare Businesswomen’s Association, shared her experience with cloud-based solutions, stating “All of our chapters can access our cloud-based financials. We have volunteers working all over the world at all hours of the day and night. With our system, they access the same world-class financial foundation that many companies use. Our board and our chapter leaders have real-time access to reports, registrations, metrics, and analyses. That means we’re constantly on top of our operation and can make strategic decisions faster. For us, the cloud is critical. It’s the only way to go.”
James Linday, CFO, Great Books Foundation, stated “Cloud financials are absolutely key to running a nonprofit today. Now we can eliminate lots of manual work, be more productive, and eliminate all of those capital investments. This is a predictable, flat operating expense, and we save at least $30,000 a year this way. In nonprofit financial management, survival depends on predictable costs, a reliable infrastructure, and world-class functionality.
Key Best Practices
What are best practices for survival and financial control?
- Make sure your accounting system can support the separate, balanced sets of books required for fund accounting.
- Carefully design your data structure and chart of accounts to support maximum flexibility.
- Be ready to accommodate multiple locations and entities.
- Balance and close each fund independently.
- Put processes in place to track general vs. restricted dollars.
- Create an infrastructure that supports rapid customized reporting by fund or donor.