Top 10 tips for solving nonprofit financial reporting challenges

Nonprofit financial reporting is mission critical. Without real-time, reliable access to performance data, nonprofit leaders can’t make the best decisions about programs, fundraising, staffing, and other priorities. That’s why nonprofit finance leaders have become strategic partners in organizational intelligence and planning. And it’s why every nonprofit needs a modern, cloud financial management solution.

Download the Achieving Real-Time Visibility with Nonprofit Financial Reporting eBook

This article will illustrate some of the top reporting challenges experienced by nonprofits and provide the top ten tips for improving nonprofit financial reporting with a best-in-class, cloud nonprofit financial management solution, like Sage Intacct.

Tip #1: Empower nonprofit leaders with real-time visibility

Unfortunately, too many nonprofit leaders can only rely on backward-looking monthly or quarterly reporting to make current decisions. In today’s rapidly changing world, you need real-time visibility into what is happening right now. Empower your team with a best-in-class financial reporting system that gives you easy access to real-time data for critical decision making. For instance, during the COVID-19 pandemic, executives with access to real-time key performance indicators (KPIs) could make smart, bold moves to keep their organization nimble through the crisis.

“Sage Intacct helps us understand where to accelerate or where to slow things down. We get both a high-level overview, and the ability to drill down and really understand the full 360-degree view of UESF’s financial health. For example, during the pandemic, we were able to quickly analyze our technology and communications spend and feel comfortable upgrading our technical infrastructure and phone system for work at home.”

Tom Malecki | Director of Finance and Operations | UESF

Tip #2: Automate reporting to gain efficiency and improve accuracy to eliminate time-consuming manual reporting

Manual reporting is time-consuming and error-prone. Yet, many nonprofit financial teams find themselves pulling financial information out of the accounting system and manipulating it in spreadsheets or other tools to create presentable, meaningful reports. That is time wasted. If this sounds all too familiar to you, I have good news. A nonprofit cloud accounting system with robust reporting capabilities will enable your team to create the reports needed in a format that’s usable—without ever leaving the system. And once you’ve created the report package that works for your organization, you can automate reporting and save hundreds of hours that can now be used for more strategic initiatives.

Tip #3: Provide timely reports in response to ad hoc requests

In most organizations, the finance team is working harder than ever. But the team looks bad if it takes a long time to deliver answers when executives or the board request more data. A modern nonprofit financial management system can help in two ways. First, it enables the team to automate routing reporting and become more efficient, leaving more time to answer ad hoc questions. Second, it makes it easier to slice and dice data to create ad hoc reports quickly.

Tip #4: Create special reporting and dashboards for the board

Is the lead up to your board meetings chaotic and stressful for your finance team? Preparation may involve more manual data manipulation—time that could have been spent more strategically by the organization’s executives. By implementing dashboards, you can provide at-a-glance KPIs and easily digestible graphs and charts to augment the board’s discussion and decision-making. The Sage Intacct Nonprofit Digital Board Book provides best practice metrics to deliver real-time insights into your organization’s performance and mission impact.

Sage Intacct Nonprofit Digital Board Book dashboards provide a real-time view of key metrics that align with industry best practices.

Tip #5: Integrate your financial reporting system for more insights

When systems are poorly integrated, the finance team will have to do more duplicate data entry. Best-in-class cloud financial reporting systems integrate easily through APIs. Sage Intacct’s open API and true cloud integration strategy make it easy to incorporate relevant data from other systems, such as payroll, budgeting, CRM/donor management, fundraising, and grant management into financial reporting.

“We no longer have to do monthly reconciliations between what was in Salesforce and what was in QuickBooks. That’s saved a lot of time, and it provides a single source of truth with consistent and accurate information in both Salesforce and Sage Intacct.”

Romulo Lopez | Director of Finance | Atlas Network

Tip #6: Keep all reports inside the financial management system

Keeping data outside of the financial management systems is one of the most common ways to undermine the integrity of financial reporting. Department managers or program managers often create their own spreadsheets to track expenses or budgets. This might happen because they lack access to the reporting system or it is too difficult to use. All financial performance data should remain inside the accounting system. An easy-to-use, cloud solution provides secure access to all departments and encourages best practices.

Tip #7: Give leaders reports that combine financial and operational performance data

Nonprofit success isn’t defined by dollars; it’s about mission impact. So, if your reports contain revenue and expense information but lack insight into operational performance and outcomes, your leaders aren’t getting the full picture. A best-in-class financial management system makes it easy to create tailored role-based dashboards and reports that bring together financial performance information and outcomes data.

Using the Sage Intacct Outcomes dashboard, you can marry financial data with statistical data for a real-time view of critical outcome metrics. 

Tip #8: Support internal controls and ease compliance

Poor internal controls or inadequate recordkeeping can throw grants and donations into jeopardy. Sage Intacct centralizes grant records and reports, tracking funding details and monitoring spending and budget as grants get used. A clear audit trail and roles-based security help enforce good internal controls. Sage Intacct Revenue Management helps manage conditional grants, automating revenue recognition as milestones are achieved.

Tip #9: Give reporting capabilities to program managers

When a nonprofit uses an underpowered, on-premises accounting system, reporting usually only happens within the finance department. But a cloud solution can extend the benefits of real-time reporting and dashboards across the entire organization. Now, program managers can easily allocate expenses and revenue across programs, and see real-time performance metrics and budget-to-actuals for their programs.

“During our monthly operations meetings, everyone’s able to look at their personalized Sage Intacct dashboards and see what’s going on in their part of the organization at that moment. It’s increased accountability across the team, and our CEO always knows if we’re on track with revenues and expenses. She can spot problems early on and ask the right questions of a specific department or program to help resolve them quickly.”

Tom Bland | CFO | International Living Future Institute

Tip #10: Have a reporting system that enables you to roll up and drill down easily

Many nonprofits operate multiple entities and multiple locations. Sage Intacct features multi-entity and multi-currency global consolidation that automates financial consolidation and helps organizations easily create and reconcile inter-entity transactions. Executives and the board can see the consolidated picture of performance. They can also drill down into individual locations and programs. Program staff can also drill into granular details about expenses and transactions within their own programs eliminating the need to ask the accounting team for this information.

Conclusion

Funders, donors, board members, and employees expect to be able to access timely, mission-critical financial performance and outcomes data in real-time. However, lacking a modern, cloud financial management solution, many nonprofits still struggle to produce the reporting they need to support strategic decision-making, budgeting and planning, and program execution.

To learn more about how real-time visibility enhances financial reporting and supports mission success, download our eBook, Achieving Real-Time Visibility with Nonprofit Financial Reporting.