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By Mandy Potts, MBA  Accountability and performance measurement have become an important and urgent subject for nonprofit organizations as they encounter increasing competition from other agencies, all competing for scarce funding. The reliance on external funding puts pressure on nonprofits to examine all expenditures and ensure funds are used to support their missions. Performance measurements can act as a check to verify the nonprofit is successful at reinforcing the mission and goals for board members, staff and volunteers.
A performance measurement is a numeric outcome of an analysis that indicates how well an organization is achieving its objectives. These measurements can be used to examine the performance of all aspects of a business, including the accounting, engineering, finance, marketing, materials management, production, research, and sales departments. In this article, we take a deeper look into setting up and tracking accounting performance.
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By Mandy Potts, MBA  Building a budget is an important step that all organizations must do. The budget is the foundation for what the organization is going to do and how they are going to pay it. The best advice I can give you is to start early (3 months out) with the goal to have the budget approved BEFORE the fiscal year starts.
Here are common steps to complete this process: Step 1: Look Back and Look Forward Most financial and budget analysts agree to start with historical data. Take the time to analyze previous years' budgets (I suggest 3 years) and understand the drivers and assumptions behind these budgets. Most of this analysis will be done through variance analysis, which means investigating the difference between the budget and the actual expense. Do some research about the future. Being active is knowing what the legislature is planning to give your organization. Research grantors and see what their funding objectives are for the next year. Research the Consumer Price Index (CPI) and any other major expenses (drivers) that could cause an impact in your new budget. Helpful hints: I suggest reviewing anything where the variance is over or under by 10%. By Mandy Potts, MBA  A common headache and time drain for growing nonprofit entities is how they manage their accounting and financial functions. Trying to find and maintain reliable, timely, and trusted employees to handle bookkeeping and some higher-level accounting services can be difficult if not impossible in a competitive workforce.
As agencies and the need for supporting systems grow, the workload and responsibility often falls to one person, which can lead to a financial control crisis. A considerable amount of time needs to be spent managing people, processes, and procedures, in order to promote a quality financial structure. Luckily with today’s technological advances, significant benefits and efficiencies can be gained by outsourcing the financial function in part or in whole. But how do you know when it’s time to consider making an investment in financial services? |
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