Webinar recap: Leveraging technology to optimize not-for-profit operations
CohnReznick recently hosted “Leveraging Technology to Optimize Not-for-Profit Operations,” part of the ongoing Not-for-Profit & Education Governance & Financial Management webinar series. If you missed the webcast or would like to experience it again, watch our on-demand recording, or read on for key highlights on how to optimize not-for-profit operations by using:
- Enterprise resource planning (ERP)
- Data analytics
- Key performance indicators (KPIs)
- Robotic process automation (RPA)
A bright future lies ahead for not-for-profits leveraging technology
As revealed in CohnReznick’s 2019 Not-for-Profit and Education Industry Perspectives Report, there is a bright future ahead for institutions that learn how to appropriately leverage technology to achieve their goals. Those considering a digital transformation should begin with a strategic assessment, including an in-depth look at the organization’s needs, resources, and risks. Buy-in from the organization’s board and key stakeholders is also imperative prior to undertaking major initiatives.
Enterprise resource planning
Start by taking advantage of one of the most widespread methods for leveraging technology: enterprise resource planning (ERP). An ERP application or system integrates any or all of an organization’s processes and functions, such as:
- Finance and accounting
- Human capital management
- Expense management
- Investment management
- Budget and planning
- Customer relationship management (CRM) (e.g., fundraising, membership)
- Supply chain management (SCM)
- Reporting, business intelligence (BI), analytics
- Fixed assets management
- Inventory management, point-of-sale (POS)
ERP offers solutions for organizations with limited resources, tight budgets, multiple business units, or a need for greater transparency. ERP systems can be based on a server, in the cloud, or a software as a service (SaaS) arrangement. The advantages of having integrated processes and systems include greater flexibility, agility, consistency, integration, automation, transparency, stewardship, controls, and regulatory compliance.
Based on our article “8 ways ERP can help lead your digital transformation,” the following are some implementation examples specific to not-for-profits.
|Transformation step||Not-for-profit examples|
|Rewrite the right business processes||Develop or revise classifications/segments of contributions received (e.g., restriction, source, fund, usage)|
|Maximize your data||Align budget and planning tools with key performance indicators (KPIs) tracked by the board|
|Make ERP customer-centric||Transition CRM function to cloud for greater access flexibility|
|Training for change||Use data analytics to predict compensation and other expense growth trends|
ERP systems collect valuable data and allow your data analytics to be on-demand, real-time, tailored to the user, viewed on a global scale, and used for better decision-making, stewardship, and transparency.
These analytics reveal the story of your organization’s past and present and inform the questions you have about its future. You can develop analytics to monitor program outcomes vs. program costs vs. related revenues. But analytics should be part of a living process, not just a snapshot to put on a shelf. You can also combine data, algorithms, and context to glean new insights about your organization: Analytical algorithms can combine your metrics (data) with your current business environment (context) to predict or forecast future performance.
To reach these insights and inform decision-making conversations from your data, start with a statement: “As a [person], I want to [action] so that [outcome].” An example could be: “As the CFO, I want to understand how fundraising Campaign A will impact the ability to deliver Program Z services.”
Key performance indicators (KPIs)
Data analytics also allow your organization to monitor KPIs and focus on what matters most to your funders. Financial KPIs that many not-for-profits should be monitoring, and that most charity watchdogs and funders monitor, include:
- Functional expense mix
- Cost per dollar raised
- Working capital ratio and/or a liquidity measure
- The percentage change in revenue and/or expense
You should also consider some of the many non-financial KPIs specific to your organization and its mission-driven programs. These could be social media statistics, donor growth and retention rates, or your number of program beneficiaries served. Leveraging technological solutions to collect and analyze data related to those non-financial metrics can help provide a more complete view of your organization’s effectiveness.
Robotic process automation
Not-for-profit organizations should consider leveraging robotic process automation (RPA) software and services to advance technological sophistication and transformation and to enable them to fulfill their missions in a more timely and cost-efficient manner. These systems can be programmed to perform complex work with IT applications and websites. Processes can be fully manual, leveraged with RPA in an assisted or unassisted manner, or even involve artificial intelligence (AI). RPA creates efficiencies with automated business processes.
Not-for-profits have many processes that can benefit from RPA solutions, including:
- Processing accounts payable invoices
- Performing monthly balance sheet reconciliations
- Fundraising and marketing campaigns, e.g., donor outreach, recording contributions, and directing email communication
- Compiling data for regulatory or management reporting, e.g., Uniform Guidance, 990, quarterly operating performance reports
To determine processes that may benefit from automation in your organization:
- Identify an executive sponsor
- Identify the functional areas
- Identify the operating model workflow and information flow, including interdepartmental transactions
- Question the as-is process
- Avoid a narrow view of the solution
To determine your organization’s readiness to deploy RPA solutions:
- Define metrics to measure ROI value (i.e., experience, quality, speed, cost, revenue)
- Bring IT and business visions together under one umbrella
- Focus on achieving integrated and intelligent automation, and think beyond task automation alone
- Have humans in the loop
Keep in mind that while there may be certain data analytic and RPA tools embedded in your current ERP systems, especially those that are larger or recently upgraded, it may be necessary to leverage third-party solutions or service providers to achieve your digital transformation goals.
Whatever path your organization decides to take toward digital transformation, be sure to align those plans with your organization’s established strategies and available resources while always keeping in mind the mission.
Insight2019 Not-for-Profit & Education Industry Perspectives ReportJohn AlfonsoAs 2019 is already emerging as a year when many not-for-profits are being asked to do even more with less, how will the leaders of these vital not-for-profits navigate these challenging times and ensure their organizations will continue to thrive? To find out, we consulted executives from a diverse array of not-for-profits in the areas of higher education, associations, foundations and grant-making organizations, social services, and housing organizations.
Insight8 ways ERP can help lead your digital transformationWhile its customary focus has been to help organizations unite traditional business-management solutions, ERP also provides a flexible foundation upon which organizations can integrate more cutting-edge technologies.
InsightFASB proposes new gift-in-kind disclosure requirements for not-for-profit entitiesJohn Alfonso, Catherine SysloA proposed FASB ASU would adjust how not-for-profits present and disclose the nature, extent, and value of contributed nonfinancial assets and services.
InsightTax-exempt groups face new IRS e-filing rules under TFAOn June 13, the Senate voted to approve the Taxpayer First Act (TFA), H.R. 3151. Previously approved by the House, the bill now awaits President Trump’s signature. The main focus of the TFA has been to improve overall customer service by the IRS through changes within the agency’s management and oversight.