Webinar recap: Leveraging technology to optimize not-for-profit operations

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)

- Consolidations

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.

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.”

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.

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.

Allison Guttenplan, CPA, Senior Manager, CohnReznick Advisory

646.601.7835