As the third-largest employer in the private sector U.S., nonprofits employ more than 12.7 million people, according to the Urban Institute. But with uncertainty around federal contracts and funding, some nonprofits have to consider how to scale back operations and staffing.
If your not-for-profit staff include in-house finance or bookkeeping professionals, you have many things to consider. Here are three scenarios that may happen in your organization:
1. Finance professionals are serving multiple roles in the organization
First of all, finance professionals often have responsibilities beyond accounting and compliance. Their knowledge of the not-for-profit organization supports your mission in a variety of ways. They may help to organize events, do research or onboard volunteers.
When these individuals are pulled into other tasks and roles, the finance role receives less attention. This leads to delayed receivables, late reporting or general disorganization. Economic uncertainty could be the catalyst for restructuring existing staff in ways that leverage their strengths and skills.
2. Finance professionals are unwilling or unsure how to upskill for technology.
Sometimes, long-time finance staff don’t want the burden of learning new processes or systems that will increase efficiency and performance in the finance department. They may choose to leave or retire before the organization adopts modern technologies.
Even if finance professionals are willing to learn new processes and technologies, the onboarding and training may be slow and costly.
3. Compensation is not keeping up with experienced professionals’ expectations.
A third reality for not-for-profit organizations with funding concerns is that they can’t pay competitive compensation and benefits required to keep experienced finance professionals.
The loss of a controller or chief finance officer results in a loss of operational efficiency, controls and financial strategy for the organization.
Explore CAS+ Services for Nonprofit Finance Staffing
A fourth reason that not-for-profit organizations are experiencing staffing issues is that a former bookkeeper or controller has risen through the ranks to take a more strategic finance role in the organization. This can require hiring additional finance staff, particularly if the organization is growing.
However, the new finance executive may not be equipped or interested in training and managing a finance team. For efficiency and budget considerations, the finance leader may decide to explore outsourcing finance roles.
What could this look like? It could start with general outsourcing of bookkeeping procedures and financial reporting, such as recordkeeping, journal entries, account reconciliation and financial statement reporting.
At a more sophisticated level, the outsourced team can take on receivables/payables, budgeting, cash flow analysis reporting, grant accounting, and audit preparation tasks.
There is a level of flexibility to outsourcing finance roles, depending on the size of the organization and scope of its accounting and compliance. By working with a firm that is already knowledgeable about not-for-profit accounting, the in-house finance leader or management team gains strategic support from day one.
If your organization is anticipating funding or staffing cuts in the near future or you simply want to take the opportunity to restructure your team and finance roles, talk to the CAS+ team at LvHJ. We could help you explore solutions that fit you best for the new realities of not-for-profit accounting and fiscal management.
