8 Trends That Are Reshaping Nonprofit Accounting | npENGAGE

8 Trends That Are Reshaping Nonprofit Accounting

By on May 16, 2016


Nonprofit Accounting Trends

We know behind the scenes you’re working on tight timelines, strict budgets, and the growing needs of your constituents and community. And somehow, you’re able to manage all of the money your organization raises each year without missing a beat. But it’s not always easy.

Moving forward, what steps can you take to become more efficient so that you can do even more for your organization? We sat down with some of the top nonprofit accountants to talk about emerging trends that you can use at your organization to help you stay ahead.

Show and tell.

Increased scrutiny from board members, donors, and funders makes it more important than ever for organizations to show how funds are being used. That being said, data visualization will continue to be important for communicating your organization’s impact so non-financial professionals (inside and outside of your organization) can understand how dollars are being stewarded. Understanding the right mix of what financial information to report—and how to share it— will be the key to delivering the high-level of transparency and accountability that supporters and board members seek. At the same time, internal teams who may not be adept to reading complex reports will seek greater insight into how their respective areas impact your organization’s bottom line.

Key takeaway: Create visual reports, like dashboards and infographics, that show how your organization is spending and raising funds.

Become a growth strategist.

The finance function at your organization will become an even more strategic role. Having a strategic financial leader at the table will be necessary to drive new revenue and test ideas in growth areas such as geographic expansion, system upgrades, and fundraising infrastructure investments. Expect to partner more with your membership, development, and programming teams to suggest new revenue sources.

Key takeaway: Use entrepreneurial modeling to look at creative ways to generate revenue, such as renting out space or selling products related to your mission. Accounting software that can track and manage new revenue sources will be key.

Break down silos.

Opening the doors for communication between your finance and fundraising teams will help make your organization more efficient, so it’s important that different systems talk to one another.

Key takeaway: The advantages of selecting a solution provider that can deliver end-to-end solutions from fundraising to financial reporting will be increasingly important in opening communication channels between departments.

Stay on target.

Non-financial metrics that support quantitative data are becoming a common part of financial reporting. Traditionally program managers have been responsible for pulling the numbers in order to gauge how programs are performing, but CFOs and controllers are being called on to show how financial and non-financial inputs and outputs support your organization’s mission. Some organizations may even have a management discussion as part of their financial statements.

Key takeaway: Financial reports should show how performance and mission achievement support one anther across your entire organization.

Proactively forecast.

Stay ahead of the game. Study your future goals to determine the financial impact, prepare accurate forecasts, and compare actual spending versus the budget you had in place at least monthly.

Key takeaway: Forecasts and budgets should be adjusted throughout the year to reflect new programs, hires, memberships, revenue changes, marketplace shifts, and other factors.

Evaluate opportunities first.

Not all dollars are created equal. As you send more grant applications out, there needs to be a way to evaluate every new funding opportunity before it comes in the door. You’ll need to pay close attention to evaluating whether a new grant or contract adequately compensates your organization and supports its competitive advantage and core mission. That means financial forecasts will be needed early (before a new funding source is identified) to understand whether your organization has the capacity to deliver the program and determine what it costs to spend the money.

Key takeaway: You’ll need to find out:

  • If your organization has the financial resources available to effectively run a new program
  • What the contractual burdens are with administrating a grant
  • If your organization has the capacity to deliver the program
  • If it’s too late to step back and objectively reconsider once the dollars have already been committed to program budgets

Stay tuned for FASB.

Financial statement presentation is going to be hot in 2016. In 2015, FASB issued proposed changes that impacted net asset classification requirements and other fundamental aspects of nonprofit financial statements that could go into effect this year.

Key takeaway: Stay ahead of how these changes will affect your organization and the changes that will follow.

Ditch the spreadsheets.

Your organization’s finance team is responsible for creating the most accurate forecast and budget possible. At budget time, the finance teams at many small- and medium-sized organizations scramble to locate the previous year’s collection of spreadsheets in order to begin the budgeting process. Don’t let that happen to your organization. It’s important to note that there are significant risks of using spreadsheets for budgeting and forecasting. While spreadsheets are a valuable tool, they lack the functionality to systematize accounting processes and streamline budgeting and planning processes.

Key takeaway: Three areas where spreadsheets fall short for nonprofits are version control, privacy, and last-minute changes. Invest in a software solution that can streamline all of these.


Nicole St. Pierre is a creative and relentless B to B marketer with more than 15 years of marketing and communications experience. As the current Demand Marketing Manager for Financial Edge NXT at Blackbaud, she delivers high impact campaigns that accelerate quality leads so sales can close deals. She’s passionate about bringing technology solutions to nonprofits so financial directors can spend less time on management and more time on mission.

She also has more than a decade of experience implementing marketing plans to lead multibillion fundraising campaigns at private research universities as the Senior Executive Director of Communication and Marketing at Northeastern University; and Executive Director of Public Relations and Marketing Communications at the University of Southern California.

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