The answer is probably “a lot of things” right? It is for many of us here at Mercadien. Our Nonprofit and Human Services Group meets regularly to discuss our clients’ top challenges and look at ways we can help them address their issues. We have gathered intel from our clients, the AICPA and NJCPA, the BDO Alliance through our membership there, and in many cases first-hand experience at Mercadien.

Based on that intel, below is the list of the top challenges facing organizations in the Nonprofit and Human Service sector:

Workforce challenges – do you have the staff you need to meet the needs of your organization and the clients and customers you serve? The Bureau of Labor Statistics (BLS) reported that “non-farm payroll employment rose by 235,000 in August and the unemployment rate declined by .2% to 5.2%.” This is good news, right? Well, why does everyone have “now hiring” signs out? Why have businesses been challenged to provide “regular” service due to lack of employees? The answer is that there continues to be a mass exodus of the workforce in general.

The labor force participation rate has been declining since 2000, and during the pandemic about 4 million people quit their jobs in April alone. On the last business day of July, the number and rate of job openings increased to a series high of 10.9 million (+749,000) and 6.9% respectively. The reasons for workforce exodus are varied, but the impact to businesses is the same – they need to do more with less, increase pay rates, and provide better benefit plans to attract and retain employees. Current employees are working overtime and suffering burnout trying to fill gaps.  Turnover is higher than usual, resulting in higher costs and work stoppages.

So, how can your organization address this issue? We recommend that you think critically through the impact on your business, including costs associated with workforce maintenance, and potential work stoppages and the ensuing revenue impact.

Succession issues – As senior leadership of your organization decide it’s time for change – whether that is to another role within your organization, a different job outside of your organization, or sipping pina coladas under a palm tree or on the golf course – you should consider your succession strategies. We can’t over emphasize the amount of planning that goes into a successful and orderly succession plan. We would be remiss not to mention that you also need an emergency succession plan, especially given the unexpected risks that come with a pandemic.

Our team can help you formalize and implement a succession plan for your organization. We can also help you make the necessary updates to your existing plan if needed. Click here to learn more about our succession planning services.

Diversity, Equity, and Inclusion (DE&I) – This is an area you cannot overlook as you plan out the next 3 years of your organization. Many organizations have been on an intentional journey to assess how they can champion DE&I initiatives. There are many questions and approaches to consider when creating a DE&I action plan. No matter where you are in your DE&I strategy, integrating it into all processes and operations of your organization is crucial. You may consider hiring an external consultant to lead these efforts. This is an area that first requires board and leadership buy-in, including budgeting for potential costs.

Technology & cybersecurity – the pace of change in technology is immense! The risk of cyber-attacks increases daily as hackers get smarter and more creative by the day. Someone in your organization needs to stay on top of software changes and updates, outdated technology, hardware upgrades, security awareness training for employees, as well as access to information and sensitive data by both employees and customers.

Planning for the cost of technology updates and cybersecurity initiatives is key and should be part of your ongoing budget. You should also consider ongoing security awareness training for your employees to minimize the risk of falling victim to cyber-attacks and compromising sensitive data; be sure to budget for this along with penetration testing and risk assessments for your technology platforms.

Of course, there are many more issues keeping us up at night, but this list alone is enough to overwhelm any organization. If you need help working through these challenges or just want to brainstorm with us about how they impact your organization and what you can do to combat them, contact us at sritter@mercadien.com or lbuttar@mercadien.com and we will gladly set some time aside to meet with you and your team.

DISCLAIMER: This advisory resource is for general information purposes only. It does not constitute business or tax advice and may not be used and relied upon as a substitute for business or tax advice regarding a specific issue or problem. Advice should be obtained from a qualified accountant, tax practitioner or attorney licensed to practice in the jurisdiction where that advice is sought.