Knowledge and Insights
It’s difficult to recall another time period in recent history when nonprofit organizations faced such a preponderance of financial and operational challenges and new developments. Every time you turn around, read an industry or news publication, or attend a professional conference or meeting, there’s a new concern or regulation nonprofits must take into account and add to their lengthy compliance to-do lists. With so many industry information sources regularly reporting on these numerous issues, it may seem to some like a bombardment to your already-vulnerable position. How should you prioritize your focus areas and what should you prepare for?
Mercadien is at an advantage having a robust perspective on the trends affecting nonprofits. Stemming from 25+ years working with many diverse exempt organizations and nonprofit clients, we continually strive to educate and share insights with the nonprofit community. As a result, in upcoming issues of this newsletter, we will examine the impact, propose helpful solutions, and compare risks and rewards for each crucial trend that we believe is imperative for nonprofits to address in the near term. Here’s our summary of them:
- Technology & Cybersecurity – The continued pervasiveness and success of scams, hackings, and thefts of financial and other information should sound alarms for all organizations to evaluate and update computer systems, software programs and related security. No matter the size or state of your nonprofit’s IT assets and environment – hardware, networks, file storage, email and back-up systems, portable devices – they will continue to be at constant risk from multiple external and internal threats.
- Financial & Performance Reporting – Changes to accounting standards and disclosure requirements (the first in 20+ years) are expected to affect virtually all nonprofits. In addition, certain new reporting complexities, such as changes to and level of detail provided on Form 990 and implications from new transactions (mergers, acquisitions, strategic alliances and joint ventures) may impact many organizations. Some of this change stems from an increased focus by regulators, donors and creditors on nonprofits’ program effectiveness. Since performance and fundraising success will more directly relate to your ability to measure mission achievement and program outcomes, your financial professionals should possess a keen understanding of these issues and demonstrate ability to work with staff and ensure compliance.
- Mitigating Reputational & Enterprise Risk – The heightened concerns and challenges in today’s operating environment, and your organization’s ability to weather and overcome them, suggest that a comprehensive risk assessment is a critical requirement and best practice for success. Because nonprofits are uniquely and significantly affected by a variety of challenges like fundraising events, donor restrictions and high-profile scandals; risk triggers and profiles are elevated. Just about every aspect of operations presents risk – employees, vendors, technology, financial processes, social media, strategy and leadership, even crisis management. Now is the time to begin implementing smart policies and internal controls that help you prevent problems, create contingencies, plan ahead, and monitor and review all aspects of your organization.
- Improving Funding – With government funds and private contributions still below pre-2008 levels, nonprofits must continue to seek out new, diversified streams of revenue that support financial stability and help minimize the impact of economic and regulatory changes, and turnover and budget cuts in government administrations. As we’ve written about previously, new initiatives, such as mergers, alliances and crowdfunding, are gaining popularity. Consideration of such opportunities may be essential to your future and should include a thorough evaluation of the impact on and risks to your operating and financial condition.
- Human Resources & Resistance to Change – Are you properly focused on maintaining and leveraging a most significant asset, your employees? Training, performance, communication, retention, conflicts, ethical violations, and whistleblowing are well-known topics to most employers, individuals, regulatory bodies and the media. Always important, they can be especially difficult or, when mishandled, potentially devastating for nonprofits.
- Board Training & Engagement – In addition to other factors, and especially evident today, the level of knowledge, involvement and strategic planning of the board members is critical to your organizations’ survival and success. Trustees, and all leadership, benefit from proactive communications with their chief executives and training from professionals. Providing governance training and consultation on special matters with expert advisors are effective methods to enhance the wisdom and contributions of your board members, and protect and move forward with the interests of the organization.
Our Nonprofit Services Group looks forward to addressing many of these trends in greater detail in the next several issues of The Nonprofit Examiner. In the meantime, please don’t hesitate to contact me at firstname.lastname@example.org or 609-689-9700 with any questions about them or other challenges faced by your organization.