Guide to Scaling Your Nonprofit’s Fund Accounting for the Next 10 Years

Guide-to-Scaling-Your-Nonprofit’s-Fund-Accounting-for-the-Next-10-Years

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The sooner your nonprofit starts thinking about scalability, the more prepared you will be when you’re ready to increase revenue, expand operating budgets or reach new communities by opening more chapters or locations. Scaling a nonprofit looks differently for each organization, depending on your team, industry, local community, mission, goals and available resources. However, some core strategies and components — such as a strong online presence, adaptable training programs or cloud-based recordkeeping and budgeting — will support your growth wherever it takes you.

What Does It Mean to Scale a Nonprofit?

Scaling a nonprofit means generating more results — like revenue, donor attention or volunteer recruitment — in the same amount of time by opening new local chapters, partnering with corporations or other nonprofits to increase impact or implementing adaptable fundraising efforts in multiple communities. Scalability makes it easier to grow or shrink your nonprofit as needed. When done correctly, a scaling strategy can help your team perform more efficiently and have a greater impact while hopefully minimizing costs or other expenditures.

While some efforts, like the ability to scale software for budgeting and volunteer management, are most effective when implemented from the beginning, you can integrate scalable strategies and tools no matter how long you’ve been operating. Analyze your current situation. What are your existing processes? What can you easily scale already, and what needs adjusting? How do you need to replicate or change your existing infrastructure to fit growth goals?

There are endless strategies out there for scaling nonprofits, depending on your specific situation, but all scaling efforts require a strong, motivated team of staff and volunteers backed by dedicated leadership and a cohesive mission statement.

Factors that Affect Scalability

Your scalability plan should be specific enough to target your niche market, including donors, volunteers and possibly consumers, but remain versatile or broad enough to adapt to new situations. Some internal and external factors that affect nonprofit scalability include:

  • The product or services you provide and how applicable those things are in new markets. For example, a nonprofit focusing on coastal cleanup may have less success scaling into new markets inland.
  • Your existing resources, like equipment and volunteer pool. These resources will dictate how much time, money and training you will need as you grow — leverage existing assets before investing in new ones.
  • Your current organization model and its sustainability across growth, including effective program management strategies and consistent processes across departments, teams and locations.
  • Your organization’s mission and applicable reach. For example, nonprofit healthcare organizations serving a particular rare disease may have a more challenging time scaling than a healthcare organization targeting broad forms of cancer or common ailments.
  • Similar organizations or competition in your community or the communities you hope to grow into, especially if they utilize similar resources, donors or volunteers.

You can hinder your organization’s scalability if your processes aren’t designed to adapt or if you’re currently operating beyond budget.

Chapter 1: Applications for Nonprofit Reporting Software

Along with helping to scale your nonprofit’s fund accounting over the long term, there are several applications and advantages associated with using nonprofit reporting software.

Using Reporting Software to Get Grant Funding for Nonprofits

Grant management is challenging due to deadlines, different report requirements and the need to keep separate grants organized. However, effective grant management is important to meet and maintain grant requirements and support future grant initiatives. Fortunately, you can use nonprofit reporting software to simplify grant management.

With fund accounting, nonprofits have transparent accounting processes for all funds, including grants, to keep them separated and organized from the rest of the expenses and income. Grants should always be in their own fund to be accurately tracked, including how much you spent, what you’ve spent the funds on, how much remains and other grant-specific stipulations.

Timely and accurate fund reports are how your organization proves you’re using funds as directed and that all money is accounted for. These reports can be as detailed as needed with the right software, including things like summaries and annual budget overviews. Ideal reporting software will also help you share data between volunteers, staff and relevant parties, including grant allocation information for all current and past grants.

Compared to physical files and spreadsheets, software is more organized, leaves less room for error and makes collaboration easier. You can customize the best organizational system for your nonprofit, such as sorting by donor name or intended fund use.

What Are the Four Types of Grants?

Types of funding include formula funding, competitive funding, continuation funding and pass-through funding.

  • Formula grants: A formula grant is given to a predetermined recipient who falls into formulaic parameters, meaning this type of grant is non-competitive. Legislation and regulations set the formula, and projects are chosen at the local level for recurring funding. Formula grant examples include contributions to programs like education, transportation infrastructure and Medicaid health insurance.
  • Competitive grants: Also called discretionary funding, competitive grants are awarded via a competitive process, with a winner who meets certain criteria. Competitive grant examples include funding for scientific research, tuition programs for students and arts and humanities grants.
  • Continuation grants: A continuation grant can be extended or renewed across budget periods. Some grant programs are limited to existing grantees, while others accept applications from current and new applicants alike. However, if you are a new applicant, keep in mind that continuing applications tend to be prioritized, so you could benefit from partnering with an entity that is currently funded.
  • Pass-through grants: A pass-through grant comes from a federal agency to aid in state agency initiatives and similar programs. States can choose to distribute funds as either competitive or non-competitive, giving states autonomy and flexibility over the use of funds. You’ll need to apply through the grants office in your state to receive a pass-through grant.

If you will be seeking any of these types of grants, you may benefit from nonprofit reporting software.

What Types of Grants Are Available for Nonprofits?

Grants give nonprofits more visibility in the community, improve their chances for potential partnerships and increase resource availability to make a more significant impact. Fortunately, once you’ve received a grant, it’s typically easier to get another one.

The grant timeline starts with the pre-award phase, where you research funding and apply for the grant. Next is the award phase, during which you receive the grant funding. The post-award phase follows, during which you start monitoring the usage of the grant and implement spending according to grant guidelines.

Sources and Uses for Nonprofit Grants

You can classify nonprofit grants in two areas — where the money comes from and how you plan to use it. Grant funding can come from any of the following sources:

  • Government grants: A government grant can come from a local, state or federal organization. With a government grant, you can use the funding for your administrative and operative costs, whereas most grants do not allow for this type of spending. Government grants are a popular source of funding, as you can apply for multiple grants and use the money as you outlined during the application process.
  • Corporate grants: Corporate grants come from large companies that allocate a percentage of their annual profits to give to deserving nonprofits. For example, your nonprofit could receive an ad grant from Google that you can use to run your nonprofit’s ads for free. Before applying for a corporate grant, be sure you are requesting funds from a reputable company.
  • Foundation grants: A foundation grant comes from private or public foundations, like family scholarship funds, and operating private foundations, like community funds. Foundation grants are a significant revenue source for nonprofit organizations, so you may want to research community funds, public foundations, private foundations and family foundations that may be available to you. Please note that foundation grants typically do not fund operating costs.
  • Federated funds: A federated fund comes from local community employees who raise money to distribute to various nonprofits. Typically, these funds are raised via salary deductions. Federated funds are another significant source of revenue for nonprofits, though the process is lengthy and highly regulated due to how the bestowing organizations raise funds. An example of a bestowing organization is United Way.

Grants can also be classified based on how you plan to use them. Grant uses include:

  • General operational grants for urgent issues or to cover employment, administrative or equipment costs.
  • Research grants in academic or scientific settings.
  • Project grants for specific projects or timelines.
  • Capacity-building grants for processes rather than specific projects.

Grants are not typically used to start nonprofits or fund operating costs. Instead, grants should be one part of a larger fund strategy. Your organization should only apply for grants when you can invest necessary resources into its application and conditions, including reporting and tracking spending.

Look for grants that align with your missions, preferably with a stake or special interest in your local community or target impact zone, and build relationships with grant donors as possible and appropriate. For example, if you have a small nonprofit, you may want to seek most grants locally.

Once you are ready to begin your search for grants available to nonprofits, you can start looking through searchable online databases like grants.gov, local or state funding groups and community boards.

What Is the Best Revenue Mix for a Nonprofit?

Both the number of nonprofit organizations and their finances have grown over the past decade, though some industries fare better than others. Consider whether you’re going to focus on a single revenue source or a mix of sources for your nonprofit by analyzing your resources, goals, availability and local competition. Types of nonprofit funding include:

  • Individual donations from one-time and repeat donors, alumni and volunteers.
  • Online and offline giving via online fundraising and in-person events.
  • Special campaigns, like text-to-give.
  • Grants from governments, public charities and community or private foundations.
  • Sponsorships from corporations, businesses or private donors.
  • Membership fees, when applicable, like alumni organizations.
  • Selling goods or services, like admission fees, dues and branded merchandise.
  • Product donations, or in-kind donations, that save you money by soliciting needed products, like animal food, blankets or clothing.

With a mix of funding sources, nonprofits can enjoy several advantages, including increased credibility and visibility in your community and access to more grants after you are approved for one.

Utilizing Healthcare Reporting Software

There are many uses for healthcare reporting software. When you implement this software in your nonprofit organization, you can accomplish the following:

  • Locate and access data quickly
  • Optimize existing tools
  • Manage finances with financial reports and easier analysis
  • Develop more flexible processes
  • Collaborate across locations
  • Adapt to changing compliance regulations
  • Deliver improved patient care, customer service or employee experience
  • Make evidence-based decisions
  • Measure key performance indicators (KPIs) and how well you’re meeting goals or grant requirements
  • Plan resources and manage to change day-to-day needs
  • Get more precise insights and metrics
  • Reduce the likelihood of costly or hazardous errors
  • Be prepared for potential audits

What Is the Source of Funding for Healthcare?

Healthcare grant funding is crucial in the industry. Along with grants, sources of funding for healthcare include private and public insurance, Medicaid, Medicare and out-of-pocket funds. For nonprofit organizations, healthcare funding often comes from:

  • Education and research grants
  • Funding requests for healthcare activities
  • Scholarships to facilitate more specialty training
  • Fellowships to further train medical professionals and researchers
  • Healthcare collaborations with partner organizations
  • Non-promotional sponsorships

Recipients of these funding sources may include patient organizations, civic organizations, medical or professional associations, academic or non-academic medical centers and scientific associations.

What Software Do Healthcare Organizations Use?

Nearly 86% of office-based physicians use electronic medical records (EMR) or electronic health records (EHR). This will continue to grow, especially after the boom in telehealth and telemedicine in 2020.

One recent trend is relying on more advanced smart medical devices and analytics for patient and organization data. Healthcare software, regardless of application, should also have tools to help facilities and organizations remain HIPAA-compliant where legally required. Ideal features of the software for a healthcare organization include:

  • Data encryption
  • Secure file storage
  • Multi-factor authentication for access
  • User control
  • Administrative settings
  • Malware and antivirus protection
  • Other security and privacy features

Software should be easy to use for all user types, including any third parties, vendors or departmental specialists who might need access to specific information.

The global healthcare cloud computing market size is expected to reach $64.635 billion by the end of 2026 due to benefits like cost savings, enhanced flexibility and scalability.

Setting and Achieving Nonprofit Goals

Scaling growth for a nonprofit organization requires a clear path forward. Setting goals gives your organization a direction to move, clarity during uncertain situations and motivation to continue during challenging times. Setting goals takes strong leadership and a clear plan.

Setting Goals

Goals for a nonprofit organization should be SMART — specific, measurable, attainable, relevant and time-bound. Setting goals for your nonprofit starts with understanding where you are and deciding where you want to be, along with planning for various scenarios that will influence your progress to plan for better results.

Consider both potential pitfalls and opportunities. Set goals for anything from mission outreach to organizational objectives. Goals should be long-term and short-term, with short-term goals supporting long-term goals by acting as building blocks.

Achieving Goals

To ensure you are achieving the goals you set, you should make necessary adjustments as you go and measure your success.

  • Making adjustments: Upon review, are you meeting your short-term and long-term goals? If so, what’s helping you succeed? If not, what steps can you take to change that? Adjust short-term and long-term goals to accommodate, if needed.
  • Measuring success: Set specific deadlines for each short-term and long-term goal and use KPIs to track and measure success. Set dates to review these KPIs.

Saving Time and Resources Through Nonprofit Reporting Software

Tracking time and resources for nonprofits is critical for things like audits, grant accountability, planning resources, potential spending reductions, spending alignment, maintaining grant eligibility, demonstrating donor impact and measuring KPIs and SMART goal success.

One of the best ways to save time is by automating processes like fundraising, timekeeping, project management, volunteer management and accounting. You can do so by finding software that was built for nonprofits.

What Is the Best Software for Nonprofits?

When you choose the best software available, your nonprofit organization will enjoy all the advantages that come with it. Follow the tips below to choose the right software for your organization:

  • Don’t choose the first one you find — compare features and make sure they fit your mission, needs and budget.
  • Work with software backed by helpful, attentive and easy-to-reach customer service.
  • Focus on scalable platforms and features.
  • Consider unique needs, like compliance tools and audit management.

To learn more about how MIP Fund Accounting® software can help your nonprofit scale, request a demo today.

Chapter 2: Healthcare Audit Management

In the healthcare industry, audits are commonplace, which makes healthcare audit management a necessity. In this situation, you should understand what occurs during an audit and how you can best utilize healthcare compliance auditing software.

What Is a Healthcare Audit?

Auditing is a systematic assessment of healthcare organizations to review policies, procedures and training to meet specific goals or legal requirements, such as a HIPAA compliance audit. Audits measure outcomes or processes against well-defined standards, and they assess the structure, process and outcome of care or organization impact mission. Various information and documentation may be reviewed during an audit, such as time-based code requirements and codes for critical care services.

For auditing to be successful, it must be objective, which means an independent reviewer conducts the audit. A healthcare audit is also accompanied by a report with recommendations for any necessary corrective actions.

Monitoring is an ongoing process to detect new risks or issues, so you can correct them prior to audits or before jeopardizing patients or resources. Typically, a management team handles monitoring and develops internal procedures and policies in compliance with changes to applicable laws and regulations. The team also takes any steps necessary for monitoring and verifying compliance. Compared to auditing, monitoring is a less structured process and is performed more often than auditing.

Why Are Audits Important in Healthcare?

Failing to comply with the Department of Health and Human Services (HHS) can lead to significant penalties for your organization, such as civil and criminal penalties, exclusion from Medicare and Medicaid programs or referral to the state medical board.

Any healthcare organization can be subjected to an audit, as audits prevent fraud, improve patient care, help organizations be more aware of what’s going on in all areas of operation, protect organization and patient privacy and ward against outside threats. Clinical audits are integral for ongoing quality improvement.

Since audits are so crucial in the healthcare industry, your organization should be prepared for them and ensure you are monitoring your organization for compliance.

How to Prepare for Healthcare Compliance Auditing and Monitoring

Unfortunately, changing regulations and laws tend to make it challenging for healthcare organizations to stay compliant. Laws also vary from state to state, and your needs for compliance also depend on your organization’s size and resources. This is why you should understand how to prepare for compliance auditing and monitoring.

Healthcare organizations should include technology in their compliance programs that can help track compliance with secure, private software features and tools. Your organization should also stay up-to-date on changing laws and regulations at the federal, state and local levels. Some laws and regulations may be industry-specific, so it’s crucial to understand those that apply to your organization.

Along with utilizing technology, your healthcare organization should ensure you deliver quality care or service every time. Focus on communication and centralized collaboration with internal team members and external specialists or experts. Invest in third-party education or certification training to refine skills and get an unbiased look at how you can improve processes.

Monitor your practices as well to ensure compliance. Analyze existing data records and check for discrepancies. Define criteria, collect and analyze data, make improvements with an actionable plan, maintain those improvements and implement ongoing monitoring to make the audit process go smoothly.

How Nonprofit Software Can Help With Healthcare Audit Reports

Fortunately, good software can help your nonprofit organization export important files and data into a single place for easier reference to ensure compliance. The right nonprofit software can offer the following features to help with healthcare audit reports:

  • Safeguards for protected information: Safeguard protected patient and organization data with the right nonprofit software. You will have the tools you need to ensure compliance with HIPAA regulations for security.
  • Integrations: Integrate your nonprofit software with other apps and services to connect multiple solutions and make it easier to share data. You can integrate with your payroll system, electronic health records and patient management system for greater efficiency and accuracy.
  • Automation: Software can help you automate specific processes, such as volunteer management or data backup, to eliminate headaches due to reporting delays and disparate data.
  • Defined user accounts: The right nonprofit software will allow you to create defined user accounts assigned to each person’s role and task.
  • Real-time reporting: Use real-time reporting to measure metrics and performance as they are relevant and how they compare to KPIs. You can easily filter to view metrics and trends by service, practice area, entity or location.

How Do You Monitor Compliance in Healthcare?

A wide range of practices must comply with healthcare regulations, including exclusion screening, external and internal rules and issues like billing practices, patient safety and privacy of patient information. After finding the right software for monitoring compliance in the healthcare industry, you can also follow these steps to monitor compliance within your nonprofit healthcare organization:

  • Perform regular risk assessments to focus efforts in between audits on the risks that may exist in your organization. Analyze what types of risks are present and how many so you can prioritize addressing those that are the most severe.
  • Schedule times to review all policies and programs to ensure up-to-date compliance.
  • Designate a compliance officer or team to facilitate compliance monitoring and audit preparation. Create healthcare compliance audit templates that your team can utilize while performing their tasks.
  • Develop internal standards that comply with regulations and laws.
  • Communicate your organization’s values and expectations and ensure your workforce has the training necessary for compliance.
  • Use a compliance checklist to perform regular self-evaluations.

Chapter 3: The Cost of Human Error in Accounting

In accounting, human error can come with a steep cost. That’s why it’s essential to know how to prevent accounting errors. To ensure your healthcare organization avoids as many human errors as possible, you should know what the common accounting errors are, how to identify errors and how to maintain accuracy.

What Are Common Accounting Errors?

No nonprofit organization is immune to the occasional accounting error. There are four primary types of errors in accounting — errors of omission, errors of principle, errors of commission and compensating errors:

  • Errors of omission: An error of omission occurs when you unintentionally leave out transactions from accounting records. This could happen if you lose receipts or documents that recorded the transaction and will interfere with accurate accounting figures. Since errors of omission can be difficult to detect, implement a reliable routine for entering transactions in a timely manner.
  • Errors of principle: Errors of principle happen when accounting principles are misused or misapplied, like reporting an expense as a tax write-off when it can’t be classified as such or listing an experience as an asset.
  • Errors of commission: An error of commission occurs when transactions are labeled with the correct class but the incorrect subsidiary ledger, like applying payments toward the wrong invoice. An error of commission may hurt your standing with some donors, partners, vendors or companies. Errors of commission can be difficult to identify, as the trial balance will show the accurate amount.
  • Compensating errors: A compensating error is made when you compensate for an error by offsetting another erroneous entry and is typically part of a chain reaction of incorrect information.

Other Examples of Accounting Errors Include

Of course, other types of less common accounting errors that you may still encounter include the following:

  • Reversal errors: A reversal error occurs when you record a transaction as one type, like a credit purchase, when it was actually another type, like a check or debit purchase. For example, if you enter an invoice as a refund or payment, you may overlook this error, as your trial balance will still be correct.
  • Subsidiary entry errors: This type of error refers to a transaction error, such as entering a donor’s $100 donation but typing it as $1,000 or entering a payment as a loan but not withdrawing enough money from the account to cover the cost of it. To identify these errors, conduct accounting reconciliations.
  • Errors of duplication: An error of duplication occurs when an entry is duplicated and charged or processed more than once for the same amount.

Errors can also occur if you neglect to deposit a fund already recorded in the books, which can lead to overstating revenue, overpaying on taxes or operating under a false budget. Using accounting software without proper training or previous experience could also lead to errors, unsaved work, or data loss. Some accounting errors can lead to other issues, such as late payment fees, interference with vendor or donor relationships and lack of cash flow.

How Do You Identify Accounting Errors?

Being able to identify accounting errors is essential for scaling your nonprofit organization’s fund accounting. When it comes to accounting errors, prevention and detection are key. Preventing and detecting accounting errors both require:

  • Using an audit trail
  • A thorough employee training program
  • Risk and error analysis and escalation plans
  • Strong internal processes for fact-checking and error detection
  • Regular audits and reconciliation with the bank, when necessary
  • Getting a fresh perspective when double-checking or reviewing financial books, especially when preparing for an audit

For example, you may be able to prevent an error from occurring by ensuring all forms are consistent and employees can develop a routine while entering information into your nonprofit organization’s accounting software. However, despite your prevention efforts, errors will occur occasionally. This is where detection methods like reconciliations come in. Perform these reconciliations regularly, such as each month, to ensure your accounting records are correct.

What Can Cause Accounting Errors?

Accounting errors are not the same thing as fraud — they are accidents, oversights or miscalculations and not deliberate altering or misleading information. Human error, when paired with technology, is a leading cause of accounting mistakes. Nearly 28% of professionals report incorrect data manually input into their firms’ enterprise systems. It accounts for 41% of inaccurate report numbers for businesses.

Additionally, lack of communication and changes to guidelines without informing proper channels often lead to errors. Understaffing is also a common cause of accounting errors, as lack of adequate staffing can lead to employee fatigue, rushed work and more frequent errors. Fortunately, you can take steps to mitigate these common causes of accounting errors.

How Do You Maintain Accuracy in Accounting?

Accurate accounting can help you get better financial insight into your nonprofit’s budget and expenses and make more informed decisions before investing in new resources or marketing plans. Keeping accurate accounting records can also help you entice possible investors, keep your cash flow intact and maintain compliance.

Accuracy is a necessary part of meeting and maintaining grant eligibility. The fewer mistakes you make, the safer you’ll be during audits and tax season and the more potential fines or fees you’ll avoid. Your organization can avoid accounting errors by:

  • Training employees thoroughly on all data entry and software.
  • Having processes in place to check for human errors, such as typos or deleted data.
  • Using collaborative tools to avoid miscommunication or costly delays.
  • Keeping accounting software updated.
  • Keeping all invoices and implementing processes to process them immediately.
  • Avoiding cash-only payments without proper paper trails.
  • Hiring enough staff to handle the workload successfully.

Chapter 4: Benefits of Using Payroll Software for Nonprofit Organizations

Nonprofit payroll software can offer many advantages to an organization, especially organizations in the healthcare industry that are looking to scale fund accounting for the next 10 years. To maximize the benefits of your healthcare payroll software, you should understand how to do payroll and how to choose the best software.

How Do Nonprofits Do Payroll?

In the healthcare industry, nonprofit and for-profit organizations have similar payroll practices. However, if you have a nonprofit, you should understand a few details about payroll for your organization.

Payroll Withholdings and Taxes

Nonprofit payroll withholds Social Security, Medicare, federal and state taxes as applicable and must match Medicare and Social Security withholding similar to a for-profit company. Nonprofits are also responsible for paying unemployment insurance, including disability, where required by law. Some states also allow certain nonprofits to choose how they will pay their unemployment insurance costs.

Nonprofits typically apply for grants to fund certain projects, and some grants can cover payroll expenses, depending on the grant’s specific terms, what type of employee you’re paying and the work they are performing on the project. When an employee is being paid through a grant, they must track their activities and time back to this grant. Tracking is crucial in this situation, as some work may qualify for grant dollars while some activities may not.

Lack of Bonuses or Commissions

Even though a nonprofit organization does not pay bonuses or commissions for things like sales or work performance, nonprofits are still required to pay employees minimum wage or more, with certain exceptions granted by the Department of Labor’s Wage and Hour Division. Nonprofits use collected funds to help a certain cause rather than to benefit the group or individuals involved in the organization, and this rule applies to commissions and bonuses.

To be exempt from this rule, a bonus or commission would need to fall under reasonable compensation as defined by the Internal Revenue Service (IRS).

Employee Benefits Packages

While employers at nonprofits can offer benefits packages to attract top talent, nonprofit leaders cannot exceed reasonable compensation. However, this does mean that nonprofit employees and employees for commercial enterprises can receive the same employee benefits packages. Like for-profit institutions, nonprofits are still responsible for abiding by paid time off, overtime, work hours, family leave, recordkeeping and labor law requirements, as dictated by their locality.

Additionally, nonprofits can, but are not required to, pay volunteers, as long as it’s not a regular amount that could be considered payroll. Nonprofit organizations often use benefits packages to attract and keep good employees. While many people are drawn to nonprofit work for the challenge and to feel proud of their work, a benefits package ensures that these excellent employees will stick around to continue doing good work.

Tax-Empty Status

Nonprofits are often required to file annual information returns unless they are exempt, such as for being a religious or political organization. When they are charitable organizations, nonprofits are tax-exempt under IRS Section 501(c)(3). This allows them to give donors deductions and pay no tax on revenue aside from state sales and use taxes. Keep in mind that organizations can lose their non-exempt statuses if they are structured to benefit individuals, stakeholders or private interests.

Benefits of Using Payroll Software for Nonprofit Organizations

For a nonprofit organization, payroll software is a platform you can use to compile information for accurate reporting and to manage your employees, payroll and benefits. Further benefits of using payroll software include:

  • Easily manage and track accounting, payments and hours.
  • Get access to human resource tools, such as on-boarding documents and benefits management.
  • Easily stay compliant with local taxes and labor laws.
  • Automate redundant tasks to free up time and resources for your employees.
  • Minimize the chance of human error, especially with features like built-in calculations and automatic reminders for important dates.
  • Enjoy the safety of an encrypted, backed-up system, when applicable.
  • Generate helpful reports for in-depth analysis and audits.
  • Make more accurate calculations, even with complex numbers from multiple financial streams.
  • Get ongoing customer support to answer questions and help you make the most of your platform.

Once you determine which benefits are essential for your nonprofit, you can pick the right payroll and HR software for your organization.

What Is the Best HR and Payroll Software?

Choose the best HR and payroll software for your nonprofit by looking for the following features:

  • Security features, including encryption, disaster recovery, multi-factor authentication, password management and secure off-site storage where servers are stored.
  • Compliance assistance for your region, including regular updates to reflect new laws and changes.
  • Flexible payment options, methods and currencies, such as direct deposit.
  • Scalability and sustainability by going digital as often as you can and choosing processes and tools that your nonprofit organization can grow and move with.
  • Options that fit comfortably within your budget.
  • Automated tax filing.
  • Integrations with other apps and services, like accounting software, for better reporting and collaboration.
  • Employee self-service options to let employees take control of their hours, scheduling, taxes and benefits information.
  • Industry-specific tools and insights, such as HIPAA guidance or inventory management.
  • Allowance for contractor payments and off-cycle payroll, if needed.
  • Features that may not be necessary but are convenient, such as mobility, device compatibility and push notifications.

Ultimately, your HR and payroll software should be designed for your organization size. There is often a difference between software for small nonprofits and large multinational organizations, including usability and cost, but the best software scales with your organization. Before you commit to a software option, be sure to request free demos or free trials to get a better feel for it. Read third-party reviews as well, as they can give you greater insights into the system itself and how it may benefit your organization.

MIP Fund Accounting® offers a comprehensive solution for nonprofit fund accounting, including payroll. Check out all our products and services or request a demo today.

Chapter 5: Streamline Your Accounting Processes

Finally, to scale your nonprofit organization’s fund accounting for the next 10 years, you should understand what streamlined processes are, their benefits and how to streamline accounting processes within nonprofit healthcare accounting software.

What Are Streamlined Processes?

Streamlining is about simplifying processes to increase productivity, reduce costs and minimize errors. The more streamlined your nonprofit is, the more time and resources staff and volunteers have for other areas of operation that cannot be automated or done digitally, such as donor outreach, fundraising engagement and generating ideas for upcoming events or projects.

Streamlining also eliminates unnecessary tasks that don’t require special skills, education or human talent and replaces them with technology or more modern processes. Your nonprofit can streamline accounting with cloud-based apps and take operations mobile across different devices. You can also modernize processes, which are repeatable activities within your organization, and workflow, which refers to a series of processes in your organization.

Benefits of Streamlining Accounting Processes

When you streamline accounting processes for a nonprofit organization in the healthcare industry, you can enjoy the following benefits:

  • Enhanced productivity: Your organization can increase productivity and save time by automating processes that would otherwise require manual effort. Employees will also have a better understanding of the expectations associated with the daily tasks they are assigned. When unnecessary tasks are minimized or eliminated, employees can concentrate their efforts on the quality of their work and better manage their time.
  • Standardized procedures: Streamlining processes often helps you standardize all procedures with less variation across departments, chapters or locations. Employees will be held to the same standard and understand what is expected of them to perform their work tasks successfully.
  • Improved communication between departments: When you streamline processes, the communication between departments within your nonprofit organization can improve, allowing for more successful tracking of finished tasks. Rather than track down the person they need to talk to, your employees can more quickly communicate about tasks to others and get assigned new tasks.
  • Increased cost efficiency: Increase cost efficiency by eliminating needless costs, such as paper and printing ink, and making those tasks digital.
  • Reduced risk: You can mitigate risk when you have greater transparency in your organization. From a single location, you can identify your employees’ progress and identify missed deadlines or errors. Similarly, streamlining your accounting processes can help your organization comply with regulations and deliver a product or service to clients promptly.
  • Improved security and organization: Digitization also improves security, increases sustainability and simplifies organization in most cases. You will have backups for your essential documents, and your staff won’t have to search through physical file folders and filing cabinets to find information.

Streamlining accounting processes is not about eliminating jobs or employees. Instead, it is about simplifying your employees’ daily responsibilities and giving them room to focus their talents and resources in more critical areas that can’t be as easily automated or streamlined.

How to Scale Accounting Processes

Staying on top of your finances is good for everyone in your organization, including your clients and employees. Once you decide you want to streamline and scale your accounting process, follow the steps below to do so in your nonprofit organization.

  • Integrate processes and tasks: Integrate as many processes and financial tasks into the same platform or software as possible, and implement an organizational system for internal processes that can adapt to all locations, chapters and departments without adjusting too much. This will allow all of your financial matters to be integrated into a single system, so your organization can create and deliver invoices, generate financial reports and receive payment reminders.
  • Digitize your organization: You can’t scale manually-input data by using paper only — some level of digitization is often necessary. With technology, you can automate invoices and integrate processes like automatic approval and spending rationale. Rely on software instead of traditional paper. Look for one created explicitly for nonprofit organizations, and consider implementing cloud-based software for increased mobility.
  • Assess your budget: Identify areas of your nonprofit organization that would be easy to streamline while prioritizing critical focus areas that may be draining you financially. Get feedback from everyone involved, from volunteers to board members and outside stakeholders. You may also want to outsource to experts and third-party services when necessary and when budgets permit. For scaling your operations, create and manage an overall annual operating budget.
  • Educate your employees and volunteers: Conduct comprehensive employee and volunteer training, including cross-training, as needed. You should also implement quality control processes, such as effective team hiring, internal checklists and regular internal reviews. Everyone on your team should understand how to effectively use the technology, especially during the implementation of a new software system.

Most importantly, try to avoid staying stagnant — scaling and streamlining processes is ever-changing and requires staying up-to-date on your industry, legal regulations, impact effectiveness and technology. Your nonprofit organization can create a multi-year plan to support scalability goals and establish KPIs to measure success along the way and adjust as needed.

Using MIP Fund Accounting® software can help your nonprofit streamline and scale your accounting processes.

MIP Fund Accounting® Can Help You Scale Your Nonprofit

Scaling your nonprofit requires a unique plan customized for your industry, community, team and goals. Many scaling strategies are most effective if you use them from the beginning, but you can implement other methods and tools at any time. An effective scaling strategy can help your nonprofit be more productive and efficient, allowing you to make a bigger impact on your community while minimizing expenses.

If you’re ready to start scaling your nonprofit, the first step is to examine your processes to see what you need to adjust to grow your organization. Integrating fund accounting software can help you automate and streamline accounting tasks so your nonprofit’s resources go further.

At MIP Fund Accounting®, we’re dedicated to helping your nonprofit organization save time and scale processes with our accounting software and ongoing training for implementation and client success. We designed our platform specifically for nonprofit organizations. It’s flexible, secure and configurable, with everything you need to generate reports and manage your finances without complicated processes or hard-to-use technology.

You can use our software to create reports to help you apply for and track grants and to prepare for an audit or internal monitoring. Using accounting software to automate certain tasks can help you reduce errors and increase the accuracy of your bookkeeping. It can even help you manage your payroll. With our comprehensive solution, you can easily forecast budgets, manage human resource tasks and get a real-time look at how close your nonprofit is to meeting its goals for growth or impact.

Learn more about our products and services, and request a demo today to see everything the MIP Fund Accounting® software solution can do to help your nonprofit reach your goals.

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