- Funding sources
There is no single source of nonprofit cash. Money to run operations in a nonprofit comes from many funding sources, some of which are irregular and unpredictable. As such, nonprofit leaders must always strive to find money to keep things running from different sources. They can do so by engaging donors, members, holding fundraisers, and applying for various grants. Keeping track of money from all these sources is often confusing and challenging for accountants, some of whom have other roles in the organization. Studies show that the main challenges to accountants and nonprofit leaders are identifying long-term sustainability and finding new funding sources. Keeping the existing sources is also tricky. As an accountant, however, using accounts receivable software can help keep you informed.
- Poor collaboration
Collaboration is critical in nonprofits. Financial professionals will get the information they need from other quarters, and fundraising will be boosted with the right collaborative efforts. However, according to the study, most nonprofit financial professionals stated that they were least involved in fundraising and development. Collaboration needs to address aspects such as nonprofit funding and long-term sustainability. With the proper collaboration, money management will be made easy, and nonprofit vision and mission will become clearer. ERP software and funds accounting programs are needed to achieve this goal.
- Tracking grants
Even after identifying grants and potential sources for your cause, you still have to go through a lot to track them. This is even harder if grant providers make the process hard. In addition to the lack of a specific date specified for funds, grant money is limited to certain expenses in most cases. This forces nonprofit accountants to continually track where the money will go to, receivable grants, and when the grant is ready to be collected. This wastes too much time that could have been used in other things. The ability to track these grants would free up a lot of time for research and the application of other grants.
- Payroll tracking
Like the for-profits, tracking payroll in nonprofits is also a big challenge. Your nonprofit needs a system to track payroll effectively. If you do not have a way of tracking income sources for your employees, the chances are that your tax reporting will be more complicated. Additionally, without sound payroll management, a nonprofit will have critical financial discrepancies. Sadly, most nonprofits lack proper bookkeeping payroll management methods, and therefore auditing is always a problem. The best approach to this is to use an external payroll bookkeeper to remove tracking issues of income and funds dispersal.
- Management reporting
This challenge is caused by a lack of real-time financial data that makes real-time reporting difficult. It includes inaccurate management reports and outdated financial statement data. To determine reporting and fundraising goals accurately, current reports are needed. This is often a challenge for many nonprofits who lack timely detailed reports for mission-based budgets. This challenge is sometimes the doing of nonprofits, who often overlook management reports. As an accountant, you can improve this by improving your daily function and finding better funding sources.