Have you often worried you did not track your not-for profit’s information for the year correctly come audit time? Do you wonder if your organization’s daily processes and procedures were changed to correct past audit mistakes? You are not alone! Not properly tracking grants and program metrics daily and waiting until year end to record them are two common errors not-for-profit leaders often make. You can prevent this in a few ways.
Ways to Track Grants and Programs:
- Manually track all your revenue and expenses using a spreadsheet,
- Use a Customer Relationship Management (CRM) system or other accounting system, or
- Outsource your accounting activities
All three options could be the solution your organization needs for your audit, but which is the best use of your organization’s resources, time and money? By removing the manual processes out of an already busy schedule, you can focus more on your mission and less on the upcoming audit. Let’s examine the ideas listed above.
Manually track all your revenue and expenses by spreadsheet
Using spreadsheets to track financial activities was a great way to keep track of grants and programs. The problem with this method though is it is time consuming and prone to errors. You have to input the information into a spreadsheet and manually manipulate the data. When you add in human error, this is the least effective tool. Emerging technologies have made this option almost obsolete.
Use a CRM system or other accounting system
The next option is a CRM or other accounting system. Both are quicker and if used properly, have less human errors. You are able to create reports to verify the data. New grants and programs are easily added so you may use them almost immediately. With the CRM, you have to ensure your organization’s data can either integrate or be uploaded into your accounting system. If not, this option is the same as the manual spreadsheet processes. The down side to these two options is using your resources to employ and manage the accounting/NFP personnel instead of having them work to further your goals and doing more to grow your organization.
Outsource your accounting activities
The best option for your not-for-profit could be outsourcing your accounting and bookkeeping activities. Just like the previous option, you are tracking your grants and programs daily with information flowing into your reports and reports are available for review and for your employees to use to work on new funding sources. The difference is you will have many more resources because your employees will gain back the time necessary to focus on your mission, not accounting tasks.
From an auditor’s perspective, outsourced accounting provides a segregation of duties which can reduce potential audit issues. In addition, the scalability of many outsourcing platforms allows organizations to choose having controller-level oversight of your financial programs. This means you effectively gain subject matter experts in financial reporting for less than it would cost you to hire, train and maintain the equivalent full time employees. A smaller not-for-profit may not have the money in the budget for a controller or accountant, making this a viable option to the operation. There are also different levels of service that might help hold the costs down.
Don’t wait until your next audit to start thinking about tracking grants and programs costs. Get started today so your next audit will be more accurate and you can do what you do best: your mission!