Design is an intrinsic part of our everyday behaviour and determines - to a certain extent - the quality of our lives. It plays a crucial role in shaping the functionality of our homes, the utilization of technology, and even the effectiveness of education and healthcare systems, all with the aim of enhancing our overall well-being. Likewise, nonprofit organizations can greatly benefit from embracing design-thinking principles when it comes to volunteer engagement. By mastering the art of design thinking, nonprofits organizations can optimize their processes and create more rewarding experiences for both volunteers and the communities they serve.
Like most design intends to do, design thinking is a practice that uses a creative toolkit to solve a host of problems and streamline processes. What makes it unique is that it is human-centred and helps the people it solves problems for. The process is also collaborative and action-focused. Consequently, it tackles all kinds of challenges that lack structure or method by reframing the problem with human behaviour at the forefront.
Design thinking can be considered radical because it is uniquely rooted in questioning, unlike any other implementation process. It requires addressing the questions at hand, assumptions about that problem, and the implications it has as a result. But what is the value of design thinking, especially in the context of engaging volunteers?
Volunteers are the backbone of many organizations, and they are esteemed in a way that is quantifiable yet infinite. Most - if not all - nonprofit organizations want their volunteers to feel valued and engaged with the work that they do. These organizations want to provide a positive environment for their volunteers, making them feel like they're contributing to the overall mission. Design thinking can help. It opens up new possibilities for volunteers, resulting in a better experience for everyone.
Because it is so rooted in human need, questions that design thinking can answer are, "What is the experience of volunteering like?" and, "How might we make it better?" In this article, we will explore the practical application of design thinking methodologies, with a specific focus on the Five Phases of Design Thinking. By examining these phases within the context of nonprofit organizations, we will provide concrete examples to illustrate how design thinking can transform volunteer engagement and create more meaningful experiences for both volunteers and the communities in which they serve.
As mentioned, design thinking is a process concerned with solving complex problems in a highly human-centric way. It consists of five steps or phases: empathize, define, ideate, prototype, and test. While these steps work in tandem with each other, they aren't necessarily sequential or need to be followed in a specific order and can be iterated on at any given time, specific to your organization's needs.
Design thinking is so human-centred that it requires a level of reframing to understand volunteers' perspectives and their needs. Empathy, therefore, is critical in problem-solving because it addresses and understands specific consumer behaviour and aspirations first and foremost and helps to uncover opportunities on a needs basis; when you know "who" you're solving a problem for, design thinking informs the "how" in which you solve it.
This phase involves observing and engaging with volunteers on a deeper emotional and psychological level, allowing the design team to internalize and empathize with their experiences.
Imagine a nonprofit organization focused on providing educational support and mentorship to underprivileged children in a local community. Let's call them Hopeful Steps. They conduct one-on-one interviews and focus group discussions to reveal volunteers' motivations and challenges. Some are passionate about the cause but face time constraints, while others are unsure about how to contribute effectively. Additional surveys of the children and their families highlight specific educational needs and aspirations.
Armed with this understanding, the organization can tailor their volunteer engagement strategies to address the unique needs of both volunteers and the children they serve to create more meaningful and impactful experiences for everyone involved.
When applying design thinking to volunteer management for nonprofits, the "Define" phase is another crucial step. After gathering valuable insights about potential solutions, the focus shifts to reshuffling and sorting through this information to gain clarity and definition. This valuable data is organized into a creative brief that combines strategic direction and creative inspiration.
Hopeful Steps, the nonprofit we discussed earlier, carefully analyzes the insights gathered during their empathize phase. They discover that a recurring theme among their current volunteers is a desire for more structured and flexible volunteer opportunities that fit into their busy schedules. The volunteers expressed that they would be more engaged if they had clear guidelines on how to contribute effectively and saw the tangible impact they make in the children's lives.
In this next phase, the focus shifts towards generating creative solutions collaboratively. Armed with a comprehensive understanding of the volunteers' needs and the problems at hand, the organization can foster an environment conducive to divergent and innovative thinking. This phase encourages the exploration of diverse options, ensuring that all potential ideas are embraced and thoroughly assessed. The creative brief serves as a guiding lighthouse, keeping the team aligned and heading toward strategically viable solutions aligned with the organization's objectives.
During collaborative brainstorming sessions, the Hopeful Steps team explores various ideas to enhance volunteer engagement and educational support for the children. Everyone is encouraged to propose even the most unconventional and provocative ideas.
One that emerges is to establish a "Buddy System" where each child is paired with a dedicated volunteer mentor. The mentorship program would provide one-on-one support to the children, addressing their specific educational needs and personal development goals. This approach aligns with the volunteers' desire for meaningful engagement and the children's need for personalized assistance.
Other ideas begin to surface, such as creating a digital platform that connects volunteers with different skill sets to children who require specific academic or extracurricular support. This solution provides more flexibility for volunteers while ensuring that children receive assistance in areas they need most.
The "Prototype" phase holds immense significance as it emphasizes the value of experimentation and transforming ideas into tangible models. Through iteration and prototyping, valuable insights emerge, shedding light on any potential gaps, barriers, constraints, or flaws in the design. This process is highly beneficial as it allows for continuous improvement and refinement of ideas.
For the "Buddy System" mentorship program, Hopeful Steps decides to pilot the initiative with a small group of volunteers and children. They match each child with a dedicated volunteer mentor and set up a structured framework for their interactions. Through this prototype, they can observe how well the mentorship program works in practice and gather feedback from both volunteers and children.
Simultaneously, they start building the digital platform for connecting volunteers with specific skills to children in need of academic or extracurricular support. They create a user-friendly interface and test its functionality with a select group of volunteers and children to ensure its effectiveness and ease of use.
Even if redesigns or rejections occur, they are viewed as essential components of the collaborative process, fostering teamwork and driving the ultimate goal of creating something meaningful and useful for volunteers and the organization alike.
Testing a viable solution holds immense importance, as it is crucial in validating and refining the solutions developed through the design thinking process. Engaging volunteers with a vested interest in the addressed problem is essential to ensure success. By asking open-ended questions that elicit constructive responses, such as "What problem could this solve for you?" or "How could this solution impact your experience?" nonprofits can gain valuable insights and feedback from the volunteers themselves.
The mentorship program set up by Hopeful Steps might expand to include a larger group of volunteers and children. Interactions and progress are closely monitored, seeking feedback from both volunteers and children to understand their experiences. This feedback helps assess the program's strengths and identify areas for improvement.
Simultaneously, they decide to launch a digital platform for connecting volunteers with specific skills to children in need. Volunteers and children are encouraged to provide feedback on the platform's usability and whether it adequately meets their needs. The organization pays close attention to the data and usage patterns to gauge the platform's effectiveness in matching volunteers with the right support opportunities.
This continuous optimization process is where design thinking shines, as nonprofits can use their findings and learnings from testing to refine and enhance their volunteer engagement strategies until they effectively solve the problem. By embracing this dynamic and flexible approach, nonprofits can ensure that their volunteer management efforts remain relevant, impactful, and responsive to the needs and aspirations of their volunteers.
Design thinking, as an intuitive problem-solving approach, becomes even more powerful when coupled with an ERP system like Sparkrock 365.
Our cloud-based ERP solution offers a wealth of data insights that enrich the design thinking process, enabling nonprofits to make informed decisions and create impactful solutions. By integrating Sparkrock 365 with other data analytics tools, organizations can gain valuable information about their volunteers' needs, preferences, and engagement patterns.
This data-driven approach allows nonprofits to make informed decisions, identify areas for improvement, and optimize their volunteer engagement strategies accordingly. The combination of design thinking's human-centric approach and data-driven decision-making empowers nonprofits to create more impactful and personalized experiences for their volunteers, leading to a stronger and more engaged volunteer community.
If you want to learn about our cloud-based ERP solution for nonprofits, we invite you to view our online demo here.
We've reflected on the key elements your organization should focus on as we've moved into a post-pandemic world, but there are individual components that will further gauge the overall health of your nonprofit organization and set you up for success. One such element is conducting a regulatory audit. Audits are part of good governance and a best practice for nonprofit organizations. Not only do they assure your organization's compliance, but they also provide transparency and accountability to all stakeholders.
Although they can be time-consuming and costly, audits help ensure compliance with laws and regulations, reduce the risk of fraud or other financial irregularities, and improve your organization's functionality. An audit will help strengthen the organization's financial reporting, assuring donors, funders, and the general public that your organization is fiscally responsible, and will help prepare and inform you for any future opportunities or bottlenecks.
Before we dive in, it's important to clarify that in addition to the varying components of this process, the two overarching types of audits conducted by organizations are external and internal.
External audits are conducted by an independent third party, a governing body such as the Canadian Revenue Agency (CRA), and other stakeholders, for example, as part of a grant agreement or as a loan condition. This type of audit is often used to verify the accuracy of financial statements and other documents and is typically used by stakeholders, such as investors, creditors, and lenders annually.
Alternatively, an organization can conduct an internal audit. Internal audit reports are used by management and can be conducted on a more regular basis, (i.e., more than once a year, or after a major change such as a pandemic) to ensure that their records, processes, and financial statements are closely examined and iterated in planned intervals. In this article, we'll focus on the latter.
An internal audit aims to evaluate internal control, a process effected by a nonprofit's board of directors, management, and other personnel, designed to provide reasonable assurance. Internal auditors are responsible for the audit and are appointed by the organization, usually in the form of a committee, and their findings are integrated by management.
Here are main components of an internal audit:
The internal audit will determine if these five components of management control are present and operating effectively, and if not, the goal is to provide recommendations for improvement. Now that you know the why of internal audits, let's get to the how.
An audit typically requires access to various components of your organization to assist the board in maintaining the organization's financial credibility and integrity, all while maintaining compliance with laws and regulations. As such, it's important that your committee includes members of the board of directors and involves a sub-committee comprised of voting members independent of your organization's management and employees. Roles within the committee can be delegated within the authority of the committee.
It's important to note that when your organization is creating this committee, the auditors will not have direct operational responsibility or authority over any of the activities that are audited. While they assist in determining ideas for improvement, they aren't responsible for implementing internal controls or completing the development of procedures. They are, however, responsible for reviewing the timeline, confirming expectations for the upcoming work, finalizing pertinent dates, and reviewing the materials needed.
Once the audit committee has outlined its goal and raised any existing concerns or issues about a specific financial area they want to ensure is included in the work plan, they will need to put together the documents and information required to complete the audit. This process should include:
This preparation allows the committee to delegate responsibilities to your team, so they can answer the questions and gather the necessary documentation before the audit.
Communication is key for any organization, especially in high-pressure situations like an audit, which can often have a negative connotation. Before the audit, you should brief your employees to ensure they are ready to answer any questions that fall within the scope of their roles and the deliverables within them.
The audit will include interviews with various departments, so communication between management and the audit committee is typical throughout the process. Management should have regular check-ins with the audit committee and communicate any changes in timing or expectations. In return, the audit committee will regularly update management on outstanding items or milestones.
Once the audit has concluded, there is usually a post-audit meeting with the committee to conduct an initial review of the results. At this meeting, several critical topics of discussion will encompass the findings of the audit. An outline of these, as well as accounting principles selected, audit adjustments, management disagreements, and any difficulties encountered while performing the audit, will be organized into a document for a potential action plan.
The audit results should also be communicated to the board members and other important stakeholders, including the general public. A positive nonprofit audit result is something to strive for, as it's indicative that the organization is reputable, trustworthy, and financially stable. While the audit itself is done, thorough preparation for the board meeting requires having a complete understanding of the organization's financials and journal entries to be able to answer potential questions.
The final step is to prepare an action plan for implementation. After reviewing the results with the board and management, the final step is to prepare an action plan, discussing improvements and proposed solutions for implementation.
Like everything else in organizational financial governance, thorough preparation and communication are the cornerstones of a successful internal audit.
Conducting a robust internal audit is an essential aspect of good governance and financial management for nonprofit organizations. With the help of Sparkrock 365's modern cloud-based ERP solution, the audit process can be further streamlined. By leveraging our platform's comprehensive financial reporting and management tools, nonprofits can enhance their internal controls and ensure compliance with laws and regulations.
Sparkrock 365 enables the efficient compilation of financial statements, bank reconciliations, payroll data, and grant details, further simplifying the audit preparation process. Moreover, its centralized database and communication features facilitate seamless collaboration between management, the audit committee, and employees during the audit.
As the audit concludes, Sparkrock 365 equips organizations with valuable insights to develop actionable improvement plans, fostering transparency and accountability to all stakeholders. With thorough preparation and the aid of Sparkrock 365's ERP solution, nonprofit organizations can achieve successful and effective internal audits, paving the way for a reputable, trustworthy, and financially stable future. Check out the rest of our nonprofit resources here, and be sure to contact us before your next audit - we'd love to help!
When it comes to the objectives that define your organization's ethos, the primary aim of most nonprofits today revolves around their mission to deliver reliable and high-quality programming and services. Financial sustainability is inextricably linked to that mission, so it should be easy to recognize that an organization with a sound financial plan is more likely to achieve that goal. What isn't so obvious, however, is the steps needed to achieve that success, especially given the changes the world experienced in the last three years.
A financial plan aimed at growing revenue for your organization while maintaining continuity, and forecasting for the future, is crucial. If your nonprofit organization needs a gut check on its financial health or steps on how to assess your organization's economic sustainability, here's a list that will help you get realigned.
The unprecedented repercussions of COVID-19 caused nonprofits everywhere to rethink their plans, and strategy shifts reflect our post-pandemic world. Although this new way of thinking presents challenges, nonprofits skilled at strategic financial planning are better equipped to handle surprises - good or bad. While we can't predict the future, the act of planning - based on historical data, results analysis, and financial health assessment - serves as a healthy foundation upon which an organization can base its programming. Strategic financial planning should be at the root of your organization's mission and a guiding light for measuring growth. Without it, it's impossible to measure when or whether you have met this goal.
Questions you may ask would be:
Growing your nonprofit organization's revenue is contingent on the specific factors that support your overall mission, including assessing your organization's financial health. Creating a sustainable financial ecosystem should be central to your organization's decision-making process.
A financial health assessment will inform what growth looks like by:
The hierarchy will inevitably differ depending on the structure of your organization specifically and overarching goals.
Nonprofits gain the majority of their revenue from charitable contributions or tax appropriations and measure the efficiency and effectiveness of their operations by the success of achieving their social mission. However, they can face challenges when it comes to operating in a fiscally responsible manner.
With this in mind, the goal of financial sustainability for nonprofits is to maintain or expand services within the organization while developing resilience to occasional economic shocks in the short term (for example, short-term loss of program funds or monthly variability in donations). Good questions to ask when conceptualizing this are:
How you divide your funding sources and channels has an enormous impact on your nonprofit's future and sustainability. Not only can revenue diversification help you mitigate risk, but an intentional plan for it can allow you to engage new donors or investors and deepen your current donor/investor relationships.
For a nonprofit with diversified revenue streams, the economic downturn, COVID-19 shutdowns, and in-person event cancellations have been challenging but have also presented an opportunity for them to reassess how they generate donations and the importance of each source.
Tip: Consider ROI as you evaluate which sources are less effective for your nonprofit. Not every revenue stream is created equal, especially when you consider your staff's time and administrative overhead. Major gifts and capital campaigns are inexpensive from a cost-per-dollar-raised perspective, and special events can get very costly.
If there's one thing we've learned over the last three years, it's that catastrophes can happen; and if they happened once, they could happen again. With this knowledge, we are empowered to make smarter choices with the possibilities that the future can bring. Some organizations establish an operating reserve by keeping cash on hand in addition to their regular bank balances in case the steady cash flow is disrupted.
Since nonprofits depend on multiple sources of income to support their operations, it's essential to plan for financial stability by setting aside additional funds. Reserves can allow an organization to weather serious bumps in the road, such as a sudden decrease in revenue or an unexpected expense and buy them time to implement new strategies.
Since operating reserves are most valuable if they are reliable, an important factor in using these funds is having a realistic replenishment plan. In addition to monitoring regular bank balances, nonprofits should include a line item in their budget for adding to reserves. As circumstances change, such as when income or expenses become less predictable due to internal or external factors, nonprofits should adjust their reserve goals accordingly to ensure they have sufficient cushion.
When it comes to achieving financial sustainability for your organization, thoughtful planning and creating a model for survival and growth are key. By establishing a proactive plan and leveraging practical tools, your organization can reach its goals. Sparkrock can help you achieve this by providing software that enables your organization to thrive. Learn more about how we can support your nonprofit in achieving its financial sustainability goals. Download our guide to Sparkrock 365 for nonprofits.