Canadian nonprofits are under “immense pressure to reduce programming, diversify funding sources, or, in the worst cases, close their doors." Faced with shrinking budgets and increasing operational costs, CFOs of nonprofits need tactics and tools to weather the storm.
This guide explores five strategies to help CFOs sustain their nonprofits using data-ready Enterprise Resource Planning (ERP) solutions.
CFOs can't have hindsight that's 20/20; they need proactive intuition that anticipates future challenges and opportunities. They adapt strategies in real-time to guide their organization through financial instability. They're visionaries who foresee risk and do what they can to mitigate it.
By staying current on trends and the economy, CFOs have the advantage of making more accurate, forward-looking decisions that align with their nonprofit's goals, but that can only take them so far. Internal, accurate data supplies CFOs with real-time analytics needed to make informed financial decisions, optimize resource allocation, and strategically drive the company's growth and profitability. Sparkrock 365's ERP offers comprehensive forecasting tools, like cash flow forecasting, that allow CFOs to analyze historical data, predict future trends, and plan accordingly.
Previously burdened by an outdated and labor-intensive ERP system, the Canadian Museum of History faced significant challenges in generating timely and accurate reports. The old system was not user-friendly and required extensive manual labor to transfer data into usable formats for analysis.
With the implementation of Sparkrock, CMH experienced a seismic shift in its forecasting capabilities:
The time it takes to generate quarterly reports has drastically reduced from days to minutes which gives CFOs the speed and accuracy of data available for forecasting.
With more accessible and timely data, the museum's management can now make informed decisions quickly based on the most current financial insights.
The integration of Sparkrock provided end-to-end visibility from procurement to payment. This visibility supported precise budget management and forecasting accuracy.
CFOs must grasp the nuances of their organization's financial structure, particularly in managing diverse revenue streams that may be unrestricted or restricted based on donor stipulations.
Right to Play faced significant challenges in managing donor data and harmonizing funds across their global operations. They implemented Sparkrock 365's ERP due to its customized reporting capabilities. The ERP system aligned donor intentions with organizational needs for transparent and optimized fund allocation. This integration demonstrates the tangible impact of donations and supports strategic decision-making in fund management.
Sparkrock 365's ERP supports CFOs with detailed financial reports and dashboards. These tools help streamline the analysis of unrestricted vs. restricted funds which ultimately improve financial oversight and strategic planning. For nonprofits like Right to Play, proper management of unrestricted and restricted revenue enables the nonprofit to sustain their operations and expand their impact.
While securing funding is necessary for nonprofit survival, CFOs should guard against the allure of conforming to every funding opportunity. Not all funds are created equal, and the most accessible or lucrative offer might not align with the organization's mission. An adept CFO understands the value for money but also recognizes that the bidding process can sometimes favor those who excel at making appealing proposals over those best suited for project execution.
Enhancing Vendor and Funding Management with ERP Features:
To manage different funding sources and maintain strategic alignment, CFOs can use advanced ERP functionalities for the following:
With Sparkrock 365, CFOs can set up and manage comprehensive vendor records in one place. This includes multiple addresses, bank accounts, preferred items, and payment terms. Centralizing all this information streamlines procurement processes and aligns financial commitments with the nonprofit's goals and compliance requirements.
Easily track and manage multiple contacts for each vendor, complete with notes and comments. This feature enhances communication and collaboration, which is important for maintaining strong relationships with donors and funding partners who are aligned with the nonprofit's mission.
Automated workflows and real-time visibility into vendor activities allows CFOs to maintain tight control over financial operations. Every dollar spent or received advances the organization's objectives and supports sustainable growth.
There's a persistent myth in nonprofits that lower overhead costs are always better. However, this sentiment stifles genuine progress. The default expectation that expenses will exceed revenue, and it's the organization's responsibility to bridge this gap, often leads nonprofits to neglect essential infrastructure—overhead costs like administrative salaries, office space, and utilities—which are necessary for sustained operations. After all, can a doctor do their work without an office, electricity, insurance, receptionist, or accounting staff? The same can be said for the nonprofit space–overhead is operational.
Investing in overhead should be viewed not as a necessary evil but as an investment in the organization's capacity to deliver on its social purpose. CFOs should advocate for this understanding among their donors and stakeholders, helping them recognize that a well-funded infrastructure supports long-term success and impact. Accenture's latest findings show that "organizations with an advanced digital core, investments in strategic innovation, and a balanced approach to their technical debt achieved 60% higher revenue growth rate and 40% higher profits."
Action Group's experience echoes the necessity of re-evaluating operational strategies. Before Sparkrock 365, they struggled with disconnected systems between finance and human resources. Payroll processing and employee scheduling were as disjointed as they were time-consuming. By integrating their processes into Sparkrock 365, Action Group
An ERP system simplifies financial management so CFOs can accurately track and justify overhead costs. With sophisticated analytics and reporting capabilities, ERP systems provide a clear picture of how these investments contribute to the organization's efficiency.
Effective internal controls are not just a regulatory necessity—they maintain a nonprofit's accountability. Internal controls support financial checks and balances to uphold procedures and protect assets.
The Sacramento Area Council of Governments (SACOG) previously struggled with disjointed systems. It hindered their ability to oversee financial operations. The adoption of Sparkrock 365 marked a turning point. The ERP system enabled SACOG to:
Features such as electronic approval workflows and contract attachments in Sparkrock 365 have notably improved transparency and accountability to manage public funds. The ERP system also supports and monitors internal controls by providing automated checks, like spending limits and vendor verification, to prevent fraud and errors. Its comprehensive reporting features also allow for ongoing oversight and detailed internal audits of all financial activities.
There is no shortage of challenges for CFOs of nonprofits. That's why leveraging a digital, centralized hub like Sparkrock gives CFOs the advantage during mounting financial pressures. Sparkrock 365 supports CFOs with the tools they need.
| ERP Features | How It Supports CFOs |
| General Ledger & Dimensions | Manage data with a dimensional structure for entries, inquiries, and reporting to align with funding-based account structures. |
| Financial Reporting | Gain rich insights with easy-to-use interfaces and flexible report structures for financial statements and government compliance. |
| Fund Accounting | Maintain balanced financial statements by fund, for accurate inter-fund entries and compliance with fund accounting requirements. |
| Commitments & Encumbrances | Integrated with purchase orders and budget checks, automatically adjusting encumbrances to streamline financial commitments. |
| Requisition Management | Enhance control over procurement with real-time budget checks, authorized vendor interactions, and streamlined requisition approvals. |
| Vendor Management | Manage vendor relations comprehensively, from price negotiation to contract management, enhancing operational control. |
| Cash Management | Manage bank accounts and transactions efficiently, with features like EFT, cash flow forecasting, and bank reconciliations. |
| Cash Flow Forecasting | Predict liquidity with greater accuracy, integrating expected receipts and disbursements to optimize financial planning. |
As your organization looks towards sustaining and expanding its impact, consider how an integrated ERP system can benefit your financial management practices. Surviving current challenges isn’t viable. Pave the way for future success. Schedule a demo to see how Sparkrock 365 can be tailored to meet your nonprofit's unique needs.