Manual, time-consuming reporting necessitated by inefficiencies and lack of process automation topped the frustrations of 600 nonprofit finance leaders responding to a recent survey on technology trends.
It’s a concern because too many of these leaders are bogged down in mundane tasks and minutiae that limit time available for strategic work and planning that their organizations require for long-term success, wrote the authors of the “2023 Nonprofit Technology Trends Report” by enterprise software company Sage.
The finding was underscored by the 71% of respondents who said they would like to spend half or more time working on strategy and planning versus the just 34% of that group of 71% who actually do. Researchers also found that 42% of respondents spend 80% or more time on tactical and routine tasks.
“For nonprofit organizations to thrive, especially in times of economic uncertainty, nonprofit executives and finance leaders must allocate more dedicated time to strategic planning,” the authors wrote.
It’s partly for this reason that 72% of respondents cited the ability to do automated financial reporting as their top priority, which was up from the 63% who gave the same answer when the survey was last done a year ago. “It’s a theme we’ve seen every year in our conversations with nonprofit leaders, that their biggest frustration is around reporting,” Natalie Anderson, senior nonprofit industry marketing manager at Sage, told The NonProfit Times.
It’s a finding that has remained remarkably consistent since the survey’s inception four years ago even though the specific pool of respondents has varied from year to year, said Anderson, who has been overseeing the survey the entire time.
The amount of labor expended on routine reporting isn’t limited to financial and accounting reports. “It’s also statistical information related to their programs and the people who are benefiting from those programs, whether it’s reporting back to grantors, constituents, the board or community,” said Joan Benson, senior director of nonprofit industry marketing at Sage.
Much of this reporting is tied to government grants, which the researchers found consistent with the 33% of nonprofit finance leaders who said their biggest increase in funding during the past year was from government sources. That’s nearly double the percentage who gave the same answer in the survey’s first installment just prior to the pandemic but still less than the nearly 40% who gave the same answer last year, which Anderson attributed to the incipient sunsetting of pandemic-era programs enacted in 2020 and 2021. “We are starting to see that trend going down, and I expect that to continue into next year,” she said.
Nonprofit finance leaders can help attract new donors to offset the reduction in government funding by highlighting metrics that demonstrate mission achievement and good stewardship of finances. “Using financial data can make the story of mission achievement powerful, and often finance has the data and impact metrics to reinforce that story,” write the authors. “Nonprofits that tie together financial and statistical metrics can demonstrate greater transparency and solidify trust with constituents.”
Nonprofit finance leaders – executive directors, chief financial officers, controllers, and the like – thus need to be freed up to put their talents where they can be most effective. “Strategy starts at the top,” write the authors. “If nonprofit organizations want to commit to more strategic thinking, they need to free their executive leadership team from tactical work to focus more on strategy.”
The full 20-page report can be found here.
