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The Development Conundrum

Development Conundrum
I recently heard from a nonprofit leader who wished to hire a Development professional but was held back by a struggling financial status. However, the leader didn’t have enough time to devote to development activities personally.
It is worth exploring your organization’s financial status…exploring whether you can free up the capital to bring in a development manager or director.
From the perspective of the accounting department, common reasons why nonprofit organizations suffer financially include:
GRANTS/EXPENSES
  • overspending of grants >>> arises from no one giving you real-time financial clarity to manage grant spending
  • grant expenditures being denied by the grantor >>> arises from you not receiving receipts and other expense documentation in real time
  • portions of salaries being denied by the grantor >>> arises from no one knowing how to (or having the time to) allocate salaries and document the rationale for that
  • salaries unreimbursed by the grantor >>> arises from no one knowing how to efficiently create a clear, formal method for allocating salaries to grants
GRANTS/INCOME
  • grant money coming in too many days after grant funds were spent >>> arises from no one with the time to place follow-up calls to grantors
  • invoices to grantors sent out too many days after the grant funds were spent >>> arises from not having the information that you need in real-time, such as expenses incurred during the month
DAILY SPENDING
  • unauthorized spending >>> arises from lack of policies and/or not keeping the conversation of fiscal responsibility alive and vibrant with employees with organizational credit/debit cards, and/or lack of real-time monitoring of spending
  • overspending >>> arises from lack of real-time clarity regarding how much is available
PLEDGES
  • not materializing >>> arises from no technology being used to automate payments, pledges receivable not being tracked anywhere, and/or no one tasked with following up on pledges receivable
RISK
  • don’t feel like you’re getting an ROI from each team member >>> arises from misaligning salary structure and salary level with job duties/job performance/job level
  • theft >>> arises from weak internal controls, which are policies and procedures designed
TIME
  • Good people are not fulfilling their roles >>> arises from higher-paid employees spending time on tasks that could be delegated to a team member who costs less…or delegated to technology…or avoided altogether if steps hadn’t been skipped or done incorrectly in a process
  • Overpaying hourly employees >>> arises from weak internal controls over documentation of the number of hours actually worked
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