Easy Office Blog

Good article from Kate Barr and Jeanne Bell of CompassPoint on Financial Leadership.  In particular, we like the section where they say:

Invest in contract consultants. So how does an organization with limited resources adequately attend to all three finance functions? Increasingly, we are seeing executives pair contract consultants with staff in the finance function. ...... This way, the executive has a strategic financial partner without creating a fixed staffing cost that she can’t afford. Board members, including the treasurer, have a role that is distinct from the staff finance team. The executive needs an uncomplicated relationship to her finance team so that she can direct them in developing the analysis and reporting she needs as the organization’s financial leader.

Outsourcing can be a key way to develop capacity around your nonprofits finances.  It is a trend we see growing in increasing acceptance.

Watch this 45 webinar regarding nonprofit financial statements.  We cover how to read and interpret financial statements.  We show examples of reports.  We discuss the unique differences between for-profit and non-profit accounting terms.  It is a useful primer for any Executive Director or non-profit board member.

 

Here is a great blog by our friends at Blue Avocado.  It is a thoughtful look at what types of nonprofits should scale - the headline "Only Bad Restaurants Go To Scale" caught my eye:  http://blueavocado.org/content/only-bad-restaurants-go-scale

It ties in nicely with a blog from my past, Small is Beautiful, http://youreasyoffice.com/_blog/Easy_Office_Blog/post/Small_is_Beautiful/, that talks about "going to scale" via shared services and outsourcing.  Many of the challenges of size can be solved - not just through warm and fuzzy collaboration - but through established shared service and outsourcing relationships.

When we as a nonprofit sector focus on doing what we do best, all of our clients & causes are better off.

Recently we have been having more and more conversations with franchised or affiliated nonprofits.  These are the groups that have a national brand, but have unique 501c3's serving local geographies.  Groups like the YMCA, Boy Scouts of America, Make*A*Wish, Special Olympics, and many many more have this model. (Sharon Oster, Yale School of Management Professor, has written some great articles on this topic.)

Many of these organizations were founded decades ago, or in the case of some, 100+ years ago.  At the time, decentralization was about the only way to operate a national model.  The airplane was just being invented when the Boy Scouts were founded and organized.  Now there are many great studies, like Professor Oster's, that outline the pros and cons of centralization.

One thing in research is pretty consistent, centralized shared services make sense for most organizations.  The program impact and cultural impact is often minimal and the financial savings are significant.  That is money that can be saved and diverted into programs and mission critical activities.  Shared services, or outsourcing as a group to a vendor, is a quick way to achieve financial savings across an affiliated network (without all of the pain and emotion involved in mergers or other cost saving activities.) 

There are great consultants out there who exist to help people think through these issues.  There is no single silver bullet answer.  But the time has come for affiliated nonprofits to investigate this as a solution.

Fraud is all too common.  Typically as non-profits we take an overly trusting stance.  We like to believe the best about people and are generally a hopeful group.  In the arena of fraud, we need to become a bit more cynical.

The best way to avoid fraud is to ensure you have proper controls to prevent fraud.  Sometimes the best of people - when presented with an opportunity - will make bad decisions.  Proper controls give everyone peace of mind that they won't be tempted, and if they are, they are guaranteed to get caught.

The Chronicle of Philanthropy ran an article on September 15th about a case of persistent and consistent fraud.  The Dean of the St. John's Institute for Asian Studies in Queens is accused of systematically stealing over $1M.  Her actions were caught during a routine internal audit.  Internal audits and external audits are essential.  Typically if people know they will get caught, this creates enough of a deterrent to prevent fraud.  However in this case, the Dean thought she had found a loophole.  In fact, she may have got away with it for a long time.  Her actual downfall was an expense report that included personal charges.  As they began to investigate this small issue, the larger picture emerged.  Her greed ultimately was her downfall.  St. John's is now reviewing their internal control structure in hopes to avoid this in the future.

Trust is an important quality, but when it comes to money and financial matters, checks and balances rule the day.