One repercussion of the expansive public response to the ongoing bushfire crisis in Australia is that media scrutiny of charity organisations and their spending of donated money has intensified.
Massive generosity from everyday people, in Australia and abroad, has funded a much-welcomed support system for local residents and the animals that barely survived the fires. However, an increased public interest in charity expenditure, operations and outcomes is, quite naturally, attached to the heightened levels of empathy and awareness.
At Hopscotch Accounting we understand that the allocation of charity funds donated in response to a crisis has become a complex undertaking for NFPs. The issue should continue to pique debate in the public arena and instigate internal reviews. Hopefully, reactions to the recent widespread and unprecedented devastation will illuminate the gap between public expectations and the realities of crisis management – and serve to reduce it.
Right now, there are many positive actions that an NFP can take. These have the potential to improve an organisation’s operations and also encourage public confidence and future goodwill.
Tangible measures to increase efficiency and instil confidence in charity finances include:
Robust cloud accounting systems
Using digital accounting systems is a basic step to ensuring donated money is trackable – revealing where it is received, allocated and spent. Well-known software packages like Xero automate processes, are systematic and widely compatible. They also link with the Australian Taxation Office and other applications.
Cloud accounting systems provide current figures in real-time, enabling multiple approved personnel to access information from any location, at any time of the day or night, by phone or mobile device.
Transparency of fund spending
Along with good accounting systems, sound reporting processes ensure the transparency of an organisation’s activities and expenditure. They also assist NFPs with legal obligations and formal reporting requirements.
Detailed records of allocation decisions
Accounting systems and reporting processes also support critical decision-making for NFPs. Management of conflicting views on how funds are allocated is an unavoidable task. Professionally presented figures detail the true costs of allocation decisions. A chartered accountant in a CFO role can further assist an NFP by presenting detailed figures to the Board.
Evaluation of non-financial achievements
As NFP outcomes are not measured by profits, it is important to evaluate social – not just financial – impacts. Social impact measurement tools, such as The Social Impact Measurement Toolbox designed by UTS for Australia’s NFP sector, include items like questionnaires, scales, analysis tools, indexes, indicators and other measurements. The PERMA-Profiler, for example, measures the five pillars of Positive emotion, Engagement, Relationships, Meaning and Accomplishment, along with negative emotion and health.
An outsourced accounting team can further assist an NFP by providing background figures, crunching the latest numbers and formulating projections for a strategic plan. Understanding the NFP’s community, including metrics that show where people like to donate, their preferred technology and patterns of giving, is essential to gauging the financial prospects of an NFP.
At Hopscotch Accounting we specialise in outsourced accounting for Australian NFPs. Our role includes strengthening compliance, planning and operational efficiencies, which helps ensure donor funds are allocated, spent and tracked for the benefit of benefactors, volunteers and the wider community.