Common Issues We See NFPs Face

Nonprofit organisations face common issues that any company faces, for example adapting to new technology and staying up to date with accounting and regulatory requirements. However, nonprofits also face some additional challenges specific to their sector. Our team at Hopscotch Accounting are here to break down some common issues we see and how we can help. 

Compliant reporting 

The NFP sector is highly regulated, which is why getting your auditing and reporting right is critical.

When receiving government funding, NFP’s usually must report how they have spent the funds (acquittal), meaning the amount must be accounted for. NFP’s may have multiple lines of government funding and how you account for funds spent is critical to ensure it is allocated correctly.

Changing policies and processes

It’s important to be aware of changing policies and processes within this sector. Some NFP’s no longer receive funding from the government and it is given to clients directly for them to spend e.g. the NDIS scheme. This means the NFP’s must adapt. So, its accounting system now needs to cope with this new model and what comes with it such as invoicing and following up with clients for any overdue payments. 

The challenge of limited government funding for nonprofit organisations

Many nonprofit organisations depend on the assistance of the government. This assistance may be in the form of grants, block payments, or part of a matching scheme, or it may merely serve as a safety net to fill the gap when funds are short.

Grants for non-profit organisations in Australia are a viable way to get money for organisations programs and activities. These grants for non-profit organisations may help to cover between one-quarter to two-thirds of annual running costs incurred by the business. Oftentimes, this assistance is the only way the organisations are able to keep afloat and continue to give back to the community. With this being said, it is absolutely crucial for the funding to continue, but also for these non-profits to become aware of the immense opportunities which are available.

Membership recruitment and retention.

Recruiting and retaining members to your association can create challenges for any organization. Whether you are a small nonprofit or a huge organisation with thousands of members, you likely feel the need to ensure that your membership numbers improve from year to year. 

Technology shortfalls 

Non-profit organisations must emphasize mission-driven initiatives such as fundraising, program development, volunteers, and staffing. Budgetary constraints often cause technology to be given a lower priority, which can create difficulties, especially in light of today’s growing cybersecurity threats. The effective use of technology can spark innovation, improvements in efficacy, and a better user experience, more than justifying the cost of adoption. 

Avoid mission creep

“Mission creep” is a change that pushes a nonprofit past its original goals and objectives. Mission creep can cause you to overextend the organisation. It can also cause processes to become ineffective and produce a change in brand perception. To prevent mission creep in your organisation, start by addressing your mission and ensure that it’s sustainable over time. Communicate often and effectively with both internal and external organisational stakeholders to keep everyone on the same page. Focusing your efforts on effective decision-making processes and adhering to your defined organisational plan is the best way to avoid mission creep in the future.

Our Focus on NFP work

At Hopscotch Accounting we offer accounting services designed especially for Australian Not-for-Profit (NFP) organisations. Our professionals are up-to-date with NFP requirements for good financial governance, transparent accounts, and timely financial reporting, including state regulations applying to registered charities and Incorporated Associations. We take the time to understand different NFP organisations of varied size, shape and purpose. We learn about their priorities so we can develop accounting systems that meet their organisational needs. 

To learn more about our NFP accounting services, please contact Hopscotch today at 1300 HOP 123.

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