Every donor today wants to be told that 100 percent of their donation is being used directly for their desired cause – that more children are being fed, or that more diseases are being cured. Rarely are constituents interested in hearing that their dollars have been put toward an organisation’s infrastructure. In fact, constituents are less likely to give when this is the case, and are increasingly expecting not for profits to operate with almost zero overhead.
Yet in reality, an organisation’s back office infrastructure is mission critical. Without well-funded initiatives, fairly compensated employees and reliable technology to handle core operations, the reach of an organisation decreases considerably. In order to appease donors who are expecting their dollars to be spent on the cause, not for profit leadership is often forced to go without this essential framework, or report artificially low overhead figures.
Herein lies the challenge that every not for profit leader knows all too well: the starvation cycle – a vicious cycle where donors are told that 100 percent of their contributions go to serve the mission, creating additional pressures and forcing not for profits to operate with old infrastructure to fill unrealistic expectations. Given the impracticality of the scenario, there is misleading reporting in return.
Avoid the starvation cycle
The starvation cycle is particularly applicable when it comes to an organisation’s back-office software. Today, many not for profits are constrained by software solutions that were built for a different time – where computing capability was meant to be limited, and the accounting system of record was all that mattered. The relatively low cost of maintaining those systems conforms to the pressures of low overhead, but masks the cost of inefficiencies in routine tasks. Examples include the monthly close or, more importantly, the dissemination of reliable information upon which decisions can be confidently made in a fast paced environment.
In order to turn this vicious cycle into a virtuous cycle, not for profits will undoubtedly have to change how they operate. To make the transition smoother, NetSuite helps not for profit leadership access the technology, strategic vision and partnerships they need to be successful.
Find out more and download NetSuite’s eBook ‘How your non profits back office can change the world’.