by Vivian Gant
During the height of the COVID-19 pandemic, the future was still very uncertain. Many nonprofits found themselves applying for government assistance, such as Paycheck Protection Program (PPP) loans, as they braced for continued negative financial impacts. Although the road ahead is still not completely clear, organizations are now looking to the future and considering how to ensure they are set up for success in both the near and long term.
For some organizations, this includes facing a very different challenge: considering how to use a surplus of funds, many of which came from an increase in contributions amid the pandemic as donors looked to support nonprofits’ missions. This leads to a completely different set of questions about how to maximize this advantageous position. The post-pandemic landscape is an opportune time for nonprofits to use these extra funds to reinvest not only in their organization but also their people and, ultimately, their mission.
Although there are a number of ways for nonprofit organizations to approach reinvesting for growth, consider focusing on the following:
With cyberattacks on the rise, it has never been more critical for nonprofits to ensure they – and their information – are protected. Nonprofits have access to sensitive donor data, which can make them a target. Organizations should consult with experts to study their current security environment, locate vulnerabilities and make recommendations for improvements. These organizations can then upgrade their current security in order to reduce the chances of an attack, which can lead to diminished trust with donors and stakeholders.
Strengthen Tech Capabilities
As the pandemic taught us, technology helps us stay connected. Nonprofits can use this time to reassess the tools they have in place, those they added amid the pandemic and those they need for future success. Investing in tools that will allow the organization to operate in a hybrid work model, communicate with donors when they can’t be face to face and streamline internal operations will foster better communication and strengthen relationships. The connected workplace that became commonplace amid COVID-19 is not likely to go away anytime soon – in fact, nonprofit leaders should only expect to see an increase in digital tools moving forward. Investing soon and doing so strategically will ensure nonprofits are not left behind in a technology-first future.
Improve Internal Infrastructure
Enterprise resource planning (ERP) systems have come a long way. Nonprofits can reinvest in the organization by updating their current ERP systems, which can be used to manage day-to-day activities and streamline their internal processes. Upgrading to the latest ERP technology can assist not only with fundraising activities, but also with event management, online payment processing for donors, marketing efforts and more. ERP systems can typically also automate back-office functions, which can help to eliminate redundancies in the organization’s overall operations, helping it to stay focused on its mission.
Establish a Board-Designated Endowment
Another way nonprofits can utilize excess funds is to set up a board-designated endowment. This allows nonprofit boards to set aside funds specifically for board initiatives.
These funds can be invested with a trusted financial institution. To do so, the board should create an investment policy that outlines how the funds are to be invested and establishes what these funds are to be used for – which should align with the organization’s mission.
Invest In Human Capital
The pandemic was a trying time for employees. Compensation increases were likely limited during 2020 as nonprofits attempted to cut costs and save for the unknown, and a lack of in-person interaction left little room for team bonding or training opportunities. Investing in programs or events that promote team bonding or providing opportunities for ongoing education can help make employees feel valued and build trust and goodwill between leadership and staff.
In these unique times, nonprofits should be creative in ways that will help not only their mission but also their workforce. Financial decisions made by nonprofits during this time will likely have lasting effects for years to come, so thinking ahead about how to reinvest in your organization is key.
Feel free to reach out to us for more tips and best practices for not-for-profit and other organizations.
This article originally appeared in BDO USA, LLP’s “Nonprofit Standard” Blog (July 8, 2021) . Copyright © 2021 BDO USA, LLP. All rights reserved. www.bdo.com.