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Nonprofits and COVID-19: Survival Techniques for Accounting and Finance Functions

21 Aug 2020 6:57 AM | Anonymous

COVID-19 is vastly changing the way nonprofits do business, and it’s important for the accounting and finance departments in every nonprofit to adapt their processes to reflect this new reality.

Many nonprofits have switched to remote work. Given this, nonprofits should update their internal policy manuals to reflect the changes brought about by working remotely. For example, have there been changes to authority levels, the way duties are segregated among staff, or how the approval process works? If so, the organization’s policies should be updated to document the new process and the new internal control structure. And, as with any policy revision, the nonprofit should make sure to circulate these updated policies so that staff is aware of the changes. Communication is key in a remote work environment. 

Consider making improvements to the key systems used by the nonprofit. Automating functions as much as possible will prove helpful in a remote environment.  Consider switching to complete online banking and eliminating mail delivery. Ask funders to send checks to lockbox addresses or switch to ACH payments. For those donors that continue to mail checks, consider purchasing an electronic check deposit machine or using mobile deposit, if possible. 

Nonprofits should also keep a close eye on cash flow and monitor unrestricted funding. If cash flow becomes problematic, consider sending out special asks to donors or renegotiating payment terms with key vendors.  Organizations in more dire situations may wish to seek loans or lines of credit with the bank.

Lastly, nonprofits should take another look at their annual budget and actuals to-date. If it’s clear that revenues will be less than originally budgeted, run a few scenarios to see how the organization can function with only 75% or 50% of the originally budgeted revenue amount. What cuts will need to be made to meet these lower revenue thresholds?  

COVID-19 is upending the way nonprofits do business, and accounting and finance departments -- as key business functions -- are no exception. Updating policies and procedures will help ensure clean audits and system upgrades will help the nonprofit survive not only the current pandemic but will better position the nonprofit for the future era of more automation and workforce flexibility. 

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