In 2022, it seemed like the nonprofit industry had finally managed to bounce back after the pandemic. However, according to the 2023 Nonprofit Technology Trends Report, finance leaders are now expressing concern about the economic uncertainty that lies ahead.
To find out more about the current state of the nonprofit industry, its biggest challenges, and trending technology strategies, we surveyed over 600 nonprofit finance executives in the U.S. during the fall of 2022.
1. Impressive revenue gains
First, the good news. In 2022, half the nonprofits surveyed enjoyed an increase in revenue compared to 2021. The revenue gains were impressive, with 37% of organizations seeing an increase of more than 25%. When it came to funding sources, government funding showed the biggest increase, followed by foundation grants.
2. Economic uncertainty is a key concern
Now, for the not-so-great news. When asked about the external challenges organizations are likely to face in 2023, economic uncertainty was the number one concern.
3. The role of the nonprofit finance leader
In the world of nonprofits, being able to communicate the impact of your mission to your constituents is the key to unlocking long-term success and growth. In our survey, we asked nonprofit finance leaders about their role in conveying that story.
By tapping into your organization’s data, your story of mission accomplishment can be made more compelling than ever before. And no team is better equipped to do that than your finance team, who have the skills and metrics you need to back that story up.
In our latest findings, around half of the respondents indicated that their finance teams place great importance on documenting transparency and accountability, while also tracking program results. This is a crucial element in communicating to stakeholders that the nonprofit is handling its finances responsibly.
Beyond that, about a third of respondents stated that their finance teams track and measure mission impact metrics. These metrics take storytelling to the next level by bringing together financial and statistical data.
Nonprofit leaders often dedicate a great deal of time and effort to operational details and routine reporting and tasks. However, to become more effective and position their organization for success and growth, nonprofit leaders must make strategy a top priority.
With that in mind, when we asked nonprofit finance leaders how much time they spent on tactical vs strategic accounting tasks, we found that 66% of respondents say they’re spending more than half their time on tactical accounting work, which doesn’t leave enough dedicated time for strategic and high value work.
As we move further into 2023, finance leaders in the nonprofit sector are bracing for potential economic uncertainty, which could have a knock-on effect when it comes to operational and program spending.
With most programs and participation seeing an increase in 2022, cutting costs will mean more difficult—but necessary—decisions for long-term success. This is where automation comes in: leveraging this kind of technology more effectively can help nonprofit executives carve out more time for analysis and forecasting, and execute more data-driven strategic planning.