Non-Profit 2013 Financial Outlook, Reporting & SystemsSurvey report | December 2012

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Non-Profit 2013 Financial Outlook, Reporting and Systems

Executive Summary

A survey of non-profit organizations and associations in the Washington, DC region was conducted in September of 2012, to determine an outlook for 2013, including:

• Financial and Business Outlook

• Financial Reporting Practices

• Financial Systems

The results provide non-profit executives with insights into the financial outlook, priorities, and challenges that face non-profits in 2013.

Key findings of the non-profit survey include a majority (71%) of those surveyed expecting growth in 2013 (vs. 2012), and only 5% contracting. The top three financial priorities for 2013 include rethinking revenue model and income generation strategies, improving program results and metrics, and expanding fundraising and development.

In terms of financial reporting practices, only 22% present financial and operational metrics to management and the Board through a dashboard. Key findings regarding financial systems include 50% of respondents use some cloud services and intend to use more in the future, and 62% are not considering upgrading or replacing any business systems.

There are a variety of financial challenges that non-profits will face in 2013. The top financial challenges for 2013 include the lack of revenue stream consistency, new non-dues revenue streams, expanding fundraising and revenue, maintaining programs with fewer resources, and diversifying revenue and identifying new sources.

The majority of survey respondents were from membership & trade associations (62%), and charitable non-profits (35%). All sizes of non-profits were represented: 35% with annual revenues of $1 - $4.99 million, 22% with revenues of both $5 – 9.99 million and $25 million or more, 15% with revenues of $10 – 24.99 million, and less than 7% with revenues less than $1 million. Almost half (49%) have 11-50 employees. And finally, the majority of participants were non-profit CFOs, Executive Directors, or CEOs.

Included in this survey report are detailed summaries and charts for each survey question, categorized by Financial Outlook, Financial Reporting, and Financial Systems. For reference, survey respondent demographics are provided at the end of the report. The survey was conducted by Veris Consulting and Brittenford Systems.

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Non-Profit 2013 Financial Outlook

QUESTION:

How would you describe your growth outlook for 2013?

The growth outlook is optimistic with 71% planning to grow in 2013. The majority of respondents (58%) indicated that they expect a 1-9% revenue growth in 2013, over 2012. 24% expect a 0% growth over 2012. 13% expect 10-20% revenue growth in 2013. Only 5% predict a year of contracting revenue, or negative growth over 2012.

1-9% growth over 2012

0% growth over 2012

10-20% growth over 2012

Negative growth over 2012

QUESTION:

Overall, what are your hiring plans for 2013?

The hiring outlook is stable with the majority maintaining FT staff and hiring 1-3 FT staff, and a very small portion planning to decrease FT staff. 59% of those surveyed indicated that they would maintain their full time staff and not make any additions. On the other hand, 27% intend to hire 1-2 full time staff, and 13% expect to hire 3 or more full time staff. Only 1% plan to decrease full time staff in 2013.

Plan to maintain FT staff

Plan to hire 1-2 FT staff

Plan to hire 3+ FT staff

Plan to decrease FT staff

58.23%

59.49%

26.58%

12.66%

1 .27%

24.05%

12.66%

5.06%

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QUESTION:

What are your top three financial priorities for 2013?

The top 3 financial priorities for 2013 include rethinking revenue models and income generation strategies (47%), improving program results and metrics (44%), and expanding fundraising and development (42%). Automating fiscal controls and systems (9%) and improving the accuracy of financial reporting (8%) are not a top priority for the majority of respondents.

Other priorities include launching a fundraising campaign, growing non-dues revenue, increasing investment in staff salaries and benefits, and purchasing and implementing new AMS.

Rethink revenue model & income generation strategies

Implement new financial management system

Implement operational efficiencies

Improve program results & metrics

Automate fiscal controls & systems

Manage reserves & investments

Expand fundraising & development

Improve accuracy of financial reporting

Improve business process automation

Reduce operational costs

Other

Access financing to grow operations

Improve cash flow

46.84%

44.3%

41.77%

35.44%

31.65%

17.72%

17.72%

12.66%

8.86%

8.86%

7.6%

6.33%

5.06%

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QUESTION:

What financial strategies has your non-profit utilized in 2012?

In 2012, the top three financial strategies for non-profits included diversifying revenue sources (51%), increasing the budget over 2011 (49%), and reducing overhead expenses (44%).

Other strategies utilized by non-profits in 2012 include cultivating current donors, increasing funding of reserve accounts, and a strategic move to use reserves for operations.

Diversify revenue sources

Share resources with complimentary organization

Adopt new cost-saving measures

Increase budget over 2011

Leverage capital financing

Layoff staff or reduce salaries

Increase capital investments

Reduce overhead expenses

Other

Increase use of volunteers

Continue or reinstitute staff hiring

Merge with complimentary organization

Outsource

50.63%

49.37%

44.3%

34.18%

31.65%

26.58%

22.79%

16.46%

11.39%

5.06%

5.06%

3.8%

1 .27%

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Non-Profit Financial Reporting

QUESTION:

What reports are typically included in management & board reports?

Financial statements (statement of activities, statement of financial position, etc.) are included in management and board reports 95% of the time. Actual vs. budget or prior year comparisons are included 94% of the time. On the other hand, dashboard, key operational metrics, and key financial metrics are included in management and board reports less frequently. Dashboards are included 27% of the time, key operational metrics 39%, and key financial metrics 43%.

Respondents also indicated other reports including: treasurer’s report, cash flow summary, membership information, investment portfolio, 3 year projections, and the best estimates of revenues, expenses, and cash flow for the year.

Financial Statements (Statement of Activites, Statement of Financial Position, etc.)

Dashboard

Actual vs. Budget or Prior Year Comparisons

Other

Key Financial Metrics (key financial metrics not included in Financial statements)

Key Operational Metrics

94.94%

93.67%

43.04%

39.24%

26.58%

6.33%

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QUESTION:

How are the management and board reports distributed?

Management and board reports are typically distributed through email and hardcopy packets. 77% of respondents indicated they used email while 56% use hardcopy packets. Direct access to management/financial systems are only used 5% of the time.

Other distribution methods included intranet sites, WorkZone, web posting, electronically, SharePoint Team Sites, secure webportal, Webex then email, board effect, and power points presented on monthly calls.

Email

Direct access to management/financial systems

Hardcopy packets

Other

Dashboard

77.22%

55.7%

12.66%

7.6%

5.06%

Monthly

Quarterly

Other

Upon request

55.7%

34.18%

7.6%

2.53%

QUESTION:

How frequently are the management and board reports distributed?

Management and board reports are most often distributed monthly (56%), with quarterly (34%) and upon request (3%) following behind.

Other frequencies indicated included 3 times/year, different schedules based on user needs, daily quarterly, and differences in frequencies depending on type (management or board).

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Non-Profit Financial SystemsQUESTION:

Which statement best describes your current approach to cloud computing?

Half of respondents use some cloud services and intend to use more in the future, while 29% do not use cloud services and do not plan to in the upcoming year, and 19% do not use cloud services but are exploring some options and plan to use it in the upcoming year. However, 2% do not know what cloud computing means.

We use some cloud services now and will use more in the future

We do not use cloud services, and do not plan to in the upcoming year

We do not use cloud services but are exploring some options and plan to use

We don’t know what cloud computing means

49.37%

29.11%

18.99%

2.53%

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QUESTION:

Within the next 12-18 months, are you considering upgrading or replacing the following business systems?

Currently, 62% of those surveyed are not considering upgrading or replacing any business systems. Of those planning to upgrade or replace their business systems, 18% are considering association or membership management, 16% accounting or financial management as well as document management, 10% business process management, and 9% grant management.

We have no plans to upgrade or replace any business systems

Association or Membership Management

Accounting or Financial Management

Business Process Management

Document Management

Grant Management

62.03%

17.72%

16.46%

15.19%

10.13%

8.86%

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Survey DemographicsQUESTION:

Which best describes your organization’s type?

63% of respondents indicated their organization is a 501(c)(3), 32% a 501(c)(6), and 5% a 501(c)(4).

501 (c)(3) 501 (c)(6) 501 (c)(4)

QUESTION:

Which best describes your organization’s annual revenue?

35% of those surveyed belong to organization’s that have annual revenues of $1-4.99 million, 22% have revenues of $5-9.99 million and also over $25 million. Only 6% have revenues less than $1 million.

$1-4.99 million $5-9.99 million Over $25 million

Less than $1 million

$10-24.99 million

63.29%

31.65%

5.06%

35.44%

21.52%

21.52%

15.19%

6.33%

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QUESTION:

Which best describes your organization’s number of FT employees?

25% belong to organizations with 21-50 employees, 24% 11-20 employees, 16% have over 100 employees, 14% 6-10 employees, 13% 51-100 employees, and 8% have 1-5 employees.

21-50 employees

11-20 employees

Over 100 employes 51-100 employees

6-10 employees 1-5 employees

25.32%

24.05%

16.46%

13.92%

12.66%

7.6%

QUESTION:

Which best describes your role within your organization?

The majority of respondents are non-profit CFOs/Financial VPs or non-profit Executive Directors, Presidents, or CEOs, with 42% and 39% respectively. 10% are considered non-profit COOs and 5% are non-profit Controllers.

Non-profit CFO or Financial VP

Non-profit Executive Director, President /CEO

Non-profit COO Other

Non-profit Controller

41.77%

39.24%

10.13%

5.06%

3.8%

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About BrittenfordBrittenford Systems is a technology services firm that implements and supports financial and CRM software systems including Microsoft Dynamics GP, Dynamics SL, Dynamics CRM, and the cloud-based Intacct financial management system. Brittenford Systems also offers CIO Advisory Services, Microsoft Dynamics training and staffing, cloud engineering services, and application development.For more information on Brittenford Systems, please visit www.brittenford.com, or call 703-860-6945.

About VerisVeris Consulting specializes in outsourced financial management and survey research for nonprofits and social enterprises. Our Outsourced Accounting and Financial Management Practice draws upon specialized expertise to improve bottom line results and enable nonprofits to grow revenue and control costs. We provide objective, hands-on consultation through interim CFO services, outsourced accounting, financial assessments, and executive search—helping nonprofits take control of their finances and advance their missions. Our Survey Research Practice delivers valuable insights through benchmarking, compensation and satisfaction surveys as well industry trends and business intelligence studies. For more information visit www.verisconsulting.com.