* Revenue diversification is highest of organizational management priorities
* Improved budgeting and accounting systems identified as financial management urgencies
* Annual budgets for financial services fall short of organization’s needs
The Certified Public Accounting firm of Davis & Hodgdon Associates CPAs, located in Williston, Vermont, conducted a survey of Vermont-based nonprofit organizations to identify their utmost organizational and financial management priorities.
Nonprofits around the state responded to a range of questions regarding their organization’s procedural and financial activities. Respondents were asked to identify their 2013 priorities in terms of administrative and financial management initiatives as well as rate the importance of specific types of financial services to their operations and planned activities. They were also asked to identify their annual budget allowed to retain such services.
Of the Vermont nonprofit organizations surveyed, it was revealed that the need for revenue diversification is the highest priority for 2013, followed by the need for program development, i.e. the organization of the various resources needed to run the program effectively. According to Oxford Journals, their findings suggest that nonprofits can “indeed reduce their revenue volatility through diversification, particularly by equalizing their reliance on earned income, investments, and contributions”.*
Respondents were also asked to rate the priority of several financial management activities ranging from improved audits, reviews or compilations to fraud prevention and development of board member resources. Improved budgeting and accounting systems were rated among the highest of priorities among those surveyed. Ironically, when asked about the annual budget for accounting and professional services needed to achieve those financial management goals, 70% of respondents indicated that only $0 – $5,000 of their annual budget is dedicated to those services. Along those lines, respondents affirmed that the most important factors in the selection of a professional services firm are responsiveness, fees and that they be “nonprofit” industry specialists. Many identified the need for the firm to have a keen understanding of laws and regulations specific to the nonprofit community.
Davis & Hodgdon’s managing partner, John Davis, concludes that “there is an understandable need in the nonprofit community to partner with consultants that understand the intricacies of federal and state compliance requirements specific to their industry. Beyond general compliance, there is great value received by working with industry-specific experts as they are able to establish efficiencies resulting from their familiarity with nonprofit business processes – from bookkeeping systems and financial reporting methods, to the development of board member resources. These results indicate that many of Vermont’s nonprofits recognize the need to look beyond the annual financial statements to identify business process improvements that will allow them to focus on their mission statement and strategic plans.”
As incentive for survey completion, the firm conducted a drawing of all participants to select one as the winner of $1,000 worth of accounting services for their organization. Everybody Wins Vermont, Inc., dedicated to fostering children’s literacy was selected at random. Davis & Hodgdon Associates will begin work with Everybody Wins Vermont this summer to identify the accounting services of most value to their organization.
For complete survey results, go to: http://survey.constantcontact.com/survey/a07e7euorjqhg3xw85h/results
*Journal of Public Administration Research and Theory, Volume 19, Issue 4, Pp. 947-966.