Driving Mission Success

A nonprofit was experiencing losses due to uncollectible program fees. 

PFFE analyzed collections data from the nonprofit’s accounting software to determine key dates in the collections cycle and probabilities of non-payment. 

By providing specific guidance to the team responsible for collections, their outreach became more targeted, which resulted in the collections rate increasing from 73% to above 90%.   

A nonprofit was paying about 2% in annual revenue (or $40,000) in credit card processing fees. 

PFFE analyzed expenses related to the various payment streams and discovered that about 70% of payments were being made by credit cards, making it the largest contributor to the total cost. PFFE encouraged the nonprofit to use a no-fee ACH payment option and added a convenience fee to credit card usage.

The nonprofit saw a dramatic uptake in the ACH options, which  reduced its costs from about $40,000 to about $18,000 per year. Additionally, the nonprofit realized soft savings when payors switched from using physical checks to ACH thereby reducing handling costs.

A nonprofit had embarked on a capital expenditure and the costs had increased from the initial projections. The organization’s revenue projections no longer aligned with the financing obligations.

PFFE provided the nonprofit with analytics and potential actions to make up the shortfall. We used cash flow projection data to forecast the shortfall in loan repayments and used modeling to determine the impact of financing costs on the operating budget.

The bank adjusted the terms of the loan to align with PFFE’s updated cash flow projections. Through a combination of factors, the nonprofit paid off the loan ahead of schedule. 

A nonprofit’s dependence on government funding made them susceptible to funding shifts as local and state leader’s priorities changed.

PFFE developed a financial model that allowed the PFFE team, executive director, and key board members to model different grant funding scenarios, while also considering inflation, service fees, and wages.

The modeling exercise led to a more accurate annual budget and long-range plan backed by clear assumptions and calculations. These outcomes then sparked discussions at the board level about revenue replacement strategies.

The Finance Committee wanted to determine the appropriate levels of operating cash and reserves the nonprofit should maintain given rising demand for program services and thus expenses.

PFFE measured historical cash levels and their volatility over a typical year and also benchmarked against other organizations using public data. PFFE created scenarios based on confidence intervals to project future levels of cash and the availability for near-term program expenses.

The analysis provided the Finance Committee with confidence in making a recommendation to the full Board. In this case, it was determined that the organization needed to build more reserves to better adapt to uncertainties in government funding.

The Executive Director wanted to benchmark the salaries for senior employees to minimize turnover in these key positions especially during a growth phase.

While not a full compensation study, PFFE provided data from research within its own archives, used 990 data from other organizations, and job posting websites to determine reasonable salary ranges. Data was also obtained from United States Department of Labor datasets for location-based wage adjustments.

These salary ranges were incorporated into the budget models to determine long term impact of such salary changes. The nonprofit found that it could afford to adjust most of the salaries to remain competitive and retain talented staff.

A nonprofit board did not have a clear understanding of unrestricted cash since a large proportion was restricted for future grant expenditures.

PFFE revised the financial reports to break down the statement of financial position into restricted and unrestricted components. Similarly, we organized the statement of activities by major programs and overhead. And we created a dashboard to provide at-a-glance highlights so that the reports could be reviewed without getting overwhelmed by details.

The board members received the clarity into cash  they desired and the dashboard enabled transparency with board members who weren’t well-versed in nonprofit financial statements. 

A small nonprofit with a budget of about $250,000 needed a new auditor and the standard costs for the service were high as a percentage of their total budget.

The executive director and PFFE met the audit team to get to know each other as well as discuss the process. PFFE was able to describe the accurate state of the books as well as the financial systems we helped build within the organization.

The auditor was willing to reduce the cost of the service by 15 percent because they understood that the process would be efficient and that they were dealing with a knowledgeable team.

A nonprofit executive director was spending about half of her productive hours managing the accounting, payroll, and reporting requirements with inaccurate results.

PFFE designed and implemented a new workflow using QuickBooks that simplified record-keeping, tracked all liabilities, managed restricted funds, and provided accurate reports for internal reports as well as for grants.

The director gained a new perspective, spurring her to delegate most accounting tasks. This enabled her to increase the time she devoted to programming and fundraising outcomes, thereby doubling revenues in one year.

A nonprofit finance team and executive director were spending a lot of time preparing a budget vs actuals report since the accounting categories in the accounting platform did not align with the board approved budget. The chart of accounts had over 300 categories and more were being added with the receipt of each new grant. Additionally, the development department staff were using categories that worked for their needs and grant reporting however these didn’t align with the accounting platform.

PFFE invited the team to think about how their activities may scale over the next five years and what new programs could come on board. 

PFFE produced a sample chart of accounts with category alignment across the entire organization and higher-level groupings that met the needs of the board. We simplified the chart of accounts by using a dynamic horizontal presentation that also allowed for granular reporting. PFFE also recycled as many old accounts as possible to enable prior-year comparisons.

The quality of the reporting improved for all stakeholders and the finance team was able to quickly produce reports without external manipulation, saving time and improving accuracy. Furthermore, the nonprofit was now able to track grant income and expenditure in one place, which enabled greater accuracy and no double-dipping of expenditures.