The voluntary sector in the UK has continuously encountered trials, from the impact of rising living costs affecting donations, to coping with the swift pace of technological advancements within constrained budgets and resources. There has been a notable shift in the experience of managing the finances of charities, due to the rapid evolution of digital tools and the increasing expectations of financial stakeholders involved with charitable organisations.
As we approach a potential economic downturn, adapting and integrating digital solutions becomes imperative for organisations to navigate this dynamic landscape effectively. Through the utilisation of robust financial technologies, charities and not-for-profits can save time, reduce costs, and better position themselves for future challenges.
What financial challenges are charities facing going into 2024?
Xledger’s Charity Digital Finance Report 2023 indicates that more than half of respondents within the charity sector lack the necessary forecasting tools ahead of a potential recession. Coupled with the ongoing talent shortage, which a significant 85% of finance professionals currently perceive, organisations face urgent pressure to adapt swiftly.
Charities encounter significant challenges beyond just swiftly accessing data and efficiently forecasting and planning; they also grapple with the imperative of transparency with donors regarding the utilisation of donations. Despite the apprehension towards change among professionals, empowering teams with adequate tools and training from reputable vendors is pivotal for achieving success in a landscape where the digital approach is proving increasingly impactful.
How can financial tools help charities face these prominent challenges?
Automation
One of the primary advantages of digitalisation for charities lies in automation. Engaging in excessive manual data entry consumes financial teams' time with slow, outdated, and costly tasks prone to human error. Recognising the importance of time alongside monetary resources, implementing a robust automated finance system enables the delegation of routine tasks like prepayments and bulk billing to technology, liberating the team to dedicate their efforts to higher-level data analysis. With the appropriate tools in place, the aspiration for the finance team to evolve into strategic partners becomes an achievable reality.
Real-time reporting
Real-time reporting provides immediate access to historical and financial data, providing valuable insights for finance teams. With user-friendly software, teams can effortlessly interact with the data, analysing it in their preferred format. By offering real-time financial reporting, charities can satisfy donors' transparency expectations while harnessing the enhanced financial oversight provided by up-to-date reporting.
Reliable fund reporting tools
Reporting for charities and not-for-profit organisations entails greater complexity compared to commercial entities. To secure additional funding successfully, charities must demonstrate efficiency in their operations and financial management to both public and private donors. Grant funders, in particular, demand comprehensive insights into fund utilisation, ensuring alignment with intended purposes. With powerful cloud-based accounting software for charities, organisations can seamlessly delve into data, manage funding sources, and allocate costs with heightened control.
Looking ahead
These robust financial tools not only propel charities forward by saving time and resources but also empower them to navigate the ever-changing landscape with flexibility. The significance of the finance department in guiding organisations through these challenges cannot be overstated, especially amidst tight budgets and increased scrutiny. The right technology can be transformative. By embracing state-of-the-art accounting solutions, charities are not just adapting to change but actively shaping their future.
Looking ahead, it's evident that the convergence of financial expertise and technological advancement will continue to redefine the narrative of charitable initiatives, fostering a future where organisations can flourish and leave a lasting impact on the communities they serve.
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