Top challenges for nonprofit organizations and how to overcome them

Unit4’s research finds that an overwhelming 64% of professionals in the UK and 60% in the US have prioritized digital transformation to overcome the challenges that face them, with 43% overall expecting to complete a digital transformation of operations within two years.

In this blog, we will explore the main challenges confronting the Nonprofit sector, and the solutions that Cloud-based ERP presents – keep reading to learn more!

1. Grant management and compliance

Grants are a vital financial resource for nonprofit organizations, and with even more limited funding out there, a nonprofit's ability to apply and manage grant applications effectively is becoming more crucial

Nonprofits need visibility of their finances, resources, assets, staff levels, and more to ensure they can meet the grant requirements without straining their current resources. Simply managing the grant process can zap a nonprofit's resources, but digital tools can ensure this process is effective and efficient.

Unit4’s solution for grant management has been tailored to meet the needs of nonprofits. It automates workflow in all stages of the grant management process, allowing for increased transparency and better tracking against project and mission impact reporting.

2. Workforce Planning

People, including volunteers, are a huge asset for nonprofits, carrying out the vital work they do, whether they are volunteers or paid staff, but without proper integration of HR data with other key functions, and visibility of that data, it becomes a challenge to effectively utilize people.

Nonprofits often face challenges in efficiently matching volunteers and staff with the right projects due to a lack of integrated HR systems, resulting in underutilized skills and availability mismatches.

Unit4 Workforce Planning and Analysis can enable your organization to effectively align competencies and availability, ensuring the right people, including volunteers, are positioned to make the greatest impact. Added Talent Management capabilities ensure your people have the learning and HR processes needed.

Click to read Helping nonprofits deliver on their mission with FP&A and HCM Gated 

3. Maintaining donor relations

Donors are another huge resource for nonprofit organizations, helping fund the vital work they carry out. To make the most of this financial resource nonprofits need accurate tracking and reporting capabilities to maintain this relationship by showing donors exactly where their money goes, upholding transparency and trust.

Poor reporting and visibility of finances mean poor transparency and accountability with donors and can also impact growing regulatory obligations, such as emerging international accounting standards for nonprofits. Unit4 FP&A provides advanced reporting capabilities showing exactly how far donations go as well as their impact.

The CIO of Save the Children International notes that It’s no exaggeration to say that, thanks to Unit4, we can now track the pound someone donates through a television appeal right through to it being used to improve literacy in Rwanda”

4. Attracting and retaining key talent

Any organization, including nonprofits, must ensure they have the necessary systems and strategies to attract, monitor, and retain the staff they need. With clear visibility of people data, nonprofit organizations can take proactive action to retain employees, and form strategies to better engage their teams in the future.

When empowered by performance data it’s much easier for managers and talent to have clear two-way conversations about their satisfaction levels, pay, and have regular opportunities to provide feedback to management.

By digitizing your HR processes, a nonprofit organization can gain better control of employee data and use digital capabilities to make the people experience within the organization more satisfying, ensuring staff and managers can focus on the valuable work they do.

Unit4 HCM enables workforces to be managed from one place, with a single employee record across the whole Unit4 platform, including engagement, competency, utilization, and performance data. People managers are equipped with essential data insights to inform productive one-on-one conversations and define and track objectives.

5. Ensure compliance

As compliance measures grow and become more complex, nonprofits need to monitor projects and finances accurately to report transparently to the relevant authorities.

 Naturally, without appropriate systems, governing bodies and donors alike will lose trust in a nonprofit if they don’t take their ability to comply with regulations seriously.

Unit4 held a roundtable event to discuss the multifaceted challenges nonprofit organizations face in reporting and accountability, ranging from the complexities of impact reporting to the evolving expectations of donors.

For example, ESG reporting is a pressing priority for many organizations. Governing bodies, donors, and investors have a growing interest in nonprofits' environmental, social, and governance impact.

With the accurate and streamlined reporting capabilities provided by Unit4 FP&A, compliance becomes simpler and easier, and nonprofits can refocus on their delivering their mission.

6. Funding allocation and tracking

Funding for nonprofits is vital, they need to not just source funding but ensure they can accurately track and allocate funds effectively for success. The Red Cross reports that “15% of funding resources should be retained within a nonprofit for it to be self-sustaining.”

Put simply, without the ability to track donations and grants, and where they are allocated, it’s hard for nonprofits to maintain the bottom line they need to sustain their operations.

Unit4 FP&A can provide the granular tracking and visibility needed for nonprofits to ensure that their funding is repaid where necessary, and unrequited funding is properly utilized to maintain financial stability.

How can Unit4 help nonprofits overcome their challenges?

Make a more significant impact with software solutions purpose-built for nonprofits, with industry-leading Enterprise Resource Planning (ERP), Human Capital Management (HCM), and Financial Planning & Analysis (FP&A) solutions.

Oxfam America, a longstanding Unit4 customer, says that “Unit4 enables and activates best practices to work efficiently and seamlessly. It’s now much easier to see and access 24/7 data. Users are more engaged, active, and able to leverage the system.”

To learn more about Unit4’s nonprofit-specific capabilities, visit our dedicated webpage, consult our customer stories, or talk to sales today!

Frequently Asked Questions (FAQs)

How can nonprofit organizations streamline the grant management process?

Nonprofits can streamline grant management by adopting digital tools, like Unit4’s built-for-purpose ERP solution, which automates finance and project accounting. This provides greater transparency, efficient tracking, and better alignment with project and mission impact reporting, helping organizations meet grant requirements without overextending their resources.

How can nonprofits enhance the utilization of their workforce? 

Nonprofits can enhance workforce planning by integrating HR data with other key functions through platforms like Unit4’s Workforce Planning and Analysis. This allows organizations to align staff and volunteer competencies with project needs, optimizing the use of available resources and ensuring that the right people are positioned to make the greatest impact.

How does nonprofit digital transformation benefit donors? 

Digital transformation enables nonprofits to improve financial tracking and reporting, which is crucial for maintaining donor transparency and trust. Solutions like Unit4 FP&A provide advanced reporting capabilities that show exactly how donations are utilized, allowing nonprofits to demonstrate the impact of donor contributions and uphold accountability.