We’re living in historic times. The global pandemic and economic crisis have changed our day-to-day lives in addition to nonprofit fundraising and financial strategies. We’re working from home, re-working budgets, and trying to get through these troubled times to the light at the end of the tunnel.
During these challenging times, it’s important for nonprofits like yours to keep an eye on the trends and changes emerging in the charitable sector, especially when it comes to your finances.
Here at Jitasa, we have worked with nonprofit finances and accounting over a decade. We’ve seen many different types of hurdles and problems that organizations have faced in the past, which has helped us develop some predictions for the difficult times in which we’re living now. The top three trends we recommend nonprofits keep an eye on include:
- A Decline in Fundraising During 2020
- Implementation of Long-Term Financial Strategies
- Completing Tax Forms Online
Ready to learn more about 2020 accounting and financial trends? Let’s dive in.
1. A Decline in Fundraising During 2020
Everyone seems to be struggling financially right now. This includes companies, nonprofits, and individuals. This means that not only is your organization struggling financially, but your nonprofit’s supporters are likely feeling the pressure too.
Therefore, your organization’s finances are depleting while the source for fundraising is also slowing down, which abates the cyclical nature of nonprofit finances.
While this makes for a challenging fundraising process, it’s not impossible.
How to Approach This Accounting Trend
The most important thing to remember during these tough times is don’t stop fundraising. While many organizations may be tempted to halt their fundraising efforts due to these challenges, the only way that you can truly guarantee that fundraising will stop is to stop trying.
You never know what supporters will have the capacity to give, even during tough times, until you ask them.
This doesn’t mean that your organization should continue fundraising as usual. Rather, you should adopt some new fundraising strategies to reflect the changes in society and make sure you’re empathetic to the capabilities of your supporters. Some of the approaches we recommend for your fundraising strategy include:
- Discuss the tax benefits for supporters. In adherence to the CARES Act, there are additional tax benefits for individuals who contribute to charitable causes during the 2020 fiscal year. Telling supporters about these additional above the line deductions can provide an incentive for them to contribute. You can read more about how your nonprofit can take advantage of the federal programs available in Jitasa’s CARES Act guide.
- Create a seamless online giving experience. Due to social distancing guidelines, nonprofit supporters can’t meet up with your fundraisers or give in-person. Therefore, the best opportunity for them to contribute to your cause is to donate online. By streamlining the online giving process, you will capture more donations. Simplify this process by limiting the information you ask for on donation forms, ensuring everything fits on a single page, and creating a clear call-to-action to submit the form.
- Show additional gratitude for donations. While it’s important to show gratitude for any and all donations made to your organization at any time, it’s especially important during times of fundraising challenges. Therefore, make sure to go the extra mile to make sure your supporters feel appreciated. For instance, send hand-written notes to your supporters, call them after the contribution, or invite them to a specialized virtual event.
In order to accomplish any of these strategies, your nonprofit should make sure to have the best fundraising software resources for coronavirus. Then, start adjusting your strategy to take into account the challenges brought about by the pandemic.
2. Implementation of Long-Term Financial Strategies
Even with the financial strategies used above, nonprofits may still find that they’re having difficulty hitting their fundraising goals. However, your nonprofit should keep in mind that these challenges won’t last forever. Your organization should prepare for the time when the pandemic has ended.
This preparation process involves the implementation of long-term financial strategies. Actions your organization takes now can affect what happens in the future.
How to Approach This Accounting Trend
The best action your nonprofit can take now to prepare for the future is to continue developing the relationships you have with your supporters. By utilizing the data you’ve already compiled in your donor database, you can make connections with your supporters and make them feel appreciated even if they can’t contribute right now.
After the pandemic ends, these are the supporters who will come back to your organization and help you come out of the difficulties and challenges ahead of other organizations in the sector. Some of the strategies we recommend to continue building relationships with supporters include:
- Call your supporters and set up virtual meetings to establish digital “face-to-face” contact.
- Personalize your outreach to supporters by addressing them by name and including specific interests.
- Use story-telling strategies to communicate the impact of the contributions supporters make to the organization.
According to Qgiv’s donor retention guide, 70% of nonprofit donors only give to organizations one time. This means that organizations use a lot of resources to replace these donors and acquire new ones.
However, if you retain the donors you’ve already captured, you don’t need to use as many of your hard-earned resources for acquisition strategies. It’s much less expensive to retain your supporters than it is to acquire new supporters.
After you’ve worked on your retention rates, be sure your bookkeeper records all of the resulting financial data. This will help you track the rate of your success. If you’re looking for someone to help your organization track your financial data, consider outsourcing your bookkeeping.
3. Completing Tax Forms Online
In addition to recording your financial information for your nonprofit organization’s own reference, you should also be sure it’s correct for tax season. Effective bookkeeping is vital for the accurate filing of your nonprofit’s tax forms each year.
In 2020, nonprofit taxes have been delayed in order to make it easier to file. While you can file later, you should also remember that nonprofit taxes went through renovations last year as well. Now, they’re all filed online rather than on paper.
How to Approach This Accounting Trend
The Taxpayer First Act was signed into law on July 1, 2019. This legislation required that nonprofit tax forms be submitted online rather than using paper forms.
The Form 990-N has been filed online for some time now. But by the year 2021, nonprofits must also transition the Form 990-EZ and Standard Form 990 to be paperless.
For many nonprofits, this might make the tax filing process easier. As other nonprofit resources have been trending towards online versions (such as fundraising pages, accounting software, and more), completing tax forms online will centralize the financial processes for organizations.
Our recommendation? Outsource your bookkeeping to a professional to make sure you have accurate records. Then, hire a professional accountant to help you complete your taxes, ensuring everything is correct and complete before you hit “submit.” Some bookkeeping and accounting firms will offer both services, making it easy to manage your organization’s finances.
- Rework your fundraising approach with the pandemic in mind.
- Read through these success stories to learn more about how accounting firms can make a difference for nonprofits.