The Not for Profits (NFP) sector in Australia is considered diverse and large (approximately 600,000 NFPs in 2010 per the Productivity Commission report), contributing to annual revenue over $100 Billion and representing 8% of the Australia’s workforce (ABS, 2016). With the chief goal of achieving missions beneficial to the public, NFPs are expected to meet a higher standard of public expectations; balancing this with seeking and managing funding has been identified as the greatest problem.
Following the Government policy changes regarding grants in the NFP sector, organisations started to experience the impact of increased competition – diminishing funding and enhanced accountability requirements. Specifically, NFPs are expected to convince funds providers of the value of their mission while ensuring efficiency and stewardship of the organisation. This situation creates opportunities for NFPs to manage financials more strategically by reassessing the efficiency of core operations against their budget and demonstrating measurable effectiveness.
Despite the opportunities, current leaders of NFPs are not ready to capitalise on this ‘financial shock’. Grant Thornton Financial Literacy Survey revealed that Board Directors in the Australian NFP sector may need to enhance financial literacy to meet these challenges. It is thus necessary to focus on efficiency, efficacy and sustainability of organisations through considering collaboration with NFP governance experts.
To overcome emerging challenges, it is time for NFPs to examine their current financial health. Focusing on a wide range of financial adaptation abilities, tools developed by our team can help to evaluate the effectiveness of current budgeting and cash flow management. The 20-point system health check has been a perfect tool for NFPs to assess their readiness for change.
Using our tools, we ensure 1) financial integrity through regular reconciliations; 2) prompt clearance of any outstanding items; 3) close monitoring of liability balances; and 4) review of financial statements. These quality assurance activities not only provide adequate financial management, but also create integral information for CEOs and Boards through charts and graphs. The Tailored Accounts teamis prepared to assess and closely monitor your organisation’s financial health, delivering useful financial information for your decision-making.
Teddy Nam is the Team Member Accountant at Tailored Accounts
“The Accounts Department of Small and Medium Business”