Although “big data” has been sort of a buzzword in the business world, it’s becoming more and more of a concern for accountants, including those working in the nonprofit sector. In a past blog post we’ve discussed ways nonprofits can leverage big data, and it appears that the issue of analyzing electronic data is only going to become more important in the near future.
According to The 2014 AICPA Survey on International Trends, published July 30, 85% of CPAs in forensic and valuation services cited big data as their biggest concern going forward. This is a shift from past surveys, which typically placed hiring and retention as the top priority.
The second most pressing concern for respondents of the survey was increased complexity and scrutiny, coming from different sources such as judges and governing bodies.
Although accountants working for NFPs and NGOs were not included in the survey, these two issues—big data and increased complexity and scrutiny—are big concerns for the nonprofit sector. Peter Brinckerhoff, a former Executive Director of two regional nonprofits and author and internationally renowned lecturer on nonprofit management issues, has stated that transparency and accuracy are two of the most pressing issues for nonprofit financial management.
The Importance of Transparency for Nonprofits
In a whitepaper written for Serenic Software, Brinckerhoff states, “Transparency is no longer optional, either inside or outside the organization.”
Nonprofits, if anything, are under more scrutiny than private sector companies. As Brinkerhoff states, your financials are “on public display at many nonprofit watchdog websites, such as GuideStar and Charity Navigator.”
Reporting requirements are getting more complex, as well. Nonprofits work directly with auditors, and they need to stay on top of all state and federal requirements for reporting, including new requirements for IRS forms 990, 990N, and 990T.
“You might as well have a reporting system that facilitates this easily,” writes Brinkerhoff, “not one that you have to spend hours pulling numbers from.”
The Opportunities of Big Data for Nonprofits
Financial information is a huge part of big data, and making sense of it is a unique challenge that CFOs, board members, and accountants must grapple with.
Brinkerhoff writes, “You still can’t manage what you don’t measure, and like it or not, financial measurements are part of the mission outcome.” Increasingly, the ability to measure and analyze big data will be crucial to a nonprofit’s financial goals and overall mission.
The biggest opportunity for big data is the potential to gather and analyze financial data in real time, and use it to make important organizational decisions.
Only advanced software solutions give your nonprofit organization the capability to both analyze big data and provide the necessary reporting for complete transparency.
Photo by: Tom