Effective financial management is crucial for every organization for transparency, financial oversight, and effective program and service management. Organizations have a duty to their donors and stakeholders to implement sound systems and processes to track all financial activity but and a shared spreadsheet can be used in place of, or in conjunction with, a financial software system.
For these organizations, the humble spreadsheet, but not just any spreadsheet – a shared one – can serve as the tracking system. In this blog post, we’ll explore how leveraging a shared spreadsheet can assist financial tracking for small or remotely staffed nonprofits, and/or organizations using external bookkeepers, fostering transparency, collaboration, and ultimately, success.
Section 1: Benefits of a Shared Spreadsheet
Nonprofit organizations operate on trust, and stakeholders, including donors, volunteers, and board members, demand transparency in financial matters. A shared spreadsheet acts as a transparent window into the financial health of the organization, allowing everyone involved to have real-time access to financial data. This transparency not only builds trust but also ensures accountability, a cornerstone of successful nonprofits.
In many nonprofits, different teams or departments handle various aspects of the organization’s finances. A shared spreadsheet breaks down the silos that can impede collaboration. Finance teams, program managers, and fundraising departments can collaborate seamlessly on a single platform, reducing communication gaps and streamlining financial processes. This collaborative approach not only enhances efficiency but also promotes a holistic understanding of the organization’s financial landscape.
In the fast-paced nonprofit environment, making informed decisions is critical. A shared spreadsheet provides real-time updates on income, expenses, and budgetary allocations. This accessibility to up-to-date financial information empowers decision-makers to respond swiftly to changing circumstances, allocate resources judiciously, and navigate challenges proactively. The ability to make informed decisions based on real-time data is a key advantage that shared spreadsheets offer.
Not all spreadsheets are created equal, and generic financial tools might not cater to the unique needs of nonprofit organizations. The beauty of shared spreadsheets lies in their flexibility and customization. Nonprofits can tailor the spreadsheet to accommodate specific financial metrics, fundraising goals, and reporting requirements as well as the skill level of the user. This adaptability ensures that the financial tracking tool works for the organization and its users.
Nonprofits often need to provide financial reports to stakeholders, including donors, grantors, and regulatory bodies. A shared spreadsheet simplifies the reporting process by centralizing all relevant financial data. With a few clicks, nonprofits can generate comprehensive reports, demonstrating fiscal responsibility and compliance. This streamlined reporting not only saves time but also enhances the organization’s credibility.
Section 2: When would a Shared Spreadsheet be used?
- The post office box is in a different location than the person recording donations and payments
- The organization is using an external bookkeeper who needs to see deposits, credit card payments, checks written, etc. for reconciliation reference
- The person approving invoice payment is different than the person recording the invoices.
- Multiple people track organization income and expenses for their roles
Section 3: Setting up the Spreadsheet
Location
Options abound for storage locations. Use Google Spreadsheets if you have a Gmail account, OneDrive for Outlook users, or try another service such as Box. Use what works for you as long as the spreadsheet can be setup as you need it and shared with appropriate permissions.
Elements
You’ll want to start tracking a few basic categories, but you can customize the spreadsheet as you go along. I’d suggest these four tabs of your spreadsheet to start. Depending on your organization’s needs, you can add Donations, Auto Pay Expenses, and more.
Checks Written column ideas
Bank Deposits column ideas
Misc Credit Card Payments column ideas
Bank Transfer Payments column ideas
Permissions
Give Editor access to some users and View access to others depending on their role with the organization and their need to access and manipulate the data.
Section 4: Implementation and Use
The best systems fail if they’re not implemented properly so it’s critical that guidelines are written out as to how the spreadsheet will be used and all users are trained on the system. Add deadlines for entering information, for review and approval, and for invoice payment. Revise and update the spreadsheet and documentation as the system evolves.