Non-profit organizations can achieve a positive Return on Investment (ROI) by moving to cloud-based Enterprise Resource Planning (ERP) software. This may sound like an odd proposition, but non-profits very much need to think in terms of ROI, if they don’t already. Cloud-based ERP software, with specialized non-profit accounting and management functions, enables non-profit ROI by allowing them to work more efficiently and cost-effectively.
Can a Non-Profit have ROI? Yes.
There’s a fallacy that because non-profits don’t report earnings, they aren’t concerned with how much return they earn from assets they buy. If anything, the concept of ROI applies more vigorously to non-profits than for-profit entities. Non-profits are typically short of cash. Raising money from grants and donors is not easy work. They are also under scrutiny (and self-motivated) to put donor dollars to work in the service of their mission, not office overhead. These factors contribute to an urgent desire to get the most performance out of all the organization’s assets, including software.
How Cloud-Based ERP Drives ERP at Non-Profits
Cloud-based ERP software helps non-profits achieve ROI in several distinct ways. They include:
- Reducing cash outlays for hardware and software—legacy accounting systems need to be updated every three to five years. Even allowing for a few extra years for slower-moving non-profit cycles, at some point, they’re going to have to make a capital investment (CapEx) in new hardware and software. The cloud changes this. Instead of tying up precious cash from grants and donors in hard assets, cloud-based ERP enables a more manageable operating expense (OpEx) approach to running financial software.
- Reducing overhead or making existing staff and facilities more productive—Getting rid of a hardware-based system cuts the non-profit’s overhead. It’s possible to reduce staff and facilities (e.g. the data center or “server room”) or assign them to more productive uses.
- Improving visibility into operations—Modern non-profit ERP, based in the cloud, offers rich features for non-profit management. These include sophisticated reporting and data visualization capabilities that give managers and other key stakeholders visibility into operations. For example, a modern ERP system for non-profits can show up-to-the-minute spending on specific projects and pair the reports with grant statuses.
- Using data to get better at soliciting grants and donations—the data analytics and reporting features of a modern, cloud-based ERP system for non-profits give managers newfound abilities to identify opportunities to raise money. This can arise, for example, from better reporting on the results of earlier grants. Armed with detailed data visualization that shows the impact of a previous donation, the non-profit is in a strong position to ask for a renewal of the grant or an increased donation in subsequent years.
- Leveraging data to improve organizational operations—Non-profits have operations, just like a business. They have facilities and assets like cars and equipment. In some cases, they have inventories, e.g. of medical supplies or emergency food rations. They have personnel. Data outputs from a modern ERP system can give non-profit managers an accurate and timely sense of how their operations are performing, in financial terms. With this data, they can make informed decisions about how the operation can perform better—creating ROI form the ERP software in the process.
Non-profit ERP software, based in the cloud, can be transformative for a non-profit. Implementing the software does take some focus and investment of effort, however. It pays to work with an experienced consultant in this process.