August 5, 2020

Community foundations are inherently complex due to the various types of funds they receive with different arrangements based on donor preferences and their status as a grantmaking organization. COVID-19 has only increased those challenges, especially in the areas of technology, operations, efficiencies, and the changing face of philanthropy, all of which are intertwined.

Having spent a lot of time working and talking with community foundations, the three most common challenges we’ve noted from them at this time include:

  • Supporting remote work through new and existing technology,
  • Automating and improving processes, and
  • Responding effectively to COVID-19 through community grants.

Challenge: Supporting Remote Work Through New and Existing Technology

Before COVID-19 swept the globe, many community foundations discussed working remotely but didn’t see how it could be accomplished. Part of that was due to mindset, part of it due to technology, and part of it due to not having a plan. The pandemic has changed that. We were all thrust into teleworking and found some silver linings—we know now it is possible to accomplish our jobs and even be more productive without physically being in the office.

Here are four solutions to make remote working better through technology:

Solution 1: Explore Necessary Tech Upgrades

Build plans into the foundation’s strategy and budget to explore necessary technology upgrades which will allow your employees to work securely from anywhere. These upgrades will include hardware, software, and tools that will allow employees to securely access the foundation’s data. Some security tool examples include firewalls, antivirus software, remote monitoring software, and multi-factor authentication. You could also consider simulating a real-life cybersecurity attack by conducting periodic penetration tests to identify and patch security weaknesses before hackers exploit them. Finally, remind employees and contractors to secure their home networks using WPA-2 protocols.

Click here for additional details on wireless security at home.

Solution 2: Build a Cloud Strategy

Work with your IT staff and/or consultants to document a cloud strategy within the IT strategy that includes plans to address security and privacy. The IT strategy is intended to support the foundation’s overall strategy and be part of the operating and capital budgets. Before you begin, make sure you have a clear understanding of all the applications used by the foundation and which ones are on-premise, hosted, or truly in the cloud.

Solution 3: Explore Cloud-Based Software

Explore cloud-based software applications that can be accessed anytime. Before going through the process to evaluate different cloud systems, ensure the foundation has a documented understanding of all software currently being used, what types of data is stored within each application, who the staff owner or department owner is, and which systems rely on data from the other systems. Then, the foundation can explore cloud-based technology by documenting the need, creating a project team, and identifying the organizational core requirements and integrations. That would be followed by narrowing the vendor pool and getting demos of solutions. See below for additional guidance on functionality of accounting systems.

Solution 4: Find Ways to Support Your Remote Employees

Determine how the foundation can best support employees working remotely through equipment, protocols, and guidance on securing personal equipment. There will need to be written guidelines on teleworking, which explain any foundation expectations, so everyone is on the same page. Then there is the human component that requires one-on-one conversations with the employee and either their supervisor or a human resources representative. As we have found, every individual has different personal circumstances that require flexibility in remote working.

Challenge: Automating and Improving Processes

Existing workflows and processes present a key challenge when working remotely. Many community foundations have struggled with automating these while their offices are shut down. We have found this is partly due to not having clearly documented processes that were followed consistently and partially due to technological limitations with accounting systems.

Here are five solutions to find efficiencies in your processes:

Solution 1: Document Key Processes

Document, document, document! Take this opportunity to ensure all key financial and grantmaking processes are documented and current, which would include screenshots, if applicable. This is the time to address the exceptions that have crept into culture and have honest conversations as to whether they are truly needed. And if you’re ready, discuss the nuances for Donor Advised Funds (DAF) and other types of funds to establish consistency when setting up new ones in the future.

Solution 2: Establish Communication Between Teams

Finance and philanthropy teams should set up time to talk through and document the process for any donations coming in and grants going out. This will identify the touch points between the systems and determine where there is duplication of entry, which leads to possible errors and inconsistent reports between departments. These workflows can bring the two departments closer together in supporting the mission, onboarding new staff, and help explain the “why” behind needed organizational practices. They may even result in a documented checklist of steps to ensure nothing is missed. At a minimum, it will improve communication.

Moving to a paperless process has also been a goal for many community foundations. This has become even more important in the recent months with the forced move to remote environments. The close process is one good area to consider pushing toward a paperless experience.

Review the current close process before you get started and then determine if all month-end, quarter-end, or year-end steps are documented. Ask if the right people are assigned to preparing and reviewing the steps or if there should be modifications to improve segregation of duties. Determine if there is enough cross-training in the event someone is on vacation or leaves the foundation. Based on the review of the existing process, decide if any steps should be removed or modified or have a change in frequency, such as changed to quarterly or annually.

Solution 3: Move New Processes Online

Move your new process to an online collaboration tool. There are many benefits of having an online tool, such as: reviewers can approve from any location, the risk of paper copies being destroyed or misplaced is eliminated, physical storage space needs are cut, added security for signoffs of preparer and reviewer is provided, and you may be able to establish reminders for team members when their tasks are due. Some examples of online collaboration tools include Smartsheet, Workzone, Microsoft Teams, Google Docs, Google Drive, and Trello, to name a few.

Solution 4: Get Creative with Existing Resources

If you do not want to invest in an online collaboration tool, use existing resources.

  • After revising your current process, if needed, create an online filing system in your existing storage solution. In a shared drive create a folder for each month, quarter, and year-end. Create a standard naming convention for the documents to be stored that everyone will use. Example: accountsreceivable.(year).(month). Of course, you will need to review your existing record retention/document destruction policy to ensure alignment.
  • Use an electronic signature application for each preparer and reviewer to electronically sign the close checklist. Examples of electronic signature applications include DocuSign, AdobeSign, HelloSign, PandaDoc, and SignNow, to name a few. These electronic signature applications are also a great way to document the approval of invoices, expense reports, or payroll reports.

Solution 5: Review the Functionality in Your Existing Accounting System

Some accounting general ledger packages allow users to store bank reconciliations, invoice support, and manual journal entry supporting documents within the software itself. In these instances, the only outside document would be the checklist of the steps that must be performed as part of the close process.

  • If your existing accounting system doesn’t have the ability to store key accounting documents within the system, there are many options out there, depending on the functionality required. Some examples from TechSoup include Box, Google Drive, Microsoft SharePoint Online, and Adobe Document Cloud (DC).
  • If your existing accounting system doesn’t contain automated accounts payable (A/P) workflows, a short-term solution would be to explore A/P systems that integrate with your accounting system. These systems would be set up with permissions and notifications for invoices to be received, entered, multi-level approval of an invoice, payment, and updating of the accounting system. All would be supported with an audit trail, documentation, and ability to align the process with good internal controls. A few system examples include, Yooz, Stampli, and Tipalti, depending on the number of monthly invoices and functionality needed. Note: There are also many other best-in-class solutions that automate different processes (such as expense management systems). If you already have some of these, you should look into integrating them with your accounting system.
  • Explore automating calculations and journal entries for earnings allocations, fund fees, budget control checks, rebalancing funds, and spendable amounts either within your existing accounting system platform or in another solution that can be integrated with your accounting system.
  • If you find that your existing accounting system doesn’t provide for a lot of automation, is not easily integrated with other systems, the chart of accounts is outdated, or your reporting is handled outside of the system, it may be time to consider changing your accounting system, starting with a functional needs assessment.

Challenge: Responding Effectively to COVID-19 Through Community Grants

With the fallout of COVID-19, we have seen new trends emerge in how grantmakers are funding their communities. These changes, however, will require adjustments to people, processes, and technology if foundations want to make the most of them.

Here are five philanthropy trends and solutions to consider:

Solution 1: Streamlining Processes

Streamlining the process for getting money out to communities by:

  • Reducing the complexity of grant application forms.
  • Reducing the number of phases required for the application process.
  • Giving additional grants to existing grantees to avoid making them reapply for supplementary funding.

Solution 2: Working with Grant Recipients

Making it easier for grant recipients by:

  • Increasing operating and capacity building grants. If organizations cannot pay for the basic costs of running the organization, they can no longer provide the programs you originally funded.
  • Reducing reporting requirements so organizations can spend more time focusing on operating the organization.
  • Changing monitoring visits to online video meetings.
  • Extending timelines for existing program-related grants so organizations can meet these restrictions after they can return to normal operations.

Solution 3: Create Emergency PPE Grants

Creating emergency grants for personal protective equipment for those in the healthcare industry, for other non-profit organizations as they start to return to the office environment, and for those with front-line social service employees. These emergency grants often include funding for professional cleaning and cleaning supplies.

  • Let existing grantees know they can use a portion of existing program related grants for emergency purposes.
  • Earmark funds for emergency grants and communicate that they are available.

Solution 4: Build a Coordinated COVID-19 Response Fund

Engaging individuals, private foundations, governmental entities, and business partners to create a COVID-19 response fund. Community foundations around the country are creating coordinated responses to address the needs of individuals, families, non-profits, and small businesses.

  • If your foundation hasn’t created an emergency fund, provide links to other community foundations providing COVID-19 response funds.

Solution 5: Sign the Council on Foundations’ Pledge

Many community and private foundations have signed the Council on Foundations’ pledge. This pledge includes many of the ideas above, but also includes pledges to increase communications with grantee recipients, listen to grant partners for their ideas of where additional funding is needed, support grantee partners who advocate for important public policy changes to fight the pandemic and deliver an equitable and just emergency response, and learn from these emergency practices so they may consider adjusting practices into the future.

  • Review and consider signing the pledge, if you haven’t already.

These solutions need not be done together or in a specific order. Take the opportunity as you reimagine your operations to choose the ones that will work best for your community foundation.

If you have questions on improving your processes, responding efficiently to the COVID-19 crisis, or exploring new technology, contact a Clark Nuber professional.

© Clark Nuber PS, 2020. All Rights Reserved

This article contains general information only and should not be construed as accounting, business, financial, investment, legal, tax, or other professional advice or services. Before making any decision or taking any action, you should engage a qualified professional advisor.