Non Profits are resource-intensive, demanding organizations. They rely heavily on donations and charities to function and often struggle with strained financial resources and stringent fiscal regulatory policies. Such policies stipulate how Non Profit Assets will be purchased, utilized and managed.
In addition to this, Non Profits are mandated to comply with federal regulations for managing and reporting their capital resources. Failure to comply may result in hefty liabilities for the board members and stakeholders of a Non Profit. All these aspects make managing Non Profit Assets quite taxing. To sidestep these issues, it is important to understand the operating structure of a Non Profit first.
Non Profit VS. For-Profit Asset Management – How is it different?
Understanding Non Profit dynamics is critical to devising a well-grounded asset management strategy for it.
Unlike For-Profit businesses, a single entity does not own and use assets belonging to a Non Profit. The business structure of a Non Profit consists of a public trust and a board of directors. The public trust owns the capital resources of a Non Profit, and the board decides how to utilize them.
For-Profit companies document all asset usage in a single ledger to account for all business activities. As mentioned earlier, Non Profits receive their finances from a diverse range of grants and donations.
Each grant contract restricts Non Profits to use the grant to purchase a certain set of Assets for a certain cause. To deal with this, most Non Profits create separate ledgers to account for each grant.
Lastly, the financial records of a For-Profit show the assets owned as retained earnings to the shareholders. Whereas, the records of Non Profits denote resources to be used for daily operations and designated causes only. There’s no financial payback to the donors from the assets.
Challenges Non Profits face with asset management
To ensure compliance with regulatory authorities, you must guarantee that you use your funds the right way. There should be an efficient allocation of donations. In this pursuit, a thorough knowledge of capital management challenges faced by Non Profits greatly helps.
Eliminating these challenges helps trim unnecessary costs and establishes the credibility of your Non Profit’s operations.
Here are a couple of common asset management challenges that Non Profits contend with.
- Tracking each class of equipment by its relevant funding code often gets confusing since each class has multiple donation resources.
- Due to limited monetary resources, conducting audits in a cost-effective manner is nearly impossible. It takes up a lot of lost employee hours, and hiring third-party auditors compounds costs.
- Most Non Profit Assets are sponsored or donated by external philanthropists so they need to be safeguarded at all costs. So, another challenge is to install a smart system that helps detect item theft, misplacement, and damage.
- Non Profit Assets are used at various locations for different causes and events. It is imperative to oversee the usage of these assets across each location and make sure they are returned in the right condition.
- Working out a balance between insurance premiums and benefits is also hard owing to the tight budget constraints.
Streamline your daily workflows by automating Non Profit Asset Management
A Non Profit organization is already burdened with limited resources and fewer employees. Manual asset tracking methods can add to the problems. They leave room for typographical errors in asset records and slow down your operations.
It is recommended that Non Profit Assets are tracked using an automated system.
A cloud based automated asset tracking system has a host of benefits that help cut costs and streamline daily workflows.
- It calls for relatively less capital investment and overhaul costs than hardware systems used for manual asset tracking.
- All the asset data is automatically backed up in the cloud so you never lose it in the face of physical disasters.
- An automated system also protects your sensitive fiscal information through passwords and restricted access, lowering the chance of embezzlement of funds.
- All your asset information is stored in a centralized database that is easier to access and update by authorized users of each department.
- The online cloud of the software offers flexible capacity so you can scale up your asset database as your organization grows.
- You have access to real-time data so you can review the progress of your business at any time.
- You can outsource affordable technical support to upgrade the asset management software. This is different from legacy hardware that often requires expensive in-house upgradation.
Key features of an automated Non Profit Asset Management System
The typical operations of a Non Profit include conducting meetings with board members and hosting various charity events. You need up-to-date asset data to successfully execute these events. Automated management software provides you this information on your Non Profit Assets.
Its unique features may help your Non Profit with seamless asset tracking and event management.
Here’s what you can accomplish with a dedicated asset management system in place.
1. Label all your equipment
Monitoring different types of assets can become complicated if you don’t have a system in place to identify them. Companies use various methods to label their assets. Barcode labeling is perhaps the most popular one among these.
Compared to QR codes and RFID tags, barcode labels are lighter on your pocket and stick to almost any surface. You can scan these labels on each of your assets using a handheld scanner. This simultaneously clocks in relevant asset information into the database.
With barcode scanning, you can implement a check-in and checkout system that tracks asset movements across different locations. This also helps establish user accountability; every time an employee has to use an asset item, they scan it and enter their signatures against it.
This way the system can always trace back to the culprit in case an item goes missing. A Non Profit has limited funds and cannot afford to lose even the low-value items. Barcode labeling and tracking keeps daily asset usage by employees under check and secures your assets.
2. Replenish stock in time
The main aim of a Non Profit is to raise as many funds as possible to work for the welfare of the masses. For this, many Non Profits organize fundraiser events and advertise via brochures, depicting the social impact they have made.
Falling short of any assets during a sponsor meeting or a fundraiser can blot your organization’s operational capability. To avoid such fate, you should automate the procurement of your assets. This helps maintain your stock at an optimum level.
The automated asset management system sets a minimum threshold for each of your assets. As soon as your asset stock reaches this level, the system automatically generates purchase orders and emails them to your vendors.
The key for efficient asset management is to sustain a balance between over and under stocking. You can do this by following these simple procurement planning steps.
- Collect a list of asset requirements from every department.
- Search for good quality options that fall within your budget.
- Decide the quantity you want to order.
- Brainstorm over where you can cut costs. Multipurpose equipment really helps in this regard!
- Schedule the delivery of your purchase items and associated events.
If you plan out your inventory requirements on an annual basis, you get an idea of your variable costs. This helps determine the minimum possible funds you need to raise to break even.
3. Make reservations in advance
Running a Non Profit is all about smart planning. With frequent events and volunteer activities happening, you need to reserve your assets in advance so you know where each item is going.
A microphone assigned to two different conferences at the same time can really hamper your fundraising event. An automated Non Profit Asset Management System shows you the availability of each of your items across a calendar.
This way you can see which assets are available for use before an event happens. It also prevents conflicting reservations by showing reserved assets as unavailable/reserved.
With an availability calendar, you can make alternate arrangements well before an event if a certain asset is unavailable. You can check the availability of your conference rooms and book them as venues for events.
The software also informs the relevant parties of the booked venues by sending them automatic alerts.
4. Track asset locations
Small tools and equipment are at high risk of getting misplaced if not tracked across various locations they are sent to.
Let’s say, you scheduled a volunteer activity at the nearby community carnival to set up a stall and attract potential donors. You also sent out some introductory brochures and souvenirs to be given to stall visitors. Tracking such assets becomes physically hard when they are outside of your official premises. But what you should do is ensure that all the checked out equipment is returned by implementing location tracking.
A cloud based program lets you enter the geographic coordinates of an item every time it gets checked in or checked out. This way, you can keep tabs on whether your assets have safely arrived at the intended location. This practice also pulls down the instances of theft and item misplacement.
5. Schedule regular maintenance
Lack of regular maintenance can bleed into prolonged downtime of items. This can deteriorate the performance of your Non Profit Assets and decrease productivity levels. Irregular servicing also results in premature equipment disposal.
An automated asset management system lets you take the reins over your maintenance routine. With it, you can:
- Automate service after an asset gets checked-in post-use.
- Generate service tickets to track repair details, costs, and relevant repair agents
- Run recurring services to ensure preventive maintenance
- Send out alerts to notify all departments and staff when you schedule an item for service
- Record service history to trace repair expenses of an item
This preventive maintenance routine enables you to control breakdowns before they actually occur. You can morph your repair sessions according to your event schedules and frequency.
6. Add customized data fields
Non Profits are bound by different grant contracts and requirements. Therefore, they need to report their assets and functions accordingly. They need to incorporate and track details that their donors ask them to.
For instance, most donors require a list of causes that were sponsored by using a certain set of funds. An automated asset tracking system enables you to create customized data fields so you can store and report the information you want.
For each piece of equipment sponsored by a funding organization, you can clock in details like the events and causes it was used for. This lets you report all the relevant information while conforming to reporting regulations.
Additional tip: Have a Non Profit compliance checklist ready!
The key aspect of maintaining the credibility of a Non Profit’s functions is to abide by all legal regulations. This needs serious consideration since the liability of non-compliance is not worth the risk.
Furthermore, most Non Profits struggle to legitimize their operations so they can gain the tax exemption benefit. Clause 501(c)(3) of the US Internal Revenue Code stipulates this benefit. Failure to accomplish this may result in huge legal and tax costs for the Non Profit.
To maintain their tax-exempt status, Non Profits must submit tax forms in the 990 Series. Missing out on this leads to a daily fine of $20 and revocation of the 501(c)(3) status after 3 years of non-submission of forms.
Compliance is absolutely necessary if you want to stay in for the long haul. You can develop the following checklist to guide you through the compliance process and make sure you are doing the necessary.
- Review your current tax exemption status.
- Fill and submit the tax exemption form before the yearly deadline approaches.
- Keep reviewing the federal non-profit compliance requirements to keep your registration updated. You can add this information to the system and get notified as soon as there is any amendment in the regulations.
- Update compliance expense records each year.
A Non Profit’s viability depends on the transparency of its operations
Whether your organiztion has been around for years or has just started out, asset management can be demanding because of the nature of Non Profit Assets. A Non Profit’s viability relies on the transparency of its operations for both legal and management reasons.
Thus, you need to make sure that all asset information is visible to both internal and external stakeholders. An automated Non Profit Asset Management System greatly helps in this regard.
It enables you to track the performance of your Non Profit so you can make the best use of the limited resources you have.
Read more: Overcome These 4 Non Profit Roadblocks with Asset Tracking Software
About EZOfficeInventory
EZOfficeInventory is the leading Non Profit Asset tracking system. It enables you to carry out inventory management that keeps you organized and your donors satisfied. Improve accountability and reduce equipment loss – at a 10% discount!
