Tuesday, May 24, 2016
Best Practices for Nonprofits with Multiple Locations
Posted by Michael Boulton
Whether you call them affiliates, chapters or just the “downtown location,” the reality is nonprofits seeking to expand their impact often expand their organization geographically. In fact, the chapter model is at the core of some of the country’s largest nonprofits, such as The American Red Cross, YMCA and Habitat for Humanity.
Yet, along with the potential for greater impact comes the potential for greater organizational headaches. Typically, there is tension between the “keepers of the vision” at headquarters and the local affiliates actually delivering on that value. Poor communication, incompatible systems and data gaps only compound the problem.
With that in mind, consider these best practices for ensuring your organization is unified and sustainable:
- Build consensus. By building consensus around a common vision and strategy, the parent organization can ensure each remote site is moving in the same direction. Executive management might establish key performance indicators that apply to all affiliates and chapters—regardless of size and programming—and track how individual chapters are working to accomplish the organization’s overall vision and mission.
- Have a clear chain of command. For example, will financial decisions up to a certain level be handled at the local level, or must decisions go through the central office?
- Develop effective cross-communication strategies. Without good communication, you run the risk of the right hand not knowing what the left hand is doing. Consistent messaging of goals and mission (and any changes to them) is essential.
- Invest in the right technology. Incompatible data systems compound the problem of keeping everyone in the loop. Upgrade your hardware and software so everyone is not only sharing data, but also protecting it with the latest security patches.
- Have a plan for volunteers. Smaller, affiliate offices may rely more heavily on a corps of volunteers to keep things running (e.g., a volunteer bookkeeper or program director). Keep everyone on the same page by providing training in standard operating procedures and how the nonprofit’s chain of command is structured.
Protect Against Fraud
Fraud risks are high for nonprofits with multiple locations, where there may be multiple accounts and multiple hands on the money. Centralized oversight may be lax (think of a youth sports organization with multiple districts, each selling tickets and collecting parking fees with no real accountability).
Spot checks by the organization’s CFO or controller are one way to go, as is developing an internal audit function at headquarters—including surprise audits of outlying offices. Even organizations not large enough to require an annual financial statement audit may benefit from having outside auditors come in and kick the tires on a periodic basis.
Give Armanino a call if you need an objective, independent assessment of your affiliates’ financial and operational performance.
Michael is a Senior Manager in the audit department at Armanino, where he specializes in financial statement audits, reviews and compilations. He is a Certified Public Accountant and an active member of the American Institute of Certified Public Accountants (AICPA) and California Society of Certified Public Accountants (CalCPA).