Finances

Donor management best practices: Turning good data into a goldmine

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For nonprofits, donors are the lifeblood of your mission. After all, they’re the people funding it. So, it’s no surprise, according to NonProfitPRO’s 2019 Leadership Impact Study, that 82% of nonprofits are using technology to improve their donor relationships and 52% are using it for donor management.

When kept current and accurate, data can be leveraged to inform critical decision-making for the entire organization. That’s why most nonprofits rely on donor database software — also known as nonprofit constituent relationship management or CRM software. This type of software stores your donor data in one centralized location, helping you to better manage and make sense of all the information.

Because donations are just the tip of the iceberg
Even the most basic donor management platforms can track donations, donor details and more. Depending on your software, it may also have built-in features that are designed to help build on the data you already have. It may even come equipped with fundraising features, helping to automate cumbersome tasks. At the end of the day, your software should make information accessible and readable, so you can easily address donor challenges, streamline the solicitation process and develop a sound strategy for effective communication.

Try the following best practices to optimize your data management and build stronger supporter relationships:

Create comprehensive profiles
To best engage with your supporters, ensure that your donor profiles contain all the essentials — and more. You should already have their full name, email address, mailing address, phone number and birthday. But having a broader picture of who your donors are and how they can impact your mission can help you create better strategies to support them. That means collecting supplementary data such as:

  • Hobbies
  • General interests
  • Employment details
  • Social media profiles

Track supporter engagement styles
Pay attention to how your donors are interacting with your nonprofit. When you can pinpoint the areas of engagement, you can better nurture those relationships and develop future plans to engage. You should have separate strategies in place for how they’re involved:

  • Donors
  • Volunteers
  • Event sponsors
  • Event guests
  • Membership program participants
  • Peer-to-peer fundraisers
  • Social ambassadors

Roll out smarter fundraising appeals
A donor’s giving history can be invaluable when it comes to planning your next ask. When you’re armed with a donation amount, payment type and donation channel, you can use this information to:

  • Be realistic about the donation amount you’re soliciting
  • Share the impact of past gifts
  • Promote the gift-giving channels you know donors are likely to use
  • Inspire them to give more by showing how a small increase could make a huge impact

Tailor your outreach
You want to stay in touch often — even when your donors are not signing a check. But too much communication can be annoying. And messages may be overlooked altogether if they’re sent through the wrong channel. That’s why it’s critical to update your donor profiles with data such as:

  • Preferred communication channel
  • Communication frequency
  • Programs or opportunities of interest

Integrate online forms
The benefit of an integrated form-builder? The data will automatically flow through your database and update your donor profiles — so you can spend less time inputting data and more time putting it to use. These forms include:

  • Donation
  • Event registration
  • Volunteer sign-up
  • Membership applications

To connect with donors personally, fundraise successfully and expand your mission, you need a donor management strategy that maximizes your data, along with the technology to support that strategy. But remember, don’t opt for a shiny new toy without ensuring that it’s right for your organization in a way that supports your overall mission and your goals.

Learn more about how Magone & Company helps nonprofits find financial clarity and maximize support for their mission.

Jump on board: 5 Next-level nonprofit trends for 2020

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In any given year, nonprofit professionals face a mix of significant accomplishments and relentless challenges. From donor expectations to new technology, the landscape is constantly innovating. Nonprofits must keep up to achieve their desired goals, or risk being left behind — along with the communities they serve.

To maximize your organization’s potential, here are some recommendations from NonProfit PRO for bringing in more donations, engaging more donors and improving communications to make your mission’s mark in 2020.

#1. Form non-traditional partnerships. With the changing political climate, nonprofits are shying away from government sources to help fund their operations. Instead, they’re building partnerships across new sectors to help protect their organizations from political uncertainty.

In the healthcare industry, for example, providers want to reduce the incidence of low-income patients being continuously readmitted because they have nowhere else to go. The solution? Stable housing. By providing disadvantaged patients with a place to live, it creates an opportunity for housing providers to partner with health systems to mutually benefit each people in need.

#2. Execute mobile-first technology. Are donors checking emails on their desktops or smartphones? The donor landscape continues to shift across generations, and nonprofits need to reach them in an increasingly mobile environment. This creates the urgency to understand and implement mobile-first technologies.

Don’t just accommodate mobile users with a full version of software that they must load onto their tablets. Give them information that’s designed specifically for mobile and touchscreen interfaces.

#3. Harness the power of AI. Artificial intelligence (AI) technology carries the ability to improve proficiencies and outcomes in various areas of the nonprofit sector.

For example, chatbot technology can be used to increase donor engagement across your social media pages. Or, you can use predictive analytics to optimize your campaigns to better speak to your donor base. The growing availability of AI and its ease of incorporation into your current processes holds great many possibilities.

#4. Focus on recurring gifts. Monthly giving allows donors to spread their contributions throughout the course of the year — so do your part to make it easier and more convenient. Leverage technology to set up monthly giving options.

Not only does this this provide a better idea of the giving forecast, it also offers stability to coincide with your year-round fundraising efforts. Remember, your nonprofit’s ability to expand giving options across multiple touchpoints — text, mobile, desktop, mail, etc. — plays a huge factor in the overall success of your efforts.

#5. Provide authentic communication. When it comes to your board, one of the biggest challenges is finding ways for members to connect with the cause. Like donors, board members are likely willing to volunteer and devote their time and energy to your organization because they have a natural affinity for its mission.

So, give them opportunities to experience the mission at work. Let them interact with the community and see first-hand how your organization is making a difference. This will help keep them engaged and enthusiastic in their roles, as well as generate new perspectives and ideas.

There’s no time like the present for establishing a fresh outlook. To strengthen your outreach and make a stronger impact, consider how you can best utilize these strategies to meet your organization’s specific goals and needs.

3 reasons you shouldn’t talk to the IRS yourself if you owe back taxes

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If you owe money to the IRS, it might sound like common sense to try to tackle your tax problem on your own. However, one of the worst things you could do is talk to the IRS directly without proper representation.

As an expert tax resolution firm, we encourage all readers facing a tax problem to contact us for a free consultation.

The IRS is not on your side and their primary goal is to collect the taxes they believe you owe. In this article, we give you 3 reasons why talking to the IRS directly could get you into deeper trouble.

1. You have rights.
Contrary to popular belief, you DO have rights as a taxpayer that you probably don’t even know exist. One is the right to representation. If an IRS revenue officer or revenue agent calls or “visits” you, did you know you are under no obligation to answer any of their (very intrusive and condescending) questions? Politely respond by asking for their contact information, explaining that you’re in the process of hiring a professional to represent you and that this person will contact them directly. A CPA or Enrolled Agent that deals with IRS problems for a living knows the “ins” and “outs” and how to deal with the IRS so that your rights are protected. A tax resolution specialist also knows how to get you the lowest possible settlement allowed by law. Generally, our clients never meet or speak with the IRS once we’re on the scene.

2. Answering questions can dig you into a deeper hole.
If you are being audited or about to be, the IRS will ask you about 50 very intrusive questions in your initial interview. How you answer these questions will dictate the fate of your case.  Having a tax resolution specialist conduct these meetings WITHOUT you is the best course of action we can recommend. Half of the referrals to the IRS’s criminal investigation division come from that “nice” auditor sitting across the table at the audit.

3. They won’t tell you about all your settlement programs and options. The just want their money.
If you owe between $10,000-$25,000+, the IRS has many NEW flexible programs under their Fresh Start Initiative available to taxpayers. These include Offer in Compromise, Partial Pay Installment Agreements, Payment Plans, Penalty Reduction, and Currently Not Collectible Status to name a few. Each carries with it its own unique process, procedures and qualifications.  Having an experienced tax pro in your corner ensures you are taking advantage of the best options available to you.

One last thing….

Ask yourself this question: Would you go to court without a lawyer?

If you answered “yes” hopefully you know the law inside and out concerning your case, but if representing yourself doesn’t seem like a great idea it’s best to hire somebody who is well versed in the subject matter. Well, it’s the same thing with the IRS. Having someone who knows how to negotiate the IRS’s maze of rules, regulations and the 74,000 pages of the Tax Code and deal with the IRS may be the best money you’ve ever spent.

If you want the help of an expert tax resolution professional who navigates the IRS maze for a living, reach out to our firm at (973) 301-2300. We’re happy to schedule a no-obligation confidential consultation to explain your options to permanently resolve your tax problem.

Can Client Accounting Services lead to increased efficiencies?

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 From increased visibility to enhanced financial controls, Magone & Company’s Client Accounting Services (CAS) were created to streamline your company’s accounting and finance functions and help you operate more efficiently.

But don’t take our word for it! Respondents to Bill.com’s 2018 Client Accounting Services Report say that CAS delivers measurable benefits.
 


What’s more, these benefits lead to hard-dollar CAS outcomes, such as increased profit (28%) and improved revenue (23%). 

Your financial needs are a moving target. So why lock into a hire who may not be able to keep pace? Our CAS team has the expertise to handle finance-related tasks at every level — for less than the cost of hiring a full-charge bookkeeper or staff accountant. 

With four levels of service — from bookkeeping and accounting to more strategic controller and CFO-level tasks — Magone & Company’s CAS services provide the financial skills, services and systems you need, without having to invest in expensive staff and technology infrastructure.

Is CAS right for you? Learn more or  call (973) 301-2300 for details.

Thinking of expanding? Not so fast

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The driving force in many expansion plans is to generate higher sales, with the hope that profits, too, will rise.

But before making moves to buy new equipment, expand your plant or implement a new business idea, you need to grasp the profit angle.

In some cases, an expansion plan boosts sales but not profits. You wind up working longer and harder for nothing. You may think, “If we lose a little bit on each deal, we can make it up on volume.” That sounds good in theory, but may prove difficult in reality. To prevent problems, here’s a step-by-step guide.

  1. Fixed and variable costs. Break down your costs as either fixed or variable. Fixed costs don’t change over any reasonable time period while variable costs are related to sales. (The more sales, the more variable costs.)
  2. Contribution margin. This is what remains from sales after you deduct the variable costs. So if your product sells for $10 and your variable costs run $8, your contribution margin is $2. From that margin, you cover fixed costs and add to your profits.
  3. Breakeven. This is the amount of dollars and time it takes the contribution margin to match fixed costs. To calculate it, divide fixed costs by contribution margin. You don’t realize a profit until the contribution margin exceeds fixed costs. Until then, you’re in the red.

Once you calculate these factors, you’re ready to analyze the impact of expansion. Let’s say your company makes Belgian chocolates and sells them in quarter-pound boxes at $10 a piece. Your variable costs are $8, giving you a contribution margin of $2 on each box to cover fixed costs and provide a profit. Your fixed costs are $100,000, so you need to sell 50,000 boxes to break even.

If you expand, and fixed costs rise to $125,000, your contribution margin stays the same. Using the breakeven formula (fixed costs divided by contribution margin), you now have to sell 12,500 more boxes, or 62,500 total.

Have your numbers calculated? It’s a good idea to talk to your accountant about how cash flow, liquidity and profitability could change, depending on business conditions. But fundamentally, a solid grasp on these factors is critical to deciding whether you’re better off keeping the status quo or charging ahead with an expansion.

Why your business absolutely needs a budget

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Most business owners view a budget with utter disdain. They’ll use any excuse to not prepare a budget. Some of the excuses I have heard over my career:

“Who has time for that?”

“Our annual earnings don’t really change from year to year.”

“Sales are flat, why bother?”

Most business owners run their business based on the business’ history and the owner’s experience. Sometimes this works well, other times not so much. Remember the credit crisis of 2008? Our business clients who weathered the storm were the ones who had transparency into their business via a budget. They could model the effect it would have on their profitability and cash flow using their existing budget and adjusting their expenses or payroll accordingly.

So, why prepare a budget? As previously discussed, transparency into the effects business conditions have on cash flow and profitability. Another reason is to plan for growth, organic or merger. Growth creates its own challenges such as the need for financing. A merger needs to be modeled to attract possible financing. Yet another reason to create a budget is to see how pricing changes affect profitability.

What is a budget?

A budget is simply your estimated income and expenses for your business year, a pro forma document, meaning you’re using your knowledge to estimate the how you will see the year.  A budget typically reflects how your company expects to spend money in the future.

Let me say it again, it is your spend, meaning you have built into the budget hiring for growth, a new or larger facility, etc.  It will change as you move through the year and must be updated. I like to update each month of the budget with actual results, so trends can be spotted and profit and cash flow projections more accurate with the known adjustments. This is especially useful when communicating with a bank or investors.

How do I prepare one?

Depending on the size of the business the budget process can begin as early as August or September. If your business has a sales team, it is imperative you start with them. Have each sales person develop their sales budget by month and by customer. Do not just accept the numbers provided challenge them based on your expectation of reality, against their previous sales and the current economic environment. This will form the foundation of the entire budget.

Next, review your historical gross margin, listen to your sales team as to pricing pressures and project the gross margin. Finally, estimate your general and administrative expenses such as administrative salaries (accounting, HR, executives) insurance, utilities, rent, travel and entertainment.

Here again, you’ll reference history and change in operations and possible hiring patterns to estimate the expenses by month.  This becomes your plan for the year and if sales are not being obtained, or margin is lower than obtained, then changes will need to be made in personnel or expenses.

Of course, if you are satisfied with the ultimate operating margin, maybe nothing needs to be changed. The important thing to remember is this will hold your employees accountable to the plan, if you hold yourself accountable to developing, monitoring and taking action against it.

Where to start? Your accountant is a great place. Don’t have one? Fix that now and call Magone & Company at (973) 301-2300.