Generating Funds with Better Fixed Asset Management

March 14, 2012       Kelly Clark      

Generating funds to advance your cause is difficult enough without the strain of today’s economic climate. Nonprofits are faced with reducing their fundraising event schedules, as everyone is holding fast to their hard-earned dollars. How to generate more funds has always been the $64 question. It’s probably the $100 question now.

A creative solution is making your fixed assets generate income. No one ever thinks in terms of fundraising through better fixed asset management. However, maximizing depreciation minimizes your costs, and minimizing your costs drops money straight to your bottom line.

Many nonprofit managers, as well as bosses at general businesses for that matter, don’t realize that implementing a fixed asset management system produces significant, bottom-line savings. For starters, today’s fixed asset management software solutions are so easy to install and use that they typically provide a return on investment within a few months.

Fixed Assets: The Basics

Fixed assets or capital goods include nearly all your higher ticket items that you don’t resell, such as the desks, chairs, computers, vehicles and buildings that your nonprofit uses every day. At its core, fixed asset accounting allows an organization to keep track of the number, type and value of the capital goods they have on hand and to depreciate that value over time.

Asset depreciation accounts for the decrease in value due to normal use, obsolescence or deterioration. By properly reflecting depreciating values in your financial statements your organization will reduce the amount of money paid to your insurance company. Everyone who owns a car knows how this works. As your automobile ages your premiums go down, assuming all else stays equal.

Adding a fixed asset inventory solution to the mix, which keeps track of exactly how many assets are on hand and where they are, will help your saving grow that much more. Let’s face it, there’s no sense paying insurance on an asset that was lost, stolen, misplaced or outlived its usefulness. The problem for most nonprofits is knowing where those assets are and their condition. Automation can take care of that for you.

Furthermore, proper fixed asset management allows for better utilization of the funds. Knowing what assets you have across the organization means that you won’t be buying new computers in one department, while another has computers sitting idle. You also can budget better when you have an accurate picture of which assets are aging and nearing the end of their usefulness.

Finally, improved fixed asset management simply makes good business sense. Since the introduction of the Public Company Accounting Reform and Investor Protection Act of 2002, better known as Sarbanes-Oxley, a number of nonprofit accounting scandals have drawn the attention of Congress. Subsequently, more and more nonprofits are following Sarbanes-Oxley regulations as a practice to help validate bookkeeping, as well as to provide the protection that solid accounting gives to all businesses.

Special Considerations For Nonprofits

When considering a fixed asset solution, nonprofits have special concerns that differ from revenue-generating businesses. Most important are the strict requirements that the Financial Accounting Standards Board (FASB) imposes on nonprofits. The FASB Concept Standard 6 clearly defines what constituted a nonprofit. The FASB Statement on Depreciation SFAS 93 requires the depreciation and reporting of fixed assets. These rules and regulations, and others, outline exclusively for nonprofits special accounting situations that affect their fixed assets.

While the cost savings associated with proper fixed asset management might be clear, it’s important to turn these procedures into action. Virtually any nonprofit can implement a proper solution to ease workflow and deliver more to its mission. Successful fixed asset system require careful research, planning and implementation, but are not necessarily difficult or all that costly.

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Kelly Clark is the director of product management at Sage Software, a developer of business management products and services for small and mid-sized companies and organizations

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