HLB Mann Judd’s fourth NFP report highlights need for futureproofing

Leading business advisory firm, HLB Mann Judd Sydney, has released its fourth annual comprehensive report on financial management in the not for profit (NFP) sector.

The report, based on a survey conducted in July and August 2024 with more than 80 NFP leaders, reveals significant economic pressures facing the sector, including rising operational costs, high turnover in finance teams, and the urgent need for technological adoption and strategic innovation.

The report highlights that 68 per cent of surveyed NFPs reported negative impacts on their financial performance due to macroeconomic factors, such as the cost-of-living crisis and inflation. Furthermore, 85 per cent identified rising operational costs as their most significant financial challenge.

Such economic pressures are compounded by an increased demand for services, emphasising the critical need for effective financial management and strategic planning, and the importance of diversifying funding sources and revisiting pricing models to ensure sustainability.

With 59 per cent of respondents citing the loss of major funding as a top financial risk, NFPs should expand income streams through corporate partnerships, new revenue-generating activities and targeted donor campaigns.

“To navigate the current economic climate, NFPs must adopt a proactive approach to financial management, focusing on diversifying funding sources and optimising pricing models,” said Aidan Smith, head of Australasian not for profit at HLB Mann Judd.

“Our findings show that organisations that strategically manage their resources and explore innovative funding options are better positioned to withstand economic uncertainties.”

Despite the clear benefits of technology and automation in enhancing efficiency and reducing costs, the report reveals that many NFPs have yet to embrace these tools fully. Only a small percentage of respondents reported using automation or artificial intelligence (AI) in their financial processes.

However, with turnover levels in finance teams remaining high and the increasing complexity of financial management, NFP leaders are urged to consider technology adoption as a vital strategy for futureproofing their organisations.

“Automation and AI offer immense potential for improving financial processes, reducing manual errors, and enhancing decision-making capabilities,” said Fiona Dixon, business transformation partner at HLB Mann Judd Sydney.

“NFP leaders who embrace these technologies will not only improve their operational efficiency but also build resilience against future challenges.”

It is important for NFPs to prioritise financial innovation and strategic planning, and HLB Mann Judd recommends investing in technology upgrades and exploring automation opportunities to support long-term sustainability.