What Nonprofits Should Know About Process Automation
Imagine you had an extra hour each day to do big-picture, meaningful work. What would you do?
According to Asana’s Anatomy of Work index, 62% of most workdays are spent on dull, repetitive tasks. If you didn’t have to manually update giving records or click five buttons to move an expense approval forward only to click the same five buttons for the next one, you would be able to focus on more important projects, such as reviewing spending trends, forecasting for potential funding changes, or researching better discounts with vendors.
Today’s software platforms have a number of built-in tools that remove much of that manual work, if you know how to use them. Process automation can be scary for nonprofit finance teams because it can feel like you are giving up control. But implementing automated processes can help you ensure consistent internal controls and set your organization up for growth.
With a clear understanding of what business process automation means to your nonprofit, you can identify ways to save time on your fund accounting and increase efficiency across your organization.
Making the Case for Automation in Nonprofit Organizations
Today’s donors want to know that their resources are making an impact. But for organizations already doing more with less, documenting those results often takes time they don’t have. Nonprofit organizations need to show their impact clearly and confidently, but manual processes and multiple data sources often get in the way.
The average U.S. employee spends almost five hours per week on repetitive tasks, taking valuable time from already stretched staff. These repetitive tasks can be even more prevalent in nonprofit organizations, where updating vendor records, tracking down donor agreements, or documenting grant applications are everyday occurrences.
One Blackbaud customer, San Diego Humane Society, was able to save more than 200 hours of staff time by automating their sustained giving program, eliminating the manual work of charging each donor each month.
Not only does automation give your nonprofit staff more time to do more impactful and strategic work, but it can also give you more confidence that your impact tracking is accurate. Manual processes can lead to errors in your data. Generally, 1% of keystrokes in manual data entry are incorrect, not including missed fields or the dreaded Excel sort selected column fiasco. Poor data health can at minimum cause a donor request to be returned undeliverable, wasting time and money. At worst, bad data can obscure your organization’s impact and cause you to lose funding.
Defining Common Automation Terms for Nonprofits
When you have a process that works, it’s easy to keep using it no matter how inefficient it is, especially when the alternative is digging into confusing new technology with unfamiliar terminology. Understanding the common terms around automation and how they apply to your nonprofit will help to make the adoption process less intimidating.
Here are a few concepts to build your knowledge base around automation and how it can be used in a nonprofit organization.
Automation
Simply put, automation is using technology to improve processes—and visibility between processes—with minimal human input, which enables your nonprofit to scale more effectively.
How this applies to nonprofits: Your organization will be able to handle more grant applications and programs without having to add headcount because time-consuming manual processes, such as address verification and accounts payable, are done automatically.
Workflow
Workflow is a term for the rules and sequence that a process follows to get a task from start to finish. Workflows can be analog or done through software.
How this applies to nonprofits: Here is an example of a workflow: a donation arrives by check in the mail. Someone opens the mail. Someone enters the check into the ledger. Someone deposits the check. Someone matches the deposit to the check. Someone allocates the amount of the check to a program. Someone sends a thank you note to the donor.
Workflow Automation
By automating a workflow, you use technology to replace manual processes with a system that completes tasks with minimal human oversight.
How this applies to nonprofits: You set up rules within your fund accounting software so expense requests are routed to the correct approver based on the dollar amount, the program associated, or expense type, for example. This automation speeds up the process, helps you close your books faster, and eliminates the staff time to manually route the expenses. It can also ensure funds are used as donors intended by establishing automated internal controls.
Trigger
The trigger is the event that sets the automated process in motion.
How this applies to nonprofits: Your office manager adds a new invoice to the system, which triggers an email to the person who needs to approve the payment. This would remove the need to manually craft an email, which saves time in the moment and keeps the process moving.
Condition
Within an automated process, the condition tells the system which process to take.
How this applies to nonprofits: For expenses over $500, your internal controls require two signatures. When an invoice is added to the system, it triggers the approval process. If the system sees that the amount is $250, it will route the approval for one signature. But if the amount is $600, it will route the invoice to get two signatures.
Business process management
All organizations have ways of doing tasks. Some were developed through trial and error. Some were instituted by someone who no longer works at the organization. With business process management, you evaluate repetitive processes throughout your organization and analyze how they can be improved, regardless of who created them and how long they’ve been used.
How this applies to nonprofits: Look at how an expense moves through your approval process. Identify manual tasks, such as chasing paper requests around the office, getting manual signatures of approval, or hounding a colleague for a receipt. All these manual processes ultimately slow down the payment process and can leave you with unhappy vendors and frustrated staff.
Business Process Automation
Business process automation is the process of moving employees to higher-value activities instead of manual, redundant work. It uses automation to create a more efficient organization that scales effectively.
How this applies to nonprofits: Integrating your bank and credit card feeds directly into your fund accounting platform securely passes that information through and auto-matches to what is already in the ledger. Instead of waiting for statements at month-end and manually reconciling them line-by-line, you can run reports weekly and close the books faster. Imagine a day when you don’t even need to prepare expense reports to send to your team. Instead, they can manage their expenses as soon as they happen and get the business office the information they need.
Application Programming Interface (API)
An API is a set of protocols that creates a handshake between two different software platforms. That handshake enables the software to share information in a way that both platforms can read it. The data can pass one way, such as incorporating credit card charges into an expense tracking system, or two ways, such as passing customer updates between a CRM and a ticketing platform to keep track of loyalty membership usage.
How this applies to nonprofits: Your development team enters donor gifts in Blackbaud Raiser’s Edge NXT®, and it automatically creates a journal entry in Blackbaud Financial Edge NXT® for review, saving time and eliminating errors.
Integration Platform as a Service (iPaaS)
An iPaaS is a platform or suite of tools that enables one or more integrations between any combination of cloud or on-premises solutions. These tools help manage the APIs required to pass information between two systems.
How this applies to nonprofits: Many tools, such as Financial Edge NXT and Microsoft Products, have built-in integrations that don’t require significant management. For example, Financial Edge NXT and Raiser’s Edge NXT integrate to tie your fund accounting and constituent relationship management system together without any technical know-how. However, if your organization has an experienced IT team that prefers to manage or build their own APIs between your systems, you might look at an iPaaS.
Artificial Intelligence (AI)
AI is the ability for computers and programs to make decisions that would normally require human brainpower. When coupled with process automation, AI is particularly powerful at saving time and eliminating manual data entry.
How it applies to nonprofits: Raiser’s Edge NXT uses AI to analyze historical giving trends and thousands of licensed and proprietary data points to identify and prioritize your best major gift prospects. This information reduces the number of situations where you leave money on the table with donors by strategically engaging with the right donors at the right time and for the right level of request.
Algorithms
An algorithm is a set of rules that software follows in order to perform a task or achieve a desired outcome.
How it applies to nonprofits: A grantmaking platform uses a weighted set of rules to evaluate which grant applications out of hundreds are best suited for manual review.
Machine Learning
The next step from traditional AI, machine learning enables computer systems to adapt based on new information provided, without additional instructions from humans.
How this applies to nonprofits: The more grant applications a foundation approves, the better the program is at identifying the ones that are most likely to be approved, and the program changes the weightings to reflect that insight.
Generative AI
Using information pulled from the web into Large Language Models (LLMs), generative AI platforms create answers to prompts by understanding the likelihood of one word following another around a topic. The results are often a good first draft of what you are trying to create, from a press release to code for a mobile app. Common platforms include ChatGPT, Claude, and Gemini.
How this applies to nonprofits: A development director can use generative AI-powered acknowledgements to speed communication with supporters and create first drafts with the right tone and content specific to their recipient, while also incorporating deep knowledge of fundraising best practices.
AI Agent
Coupling machine learning and generative AI, an AI agent follows specific prompts to gather information and take actions to achieve specific goals. They can act autonomously, using human-defined goals that the agent should pursue.
How this applies to nonprofits: Many software platforms are creating Agents within the system to help users perform specific actions, like run a report or get a quick answer about their specific data. A finance director can ask the agent in their fund accounting software to give them a list of programs that are 75% or more budget to actuals.
Understanding Automation is Key to Your Nonprofit’s Growth
Good process automation enables your nonprofit to focus on finding technology that best matches your preferred methods instead of letting your technology dictate how you manage your organization. It also helps you optimize your processes instead of using workflows that no longer fit with your organization, even though it’s the way it has always been done. With APIs and other automation tools, you can have your preferred tools work together and minimize your manual processes.
To learn more about incorporating process automation into your nonprofit’s fund accounting, check out the white paper, How to Get Started with Automation in Your Nonprofit Finance Office.
