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The Nonprofit Time Card Balance Beam

Posted by Felipe Gonzales-Paul on May 29, 2020 8:16:57 AM
Felipe Gonzales-Paul

nonprofit time card balance beam

Have you ever attempted to walk on a balance beam while holding a bucket of water in each hand? Many grant managers and CFOs try to do that with payroll every day.

They’re walking the balance beam of funder or grantor compliance, while trying not to task their frontline employees with overly detailed time capture requirements. They’re attempting to balance process, technology and reporting requirements. After all, no one wants to divert employees’ efforts away from the mission or services.

Reducing inefficiencies can help you find balance. A couple natural places to start are your manual processes for allocating time and earnings, along with your complex calculations in Excel spreadsheets. You can automate allocations and get rid of spreadsheets by getting the right technology in place — such as a Human Capital Management (HCM) system combined with IDI’s salary allocation solution. This solution can automatically distribute employees’ earnings based on the percentage of time worked across different cost centers (e.g., grants, contracts, programs, and activities).

When evaluating an HCM-plus-salary allocation system, even the most tech-savvy and experienced non-profit accounting professionals can struggle to walk along the time card balance beam with the technology being evaluated. Here are the best practices we recommend to our IDI clients before selecting an optimal time card and salary allocation configuration.

Related: What Non-Profits Need to Know About Implementing a Payroll System

Ask Funding Sources for Guidance

We’ve heard from many panicked clients over the years when an auditor pointed out that time cards didn’t meet grant or contract requirements. Furthermore, grants and contracts can require employees to spend time on their grant or contract before time cards are set up correctly to account for the grant.

Pro-Tip: If you’re unsure that a new time-and-attendance system configuration provides enough detail to achieve compliance, go to the source! HCM can provide screenshots and screen sharing solutions so that you can review the system with your funders before making a final decision.

Discuss with your grant team

The data available in the general ledger is not necessarily grant manager-friendly. While the information zeroes out debits and credits, the effort it takes to manipulate data from accounting software to adhere to funder requirements can expose gaps in reporting capabilities.

Pro-Tip: Ask your grant team these questions:

  1. What manipulations need to be made to the reports that are automatically generated from the accounting software, in order to produce the needed reports for grant or contract compliance?
  2. How much time is it taking to produce budget vs. actual reports?
  3. How reliable are the financials with the current systems in place?

Review With Your Board

Board members can offer helpful perspectives and have a vested interest in the success of the organization. If reporting labor cost actuals is required from funding sources, you aren’t alone on the balance beam — this may also be on the board’s mind as well! Getting to the actual labor cost all starts on the time card.

Pro-Tip: These purchase or technology investment decisions often require board approval. Bringing a mockup of the new time and attendance solution with associated cost centers (e.g., Activity and Fund) and the associated IDI salary allocation earnings can give the board assurance, and confirm the value of your proposed investment.

After defining optimal time card and salary allocation configurations, remember that frontline employees’ adoption of the time card will make or break the success of this investment — driving accuracy of financials and grant reporting. 

Check out how to make late and inaccurate time cards a thing of the past.

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Topics: Nonprofit Industry Solutions