Legacy Strongholds in Your Nonprofit

Because I write about nonprofit accounting a lot, the term “legacy” usually comes up in the context of software systems. For example, an accounting system that was designed in the 1980s but is still in use by the organization today, is called a legacy system.

I was reading an article from Accounting Today and saw “legacy” used in another context. The author was covering audits and preparing for audits and wrote this:

“In my two decades of working with nonprofits, I’ve seen them all make the same mistakes, regardless of size. Most not-for-profits begin with volunteers and inexperienced professionals, but as the organization grows, they usually continue with those same hiring practices. As a result, they create legacy problems that continue year after year.”

“They create legacy problems that continue year after year.”

Legacy problems. Old ways of thinking that have become obsolete. Very smart people can have legacy problems. I suspect legacy problems take root and gather nourishment from complacency and “we’ve always done it this way” thinking.

Legacy problems – much like legacy software systems – slow us down. We’re not as agile. We’re not as effective. We’re squandering time and money. Our old ways may be comfortable and we may not welcome another change – but don’t we owe it to our organization, funders, and constituents to challenge our habits and be open to innovations?

“If you don’t like change, you are going to like irrelevance even less.” General Eric Shinseki

In the past year, I have come to the conclusion that for the vast majority of nonprofits, outsourcing is the best practice of the 21st century. Pricing makes it accessible for nonprofits and outsourcing immediately addresses the characteristic weakness many nonprofits have when it comes to accounting. If you select the right firm, you can solve the professional personnel and appropriate modern technology problems right away.

For large organizations with multiple staff positions in accounting, outsourcing versus in-house is less cut and dry.

But I’ve seen a lot of resistance to outsourcing among most organizations. Most of it is knee-jerk rejection, Executive Directors won’t even discuss it. Now I have a term to describe it: attachment to a legacy problem.

It’s interesting to talk to Executive Directors who have outsourced. There’s almost embarrassment about how easy the process is and how dramatic the improvements are. “I wish I had gone this route year ago” is a consistent echo from the savvy leaders who have outsourced to firms specializing in nonprofit accounting.

I will be writing more about outsourcing. As I mentioned in an earlier post, there is a great eBook on outsourcing that you can download for free ‘Confessions of Nonprofit Executive Directors: Seven Unspoken (but all too familiar) Reasons for Outsourcing Accounting