Which makes a more effective charity:  a national organization with a professional team and economies of scale, or a passionate local group with deep roots in the community?

Okay, that question was a set-up.  Why can’t a charity be both?  Why can’t a charity have both a national, professional structure AND local managers who have freedom to respond to their community’s unique conditions, including their accounting needs?  

Advantages

While the situation is different for each charity and mighty things have been accomplished by small groups of people, in general, national and local charities have different advantages.

Accounting challenge #1: structure

Creating an account structure that meets the needs of different geographic regions, and is complex enough for a large local office but simple enough for a small one, requires a lot of planning.  All of the regional requirements need to be gathered and analyzed.  Even then, it is best to have a plan for how unforeseen requirements will be handled.

One client dealt with the geographic issue by giving the local offices control of the last digit of the account number.  The national accounts all ended in zero, allowing the local offices 9 other possible accounts for each national account.

One way to help smaller offices is to make their chart of accounts a simplified sub-set of the national accounts.

Accounting challenge #2: software

Can one package handle the sophisticated requirements of a big organization and be simple enough for a part-time volunteer?  While software developers have made huge strides in simplifying and standardizing user interfaces, my answer is still no, or at least, not yet.  A more practical solution, given current software, is to have different software for the large and small operations, but set up so that the small systems merge easily into the central database.

Accounting challenge #3:  people

While a central support team makes a lot of sense on paper, the challenge is in the details.  The old saying, “Good fences make good neighbours” applies here.  Be sure that everyone is clear about what support will be handled locally or regionally (e.g. sales taxes) and what will be the responsibility of the national office (e.g. Board reporting).

Logistics are important too.  Time zones are both an advantage and a disadvantage.  You can save money on user licenses, since people will be using the system at different times across the country.  At the same time, the users will need support available to them during the local work day.

Where does your organization stand?

Have you worked on reducing the cost and increasing the effectiveness of administration through centralization?  Alternatively, do you know of a national group working to be more effective locally?  Please add your experience to the discussion.