Which Way Does Your Non-Profit Handle Non-Employee Expenses?

Volunteers can offer an incredibly valuable resource for non-profit and non-governmental organizations, and other non-employees, such as scholarship and grant recipients, are a key part of many of these organizations. However, properly tracking and recording any out-of-pocket expenses they incur can be a major headache. Organizations typically have two options for handling expenses accrued by volunteers and non-employees. One involves a time-consuming, tedious process, while the other offers a quick and easy resolution.

The Old Way: Time-Consuming Hassle

Non-profits and NGOs that rely on one-size-fits-all expense management systems may have no other option than to record expenses the old-fashioned way. This would involve the time-consuming process of actually adding each non-employee to the system and then using the standard expense reporting function as you would with regular employees.

While this method could work for volunteers and other non-employees who accrued numerous expenses or were constantly part of your non-employee workforce, it’s not the optimum choice for others. Volunteers often come and go, with a new batch every few months or even for specific initiatives. They may also only file a single expense report or two while volunteering with your organization.

Learn more: Sign up to our November 9 webinar, Expense Management Best Practices for Non-Profits and Key Questions to Ask

The New Way: Easy Resolution

A much more convenient and feasible expense reporting option exists, particularly useful for organizations with multiple non-employees who may only be called up for a short time period or a specific project, event or grant. This method involves collecting 1099 forms from approved non-employees as you normally would, and then simply importing the list into the expense reporting solution. The system can then be configured so that the expense report type can be created, applying specific policies, expense types, GL allocations, and so on.

Once non-employee names are in the system, they typically submit receipts to a central administrator, based on the business rules already in place. They are treated to the same easy-to-use, intuitive interface and mobile capabilities that regular employees receive when filing their own expense reports.

Another bonus is an expense management solution’s ability to tailor expense reports to suit your organization’s exact needs. You can configure the expense solution so that you can specify allowable reimbursements and, or even adjust permissions so reports can be submitted by an authorized user on behalf of non-employees.

Related: 7 Questions Non-Profits Should Ask When Choosing a Travel and Expense Management Solution

ROI for the Organization

While having an expense automation system is certainly a boon for those who incur expenses, it also needs to offer a good return on investment for the organization itself – this is especially the case for non-profits and NGOs. From an operational point of view, automating expense management can reduce the per-report processing cost by about 75 percent.

Related: The Operational Impact of Expense Management

However, you also need to ensure that your solution vendor gives you the most bang for your buck with the solution it provides. This means looking for a system that includes features such as analytics, changes to expense rules, and OCR, as part of the base price. OCR – optical character recognition – is particularly critical for organizations whose non-employees simply send in their receipts to a central admin resource, as it automatically extracts receipt data (vendor, type, date, amount), and imports this into the expense report as a line item.

Keeping volunteers and other non-employees happy is a surefire way to keep them coming back to support your organization. And they’re likely to be happiest when they don’t have to struggle with a cumbersome expense report, or wait for an excessive period to be reimbursed for money spent while furthering your cause.

Specialized features for non-employee expenses is just one way that an expense management solution supports the needs of non-profits and NGOs.