6 Financial Tips for Nonprofit Organizations
Heading into 2022, the National Association of Nonprofit Organizations & Executives (NANOE) said that the nonprofit sector was facing “a potentially extinction-level event.”
Nonprofit organizations have always had an uphill climb. They must routinely prove themselves as worthy fiduciaries to stakeholders and constantly find ways to become more efficient. They must effectively tap existing sources of money while also discovering new avenues of funding. And they must do all of this while staying on the right side of financial and regulatory rules and guidelines.
It’s a difficult job and COVID made it even worse. Take a look at this spot check from NANOE right before the new year:
A recent study in New Jersey found that 78% of the nonprofits polled had already canceled programs and/or events, 17% suspended all operations temporarily and 27% laid off or cut staff (New Jersey Center for Nonprofits, 2021). The 207 nonprofits that responded to the survey had lost more than $46 millions as a result of the crisis already! Over 4,200 positions in 88 nonprofits were laid off or furloughed, even though 40% of the organizations were providing services deemed ‘essential.’
In other words, nonprofits are truly fighting for their survival. That’s why it’s more important than ever to have your numbers in order. To help you out, read on as we provide several financial tips for nonprofits.
6 Financial Tips for Nonprofit Organizations
Make the Board Earn Its Keep
At some nonprofits, board members enjoy a fairly cushy gig as mere advisers. The advice of experts isn’t to be discounted, but your board can do more. Successful people in positions of importance can also be responsible for helping in fundraising. That could mean helping the rest of your team dig up new sources of financial help, or leveraging their positions to procure donations of goods or services to be used in future fundraising events.
Have More Financial Accountability
When it comes to ensuring your finances are being properly managed and maintained, it helps not to have too many cooks in the kitchen … but it also helps to have more than one. Ensuring that multiple people have their eyes on finances and sign off on certain large outlays can reduce the chances of theft and internal scams. You could even contract an outside accountant to ensure your numbers are always clean.
Build a Financial Reserve (When You Can)
The statistics we listed above imply that few nonprofits have excess cash just lying around. So for many, building a financial reserve might not be realistic. But if you can afford to save a little, you’ll be able to build a backstop that could save your nonprofit organization down the road. That said, be as transparent as possible to all stakeholders about why the fund is there – a pool of untouched money when times are a little tight can be a point of contention.
Prioritize Donor Detention
A cardinal rule of for-profits and nonprofits alike is that it’s far more expensive to acquire new customers/donors than it is to retain them. And yet, if you go to some nonprofit organizations’ planning meetings for the upcoming year, you’ll see far more importance placed on sniffing out new donors than keeping current ones happy. That’s a mistake. Yes, you should always try to bring in fresh blood to grow your donations, but you should also realize the potential returns from paying more attention to people who have already proven they’re willing to open their wallets to you.
Make the Most Out of the Internet
In general, going paperless can save an organization on all sorts of costs. But a much more important reason to consider implementing an online donation is that younger generations are increasingly giving online. A few noteworthy statistics from the Blackbaud Institute:
- Online giving grew 9% year-over-year in 2021.
- Online giving is up 42% over the past three years.
- 12% of total fundraising now comes from online sources.
- 28% of online contributions come from a mobile device.
Get Help From the Pros
McManamon & Co. provides accounting and other consulting services to small- and midsize businesses, but we also have a team of nonprofit experts who can help you optimize your nonprofit’s performance, attain compliance, mitigate risk and reduce operating costs.
If you’d like to learn more about what we can do for your nonprofit, call us at 440.892.8900 or contact us online today.
Tags: McManamon, McManamon & Co., nonprofit | Posted in accounting tips for nonprofits, McManamon & Co., nonprofit