If you run a nonprofit organization, then you know how difficult the financial aspect can be when you’re so driven by and focused on your important mission.
But if you want your nonprofit to grow, you need to establish good financial practices now.
Here are some essential tips to help make raising funds and overseeing your organization’s finances a little bit easier.
Create an Annual Operating Budget
Whether your organization is for-profit or a nonprofit, all businesses need a realistic annual operating budget.
Each year, you should consider the expenses of your nonprofit: programming and services, staffing, rent, utilities, administrative costs.
While many on the items on this list are fixed costs, your programming and services are where you’ll see more ebb and flow.
You need to understand your programming costs, as this will help you make informed and strategic decisions for your nonprofit throughout the year. Knowing your costs will help you understand your business’ fundraising needs.
And remember: your operating budget is a living document. You might write it ahead of the new year, but it will be adjusted throughout the year to adapt to any financial changes in your business.
Elect a Treasurer You Trust
All nonprofits are required to elect a treasurer. This person will have a finger on the pulse of your organization’s financial activity.
It’s important to put a lot of thought into who will fill this role. They’ll have access to the nonprofit’s bank accounts and information.
They’ll also be responsible for documenting everything. Every purchase. Every expense. Every dollar that comes in.
Your board must select a treasurer with a mind for numbers, ideally a background in accounting, and an understanding of non profit accounting basics.
Transparency is Key
As a nonprofit organization, transparency is important. Your financial information is public record.
In fact, the IRS requires tax-exempt organizations to make much of their annual financial information available for public inspection.
This transparency is also useful in raising funds, as it plays a key role in winning grant money and drawing donors who want to support your mission.
Stay Organized Throughout the Year
Since your financial information is public, it’s important to make sure the numbers are correct.
To keep on top of your finances, you should keep your financial records organized throughout the year.
Hire Outside Help as Needed
While your treasurer should have a firm grasp of accounting basics to take on the role, it’s important to remember that your board is composed of volunteers. They’re individuals dedicating their time to your nonprofit and its work in the community.
Your treasurer is responsible for financial record keeping, but if any major issues arise, consider hiring a professional.
Some scenarios where you’d want to bring in an accounting professional are during tax season, an IRS audit, or you’ve received a large donation.
Find Diverse Funding Sources
Fundraising is key to bringing in the money you need to operate your nonprofit. You need to have a good reputation in your field for creating and offering impactful programming.
But what happens if donations dry up? This could happen during economic downturns or following a national emergency that diverts attention to specific industries.
This is why it’s important to find diverse funding sources for your nonprofit.
Consider applying for grants to fund your operations. You can find government grants through your local cities and counties, your state, and at the federal level.
Other possible funding sources for your nonprofit include membership fees, corporate sponsorship, and special event fees.
Want to Learn More About Running Your Nonprofit Organization?
Ready to learn more about growing your nonprofit organization?
A nonprofit is still a business. So, many business practices – from marketing to financial management – will apply to your organization.
Check out our blog for more tips on growing your business.