pexels-photo (1)Having a good grasp on your organisation’s finances is the key to creating a nonprofit that is strong and flexible enough to weather hardships and setbacks, and flourish over the long-term. The following strategies can help your nonprofit improve its financial position and increase its stability.

Increase Transparency

Full and open disclosure increases accountability and performance, but, it’s also important to provide notes, details and supplemental information that will improve clarity. NFPs should also work to balance their release of information so that it works to increase understanding about our programs, processes and total costs. This allows everyone to see how specific areas of your operation impacts your financial stability, without overwhelming stakeholders and creating greater confusion. Always be on the lookout for ways to improve your financial reporting so that increases understanding.

Move Towards Greater Stewardship

Past decisions often come back to haunt NFP boards. To increase your financial stability and sustainability, take a more active role. Move past merely being the passive recipient of funding. Get to the heart of your sources of revenue and seek to understand the obligations and long-term expenses that are attached to specific financing sources. This one step will help you gain a better understanding of your NFP’s business model and will provide greater insight into the full cost to operate programs and provide services.

Evaluate All Sources of Funding Before You Allocate the Money

Does your nonprofit spend too much time chasing specific sources of funding without taking into consideration the cost associated with accepting the funds? Administering grants and other sources of funding typically require nonprofits to spend the money in specific ways that may take away from the NFP’s long-term sustainability and capacity to serve. This is especially true in those instances where accepting the funds will require the nonprofit to offer programs and services outside its core mission and objectives. Avoid chasing grants or contracts that will overextend your organisation and distract it from its actual cause.

Establish a Reserve

No matter how great your impact, or how wonderfully major donors support your nonprofit, there is always a risk that a main source of funding could unexpectedly become unavailable, or, specific costs might rise and negatively affect your NFP’s ability to provide services. Help your nonprofit prepare for these types of setbacks by including a reserve fund in your budgets and strategic planning.

Move Past Compliance and Assume a Greater Role in Strategic Planning

Is your volunteer treasurer spending all their time and energy chasing compliance issues? While compliance is a significant issue, you’re underutilising their talents if this is their primary role. Encourage your treasurer to take a more active part in your organisation’s planning activities and decision-making processes. In addition to preparing budgets and tracking spending, partner with them to increase the entire board’s understanding of the true costs associated with activities such as fundraising, program operations and your capital building projects. It’s difficult for many treasurers to free-up enough time to become active planning partners with their boards. Make it easier on them to fulfil all their duties and increase the accuracy and timeliness of their reporting by giving them the tools that they need to perform the role well. Admin Bandit’s accountancy software simplifies most of the processes, making it easier to perform essential record-keeping, reporting and compliance-related tasks and freeing up your treasurers’ valuable time so that they can take a more active role in oversight, guidance and planning.

Keep an Eye on the Future, but Ground Your Plans in Reality

Your mission and critical objectives should always be the starting place for developing your nonprofit’s strategy; so, don’t wait for the annual budget to begin strategic planning. Always keep your NFP’s long-term goals in mind when creating your budget, and, keep in mind past performance when making your projections for both revenues and expenditures. Using this approach will help your nonprofit create more realistic budgets and enable your board to make better financial decisions.