The founders of your organization recognized a pressing need, and their passion drove them to pursue support in your community among friends, businesses, and government organizations. Even if you aren’t a founder, you too share in the original and expanding mission of your nonprofit. You recognize that management carries all the weight and responsibilities as for-profit businesses but without the same income-generating potential that they do. In fact, your organization may exist as a counterweight to the long-term effects that business growth has on your city and community. If it weren’t for the efforts of your nonprofit, some of the chronic issues that surround us would grow unabated. As a manager, director, or board member, nonprofit financial management is also a topic that never retreats from your meetings, and you are always looking for new and innovative ways to streamline your operations.
For nonprofits, financial management is mission-critical
To plan a successful program season, you need accurate budgeting. Fortunately, your planning team is already seasoned in itemizing costs. Together with your staff accountant or bookkeeper, you can get all your needs for the next cycle into your accounting application. Now that you’ve aggregated all operational expenses, including salaries and overhead, you can determine the financial health of your organization. Based on this assessment, you can determine how well your funds (and pledges) can support the work that you do. The best obvious scenarios are for service programs to maintain the status quo or to expand. However, they do sometimes need temporary cut backs to ensure the continued viability of the organization.
Nonprofit financial management is a common challenge because 63% of organizations reported last year that they have less than 6 months of finances in reserve. Of the 63%, 31% have 4 months or less to operate on. These statistics wouldn’t bode well for profit-driven business managers, especially for publicly traded companies, but nonprofits are unique. Non profits, by nature, don’t have massive treasury accounts or credit lines at banks, and liquidity is a constant challenge. In fact, fundraising is always a top priority. Thirty-nine percent of nonprofits reported seeking new sources of revenue as their main goal this year.
Cost control and expense auditing
Nonprofits do run on thin cash flows, which is why cost controls and auditing your expenses should take priority right alongside fundraising. It doesn’t have to be a “knee jerk” reaction to ballooning costs or a misinterpreted as anything personal if you set in a place a cost control standard. Create an expense auditor role within the board of directors or hire a third-party consultant if you suspect appointing someone from within your organization would cause political conflicts internally. The point here is that identifying cost cuts does not mean also putting the effectiveness of your organization in peril.
Consider outside advice from nonprofit experts
Perhaps you haven’t spent much time thinking about nonprofit organizations hiring financial advisors, however, 501(c)(3) experts do exist. Your well-run nonprofit is a direct reflection of the leadership, continuity, and professionalism of your organization. A financial audit from a specialized consultant can reveal a lot about your nonprofit that you did not consider before.
Nonprofits compete just as for-profit businesses do, but they compete for donor dollars. Patrons want to hear about the impact of the programs they contribute to. However, they are also interested in knowing that funds are spent effectively and that directors make risk management a priority. A non profit financial consultant can audit your expense accounts and identify what budgets can be scaled back or increased to improve overall operations. They can also identify whether you’re expensing something that generates little benefit and can be reduced.
Nonprofits, like businesses, need to have a means of fraud detection and deterrence. With so many large companies facing major data breaches recently, non profits are also at increased risk. A data breach that exposed the personal information of partners, donors, or employees could be devastating to an organization. SD Mayer can help turn anti-fraud risk management into an internal function that will add a critical layer of security to your organization.
Refocus on your mission
SD Mayer works diligently to assist managers to be the best at what they do. They are a team of professionals who know how to identify new opportunities to help their client organizations run more efficiently, lower costs, and streamline operations. SD Mayer recognizes that the nonprofits can become more successful with a holistic approach, combining mission, math, and planning to ensure your success. You do so much for your community, and you should be able to focus on that while having peace of mind that your organization’s financials are in expert hands.
SD Mayer’s team of financial advisors recognize that nonprofits form the backbone of our communities, and we are committed to helping ensure this continues. We can help you streamline your organization’s finance and tax concerns so that you can spend your time doing what you do best: serving your community. Contact us today to find out more.