Nonprofit Leader: 6 financial actions to take right now
As part of my nonprofit consulting practice in Lake Nona, a community within Orlando, FL "the City Beautiful", I see plenty of nonprofits who could benefit from these 6 action steps. Whether you are here in Florida or anywhere else in the country, these steps could benefit your organization.
To be honest you probably should have already done these, which is why you need to get on them as soon as possible if you have not. I could put number one here in the introduction, but let's make it one of the actions and jump right in.
Note: For church leaders or other faith-based nonprofits, read this post which covers the same steps but incorporates prayer and other biblical principles.
Do not ignore finance Finance should not drive mission. However, you cannot ignore it either. You are a steward of the resources entrusted to you. Burying your head in the sand is irresponsible and dishonors your donors.
Revisit the mission You need to revisit the mission of your organization. What are you called to do? The mission you've been called to has to be the center of any financial plan that is put in place. As I mentioned under point #1, finance doesn't drive the mission, it supports and gives resources to accomplish the mission. Your mission must be clear in order to spend your financial resources appropriately.
Make, implement, and adapt a plan (ie - budget) Without a plan, you are sure to fail. Don't set out to make the budget without doing step #2 first. Finances will always show your priorities. What you put resources towards is what gets accomplished. If feeding the homeless is #1 after you do step two above, then it should get significant resources during this step. If hosting after school sports programs isn't on the list, then why should a large portion of the finances go towards supporting it? Once the plan is set, follow it. If it needs adjusting, make adjustments. It's not a static plan, it changes and adapts with new realities and priorities.
Make the Ask Why are some leaders afraid of this part? It's hard to ask for help. Our culture teaches us to be self sufficient and to work for what we have. Sometimes asking for financial gifts is seen as a handout. Nonprofits cannot operate without them. Invite people to participate in your work through their giving. Let them know of the needs. Let them know of the opportunities. Ask people to give. You aren't asking for a handout, you're giving them an opportunity to be part of what your organization's mission.
Enter the 21st century If you don't accept online donations, find out how and do it now. Very few people are using cash and even fewer are using checks. They want to give online or by text. They want to set up automatic giving on a weekly or monthly basis. Help your donors give to your mission by removing barriers. If our current pandemic and lack of in person meetings hasn't made this one obvious, then any encouragement I give here likely won't help you make the jump either.
Protect your people You are responsible for protecting the resources of the organization, however, you also need to protect your people. When people have pressure (a large medical bill) and opportunity (lack of controls) then they are quite capable of rationalization. Implementing financial controls is necessary and it is also the caring thing do. Cash should be counted by two people and never in the possession of a single individual, bank accounts should be reconciled by someone who doesn't have the authority to sign checks or make disbursements, etc. Trust your people, but also protect them.
As a nonprofit leader, you have legal responsibilities and you have fiduciary responsibilities, but you also have a responsibility to the mission of your organization. You have been entrusted not only with your people and the mission of your organization, but also with the financial resources within the organization. Steward all of them well.
I enjoy helping individuals with tax preparation and tax planning as well as offering tax help to individuals dealing with tax debt, IRS liens, IRS levies, Wage Garnishments, etc. I also service businesses (including nonprofits and churches) by providing tax preparation and tax planning as well as consulting for accounting, bookkeeping, and other finance related questions. I live in Orlando, FL, but I serve clients all across the country. Schedule an appointment if you need assistance and take a look at the resource page.
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*The blog posts (as well as the YouTube channel) are my personal opinions and thoughts about a wide range of topics. They are not meant to apply to individuals specifically and should never be relied on as tax or investment advice. You should contact a professional for specific advice before taking action.