One of the biggest challenges for nonprofit organizations is sustainability. Staying afloat during uncertain times can be especially tough without a proper financial plan in place. A carefully planned budget can help NPO’s maintain and improve their operations and even refocus their goals and objectives when challenges arise. Think of a budget as a roadmap that will guide your decisions on how…
By adopting nonprofit financial management best practices, organizations can optimize their present and protect their futures. Following a few key steps can make a big difference in the performance of a nonprofit, giving it the stability and flexibility needed to deliver on its goals and achieve its missions. Following financial management best practices also protects nonprofits from making costly mistakes or taking actions that compromise the organization’s integrity. While it is impossible to…
If you have ever wanted to expand your knowledge of nonprofit accounting basics, learning about functional expenses is a great place to start. Nonprofits have unique reporting requirements that set them apart from for-profit businesses. One of these reporting requirements is presenting an analysis of natural expenses by function – most commonly through the Statement…
Cash flow management in any organization is nothing more than the mix and timing of cash receipts and cash payments. In its most simplistic form, it is cash in and cash out and, ultimately, it is where budgets, projections and forecasts meet reality. It is critical to ensuring that funds are available to pay the…
Professional athletes measure their performance all the time. As Peter Drucker–the man who invented modern business management–famously said, “If you can’t measure it, you can’t improve it.” Even though professional athletes are not considered to be in business, they do just that. They measure their performance during each game, during each season, and during their…
For many nonprofit leaders and their accounting and finance teams the annual audit can be a stressful and disruptive time, commanding considerable staff resources. This should be the exception, not the rule. There are year-round strategies to help make audit time a less stressful experience. Storing required audit documents throughout the year An auditor’s PBC…
An assessment can be a valuable tool in determining the current state of your organization’s accounting and finance function. Not having a good grasp of this information can lead to challenges down the road such as inaccurate data used in decision-making or even an unfavorable management letter from your external auditor. A comprehensive accounting and…
For nonprofits, deciding on a board committee structure can be a challenge. Often, the decision is solely based on the number of board members and their talents and expertise. Proper financial oversight, however, is important to the success of a nonprofit because it ensures that the organization is in compliance with applicable laws, is acting…
5 Steps for Nonprofits to Develop a Wise Investment Policy Nonprofit boards have a fiduciary responsibility to protect the organization’s assets and ensure that they’re used to further the mission. Often, an important part of the board’s responsibility is deciding how to invest the nonprofit’s cash. That requires implementing a sound investment policy that balances…
5 Keys to Develop Your Operating Reserve Policy Every nonprofit needs to have sufficient cash flow to meet obligations. Setting aside an operating reserve is a smart practice as it provides a cushion against unexpected events that could temporarily impact the cash flow. Following are five best practices to follow when establishing your operating reserve…
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