Studies show that one out of three nonprofit organizations endured a challenging year. Staggering national unemployment affected the ability for people to donate, plus it led to more people needing the assistance of nonprofit services. If you’re a nonprofit that felt the impact of a tough year and wondered how to turn the tide, below are seven financial wins to set your organization back on course.

Build a Reserve—Uncertainty reigned supreme last year. Many nonprofits provided more assistance than usual while others—such as the arts—faltered because several modes of fundraising were off-limits. If there’s one financial takeaway for all nonprofits, it’s the importance of building a reserve. Setting up and budgeting regular deposits will provide added protection from catastrophes, unlikely setbacks, and unforeseen circumstances. It likewise protects from the ebb and flow of donations.

Stay on Budget—Build a budget and stick to it. Don’t assume if you overextend your nonprofit in one area; another area will be able to absorb the loss. The only way to keep your organization on track is to adhere to the budget that is set. Part of this plan should extend beyond expenses and include building your reserve. 

Develop Growth Strategies—No business can remain stagnant, nonprofits included. Strategize on methods of how to grow your organization. Develop new revenue streams or new donors to reach out to, or maybe even think about new incentives to adopt. 

Open Lines of Communication—Fundraising and accounting teams should keep each other in the loop regarding expectations and performance. The accounting team needs to be notified if fundraising has not reached its goals, and the fundraising team should understand accounting’s projections. Keeping everyone on the same page alleviates financial misunderstandings within the organization. 

Monitor Finances—Sometimes, a nonprofit has blinders on and only looks at the organization’s whole. It’s essential to know and understand how each facet of the nonprofit is performing and how it functions together. If your organization has many arms, fully understand the purpose of each one. Regular updates and meetings to determine performance at a snapshot will help stave off any financial problems from the start.

Utilize Financial Dashboards—This vital step goes hand-in-hand with monitoring performance. If you don’t have a way to obtain a snapshot of your nonprofit’s finances on any given day, invest in this critical component. If you already employ this element, utilize it to stay on top of financial metrics and performance. There’s no better way to keep on top of the checks and balances of your organization. Compare and contrast the numbers over time to maximize profitability.

Understand Statements and Reports—990 reports, internal and external audits, all of it should be understood by your board. There are various nuances between them, and your accounting professional or auditor should help your board comprehend all of them to make better decisions.

Establishing budgets, understanding statements, and developing goals may not be the strong suit of every person inside a nonprofit organization. If you’re confused about one or all of these aspects, ask for professional guidance. It will be the most significant financial win for your organization. We can work to set your nonprofit on the correct path. Contact us to schedule a phone call. 

Katie Robinette

Co-Founder