Even if you don’t work for a nonprofit, many of us are connected to nonprofits in countless ways. Most colleges are nonprofits. Religious institutions are nonprofits. The list goes on. Most of us care – and some care deeply – about at least one nonprofit. Today I want to talk about a challenge nonprofits face but do not like to focus on: finances.
By it’s nature nonprofits are meant to focus on things other than financing, and nonprofits are better or worse at this function. The reason can be a change in the economy and subsequent decrease in voluntary (or government) funding, or a vision change that made some supporters jump ship. Whatever the point is, I think we can all agree that nonprofits function better when they are financially sound.
1) Have someone with a background in finance on your staff
One solution to the financial challenges nonprofits face is to have someone on staff who has a background in finance. Whether they are an account or worked in some other area of finance, such as capital management, this background can be invaluable to nonprofits. Of course, oftentimes these individuals can make more money elsewhere, making them hard to attain. Having them on staff, though, may be worth giving them additional perks like extra paid time off or flexible work-life balance that includes telecommuting or choosing the hours they work.
The other option is to seek outside help and counsel from people who specialize in the finance side of philanthropy and nonprofit management. There are various financial institutions, consultants, or other resources that can provide nonprofits the guidance they need.
2) Raise more Money
Some may criticize me for constantly saying that increasing income is the solution for many problems. In reality, though, if you keep the same expenses but bring in more money, an organization can be much better off and better prepared for the hard times or unpredictable financing.
Raising more money can be as simple as getting the word out about your organizations. In my job in corporate finance the company oftentimes will allow us to go out as a team and volunteer at various nonprofits in the area. This has the dual benefit for the nonprofit because they will be able to have some helping hands for an hour or two as well as be able to expose people to their organization and what they are all about. It just might result in some new donors.
Understanding that people want to be philanthropic even if they are not wealthy is important too. I’m a young adult in my early 20s with a ton of student loan debt. Despite that, I do think it is important to be philanthropic and have regular payroll deductions that go to organizations that have welcomed me as a volunteer and have really focused on showing me the vision of their organization.
3) Be Transparent and Get People on Board
Having transparent reporting and communication can work wonders for a nonprofit. If a church is constantly asking for money because they are in debt, perhaps an open dialogue about how the church got to this place and what their plan is for the future may inspire people to donate more and help them get through these hard times.
Having people on board with the vision of a nonprofit is a key point that I think some leaders miss. If the participants, volunteers, and donors of an organization are not fully on board with the vision you can’t expect to have predictable financing. I would advocate regular communications about where the organization is going. If you want to grow 100% in the next two years, say it! If you want to keep the organization the same size, say that as well.
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Photo by Stein Ove Korneliussen
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