7 Unique Nonprofit Financial Management Tips

Developing necessary financial skills can make a difference between efficient and inefficient management. Moreover, continually learning and books and online articles (such as this) will help you become more successful in the field of nonprofit financial management. In this article, you will find seven unique nonprofit financial management tips.

  1. Build Stronger Financial Leadership

According to one Forbes article, nonprofit organizations focus too much on bringing in more money instead of controlling their current capital. Finance shouldn’t be so focused on things such as budget cuts, clean audit, spending. While these things are indeed important, organizations tend to focus on them too much. Instead, an organization should encourage their financial leadership to discuss topics that matter: expansion, organize fundraising, promote system upgrades, etc.

Leadership should always have some strategic financial plan in mind and bring it forth at crucial meetings. Moreover, this will set an example for other employees and encourage them to perform better.

  1. Beware of Fraudulent Activity

Aside from the typical problems of almost every nonprofit organization (low budget, small size staff), nonprofit organizations are in significant danger when it comes to fraudulent activities among their executives, employees, and volunteers, according to the HuffPost article.

How does this relate to financial management? Well, fraud can tear down the organization no matter how prominent, successful and respectable it is. Financial problems won’t be a problem if you have nothing to manage. But imposing anti-fraud controls will help stop this activity (you can find tips in the article).

  1. Pay Attention To Cash Flow

As stated previously, strong financial leadership plays a huge role in this. Furthermore, the communication between accountant officers and financial leadership is essential in monitoring cash flow.

Careful monitoring can help organizations predict and anticipate cash flow problems, allowing them to prepare or even fix the problem before it even occurs. Improving accounting systems (from staff to technology), managing payments (payments and recipes), arranging credits, etc. Moreover, careful monitoring of cash flow can also help fraudulent activities, since they often leave a money trail.

Also, if you pay attention to cash flow now, it will undoubtedly help in the future, since the organization will be able to fix past mistakes or built upon the excellent decision and apply them efficiently.

  1. Apply Analytics

Analytics (like Big Data) help companies and organizations assess and analyze large amounts of data. Results of the analysis can be used variously (generally to correct and predict). Why? Data doesn’t lie. An organization can benefit significantly from analytics by having a better insight of their current expenses, running costs, and it can help them transition from passive recipient to an active pursuer of progress.

Moreover, analysts can help organizations predict future and evaluate how beneficial is each new funding opportunity is. Consider hiring someone outside of the organization, to lower the risk of data manipulation.

  1. Utilize Apps and Software

You have to go with the time. Using applications and software designed for financial management can help tremendously. If you can’t afford top of the line software, that’s not an issue.

There are hundreds of low-budget applications and desktop software that will do the trick. Moreover, you can even use free software. Software like Mint or YNAB already showed success in managing both personal and organizational finance more efficiently. You can find more apps in this Forbes article, or by just googling and researching the Internet.

  1. Build Reserve Funds

The disastrous situation may occur in any organizations, profit or nonprofit, and having a reserve fund can mitigate the risk and bring stability to the organization.

The reserve fund can help organizations stay alive in dire needs, cover unexpected costs, help fund great opportunities that can come in the future. The sooner the organization starts building this reserves, the better. Think about how you would manage personal finance. Similarly, saving money can be vital to successful financial management in the nonprofit organization.

  1. Plan Yearly Budget

Planning your budget is essential. Figuring out your expenses and your income (which usually comes in forms of donations, grants, fundraisers) can make your decision a lot easier.

Because yearly budget affects everyone and everything in the organization, it can help discover unnecessary costs, predict future operational fees, etc. Financial managers should also include potential incomes, though this should be done rationally and objectively, depending on the credibility and the felicity of the government grants and promised donations, number of planned fundraisers, etc.

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