Planning Your Nonprofit’s Sustainable Financial Management – A Guide to Strong Financial Leadership

by | Nov 27, 2017

NFP Partners has talked about areas to focus on that relate to nonprofit financial planning, monitoring, operations, and governance.

In a previous article, we wrote about focusing on governance. We’ve also discussed the strong financial leadership a nonprofit organization should expect from their Board of Directors. We’ve talked about creating dashboards as a summary of financial data and key performance indicators. These dashboards can assist your nonprofit in changing the conversation in planning the future as opposed to just reviewing performance.

Now, it’s time to discuss why Boards need to direct the conversation to sustainability if they want to ensure the continuing success of a nonprofit. Boards should be involved in setting goals and be reviewing the performance regularly, using the experience as a step towards shifting the mindset from oversight to sustainability. In doing so, this will help shape the focus on what is necessary for long-term success.

How can my nonprofit prepare for long-term financial success?

To plan and prepare for the future, setting goals for profit is imperative. Nonprofits, as well as for-profit organizations, should evaluate the effectiveness of all programming on an on-going basis. Additionally, constant refinement of existing programs and research for new ones needs to happen to ensure the continued success of the nonprofit. THIS TAKES MONEY!

You can start refining by asking if the existing programs are all carrying their weight financially. If not, explore options for partnering with another nonprofit that may have a similar program and get that one “off the books.”

Next, develop ongoing financial projections, keeping in mind the budget and the cash projection examples we discussed in an earlier article. These projections will help you know how the organization has performed to date in comparison to the budget and also how it is expected to complete the following:

  • Perform status quo
  • Find new funding streams
  • Lose a budgeted funding stream
  • Respond to impact(s) of staffing changes

Accordingly, NFP Partners does projections for several nonprofit clients. We use the budget as a basis for the forecasting. We also use it as an opportunity to incorporate changes that have occurred since the budget season.

How can my nonprofit make informed financial decisions?

In addition to the previous tips, nonprofits can refer to the following when making informed financial decisions:

  • Project to the end of the current fiscal year and develop an ongoing, rolling projection
  • Continue to grow and develop your nonprofit’s key business models
  • Ensure that your message doesn’t get old and do so by being innovative
  • Set aside funds to explore new business opportunities. At the very least, personnel resources or contractors to develop an idea that can be market tested to determine the validity. Also, use resources to create a business plan for that new business idea to quantify the effect the program would have on the organization’s bottom line.

To find every article in our series, A Guide to Strong Financial Leadership, click here.

Thank you for reading,
Laura Jorstad
Managing Principal