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The Challenges of Non-profit Financial Leaders: Donations, Dues, and Don’ts

The Challenges of Non-profit Financial Leaders: Donations, Dues, and Don’ts, Centage
Nonprofit organizations issues and concepts word cloud illustration. Word collage concept.

Facing hurdles in the non-profit world is a different animal than we see in the private sector. Preparing financial statements, tax returns and grant applications can be jarring if you aren’t prepared for the shifts needed to make a smooth transition. Forming and executing the group’s strategic vision can be equally as challenging.  Size varies of course. Non-profit organizations are everything from single-person initiatives to global organizations with thousands of locations.

Rather than working toward earning the highest profit possible, the primary goal of a non-profit is to serve their constituents and their mission but that doesn’t make managing their books and budgets any easier. Sustainability and keeping an eye on cash flow are just some of the fundamental responsibilities that non-profit financial professionals take on.

Managing the Money

Once you pass the hurdle of acquiring funding (which is a whole other matter), the work just begins.

  • Projecting donations – Business directors in non-profits have to look into their crystal balls just as we do in the corporate world. You have to anticipate the types and volume of monies, trusts, and property coming through the door when there is little or no control on whether they’ll come to fruition.
  • What if planning – Making assumptions about the economy, incoming funds, and the needs of the beneficiaries is an imperfect science. With people (or puppies) depending on the organization, scenario planning is imperative.
  • Multiple income streams – Fund raising events, physical product sales, and real-estate endowments are only a few of the ways that non-profits get money to provide their services. Annuities, securities, and even life insurance gifts can require unique knowledge to properly manage, convert and utilize their distributions.
  • Restricted donations and grants – Forecasting, tracking and non-profit reporting on monies that are earmarked for specific use is quite a job. Managing and documenting the income and outflows for government or private grant programs takes serious attention to detail.
  • Text to Give – In 2010, the Red Cross raised $43 million to aid victims of the devastating Haiti earthquake. Amazingly it was done through modest $10 donations by people sending a text of the word ‘Haiti’. Innovative fundraising methods spread awareness of the group’s needs to the public while securing the monies they need to aid others.
  • Bitcoin – The adoption of bitcoin donations by the non-profit world is adding yet another dimension to their funding portfolios. From United Way to global water purification projects, accepting bitcoin is attracting both new donors and public interest, raising the profiles of the organizations while securing funding and additional advocates.

Education Never Stops

There’s a continual need to educate individuals about the financial aspects of non-profits. Sharing your knowledge on everything from keying in transactions to reading financial statements to explaining metrics and reserve requirements often need to be done.

  • Staff and volunteers – Employment at non-profits is a growing sector in the economy but the team you work can sometimes have little or no accounting experience, let alone accounting experience within a non- Adjusting from the financial requirements in the corporate world can be coupled with an unexpected high turnover level.
  • Operational leaders – Depending on the size and function of the group, a managerial team might handle the day to day activity. Their skillsets might not include an understanding of non-profit accounting.
  • Branches and Chapters – Working with a non-profit, similar to a business, could include working at the headquarters of the group or within a local chapter or regional branch of the non- If you’ve been active in a professional association, you know that leadership and other volunteer positions can be transient. When people get overwhelmed with obligations, volunteer work is often the first area impacted. Turnover gets us again.
  • Board members – People holding board positions are passionate about the mission of the non-profit but they’re more likely to come to the board without the business experience or education than you would find in private industry. Enlightening them to their fiduciary responsibilities aids the organization and enhances the board members’ abilities to better serve the non-

Foundation for Success

Non-profit work itself is very fulfilling. You may be surprised at how much bringing your accounting and financial skills is appreciated. Whether choosing non-profit work for your professional career or through volunteering with fundraising, board or treasury activities, financial expertise can play a big part in keeping non-profits viable and able to focus on their missions.

If you’re not already involved, find some time to help an organization that shares your beliefs and values. They’ll be grateful and you’ll feel good too.

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