Changing the world was never supposed to be this complicated, was it?
You always knew that running a nonprofit was going to have its challenges. That’s half the reason you were attracted to the job in the first place.
Yet somewhere between the increasingly stiff competition for funders and legislation like the Tax Cuts and Jobs Act, which makes it tougher for taxpayers to claim charitable donations, there is one challenge proving increasingly difficult to overcome:
Keeping enough money to pay for the day-to-day operations of your organization.
For many nonprofit leaders, half the battle is simply giving money management the attention it requires. With so much focus on the organization’s mission, cash flow statements and balance sheets can fall by the wayside, often overlooked as a bothersome chore rather than an integral key to success.
But by failing to take a proactive approach to cash flow, those same leaders actually limit their ability to properly carry out their mission.
In 2013, the National Nonprofit Foundation conducted its annual State of the Sector Survey, finding that 16% of non-profits were operating with no more than a month’s reserves of cash, while 8% were struggling to get by with no cash whatsoever.
Things have hardly improved in more recent years. In 2018’s State of the Sector Survey, a large percentage of nonprofits were operating with less than six months’ worth of cash receipts.
Naturally, these limited reserves restrict an organization’s efforts to manage even their day-to-day operations, let alone invest in long-term future plans.
The good news is that it doesn’t have to be this way. In this guide, we’ll outline a few simple steps to improving your cash flow and limiting shortfalls without compromising the altruistic integrity of your organization.