How To Manage And Better Your Non-profit Without Losing Money
These are four strategies non-profits of all sizes can implement to reduce money leakages and improve performance.
11:09 28 April 2021
Everyone from the top executive right down to the field staff in a non-profit is working with one motive in mind and that is to spread positivity and in some way add value to people's lives. However, even a company that works for the benefit of others has expenses it incurs and needs to have effective money management strategies in order for it to survive.
Traditional businesses and for-profit organizations can afford to incur more losses as they can make up for it later when they make profits. Non-profits on the other hand not only suffer loss when they spend inefficiently but it also impacts their reputation in the eyes of donors and stakeholders. Moreover, it is important to have effective money management as a non-profit as the available funds are resources donated by individuals with the intention of helping others, not running a business.
1. Focus On Returns, Not Expenses
Rather than trying to do the most with the least amount of money, try to get the best possible job done, even if it limits what you can do in the long run. Investors, donors, and even recipients of your work are looking to see results, not your balance sheet.
If you can't deliver quality work it is unlikely anyone will want to work for you or have you work for them in the future. Philanthropic efforts should be high quality. If you can provide a high level of service people will not think twice before investing in your project or hiring your non-profit to deliver on a project for them
2. Evaluate First, Raise Funds Later
A lot of new non-profit startups spend too much energy in the fund-raising part of their business and not enough time in critically evaluating their mission and what it will cost to achieve success.
Non-profit companies don't have to be cheap. If you can justify your expenses and illustrate to donors that you are putting the money to good use, they will be happy to pay for the task. When you start with a budget and then try to tackle the problem, you end up cutting corners and never getting the job done right. You first need to evaluate what it will cost, then raise funds to meet that requirement. Ideally, you should factor in unseen costs and have an overhead margin.
With the right funding in your pocket, you can start with tackling the problem. It would be a good idea to use management software, and you’ll be able to find the best if you look for the best out there by checking out their website to get a better understanding of the features and services available. It’s extremely important to keep track of expenses and operations and set budgets for particular things.
3. Create Revenue Streams
The non-profit status doesn’t mean you can’t make money. It doesn’t mean that you can’t have operations that are actually profitable and provide valuable income which contributes towards the growth of your non-profit.
Some of the biggest non-profit companies in the world have solid revenue streams and operations which generate good income for them. In this way, they are barely dependent on donors. Some large non-profits earn up to 90% of their operational expenditures through their revenue streams.
This gives you autonomy and the flexibility to do what you have to, to achieve what you need to.
4. Manage It Like A Business
Just like a traditional business, non-profits have expenses, they have targets and they have an infrastructure to feed. There is no reason to not manage your non-profit like a mainstream business. The only way you are going to keep it running long term and see growth is if you can take strategic decisions which are all about increasing ROI and optimizing expenses.
The main takeaway is to focus on the non-profit just like any other business. Do not allow yourself or the company, any room to relax just because it has different aims than a traditional business operation. The problems are the same, the possibilities of growth are the same and the resources you have are probably fewer, if not the same as a business.
Non-profits need to take more caution and be more proactive than any other kind of institution when it comes to management and specifically money management, to keep the house in order. Stakeholders will be watching with their eyes peeled for any signs of weakness and inefficiency as they are investors in the operations and not just recipients.
The best way to lose less money as a non-profit would be to have more money-making systems that help to cover the basic functions. If the fundamental expenses are cleared, donations and additional income can be used to more effectively achieve targets and achieve growth.