Good financial management is crucial for nonprofit organizations. Here is some useful information to help ensure a smooth and complete process.
Financial management basics and best practices
- Sound Financial Management for a Sound Night’s Sleep – Third Sector New England
- Basic Overview of U.S. Nonprofit Financial Management – Free Management Library
- Financial Management – National Council of Nonprofits
- Plan for a Fun and Successful 2013 – Chris Bertoncini
Budget
Here is some helpful information about creating a budget. Be sure to start planning your annual budget at least three months before the end of your current fiscal year.
- Non-profit Budget Tips for a Healthy New Year – Third Sector New England
- Annual Budget Planning: A 10 Step Checklist – Nonprofits Assistance Fund
- Nonprofit Cost Analysis: Introduction
Payroll
Some argue that it’s better for smaller nonprofits to outsource their payroll, but if you are thinking of doing your own, here are some suggestions.
Audits
An audit can be a daunting process. In Massachusetts a formal audit is required for organizations with budgets over $500,000. An external financial review (less ambitious than an audit) is required for organizations between $200,000 and $500,000. Here is what you need to know about audit requirements, which might help ease the burden.
Capacity building
You hear the term capacity building a lot, but you may not know what it means and why it is important. Here are some answers to your questions.
- Capacity Building (Nonprofit) – Free Management Library
- Capacity Building for Nonprofit Organizations: A Resource List – Foundation Center
Third Sector New England provides Capacity Building grants to area nonprofits: Capacity Building Networks
Endowment
Thinking about starting an endowment? They are not just for large organizations. They can be an important tool for long term discretionary and/or matching funds.
- How to Start an Endowment for Your Nonprofit – About.com
- Investment and Endowment Policies – Nonprofit Assistance Fund
Reserve fund
In this unstable economy, it’s even more important for organizations to have a reserve fund. Most organizations should try and carry a reserve of at least 3 months operating expenses.
- Operating Reserves – Nonprofit Assistance Fund
- What Level of Reserve Funds is Appropriate for a Nonprofit? – Board Source
Financial management in tough economic times
It’s been a difficult time for many organizations. Here are some ways you can manage your budget and organization during this recession.
- Financial Analysis in Turbulent Times – Third Sector New England
- Four Questions for Charities to Answer as They Seek to Thrive in Hard Times – Bridgespan
Fiscal year
All organizations operate on a fiscal year. Many nonprofit organizations’ fiscal year runs from July 1 to June 30. Some use a calendar year and others model the federal government and run from October 1 to September 30. It’s up to your board to decide what would work best for your organization.
