5 Financial Management Tips for Your Non-Profit Startup

Lizzie Weakley

May 09, 2016

	Not rated
	Rate:

While most people who start a non-profit have the best of intentions, they often fall victim to poor financial management. To make sure this does not happen, it's vital to have a thorough understanding of the organization's financial needs prior to its beginning. While there are many different financial strategies for non-profits, there are some principles that apply to any type of organization.

Have a Clear Financial Strategy
Unfortunately, many people spend plenty of time deciding on their mission statement and strategy, but little if any time developing their financial strategy. Instead, taking a look at where the organization is at its beginning, where it wants to be in 5-10 years, and how it plans to achieve its financial goals will go far toward spelling future success.

Begin with Financial Reserves
To get off to sound financial footing, it's best to start an organization with an adequate amount of financial reserves already on hand. By doing so, the group has working capital to pay for goods and services, while also having money available to meet any unexpected expenses that may arise.

Have a Plan for Generating Income
While it's good to have a financial reserve when beginning, it's vital to have a plan for generating income in order to keep the organization viable over the long-term. In today's world, more and more groups use various types of online fundraising sites as well as social media to get the word out about their cause and how much money they need to operate. To do this effectively, it's a good idea to have a staff member who has a master’s of public administration since they will have likely studied budgeting and income generation while earning their degree.

Clearly Define Roles
Within any organization, power struggles and misunderstandings can lead to failure. Instead, make sure roles are clearly defined for staff members, managers, board of trustee members, and so forth. For example, day-to-day financial management falls on the executive director and senior management, while trustees usually meet monthly to review policies and finances.

Always Be Transparent
Above all, a nonprofit group must always keep the public's trust in order to survive. Therefore, it's imperative that all financial records always be available for analysis by board members and members of the public who work with or contribute money to the organization.

By implementing these financial management tips when beginning your nonprofit, there's a good chance you will find success in the years ahead.