Is Your Nonprofit Run Like a Business?
By Erica Crenshaw In Financial Leadership Posted September 17, 2015 0 Comments

The biggest problem funders have with nonprofits is that they don’t operate enough like a business. Nonprofits are accused of having lofty goals, and not having a solid plan that is backed by financial realities.

Nonprofits, on the other hand, are often underfunded and can’t afford to keep quality employees. The problem remains cyclical; therefore, solutions are rarely reached.
Absolute transparency is something that funders say is lacking when nonprofits ask for a specific grant or donation amount. Often times the need is expressed but exactly how the dollars will be spent is not clearly communicated.

Nonprofits, like every other business have overhead needs but these nonprofits are afraid to disclose the true cost because many grant makers are known for not wanting to invest in overhead.

This lack of funding creates high turnover, ergo, the funds meant for the particular cause has to be allocated to finding, hiring and training new employees.
It has become evident that nonprofits can avoid a lot of problems by just being completely transparent about their needs and demonstrate a consistent ability of being able to work within those financial needs.

How?

  1. Create a plan of action
  2. Develop a thoughtful monthly budget
  3. Outline each step and attach a dollar amount
  4. Prioritize the steps so funders can see exactly where and how their dollars will be invested.

 

Yes, invested. Funds are being invested in your nonprofits with a specific return – measurable outcomes.

With this method funders understand the need and what will and won’t be accomplished if certain financial goals are not met. This will hopefully clear up any ambiguity, keep everyone on the same page and keep goals manageable.

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