Manage NGO Cash Better with These 3 Practical Pointers
Non-governmental organizations (NGOs) are crucial in supporting communities and addressing social issues. However, managing finances is one of NGOs’ most significant challenges. NGOs require significant funds to operate, and efficient use is essential to ensure sustainability. So, managing NGO cash better is critical to running a successful nonprofit. Here are three practical pointers to help NGOs manage their cash better like a CPA for nonprofits:
Develop a Budget and Stick to It
The first step in managing NGO cash better is to develop a budget, a financial plan outlining how much money the organization expects to receive and spend over a specific period. A budget requires a thorough analysis of the organization’s financial needs, including salaries, rent, utilities, equipment, and other expenses.
Once the budget is in place, monitoring and tracking actual expenses against the budget is essential. This will help identify areas where the organization is overspending and areas where it can cut costs. It is also crucial to adjust the budget to reflect changes in funding, expenses, and other factors that may impact the organization’s financial situation.
To stick to the budget, it is crucial to establish financial controls and procedures that ensure expenses are within the budget limits. This includes requiring approval for all expenses, maintaining accurate financial records, and conducting regular financial audits.
Diversify Funding Sources
NGOs often rely on a single funding source, such as grants or donations from a particular organization. However, this can be risky because the organization may need help to operate if that funding source dries up. So, it is essential to diversify funding sources to reduce reliance on a single donor or funding stream.
Diversifying funding sources can include:
- Soliciting individual donations.
- Applying for grants from multiple organizations.
- Partnering with other NGOs to share resources and expenses.
Building relationships with funders and donors is also crucial to ensure continued support.
Another way to diversify funding sources is to generate income through social enterprise activities. Social enterprises are businesses that operate for a social or environmental purpose and reinvest their profits into the organization’s mission. This can include selling products or services, renting out space, or running a training program.
Invest in Financial Management Expertise
Managing NGO finances is a complex task that requires expertise in financial management. However, many NGOs need to gain the necessary skills in-house, which can lead to financial mismanagement and inefficiencies. Therefore, investing in financial management expertise is crucial to ensure the organization’s financial health.
This can include hiring a finance manager, a CPA for a nonprofit, or outsourcing financial management to a reputable accounting firm. These professionals can provide financial planning and analysis, budget management, and financial reporting services. They can also help the organization comply with financial regulations and requirements, such as tax filings and audits.
Investing in financial management expertise can also provide the organization with the tools and knowledge to make informed financial decisions. It can help identify areas where the organization can save costs, increase revenue, and improve financial efficiency.
Providing Accounting Services in Framingham, MA
Managing NGO cash better is essential to ensure the organization’s sustainability and success in achieving its mission. Developing a budget, diversifying funding sources, and investing in financial management expertise are three practical pointers that can help NGOs manage their finances better. By implementing these strategies, NGOs can operate more efficiently, reduce financial risks, and achieve their goals.
Ash CPA has a history of managing accounting and finance operations for small to large-sized companies, resulting in their overall growth by helping them strengthen their financial system through sound accounting, improving procedures, financial reporting, and working capital. We develop efficient financial controls, policies, and procedures resulting in profit gains, operational enhancements, and asset protection. Call (617) 462-651 to inquire about a CPA for a nonprofit.