The past few years have been a testament to strength and perseverance, especially for small businesses and nonprofits.
Thanks to the pandemic and how the world shifted in 2020, organizations everywhere have adjusted how they raise funds, hold meetings, attend conventions, connect with their members and overall conduct business. The importance of things like long-term planning, emergency funds and financial dashboards have all come to the forefront.
Here are some financial resolutions for you and your nonprofit to keep in mind going into the new year.
[Related: How to Select an Auditor]
Start Long-Term Planning
Although recent years have shown us that it may be nearly impossible to know what’s going to happen 12 months from now, creating a multiyear budget might be in your nonprofit’s best interests.
Instead of setting vague, idealistic goals for your organization, start using current financial data, trend analysis and economic forecasts to make achievable goals and milestones for the next five years. What can you do now to build a strong foundation for your future success?
Use Financial Dashboards
Instead of bogging down board members with pages and pages of financial data, consider using a visually pleasing dashboard. It’ll simplify statements and make them easy to understand and analyze. A one-page data report can facilitate meaningful conversation, determine key performance metrics and convey relevant information.
Check out our blog on demystifying financial data for board members using dashboards.
Create an Emergency Fund
Since 2020 and the pandemic, many businesses have experienced the need for emergency reserves.
If your nonprofit doesn’t have an emergency operating reserves fund, create one. It will help stabilize expenses during sudden bumps in the road or unexpected income losses. If you already have one, review its regulations.
[Related: Top Skills of Nonprofit Accountants]
What does your nonprofit consider an emergency? How much can you withdraw from the fund? What’s your plan to replenish the fund?
Remember: Emergency operating reserves should be to help your nonprofit during short-term problems, not long-term financial structural issues.
Diversify Your Funding Sources
When it comes to funding, small business owners and those working with nonprofits should know by now to expect the unexpected. Your nonprofit should take advantage of multiple funding options rather than rely on just one or two main streams.
Consider new ideas for funding sources, such as these:
- Applying for government contracts and grants
- Creating an e-commerce store
- Hosting virtual parties
- Inquiring about corporate sponsors
That’s by no means an exhaustive list — do some brainstorming and work together to find innovative options.
Monitor Your Internal Control System
Your internal control system (ICS) should be well designed and functional to help your organization mitigate shortcomings and thrive in the new year. One essential aspect of a successful ICS is monitoring. In sum, monitoring ensures everything operates smoothly when it comes to your ICS.
Your nonprofit should make this a priority in the new year.
Department heads and managers in your organization should provide feedback regularly and communicate in a timely manner to the board and to others who can take corrective action. A consistently monitored ICS increases your nonprofit’s effectiveness and also reduces costs when it comes to events like audits and financial reporting.
Submit Requests for Proposal to Help Your Organization Succeed
The last two years have taught us that we should view asking for help as a positive thing — not as a sign of weakness.
In the upcoming year, if your organization struggles with providing quality services or achieving its goals, you should consider submitting a request for proposal (RFP). When done well, RFPs help organizations outsource things like projects or services that they don’t have time for or the resources to complete in-house.
Creating a quality RFP using best practices can increase your ROI and further your nonprofit’s reputation as an organization that delivers the best-possible services. Don’t struggle to keep your head above water by tackling something that you could outsource.
This next year should be the year your nonprofit focuses on its mission and its members.
[Related: Fundraising in a Soft Economy]
Leave Your Accounting to a Nonprofit-Focused Firm
Jacobson Jarvis is ready to help you with all your not-for-profit financing and accounting needs in the new year. At Jacobson Jarvis, we provide unmatched quality of work and customer service for the entire nonprofit community.
Contact us today to get started.