Essentials of Nonprofit Financial Management: Strategies & Tips to Excel

This book is the product of years of working both in the nonprofit and for-profit sectors. Doing so has equipped me with a good insight of their differences and similarities. A key difference in managing finances in the private sector versus the nonprofit sector is the altruistic mission of a nonprofit. Many believe that the private sector is purposed solely to attain a financial reward or profit while the nonprofit objective is simply to “do good”. Although some may question the accuracy of this statement none can deny that both the nonprofit and the for-profit sectors require financial resources in order to function. In reality, a nonprofit, not unlike a for-profit organization, need to have a financial grasp. In fact, doing so is integral to sustainability and the continuation of the nonprofit to provide a much needed public service.

This book seeks to equip nonprofit leaders, employees, volunteers, funders,
and anyone else with an interest in a nonprofit, with strategies and techniques that can minimize the obfuscation that can arise in managing the nonprofit finances. This book identifies best practices in order for nonprofits to not only survive but strive in an environment that has proved challenging for a great many of nonprofit—small to large.

Generally speaking the nonprofit must address three key functions, which include: strategic planning, financial analysis, and ongoing monitoring. These interlocking duties are needed for a nonprofit’s longevity.

These three functions are detailed in this text: First function, a strategic plan, is a thorough conceptualization of the operational and technical details of the nonprofit. Second function, is a detailed financial assessment, current and projected, of the nonprofit. Third function, is an ongoing monitoring of the strategic plan and financial status of the nonprofit. Exclusion of either can greatly diminish the longevity of a nonprofit.

In this text all three concepts are discussed. However, the primary focus is on providing strategies and tips on analyzing the finances of a nonprofit—the second function, financial analysis. This book discusses budgets, cash, costs, financial statements, establishing internal controls, various financial ratios used to evaluate nonprofit finances, and real world practices on how to use them. Whether as a new nonprofit or one that has been around for decades this book concisely provide a high level view of the complexities of finance in an easy to read text.

It is the hope and desire of the authors, staff, and board of Bolder Business Consultants that this material proves beneficial for those currently working at a nonprofit, funding a nonprofit, as well as for those who aspire to fund or work at a nonprofit.