Charitable organisations have different goals, focuses, and structure than for-profit businesses. Because of these and other considerations, they require different advice regarding financial planning. The following tips are designed to help charities, even during tough economic times
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1. Be Knowledgeable about Tax Information
The IRS is a constant presence in the life of a charitable organization. For planning purposes, it is useful to know about the life cycle of a public charity, a useful refresher for many finance officers from the IRS, geared toward helping nonprofits.
2. Communicate with Stakeholders
An organization's stakeholders are its allies and can be an important resource. A charity may have among its supporters those with advanced skills that can be put to use for the cause. These can include accountants, auditors, bankers, and tax attorneys, to suggest a few possibilities. Communicate with them and avail the organization of that knowledge.
3. Balance Short and Long-term Planning
It is not enough for a charity to plan for next year alone; they must also plan for five, ten, and fifteen years. Striking a balance between immediate and long-term priorities can be difficult. In hard times, however, it may be advantageous to focus on shorter term goals until conditions improve.
4. Build Reserves for Lean Times
Inasmuch as possible, the organization needs to have reserves to handle times when donations drop off or unexpected expenses hit. Exercising fiscal wisdom, including cost control, capital management, and understanding cost structure, all help with this difficult goal.
5. Monitor Cashflow Carefully
Knowing where the money goes each month or quarter is a crucial step in planning. The organization must be attentive to this factor, not only because it affects the overall success of the mission, but because mismanagement draws the wrong kind of publicity and attention.
6. Improve the Skills of Managers and Trustees
Continuing education for finance officers, managers, and trustees can pay dividends as new ways to manage funds are discovered and better methods are learned. Organisations exist that help provide both training and support to charities seeking to improve their financial literacy, including Charities Aid Foundation.
7. Consider Outside Assistance
If possible, utilising professional financial planners to get an organization off the ground or fill in the gaps might prove an ideal solution to long-term financial planning. Many planners can put everything in order and then leave the regular staff with a tidy five or ten year financial plan.
8. Analyse Strategy Decisions
Analyze decisions and act with parsimony. Every decision should be goal-oriented and if the mission isn't furthered by a financial decision, then that decision should not be made.
9. Conduct Periodic Reviews
Learn from past and present mistakes, and use that knowledge to plan for a better future. Good organizations are continuously examining their decisions to find the strategies that worked best for them and got the results they need.
10. Engage in Contingency Planning
A charitable organization should always have a plan at the ready for emergencies and the ability to carry it out, if needed. This contingency plan will also require frequent, enlightened updating to ensure its viability, should the charity ever need to act in an emergency, financial or otherwise.In summary, charities have a lot to think about in terms of financial planning. Beginning with these tips, any organization should be able to improve its situation and clarify its direction and financial goals for the future.
Author Bio:
Emslie is a Manager for a popular charity and financial planning is her main priority. Emslie recommends Francis Clark Financial Planning for those looking for expert financial advice.
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