Nonprofit leaders are usually focused on serving their communities, not on compliance, regulations, and policies related to operating a small business. Limitation on time, funding, and technical knowledge can make it challenging to navigate and follow financial rules and regulations. A nonprofit’s financial practices are critical to the organization’s ability to achieve their mission and protect their assets. Here are five questions that highlight why nonprofit finance matters to an organization’s success.
- Impact: Is the organization able to do what it set out to do?
- Efficiency: How well does the organization use its money?
- Liquidity: Does the organization have money in the bank (for short-term obligations)?
- Profitability: Is the organization generating more money than it spends?
- Solvency: Is the organization worth anything (i.e., assets exceed liabilities)?
Also, there are many layers of individuals and agencies involved in unlocking your nonprofit’s financials for mission delivery and asset protection. From the board to staff to the IRS each group has a role in building a nonprofit with exceptional financial compliance and effective practices that support the organization throughout its lifecycle.