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Return to Book Page. Financial Leadership for Nonprofit Executives: Making sure that your nonprofit is going to be around long-term requires financial leadership. Financial Leadership for Nonprofit Executives gives you the framework, specific language, and processes to lead with confidence. You already have many of the skills it takes to be a financial leader. This useful guide makes the process understandable and doable. At the end of each chapter is an evaluation tool.
You can rate how your organization is doing relative to the component of financial leadership covered in each chapter. Each attribute is scored as being red, yellow, or green. Paperback , pages. Guiding Your Organization to Long-term Success. To see what your friends thought of this book, please sign up.
To ask other readers questions about Financial Leadership for Nonprofit Executives , please sign up. Be the first to ask a question about Financial Leadership for Nonprofit Executives. Lists with This Book. This book is not yet featured on Listopia. Jul 27, Jeremy Floyd rated it it was amazing Shelves: Helpful overview of financial management in nonprofit organizations. Good resource for executives who have a basic understanding of the financial side of running a nonprofit but are looking for guidance in putting it all together into a comprehensive financial management strategy.
Useful and practical evaluation tools are provided. Nov 20, Dana rated it really liked it Shelves: Great overview to improve financial literacy for folks working with non-profits. I reread it in January before recommending it to our volunteer Board of Directors who are not sufficiently comfortable with financial management.
Jul 26, Melissa rated it really liked it Shelves: As a nonprofit board member, I've found this book very useful and referred to it many times. It gives practical information about non-profit accounting and the budgeting process.
Willam rated it liked it Aug 22, Commit to financial projection. At least quarterly, the management team should evaluate what they are learning about current and possible revenue streams, shifts in programming, and strategic opportunities, and there should be a means to capture that up-to-the moment thinking in a financial projection. Income diversification is often touted as a tenet of sustainability—the idea being that having all of your eggs in one basket is by definition riskier than having them in multiple baskets—or in this case, multiple revenue streams.
In fact, nonprofit business models vary considerably by field or service type. Determine the degree of diversification you need. Income diversification is more possible and more necessary in some models than in others. For instance, community mental health services are likely to be heavily government funded, and once a nonprofit has established a successful track record of providing these services, that government funding may remain in place for years.
Even though the organization is technically dependent on one set of government contracts, it may not be in a riskier position than another kind of nonprofit struggling to raise small amounts of money from individuals, corporations, and foundations, for instance.
The reliability and competitiveness of your revenue streams dictate the degree of diversification that you need. Income diversification carries some real risks. To attract new revenue streams, an organization has to develop and sustain new capacities. Each calls for specific skills, market connections, capital investment, and management capacity.
Only then will each product attract reliable operating revenue, pay the full cost of operations, and deliver results. Most financial reports are historical documents, useful to verify what has already happened and compare to budgets and plans.
Develop a cash flow projection. For looking forward, one of the most important tools is a cash flow projection. Unless your organization has built up a substantial base of operating cash, any nonprofit can run into cash flow problems. A variety of factors, including seasonal fundraising, annual grant payments, reimbursement-based contracts, and start-up costs for new programs. Anticipate—and resolve—cash flow issues. Cash flow projections require knowledge and judgment that the accounting department may not have.
Sarah added it Jul 21, Develop your annual budget with a commitment to its net financial result—whether surplus or planned deficit—and then adjust spending during the year if income is not coming in on pace to yield that net result. Ashley Sukalski marked it as to-read Nov 01, Determine your reserve goal. Mandi marked it as to-read Feb 21, Beverly Bushyhead added it Feb 14,
Because of this, executive directors need to have a direct role in developing useful cash flow projections, agreeing on the assumptions to use, and reviewing the projections carefully. The earlier you anticipate cash flow issues, the easier it is to address them.
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As a first step, assess whether the cash flow shortfall is a problem with timing or is an indication of a deficit. The strategies used to solve the cash flow problem should match the cause of the shortfall. Timing problems can be prevented by managing the timing of payments and receipts, improving internal systems, or arranging for a line of credit. Shortfalls caused by deficits need to be solved by budget adjustments or strategic choices to absorb a near-term shortfall.
All of these options need the input and support of senior management. Managing cash flow is not a one-time activity. Insist that projecting and discussing cash flow every month or quarter become routine practice. Having a cushion of cash that can absorb an unexpected delay in receiving funds, a shortfall in revenue for a special event, or unbudgeted expenses can stabilize an organization. Nonprofits that have built up a good cash cushion have had options and opportunities during the recession that have allowed them to respond to reduced income and increased demand more strategically and carefully than those organizations with few extra dollars in the bank.
Wishing you had reserves is not the same as planning for reserves. But where do reserves come from? For most nonprofits, reserves are built up over time by generating unrestricted surpluses and intentionally designating a portion of the excess cash as a reserve fund. On rare occasions a nonprofit will receive a grant to create an operating reserve fund.
So step one in planning for reserves is to develop realistic income and expense budgets that are likely to result in a surplus. Step two is to make sure that achieving a surplus is a priority that is understood and supported by staff and board members. For some organizations, there is an earlier step, too. They have to stop operating with deficits before they can even dream of having a reserve.
Determine your reserve goal. How much should you have? At the low end, reserves should be enough to cover at least one payroll, including taxes. Once a nonprofit has been able to build a reserve, using it must be intentional and strategic. Using reserves to fill a long-term income gap is dangerous. You can rate how your organization is doing relative to the component of financial leadership covered in each chapter. Each attribute is scored as being red, yellow, or green. Over time, as you and your partners on the board and staff move the organization toward "green" in each of these areas, you will create an environment in which financial leadership can flourish.
The Jossey-Bass Nonprofit Guidebook: The Budget-Building Book for Nonprofits: Harry Potter Years by J. Rowling , Hardcover Harry Potter and the Sorcerer's Stone 1 by J.