Finance

The Complexity of Handling Non Profit Money

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Non-profit money might seem like an oxymoron—but if you’re running a non-profit organization, you’ll quickly find that the funds are what keep the whole thing running.

So even though it may seem like money should take a backseat, this doesn’t mean you can ignore it and hope all goes well. A smooth, well-run organization will take care to navigate through the tricky waters of non-profit finances to make sure the real work can get done.

We’ve put together some of the top areas you should think about when you’re putting together the money side of your non-profit organization. From grants to salaries and more, you’ll be glad you took the time to secure your funding.

Fundraising

Non-profits might be founded on good ideas, but the engine that keeps them running is excellent fundraising. It might not be what you set out to spend your days doing, but the flow of money will be what allows you to make your dreams a reality.

Tax-Deductible Donations

A major part of your charitable gifts is the offer of tax-deductible donations. This can encourage donors and sponsors to give more than they would have otherwise.

If it’s possible to make your non-profit donations tax-deductible, do your best to make this clear for your donors. State it on your website and on any fundraising materials.

Crowdfunding

Even if you don’t have big sponsors funding your work, you can make up the difference with crowdfunding campaigns. You’d be surprised at how many thousands of dollars you can raise just by appealing to regular people in the community. Small gifts of $5 and $10, with the occasional large amount, really add up.

But pulling off a successful crowdfunding campaign does take a good bit of planning. If you’re using a platform like Kickstarter or Patreon, you might want to prepare gifts or other benefits for donors at different tiers.

And if you’re circulating your crowdfunding materials through social media, you might want to focus on graphic design and innovative challenges. For example, some crowdfunding campaigns use a “bingo”-inspired challenge on Instagram stories with squares of different amounts of money. People can then try to fill up rows and columns with amounts donated by their online friends.

Applying to Grants

Grants hold lots of power for non-profits. Whether or not you get a grant could determine whether you can accomplish the next project on the radar.

If you have a dedicated grant writer on your team, you’ve got the messaging covered. But how are the numbers looking?

Creating the budget for your grant can be one of the most important parts of the grant itself. How much money do you really need for your plan? And if you do get the grant, how can you spend the money in a responsible way?

Some of these questions can be answered by a concept called fund accounting, which is a method of money allocation that considers limitations from the donor. If you’re handling church donations or not-for-profit finances, you might want to check out a helpful piece on the Fund Accounting Definition For Churches & Not For Profits.

Being Transparent

When you’re trying to build the reputation of a non-profit, you’ll have to focus on trust.

You might know that you’ve split all the funds for your organization in a responsible way, but others won’t know unless you make a point to be transparent. Consider making a regular report or infographic for your organization’s website that details what portion of the funds go where.

If you show that most of your funds are going directly to the people who you’re trying to benefit (rather than mostly to overhead), this can encourage potential donors to send their money your way. It sends a message that your non-profit will let them make the most direct impact out of their money. For example, if you’re handling funding for churches, you can highlight how much money will go toward community service efforts.

Paying Employees With Non-Profit Money

Many non-profits start small, and they often rely on the help of volunteers. But once you start hiring full-time employees, things can get a little more complicated.

People don’t enter the non-profit field for the money, so it makes sense if the salary isn’t that big. But in order to pay people what they’re worth and be respected in a sizeable job market, you need to budget an appropriate amount. For example, grant writers make an average of almost $50,000 a year.

You’ll also need to be aware of the stability (or instability) of the jobs you have on board. For example, if you’re able to hire more employees because of a huge grant, you should keep track of when that grant will run out. Be extra cautious about spending during this period since it will translate directly to the time you can keep those employees on board.

Spending Money on Marketing

Marketing campaigns can be tough in non-profit situations because there often aren’t a lot of funds allocated to this section of the work. You’ll have to be smart and budget a marketing strategy that gives you the most bang for your buck.

Finding creative ways to save on marketing can also help your organization stay transparent while also appealing to potential donors.

Make Some Change With Your Dollars!

Non-profits are an excellent way to create real change in the communities you impact and inhabit. So take care of your finances in plenty of time to make the perfect plan. If you carefully consider your non-profit money now rather than later, you’ll be able to reserve future time for developing your ideas!

So go secure that money, and you’ll be well on your way to making those dreams happen. And for more articles on finances and how they work in the world, check out the rest of this site!

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