10 Cash Flow Management Tips for Your Non-Profit Organization

The United States is home to over 1.5 million non-profits.

Clearly, Americans have plenty of options for donating to non-profits. And what if yours takes a bad turn?

Seeing a dip in donations can be a scary moment. But if you have managed your cash flow well, your organization will be able to survive.

Read on for 10 cash flow tips that could save your non-profit organization.

What is Cash Flow?

Cash flow is the amount of money an organization has available to use at any given time. In short, this is the money that non-profits use to stay in business.

They use cash flow to pay employees and continue their activities. Cash flow is not the worth of the company or how much money it makes.

This is why management for cash flow is very important. If it is not monitored, an organization's survival could be at stake.

Keep in mind that cash flow mistakes are common in a non-profit. While a simple mistake could be detrimental, not every mistake will be.

1. Be Active in Cash Flow Management

One of the biggest cash flow errors a non-profit can make is being idle in its management. Don't assume that everything will work out.

Instead, take steps as soon as possible to manage cash flow. The first step is often designating an employee to oversee cash flow.

Also, try to use a spreadsheet to oversee the amount of money your organization is spending. You also should use technology to help manage cash flow.

2. Get Creative

It's easy for a company to get comfortable using the same revenues for cash flow for years on end. This, however, is not a good idea.

Your reliable income may stay steady. But if you're not getting creative with your cash flow resources, you won't be able to save any money.

Finding new donors in places your organization has never been. Look for different grants that you may qualify for but didn't before. And always try new fundraising options. The ideas are limitless.

3. Appreciate Your Donors

Imagine giving a friend a gift and not receiving a thank you. You might not be mad, but you'll probably think twice before giving them another gift.

The same is true for non-profit donors. Saying thank you is one of the most important ways to make sure that your organization survives.

A simple thank you card from an employee or someone helped by their money can mean the world to a donor. Consider also creating free merchandise to help them feel like they are part of the team.

4. Don't Operate with a Deficit

Operating with a deficit is a scary place to be for a non-profit. Eventually, you will be unable to pay employees or fulfill your organization's duties.

If you have to, turn the lights off for a few days and send everyone home. Maybe ask donors for an emergency donation.

No matter what it takes, do not operate with a deficit. If you are, it may be time to make some serious changes.

5. Be Realistic About Spending

What's the point of cash flow if you don't spend it?

But what's the point of cash flow if you don't have any? If you aren't realistic about your spending, you may not have anything to spend.

Be conservative in your non-profit spending. You don't need to buy a pool table for the office. Keep to the necessities and focus on the good you do.

At the same time, don't assume your non-profit won't spend any money. Pay attention to the financial details of each event and project to the penny.

6. Stay Relevant

Often, non-profits can become too focused on their current goals. Soon they ignore what their supporters want.

Like driving through a tunnel, it is difficult to see what's going on around you. Instead, make sure you're still serving the needs of the people you are trying to help.

For donors, show them how their money is being used properly. It's difficult to donate when you don't know how you're helping.

To do this, you could consider sending out a survey or creating a focus group. Try, also, to also stay up-to-date in the news about your field.

An outdated non-profit is not one people want to support. If you become irrelevant, your cash flow will become so too.

8. Diversify Your Income

If you find that your non-profit's income is falling, you may want to diversify your income. This means finding new sources to help financially stabilize your organization.

Don't count out any type of income creator. Bake sales, donation drives, and car washes can all work when the time is right.

It may be awkward for your organization to transition to other forms of income. Different types of fundraisers may surprise you with how much they can help.

9. Remove What You Don't Need

Sometimes, when finances get tough, it may be time to let some things go.

If you can survive without a printer, do it. Sell the extra desk nobody uses. Stop buying candy for the office.

Unfortunately, this removal doesn't stop with objects. Sometimes you may need to cut an employee's hours or remove them altogether.

Cutting down on payroll expenses should not be the last option. Reevaluate your staff now to see if you could remove any jobs or designate them to a volunteer.

While it is difficult to let people go, it may be necessary to keep a working cash flow.

10. Be Ready for a Rainy Day

Finally, be ready for your cash flow to drop. Even if you apply all these tips, the worst can still happen.

To be ready, keep cash on reserve to use for financial trouble. That way you will be able to survive until your donations rise.

Next Steps

Take these tips about cash flow management and integrate them as soon as possible. Don't forget that mistakes are possible, but you're more ready to fix them than before.

For more tips, check out our blog, and contact us for a free accounting consultation.