Following on from the second blog in my series of the 10 things you need to know about not-for-profit governance blogs – about Purpose and Strategy – this week we are going to dive into another essential aspect of not-for-profit governance: Financial Sustainability and Obligations.
Financial sustainability is the cornerstone of any successful not-for-profit organisation. And without proper financial oversight and management, it becomes challenging to achieve our Purpose and deliver on our Strategy.
First and foremost, it’s crucial to understand that as part of the governing body of an organisation, we have a key obligation to keep the organisation solvent.
This is not just the job of the Treasurer, or the CEO, or the Finance Manager – as Board members, Directors, or Management Committee members, we ALL have a shared responsibility for the financial health of the organisation.
This is why being able to read and understand financal reports is so important – we don’t all need to be accountants or bookkeepers, but we do need to have a reasonable level of financial literacy so that we can spot any issues or anomalies in the papers that are being presented to us. And it goes without saying that you need to read your board papers!
Financial obligations go beyond just solvency.
There is a range of other responsibilities that we must fulfill as Board of Committee members. These obligations will vary depending on the size and turnover of your organisation. To navigate this complex landscape, it’s highly recommended to have access to a knowledgeable accountant (ideally one who is familiar with the not-for-profit context) who can provide you with valuable guidance along the way.
If your organisation has limited funds, don’t panic! There are pro bono options available, where experienced accountants offer their services at low cost, or even free of charge, to support organisations in need. Reach out to local accounting firms, or organisations that specialise in supporting not-for-profits, to explore these possibilities. A good accountant can help you understand your financial statements, your compliance requirements, your budgeting needs, and much, much more.
Some of my favourite resources to help not-for-profit Board members navigate their financial landscape are the Damn Good Advice series from Our Community. Damn Good Advice for Board Members and its companion guides offer great advice and questions to help you look for and ask the right questions. I thoroughly recommend using them with your Board to help you all better manage your financial oversight obligations.
The other piece of the financial sustainability puzzle is about bringing in the dollars – where do you find the money to make budget so that you can delivery your strategy?
I think the keys to this question are two-fold: a) diversify your income streams and don’t rely on just one or two major sources of funds i.e. government grants; and b) have a fundraising strategy that spells out how and from where you are going to bring in the money that you need.
A great resource to help you with this is a book called The Fundraiser’s Handbook, by Pamela Sutton Legaud. Pamela’s book is beautifully simple in its approach, and it steps you through, in great detail, a robust process for developing your own fundraising strategy.
So remember, financial sustainability and obligations are not to be taken lightly.
Seek the support of professionals, leverage pro bono options, and ensure that every member of the Board or Management committee understands and contributes to your organisation’s financial well-being.
Stay tuned for the next installment in my 10 things blog series, where I’ll explore another essential aspect of not-for-profit governance – Managing Risk.
If you’d like to catch up on the 10 things webinar, where I discuss these 10 essential elements of not-for-profit governance in more detail, you can check that out HERE – the passcode is 7A#AQMg*
And if you think I can help you or your not-for-profit with YOUR good governance, do have a look at the supports and services I offer organisations HERE – and if you would like to book a discovery call with me to discuss your needs, you can do that HERE.
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