Nonprofit Fundraising and Finance Management
Because fundraising is so crucial to many nonprofit organizations, your written plan needs to explain exactly where you intend to get the money to support your efforts and how much you expect to raise.
Typically, nonprofits take in the money they need to operate from the following sources:
Donations from companies and individuals
Government or private foundation grants
Income from endowments and trusts
Income from products and services, such as proceeds from the museum shop, concert tickets, and door-to-door cookie sales
Most nonprofits rely on a combination of these funding sources. National Public Radio, for example, is made possible by donations from listeners like you, corporate sponsors, and a little bit of help from Uncle Sam.
Literally thousands of foundations and government agencies offer grants to nonprofit organizations. To unlock their largesse, though, you need to persuade them that yours is the best organization to turn their dollars into good deeds. And that takes a strong grant proposal — a written description of your organization, your programs, your financial request, and exactly how you plan to spend the money and carry out your plans.
Writing a grant proposal may not be anyone’s idea of a good time, but it doesn’t have to be agony. In fact, as long as you have a good, solid business plan in place, you’re already well on your way to writing a grant proposal because a lot of the information that goes into your grant proposal comes right out of your business plan.
Your proposals will most likely include information such as your mission statement, your philosophy and vision, and a description of how your organization is set up and how you operate. If you’ve done your business-planning homework, the information is ready to go — or at least waiting to serve as useful background material.
Nonprofit organizations are founded on trust. Donors trust that you’ll use the money they give wisely, and grant makers trust (and usually verify) that you use the funds they provide for the purposes described in the grant application.
The members of the board of trustees are responsible for making sure that the organization lives up to its pledges, and that means maintaining accountability by keeping track of where, when, and how the organization spends each dollar. Wherever your dollars come from, be sure you establish a detailed record-keeping system.
If your nonprofit is incorporated, official corporate documents, board-meeting minutes, financial reports, and other records must be preserved over the life of the organization. For more information, check with the office of your Secretary of State or state Attorney General.
In your business plan, include provisions for an annual audit of your organization’s finances. Many nonprofits hire professional accounting firms to conduct an audit in order to make sure it’s independent and objective.
If your nonprofit is small or relatively new, you may opt to create a volunteer committee of people with experience in accounting to review the records, verify bank balances, and produce a written report of their findings. In order to ensure that the committee has no conflict of interest, it should operate completely independently of the board of trustees.