It’s in the name: “nonprofit.” Your nonprofit organization’s primary purpose is to fulfill its goals and mission to improve our world in some way.
But money and bottom lines, while not your focal points, are still pivotal points that determine your nonprofit’s sustainability and efficacy.
Is your nonprofit organization ready for the changes that 2023 will bring to your finances?
With a looming recession tightening up everyone’s budget, the experts at Temple Management found the top 5 financial best practices that every nonprofit needs to know and consider adopting in 2023.
Best financial practice #1: Diversify your funding
Self-evidently, multiple sources of revenue can help ensure financial stability for working individuals (especially with a looming recession on the horizon). Likewise, nonprofit organizations in 2023 would do well to consider diversifying their own income streams, by exploring options such as:
- Individual donations
- Corporate sponsorships
- Earned income from events
- Merchandise sales
- Membership fees
Your nonprofit can diversify its funding in 2023 by diversifying its fundraising approach beyond traditional donor prospecting (Still important! More on that later…).
Consider enhancing your marketing strategy, experimenting with a peer-to-peer approach, or even holding an auction.
Best financial practice #2: Take an entrepreneurial approach
Let’s reinforce a foundational understanding of your nonprofit from a financial perspective: every nonprofit is, by nature, a business. And a nonprofit’s donors are, by nature, consumers.
It may be called a “nonprofit” organization, but it must function like a business if it is to succeed in its mission and effectiveness.
To this end, a nonprofit typically has its own finance or accounting department – or, at least, it has a dedicated resource for its financial needs. Nonprofits are finding increased assurance and satisfaction in outsourcing their bookkeeping to virtual CPA services.
Ultimately, nonprofits need to stick with an entrepreneurial business mindset when it comes to developing and implementing effective strategies for sustained growth and revenue – especially as 2023 brings with it the economic uncertainty of inflation, supply chain security issues, and other recessionary pain points.
Learn the full scope of services from Temple Management’s virtual accountants and CPAs, and what they offer specifically to nonprofits and churches.
Best financial practice #3: Grow and maintain relationships
This is “nonprofit 101.”
It’s unchanging every year how essential it is to build and maintain relationships with donors to ensure financial stability for your organization. Donors are the lifeblood of nonprofits, so it is still ever-important to develop meaningful relationships that will lead to long-term support.
Identify potential supporters who share your mission and values at every networking opportunity you find, whether it’s a company-sponsored event, or a happenstance encounter at your usual coffee shop. Branch out your donor demographics – Magnify Money found that in 2022, millennials’ total net worth had more than doubled this year alone.
Remember: donors are consumers. They give every significant financial decision deliberate thought, usually roping in their financial adviser to ensure their decision is sound. Now that the pandemic is in the rearview mirror, you can more easily further assure your potential donors with gestures such as a tour of your facility, or an opportunity to get acquainted with the staff members behind the scenes.
This all goes toward fostering a personal connection with the donor, and clearly exposing your nonprofit’s goals and impact so that your prospect understands why donating money could benefit both parties.
Finally, don’t neglect the impact of an intentional, personalized follow-up! And it goes without saying to never underestimate the power of a simple thank-you note after a donation to show appreciation, and remind your donors why they chose to support your organization.
Best financial practice #4: Update your technology
Fundraising will see a slew of technological advances (as it often does every year). In 2023, these financial trends for nonprofits include enhanced communication through SMS, greater emphasis on cybersecurity to protect financial data, and even artificial intelligence to help integrate streamlined virtual collaboration. This is why it’s vital to keep your organization’s technology as up-to-date as possible.
Another helpful perspective: take the practices you learned and adapted for your nonprofit during the height of the COVID-19 pandemic, and optimize them to keep your digital constituent outreach relevant.
With pandemic-era insights, however, do not mistakenly expect pandemic-era results. Keep building trusting, mindful, and mutual relationships in your prospecting, whether in-person or digital, and boost your marketing to make it authentic and personal – even over the ever-changing digital landscape.
Best financial practice #5: Know why and when to outsource your bookkeeping
Are behind-the-scenes nonprofit financial tasks pulling you away from your actual work? The work that propels your organization?
Growing your organization’s reach and increasing your bottom line can often leave you constantly feeling crunched for time. Outsourcing to virtual accounting and bookkeeping services like Temple Management can actually save you time and money, reduce risks with effective systems, improve your internal processes, and add further value to your organization as it scales and grows. This will give donors (present and future) a clearer picture of your nonprofit’s financial health, and the confidence to continue giving.
Is your financial strategy ready for 2023?
Temple Management consists of industry professionals whose virtual bookkeeping and nonprofit accounting services services can help you prepare for whatever 2023 throws your way. Temple Management’s virtual CPAs want you to focus on what you love, while we focus on what we’re good at: helping nonprofits succeed financially.
Reach out to our team virtually here, or give us a call at 770-892-2087.