Mastering Nonprofit School Finance: Tackling the Top 4 Challenges Head-On
..Financial management for nonprofit schools is often tricky, but it doesn’t have to be. The four top challenges to be aware of are endowments, fundraising, audits, and strategic planning. Sure, it seems like a lot, but don’t worry — we’re here to educate you on the basics while providing tips on tackling each one successfully. Class is in session. Let’s begin…
Endowment Management for Nonprofit Schools
An endowment is a monetary fund that provides long-term support for a nonprofit organization (typically a school). Most endowments are designed to keep the principal fund intact while using the investment income for charitable causes. That investment income usually helps sustain a school over time. To manage an endowment properly, do the following:
- Define the objective.
- Determine the pay-out policy.
- Decide on the most advantageous asset allocations.
- Assign a manager (or managers) to administer the allocations properly.
- Create a system for periodically reviewing risks and monitoring costs.
The advisor managing your endowments is accountable for hitting benchmarks, so hold them to that. Advisors should also be transparent in their communication, make recommendations for allocations, understand how economic conditions can impact those recommendations, and accurately report on returns. Choose your advisor(s) wisely.
Effective Fundraising for Your Nonprofit School
While financially rewarding for your school, fundraising is hard work. There are multiple factors a school must consider before starting a fundraising campaign. Along with having a clearly defined case for support, your fundraising effort should:
- Prioritize only your best fundraising ideas, ensuring you don’t overwhelm the school calendar, parents, staff, students, or alumni.
- Have strong leadership, which gives stakeholders confidence in your campaign, not to mention the organization’s overall mission.
- Have a focused request for donations (not just raising money for the sake of raising money).
Also, don’t forget to keep the “fun” in fundraising. Some interesting ideas for fundraising include naming rights — not just for a big, expensive building but for simple things like a brick in a new wall or a seat in a lecture hall. A selfie-themed 5K run with sponsorships from local businesses is a unique idea, not to mention a great online marketing tool for attracting additional donations. Of course, well-organized charity balls and golf tournaments can be fun, not to mention the most profitable fundraising events you’ll ever conduct.
Preparing for Your Nonprofit School’s Audit
Unsurprisingly, schools with the least stressful annual audits are the ones most prepared for one. Here’s how to get your organization ready:
- Use your school’s audit engagement letter to set realistic expectations. It outlines the timelines and the responsibilities of the auditor and your team.
- Keep your files organized and ask your auditor what they need. Stay in communication with your auditor. Check in with them periodically, even if it’s well before audit time.
- Be aware of and prepared to explain any internal control deficiencies.
- Always keep your audit in mind, even if one isn’t looming. Periodically review your accounting procedures, be on the lookout for unusual transactions, and familiarize yourself with any new contracts, agreements, and programs.
A Strategic Plan is Key to Success
Consider the future of your school in your decision-making process. Outline and clearly define your goals to make your future objectives a reality. Don’t let time or money dissuade you from plotting your vision. A strategic planning facilitator (usually an outside consultant) will keep your efforts on track. Having a well-thought-out strategic plan in place not only keeps your team focused on objectives, but it can also rejuvenate their mission for success.
To learn more about how your nonprofit educational institution can overcome these and other financial challenges, we can help. Our expert nonprofit accounting team is pleased to provide guidance to streamline your financial management and accounting processes. Are you ready to be ready? Gain peace of mind and schedule a complimentary call today. We look forward to talking with you soon.
Non Profit Accounting Solutions
Qbix's goal is to provide the latest cloud-based accounting technology while delivering real-time visibility into your nonprofit's financials 24/7. Numbers are our passion, but providing your nonprofit with the financial expertise needed to facilitate growth and profitability is our top priority. And because no two organizations are the same, Qbix offers the flexibility you need to accomplish your nonprofit's goals.
500A Northside Crossing
Macon, GA 31210
Let Us Prepare Your Form 990
Save time, money, and stress. Let us prepare your Form 990. Schedule a consultation today.