Big Picture Financial Planning for Nonprofits (part 6 of a series)

Big Picture Financial Planning for Nonprofits (part 6 of a series)

By Tom Wilson Major Gifts Guru

Now, we’re ready to finish the elements of financial stabilization for nonprofits – special projects and endowment.

Remember we started with a balanced budget, a 5% contingency line item in the operating budget, no debt (eliminating it over 3 to 5 years), reserve funds (3 to 6 months of operating revenues built over time), and a venture fund.

Special projects.

Like any comprehensive fundraising effort we need to look at any special projects over the next 5 to 8 years (or longer) – if you have a 3-year campaign with a 5-year pledge schedule the cash flow from your campaign can go out at least 8 years.

So, look for any capital items – deferred maintenance on a roof, new equipment for a science lab, new beds for the entire hospital. Put these projects into a “shopping list” for donors to review.

Endowment.

Finally, come back to endowment. While not a magic bullet of financial success like everyone initially thought, a strong endowment is still important. National benchmarking shows 20% to 30% of your yearly operating budget should be generated by endowment.

Add all of these elements together and you have financial stable and vital nonprofit organization.

This article was the sixth of a series. To read the rest of the series, please see below:

Permanent Link: Big Picture Financial Planning for Nonprofits (part 6 of a series)

http://majorgiftsguru.com/2009/05/big-picture-financial-planning-for_25.html

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