Successful nonprofits are adept at managing cash flow

April 28, 2014

Successful nonprofits are adept at managing cash flow

One of the greatest challenges for nonprofit organizations is cash flow. The need for services is unpredictable, as are the level of funding and the size of donations an organization receives. Ensuring that there is enough money to both pay bills and provide for the community requires meticulous financial management.

The ability to budget and manage cash flow is one of the most impressive feats accomplished by nonprofits since the recession. Since the economic downturn, grants from government organizations have dropped, as did funding from private donors. At the same time, demand remained high for nonprofits to help their communities impacted by the economy.

Nonprofits often have little money to fall back on. Clint Mabie, head of the Community Foundation for Southern Arizona, told Inside Tucson Business that 73 percent of nonprofits in the region have less than six months of operating reserves. Mabie explained these small reserves do not mean that nonprofits are irresponsible with money, but rather it's the reality of a cash gap caused by a lack of funding in the region.

Controlling cash flow by controlling costs
One way for nonprofits to keep their budgets healthy is to take advantage of as many programs as they can. Many organizations, while running a tight budget, are unaware of the wide array of grants and exemptions that could improve their budget. For instance, nonprofits have a great chance to save on their unemployment insurance (UI) costs. By switching to the reimbursable method, organizations can avoid unpredictable state UI tax pools and better manage their budgets.

As a reimbursing employer, nonprofits are responsible only for the actual number of UI claims paid out to former employees. Organizations with no unemployment would have no UI costs. However, if UI spikes, programs at the nonprofit could be put at risk. For this reason, it's important for groups to enlist the help of a UI specialist when considering opting out of SUI tax pools.

Savings programs provide nonprofits the maximum amount of savings and the least amount of risk. Insurance agents can also help their nonprofit clients save a substantial amount on their UI costs by informing them about such programs. These savings can be used any way an organization wishes, allowing them to grow and expand or build a stronger cash reserve. Reimbursing is one the easiest grants that a nonprofit can give itself.

For information on how your organization can cost-effectively meet its unemployment insurance needs, contact First Nonprofit Group at FNCUI@firstnonprofit.com or visit www.firstnonprofitgroup.com.

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Testimonials

NYCON members who use First Nonprofit’s programs enjoy enduring savings and improved efficiency. Our association knows that success, because from the beginning, we achieved the same great benefits. Great savings, seamless technology, and responsive service. NYCON highly recommends First Nonprofit’s remarkable unemployment solutions.

New York Council of Nonprofits, Albany, NY

We were introduced to First Nonprofit through another housing authority. In our analysis and comparison to what we were paying the State, our first year savings was $5,800 plus. We have been with them since the end of 2008 and I am glad we have been. I consider them an arm of our HR department.

Kankakee County Housing Authority, Kankakee, IL

Because INCS advocates for the operating conditions that allow charter public schools to provide high quality public education, partnering with First Nonprofit was an easy decision. First Nonprofit’s unemployment programs provide our member schools two operating elements crucial to their ability to provide high quality public education: savings and budget certainty. Capable, committed teachers are the key to student success. By participating in the unemployment insurance savings plan, charter public schools gain peace of mind and are able to invest more money in their teachers.

Illinois Network of Charter Schools

Throughout our membership in the Unemployment Savings Program, First Nonprofit understood our demands, community dynamics, and the importance of seamless services; that allowed us to serve our constituents better.

Hugh Parry, Retired President of Prevent Blindness America