How Financial Planning Can Benefit Non-Profits
Financial planning, in an optioned-based conservative manner, can benefit non-profits
In early December, Forbes put out a tremendous article on smart ways for non-profits to handle financial planning for the next year. I printed it out and kept it. I just found it again this last week. The article indicates 14 recommendations that a panel of experts gave regarding how to be “money smart” during the chaos of Covid-19.
What I found interesting was how each, in their own way, were creating options from a conservative financial perspective. One of the recommendations was “planning for the worst-case scenario.” Another was on “making very conservative budget plans.” A third was a conversation around “tolerance for a loss.”
Even though Hallett Philanthropy is not a non-profit, that same thought process is how I run my company. I try to keep my fixed expenses as low as possible, spend variable expenses when there are resources to do so, and always try to be thinking about several options - if “A” should happen or “B” should happen, I would do the following. There’s great comfort in knowing that there are always multiple alternatives when you have a conservative perspective on resources.
Two other things struck me. The goal of organizations, according to the article, should be long-term financial stability—don’t get too caught up in the day-to-day at the expense of long-term success. The other recommendation, which I support, is that investment in appropriate places, which support the mission and drives revenues, are worthy of discussion even in challenging times. In the for-profit world, at least at Hallett Philanthropy, I feel the same. The goal should be to be in existence many years down the road and wise investment infrastructure, services, or people will make a difference in reaching that goal.
This is just another reminder that non-profits are still businesses. Basic, well-thought-out, principles can allow an organization to live its mission and goals and make a difference for people.