Why talk about “not for profit” on a business blog site? A for-profit business usually has a goal of maximizing shareholder wealth. Although a not-for-profit has a different mission and goals than a for-profit business, both types of entities have similar challenges. Both desire to operate efficiently and effectively in achieving their organization’s goals.
Just like businesses, there are many different types and sizes of not-for-profits. The large not-for-profits (such as United Way) have well established policies, procedures, and financial systems. The small not-for-profits operate very similarly to a small entrepreneurial business. The organization was founded by an “entrepreneurial” founder or founders who have a vision of providing a social good. The entity starts out small and grows as more people become involved with the mission. Many times some services are provided to the not-for-profit on a gratuitous basis including that of financial guidance.
Do you as the CEO, President, or Chief Operating Officer of a not-for-profit ever experience cash surprises? Do you use your financial system to help make good decisions on a timely basis?
Many small organizations don’t use monthly financial information to help drive the organization to its planned goal for the year. The accounting system is used primarily to track and collect the revenues, funds, cash inflows and to pay bills. Many small entities don’t use any budgeting or forecasting. Why is it that all large organizations use budgeting and forecasting?
Using budgeting and forecasting helps to provide financial clarity; assisting an organization to achieve its organization’s goals. Good financial practices benefit both for-profit and not-for-profit organizations.
Just like small business, small not-for-profits don’t have a full-time need for a Chief Financial Officer nor could they afford one. A solution available in today’s world is to use a CFO on a part-time basis. This allows the not-for-profit to obtain financial guidance from an experienced CFO at an amount the organization can afford.
Can your not-for-profit use some financial guidance?
Is your financial guidance exceptional? If not, contact me.
Dave Mayo, CPA, CGMA
Founder & Partner
CFO 4 Small Biz TM