By: Lauren Perrodin
The White House has announced its impending approach to the debt ceiling. What this means is that any government-funded programs will encounter serious consequences.
For nonprofits and government bodies, severe repercussions are ahead as most of their income and support comes from government funding according to the 2023 FORVIS report. But, reaching the debt ceiling doesn’t mean police officers stop working, firefighters hang up their hoses and nonprofits and small government agencies shut down all of their organizations. Instead, they find new ways to get the funds they need to continue the necessary work they’re doing.
The State of Nonprofits
FORVIS’ report offered a deep dive into the state of nonprofits today. While the industry holds a pivotal spot in the nation’s economic, mental and physical well-being, it’s still facing hardships. The report found that although 68% of nonprofits are experiencing an increase in public demand, 78% are struggling to fill staffing vacancies and, as a result, 50% face difficulties delivering services to those they serve.
What’s more, large nonprofit organizations are currently feeling financially comfortable, while small institutions are struggling. This is likely because larger syndicates are generating steady cash flows through contributions and fees from service programs. However, smaller nonprofits may require more support from government bodies to stay afloat.
Budgeting Best Practices for Small Budgets
Learning how to budget will be essential to survive all economic ups and downs. Follow these small-budget best practices so your organization is prepared for anything that may come your way.
Establish Financial Infrastructure
- What’s your financial plan? How can you ensure your facility can continue to run even if economic times get hard? Establishing a financial infrastructure can help set a baseline for basic necessities and hard data. Take stock of what you need to keep your programs running and what are nice-to-haves.
Budgeting Strategies for Limited Resources
- If you haven’t already, it’s important to establish a contingency reserve or a long-term savings account of retained earnings to safeguard your establishment from unexpected losses. Additionally, all nonprofits rely on donations and consistent givers to some degree. Building relationships with your high and/or sustained donors can help plant long-term endowments that will protect your best interests and those you serve.
Prioritize Core Programs and Services
- Think back to 2020 when the world stayed inside. Businesses had to first establish what their core offerings were and then find creative ways to continue to serve the public while keeping costs down. This means minimizing spending while maximizing essential services for organizational continuity.
Seek Cost-Effective Alternatives
- Identifying where you can diversify your revenue and lift reliance on government agencies, the more comfortable your establishment is likely to feel. You could deliver donation requests, put on fundraisers, send emails and look for more investors outside of the government.
Advantages of Hiring an Accountant
Budgeting on top of running a nonprofit organization isn’t easy. Volunteer management, events, staff and core services take up a lot of time and effort that can distract you from establishing new income streams.
Having an accountant on staff can:
- Ensure resources are properly used.
- Cut down on waste.
- Manage financial reports ahead of audits.
- Keep costs low.
- Free up management’s time and effort so they can focus instead on improving their programs.
- Protect against financial fraud or unnecessary mistakes.
Offer financially strategic suggestions.
Any economic uncertainty can make any organization uneasy. Along with implementing budgeting best practices, adding an accountant to your team can help ensure your organization’s longevity. Managing minimal funds now, can ensure there is a long future ahead for your institution.