If you’re already involved or looking to start a non-profit business, it’s important that you successfully manage the #1 pitfall for small businesses. CASH FLOW MANAGEMENT!!!!! Many non-profits or foundations operate around a central “event”. That may be your annual fundraiser or a golf outing or 5k walk. In order to ensure that your event is as successful and makes as much money as possible, it’s critical that you successfully manage your cash flow in order to avoid going into personal debt as part of this venture.
First Step: Budget!
First, whatever event you are planning, take some time to develop a reasonable budget for what it will cost and how much can be raised. That likely means getting quotes from the venue and vendors. From there you can gauge levels of success and what items need to be paid for early.
Second Step: Manage the Timing of Cash
How?? Try to pay vendor later and take donations earlier. Simple Enough, Right?
- Vendor Management: Be honest with your vendors and explain the event and cause. Ask for extended payment terms or discounted pricing from there. With your budget projections, you can offer them the volume of business available for them plus you have your passion for the cause. So you’re pulling at the purse strings as well as the heart.
Another cash flow improvement method is to make your vendors a sponsor of the event through additional exposure to your guests at the event for reduced pricing. Many people want to be involved in a good cause – guide them through it.
- Donation Management: Develop multiple streams of revenue. Require tickets/registration be made by guests in advance to build up a war chest that can be used for deposits or awards. The registration funds will also help you gauge turn-out early on which then helps budget for food and entertainment.
Then, on the day of the event, set up several games of chance, such as 50/50 raffle or silent or live auctions, and allow for additional donations to be made.
Always Remember: Your guests WANT to contribute to the cause!!! They wouldn’t be there if they didn’t believe in the cause or they didn’t like you. You need to offer them as many chances as possible to make their contribution.
Third Step: Review and Distribute
At the conclusion of your event, make sure you have collection process in place for people who bid on auction items but had to leave early or made pledges to your organization. That may require you to make some phone calls or issue contribution statements.
Once all contributions have been collected and vendors have been paid – the remaining balance is available for your cause. There is one last thing to consider. And that is maintaining a floor balance based on initial deposits that need to be made for next year’s event. Review your vendor figures and also other potential outlays such as new equipment or personnel. On average, a non-profit spends about 10% to 20% of all contributions on administrative expenses.
For more information – contact Secure Direction at 412-841-0228 or firstname.lastname@example.org