Wallace Blog Search Results

Search Blogs by Keyword
Browse by Date
clear all

 

 

Managing Nonprofit Finances During the Coronavirus Crisis11180GP0|#c8879bc7-c75a-44d8-b58e-3c9131218ffc;L0|#0c8879bc7-c75a-44d8-b58e-3c9131218ffc|Nonprofit Financial Management;GTSet|#a1e8653d-64cb-48e0-8015-b5826f8c5b61<p>Nonprofit organizations face unprecedented financial challenges because of the COVID-19 pandemic. With <span></span>nationwide restrictions on public gatherings, theatres have gone dark, schools and afterschool programs have shuttered their doors indefinitely, and spring galas, often the biggest fundraiser of the year for many nonprofits, <span> <span> <span> <span> <span></span></span></span></span></span>have been canceled. Hilda Polanco is the CEO of Fiscal Management Associates, a national capacity-building firm that advises nonprofits on strategic financial management. Her organization helped develop much of the content <span> <span> <span></span></span></span>for a Wallace-supported website—<a href="/knowledge-center/resources-for-financial-management/pages/default.aspx">strongnonprofits.org</a>—providing free guidance on nonprofit financial management. Recently, Polanco discussed how organizations can best assess and work to maintain their financial health in such uncertain times. The interview has been lightly edited for length and clarity. Also, watch FMA's recent webinar, <a href="/knowledge-center/pages/navigating-covid-19-for-nonprofits-from-financial-triage-to-scenario-planning.aspx">Navigating COVID-19 for nonprofits</a>.<span><span><strong><span><span><span><span><span><span><span><span><img src="/News-and-Media/Blog/PublishingImages/Pages/Managing-Nonprofit-Finances-During-the-Coronavirus-Crisis/hpolanco.jpg" alt="hpolanco.jpg" class="wf-Image-Right" style="margin&#58;5px;width&#58;224px;height&#58;335px;" /></span></span></span></span></span></span></span></span></strong></span></span></p><p> <strong>What should nonprofits be doing right now to weather the current crisis?<span><span><span><span><span><span><span></span></span></span></span></span></span></span></strong></p><p>They should be taking three steps&#58; </p><ul><li>Understand your financial position in terms of net assets and liquidity;</li><li>Identify implications on revenue and expenses;</li><li>And finally, manage your cash flow.</li></ul><p>Net assets are those you’ve accumulated and that are available for current and future operations. Look at what you own and how quickly you can make them liquid and flexible. Net assets may come with or without restrictions. You may also have board-designated funds that have accumulated over time. What is the purpose of those funds—would the board be willing to redirect them? A nonprofit might also have liquid unrestricted net assets, or LUNA, which are available and have no specific earmark. A calculator on <a href="/knowledge-center/resources-for-financial-management/pages/default.aspx">strongnonprofits.org</a> can help you determine your LUNA balance and how many months’ worth of operating expenses it will cover. [<em>The calculator is within this <a href="/knowledge-center/resources-for-financial-management/pages/the-key-to-long-term-financial-health.aspx">page</a>; scroll down to see the link under the piggy bank image.</em>] Nonprofits may <span></span>also have temporarily restricted assets, such as grants from funders. It is important to understand the funder expectations around these restricted funds and assess whether you are in a position to meet these expectations. If you aren’t, speak to your funder and explore possibilities around releasing or loosening these expectations, in order to make these available for ongoing operations. </p><p> <span> <span> <span> <span> <img src="/News-and-Media/Blog/PublishingImages/Pages/Managing-Nonprofit-Finances-During-the-Coronavirus-Crisis/Strongnonprofitsshot.png" alt="Strongnonprofitsshot.png" class="wf-Image-Left" style="margin&#58;5px;width&#58;334px;height&#58;225px;" /></span></span></span></span> <strong>How can nonprofits deal with uncertainty in revenue?</strong></p><p>Nonprofits have two significant sources of revenue&#58; contributed, such as donations from individuals and corporations, and earned, such as program service fees. Regarding contributed revenue, this is the time to turn to relationships with existing donors. In addition to releasing restrictions on current grants, some foundations are considering reserve grants to replenish resources that nonprofits are draining right now. In addition, emergency relief funds are starting to come through, both from government-funded stimulus packages and philanthropic efforts. A summary of emergency funds across the country can be found <a href="https&#58;//givingcompass.org/coronavirus-covid19">here</a>. It is extremely critical that leaders stay aware of these funds in their communities. Lastly, engage your community through new fundraising strategies, like crowd-source funding. People want to help even if the events aren’t there. </p><p>Your organization may also have some earned revenue potential right now. Do you have a valuable product for this new operating environment? For example, organizations that have been delivering programming online are at a competitive advantage right now. Maybe they can offer their online learning product to other organizations that need this capacity in order to meet their mission.</p><p>Create best, moderate and worst case scenarios based on likely revenue and compare each one to projected expenses. This <a href="/knowledge-center/resources-for-financial-management/pages/revenue-analysis-worksheet.aspx">scenario planning tool</a> can get you started.</p><p> <strong>What are the implications on expenses? </strong></p><p>When reviewing expenses, group them into three categories&#58; fixed, variable and semi-variable. Thinking of them in this way will help you make decisions. Take a look at variable expenses first because they’re the ones based on particular programming, which might be reduced if programming is reduced. Semi-variable expenses are ones that you can’t totally do without, but you might be able to curtail, such as utilities. Expenses like rent and insurance are fixed because they’re incurred regardless of programming. Still, you might be able to work with your landlord on rent. Banks have deferred mortgage payments for 90 days, so keep that in mind when you’re negotiating.</p><p>Workforce-related expenses make up 70 to 80 percent of most organizations’ budgets. The two most critical are salaries and related benefits. Reviewing salaries also means reviewing any accrued paid-time-off that may be due employees. Which are your core operations that must remain at this time? Can staff be redeployed to where current core operations require? If given the option, would certain team members opt for less than full time schedules? This <a href="https&#58;//nam01.safelinks.protection.outlook.com/?url=https&#58;//hbr.org/2020/03/the-coronavirus-crisis-doesnt-have-to-lead-to-layoffs?utm_source%3Dtwitter%26utm_campaign%3Dhbr%26utm_medium%3Dsocial&amp;data=02%7c01%7chpolanco%40fmaonline.net%7c2e4ec925cb1d48d6656e08d7d011cff2%7cd447875067d043fdba2e1b4c46d37689%7c0%7c0%7c637206647245708840&amp;sdata=UkQQs43N/ldQaq8Nhq6sUrIqnPO0jnuRb3hh2cvPEdU%3D&amp;reserved=0">Harvard Business Review article</a> suggests alternative to deep layoffs. </p><p>As you weigh your options, explore federal and state programs that can help maintain your current workforce; what is your state’s department of labor unemployment program at this time? Keep in mind, too, that there’s life after the crisis. Think strategically about retaining capacity. And, as you make these difficult decisions, I urge you to apply an equity lens. </p><p> <strong>How can a nonprofit better manage cash flow in such difficult times?</strong></p><p>The&#160;ebb and flow&#160;of your cash flow will tell you when you’ll need to draw on your reserves or when you need to start planning for contingencies.&#160;Develop cash projections for the week, month and quarter (this <a href="/knowledge-center/resources-for-financial-management/pages/cash-flow-projections-template.aspx">template</a> on strongnonprofits.org can help). Look closely at each of your revenue sources to understand which ones might be at risk. Delay non-essential payments and ask vendors you owe if they’re open to revisiting payment terms. Review your accounts receivable but understand that these balances may be slower to pay. You may also want to approach funders about accelerating grant payments. </p><p>Financing is another option. If you have a credit line, now may be the time to use it. The Small Business Administration is making loans available to nonprofits [<em>find the federal agency’s information on disaster assistance in response to the pandemic <a href="https&#58;//www.sba.gov/disaster-assistance/coronavirus-covid-19">here</a></em>]; some foundations are considering bridge loans; and there are also low-interest loans from community development financial institutions. My word of caution is that this is debt. You have to understand how you’re going to pay it back, as part of the decision to draw on this debt.</p><p> <strong>If it looks like an organization must choose among difficult financial options, whom should decision-makers consult for a clear-headed picture of considerations and trade-offs? Board members might be one source, but are there others? </strong></p><p>Speak to your funders, especially those who are trusted long-time partners and want to help. Many foundations have told me they’re reaching out to grantees to understand their needs. Still, there may be some funders who haven’t had a chance to do that yet but want to be a thought partner for you. </p><p>When you do reach out, be as clear as you can as to your current financial situation, and where you feel your risks will be. I did a webinar recently and a funder asked, <em>I have limited resources. I have many grantees whose reserves have been eroded. How do I best decide how to respond? </em> As hard as I know this is for all nonprofit leaders, my response focused on gaining clarity as to the grantee’s current position. It’s important that the grantee has a sense of where it is financially, and what it needs to turn the corner. In writing those additional checks, funders want to understand your plan as part of investing those dollars. </p><p>Another source of support might be other leaders in your community. Peer exchange is often a powerful source of ideas. If you’re a member of an association or advocacy group, now’s the time to get together and hear what other nonprofits are doing and learning.</p><p> <strong>Managing through a crisis is stressful. Are there any positive aspects? Can a nonprofit emerge stronger?</strong></p><p>The sudden push to working from home is helping organizations prioritize automation and technology, which is a great first step toward more efficient financial operations. </p><p>Leaders coming together to make difficult decisions creates a stronger team, a team that’s looking to a successful outcome for the whole organization. For organizations that have drifted from their mission and have found themselves delivering services outside of their core, this may be the jolt that might make them ask&#58; What is our real core and how do we do that the best? It’s a time for recognizing that, in certain cases, rather than delivering a particular service or program, maybe they should be strengthening partnerships with other groups in the sector to carry it out.</p><p>I also hope this is an opportunity for nonprofits to strengthen relationships with long-term funders, and for funders to identify ways to support nonprofits from an enterprise perspective, rather than one program at a time. </p>Jennifer Gill832020-03-25T04:00:00ZManaging Nonprofit Finances During the Coronavirus Crisis5/19/2020 3:46:35 PMThe Wallace Foundation / News and Media / Wallace Blog / Managing Nonprofit Finances During the Coronavirus Crisis Financial management expert Hilda Polanco suggests key 2309https://www.wallacefoundation.org/News-and-Media/Blog/Pages/Forms/AllItems.aspxhtmlFalseaspx
New and Improved Financial Tools Help Nonprofits Stay Nimble16102GP0|#af3e9879-f65e-40d3-8cc6-25ef5b2f858e;L0|#0af3e9879-f65e-40d3-8cc6-25ef5b2f858e|Advancing Philanthropy;GTSet|#a1e8653d-64cb-48e0-8015-b5826f8c5b61<p>Recently, Hilda Polanco, founder and CEO of the consulting firm <a href="http&#58;//fmaonline.net/">Fiscal Management Associates</a> (FMA), talked to us about changes she’s seen over the years in the way nonprofit organizations approach their financial responsibilities. She noted that nonprofits are increasingly accepting the idea that financial planning is a “process that never ends,” one that calls for a nimble response to shifting winds and bumps in the road.</p><p>It’s no surprise then that <a href="/knowledge-center/resources-for-financial-management/pages/default.aspx">Strongnonprofits.org</a>, the website&#160;we created with&#160;FMA five years ago to help organizations build their financial know-how, has also changed to meet their evolving needs. We asked John Summers, director of consulting services at FMA, to walk us through some of the site’s latest features and updates.*</p><p><strong>What is your process for updating the site? How do you determine when a feature needs updating or there’s a need for a new feature? </strong></p><p><img class="wf-Image-Left" alt="jsummers_portrait_72square.jpg" src="/News-and-Media/Blog/PublishingImages/jsummers_portrait_72square.jpg" style="margin&#58;5px;" />We get feedback from users that will suggest a modification of an existing tool or a totally new tool. They’ll say, “Do you have something that can do X?” Then there’s our own practice. We’re consultants working with nonprofit organizations every day. So, if there’s something we put together for one of our consulting clients or someone we’re doing outsourced accounting for, and it seems like it would be widely applicable, that can become a tool on Strongnonprofits. </p><p><strong>What is the new or updated feature on the site that you’d most like to highlight?</strong><br> <br> Cash flow projection is one of the backbones of financial management in any organization. The <a href="/knowledge-center/resources-for-financial-management/Pages/Cash-Flow-Projections-Template.aspx">cash flow projection tool</a> on the site was originally a 12-month calendar, but the modifications we made allow users to update it each month, so they can see how much they have actually spent and what remains in their budget and have a better sense as the year goes on of what their cash position is going to be and answer questions like, “Are we going to have enough when we need it?”</p><p><strong>You’ve created narrative guides to show how individual features of the site can be used in combination. What is the advantage of using the tools this way?</strong></p><p>If you’re doing some annual task like budget development, there’s pretty close to a comprehensive package of budget development tools on the site. The <a href="/knowledge-center/resources-for-financial-management/pages/topic-area-guide.aspx">narrative guide</a> is an attempt to pull those together and give an outline&#58; If you use these tools in this order that’s going to help you produce your organization’s budget, from figuring out who should be involved in the process all the way through planning your expenses, planning your revenue, looking at cash flow, presenting it to the board. There are resources for each step that, together, can be a do-it-yourself guide to budget development. We’ve got guides for budget development, auditing, financial reporting.<br> <br> <strong>Is there anything else that regular users of the site should keep an eye out for the next time they visit? </strong></p><p>We’re not finished. Within the next few months, there will be new tools on there, including a tool to establish operating reserves. Just keep checking back.</p><p>*<em>This interview has been edited and condensed.</em></p> Wallace editorial team792018-01-04T05:00:00ZNew and Improved Tools to Help Nonprofits Build Their Financial Know-How4/4/2018 3:54:12 PMThe Wallace Foundation / News and Media / Wallace Blog / New and Improved Financial Tools Help Nonprofits Stay Nimble Updated Website Features “Do-It-Yourself Guide” to Budget 671https://www.wallacefoundation.org/News-and-Media/Blog/Pages/Forms/AllItems.aspxhtmlFalseaspx
A New Year’s Resolution for Nonprofits: Get ‘Fiscally Fit’16096GP0|#af3e9879-f65e-40d3-8cc6-25ef5b2f858e;L0|#0af3e9879-f65e-40d3-8cc6-25ef5b2f858e|Advancing Philanthropy;GTSet|#a1e8653d-64cb-48e0-8015-b5826f8c5b61<p>It’s never too early (or too late!) to start thinking about New Year’s resolutions. For many nonprofit organizations, getting a better handle on finances will top the list.</p><p><a href="/knowledge-center/resources-for-financial-management/pages/default.aspx">Strongnonprofits.org</a> is a Wallace Foundation website designed to help nonprofits do exactly that.&#160; It offers more than 60 tools, how-tos, articles and other features to help organizations build their financial muscle so they can fulfill their missions and deliver the best services possible.</p><p>We talked to Hilda Polanco, founder and CEO of <a href="http&#58;//fmaonline.net/">Fiscal Management Associates</a> (FMA), the consulting firm that created and maintains the site, about changes in the way nonprofits approach their finances and how they can get “fiscally fit” in the upcoming year.*</p><p><strong>Do you see a change in the way nonprofits approach financial management since Strongnonprofits.org launched several years ago?</strong></p><p><img class="wf-Image-Left" alt="hpolanco.jpg" src="/News-and-Media/Blog/PublishingImages/Pages/Hilda-Polanco-Strong-Nonprofits-QA/hpolanco.jpg" style="margin&#58;5px;" />In the last few years—and this has been heightened in the last year—the focus has been first and foremost on planning. Organizations are trying to take control of their destiny by having the right financial information. Four areas have become extremely critical. The first is an organization’s ability to understand the full cost of delivering their programs. The second is scenario planning, projecting into the future and thinking about multiple options. The third is managing cash flow. In so many states, payments are being delayed and organizations have gone through their reserves since 2008. The last one is the idea of planning as a process that never ends. Organizations, especially the ones that are successful and scaling, do a five-year strategic plan and put it on the shelf. But stuff changes. The days when boards would say, “the budget is the budget, and it never changes”—that’s not realistic anymore. We have to be more than just sustainable; we have to be resilient.</p><p><strong>What tools and templates on the site have been the most popular with users? What are the greatest needs that the site can help nonprofits address?</strong></p><p>The number one most popular tool is the <a href="/knowledge-center/resources-for-financial-management/Pages/Program-Based-Budget-Template.aspx">program-based budget builder</a>. It can help organizations quantify their costs in a way they can present in their development proposals and articulate when they negotiate performance-based contracts. The second is the <a href="/knowledge-center/resources-for-financial-management/Pages/Cash-Flow-Projections-Template.aspx">cash flow template</a>. I call it the “executive director’s navigation tool” because it gives organizations the ability to project cash flow into the future, manage it and know when they’re going into danger territory. The third is the <a href="/knowledge-center/resources-for-financial-management/pages/funding-opportunity-assessment-tool.aspx">“go/no go” tool</a>, which brings together teams to decide should we go for this [funding] opportunity or not. The site is helpful to organizations of all sizes, but for organizations that don’t have a full finance staff these tools have been transformational because they give them the ability to do some pretty complicated thinking.</p><p><strong>Are there any overlooked features of the site that you’d like to encourage users to take greater advantage of?</strong></p><p>One that I like a lot is the <a href="/knowledge-center/resources-for-financial-management/pages/revenue-analysis-worksheet.aspx">scenario-planning tool</a>. It’s simple. The thing with scenarios is that if you get too complex people get confused.</p><p><strong>Is there anything about the way you work with nonprofits to build financial strength that has changed over the years?</strong></p><p>Each year we work more and more with the senior management team rather than only the finance team, building their capacity to make better decisions, better plans, while also building the capacity of individuals, so that if one person leaves, the structure is there, the next person comes right into their role, and the organization continues. In that context, we’ve also spent more time working with program leaders to make them owners of their budgets and with development leaders, so they can provide better information in the proposals they send out the door and better understand the consequences of the funds they’re raising. Another area where we’re getting frequent requests for help is establishing a board-designated operating reserve. Boards want to make sure they have funds set aside for unexpected events. I find it encouraging that they’re thinking about that.</p><p><strong>What is the most important piece of advice you have for nonprofits looking to improve their financial outlook?</strong></p><p>Face the data. Think about the processes, frameworks, work flows you have in place. Are these systems giving you the information you need to make strategic decisions about current needs as well as the long term? Build your planning muscle. When I ask an organization if they revise their budget, sometimes they look at me and say, “There’s no way I’m doing that again.” If your processes are painful, you don’t have the right tools. Don’t think of planning as compliance, think of it as an opportunity for making the smartest choices. Finally, solidify the partnership between the board and leadership. The world is throwing curveballs. Have the courage to envision what it would be like to respond to a significant shift in your revenue, and as a result, be better prepared.</p><p>*<em>This interview has been edited and condensed.</em></p>Wallace editorial team792017-12-14T05:00:00ZMust-Read Advice From a Nonprofit Financial Management Consultant12/14/2017 10:12:28 PMThe Wallace Foundation / News and Media / Wallace Blog / A New Year’s Resolution for Nonprofits: Get ‘Fiscally Fit Advice From Fiscal Management Associates’ Hilda Polanco 646https://www.wallacefoundation.org/News-and-Media/Blog/Pages/Forms/AllItems.aspxhtmlFalseaspx
Proper Financial Management Helps Nonprofits Improve Efficiency16113GP0|#af3e9879-f65e-40d3-8cc6-25ef5b2f858e;L0|#0af3e9879-f65e-40d3-8cc6-25ef5b2f858e|Advancing Philanthropy;GTSet|#a1e8653d-64cb-48e0-8015-b5826f8c5b61<p>Most nonprofits would agree that good financial management is essential for their success and growth. But many small organizations lack the resources and skills necessary to create a healthy financial infrastructure. </p><p> In response to this growing need, we commissioned Fiscal Management Associates, a consulting firm, to create a website that would help nonprofits strengthen their financial management and provide a number of easy to use templates and resources. The title of the site is, appropriately, <a href="/knowledge-center/Resources-for-Financial-Management/Pages/default.aspx"> www.strongnonprofits.org</a>.</p><p> The genesis of the site arose from our work with 26 afterschool programs in Chicago, where it became clear that many of the organizations struggled with financial management. As our president Will Miller told the Wall Street Journal&#58; “It became a theme that the lack of understanding of the financial realities of their own organizations was one of the things impeding them from being sustainable, successful, mission-fulfilling nonprofits.” </p><p> Looking to help train nonprofit organizations become “fiscally fit,” Strong Nonprofits contains a library of resources compiled in partnership with Fiscal Management Associates, which highlight four key elements of strong financial management&#58; planning, monitoring, operations and governance. For each of these elements the site offers a variety of articles, resources and tools.</p><p> <em>The Chronicle of Philanthropy</em> has highlighted the site’s <em> </em> <a href="/knowledge-center/resources-for-financial-management/Pages/Funding-Opportunity-Assessment-Tool.aspx"> <em>Go or No Go questionnaire</em></a><em>,</em> which aims to help nonprofits decide whether or not go through with a proposed contract. This questionnaire serves as a good example of the many interactive tools available on the site. Also popular are the <em> Out-of-School Time Cost Calculator</em> and the <em> Program Based Budget Builder</em> that allows nonprofit staff to allocate their spending by program and personnel. </p><p>The demand for these resources speaks volumes about need. The Strong Nonprofits resources consistently rank among our top monthly downloads. And two of our most downloaded publications of all time, the <em>Program Based Budget Builder</em> and <em> </em> <em>A Five-Step Guide to Budget Development,</em> have accumulated 72,373 and 60,387 downloads, respectively, since they were published in February, 2013. Ultimately, what makes Strong Nonprofits so exciting beyond its ‘nuts and bolts’ subject matter, is its testimony to our research approach. Here, our afterschool work uncovered a gap in financial knowledge across many organizations, which led us to create additional tools and resources to fill this gap. </p>Wallace editorial team792017-09-21T04:00:00ZWallace Foundation’s Financial Management website offers tools and research to help nonprofits manage their money12/4/2017 4:39:21 PMThe Wallace Foundation / News and Media / Wallace Blog / Proper Financial Management Helps Nonprofits Improve Efficiency Wallace Foundation’s Financial Management website offers 287https://www.wallacefoundation.org/News-and-Media/Blog/Pages/Forms/AllItems.aspxhtmlFalseaspx

​​​​​​​