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Tips for Successful Nonprofit Management

There’s been a drive inside of you to help others, but you haven’t found the right opportunity — so you decided to create one. Days filled with making a difference in other people’s lives feel like a dream come true. You’ve weighed the pros and cons of running a business, and you’ve decided that you want to move forward with starting a nonprofit.

Do you plan on working with seniors, veterans, children or animals? Or are you striving to create a better environment? Regardless of your aspirations, there’s a lot of work ahead of you. Here are a few things you need to know when starting a nonprofit.

Build a Board of Directors

If you’re starting a new nonprofit, one of your first tasks will be to build a board of directors, which should include at least three people. In addition to this being a legal requirement, it will also ensure that there are strong leaders at the helm of your organization. The board of directors will make decisions about how the nonprofit’s money will be used, but they will not make any money themselves — directors don’t get a salary or bonuses.

The board of directors aren’t the same people who will be working or volunteering for the nonprofit. They’re probably not going to be sorting donations or cleaning garbage from the roadside. Instead, the board of directors will be making high-level decisions about the activities and mission of the nonprofit. Think of them as upper management.

Showcase Your Emotional Intelligence

Emotional intelligence is the ability to recognize, control, and express emotions, as well as the ability to empathize when others express their emotions. Emotionally intelligent leaders have traits like strong self-awareness, self-management, social awareness, and relationship management. Nonprofit leaders who have emotional intelligence have a better chance of succeeding because they can build valuable relationships.

Enhance Your Cultural Intelligence

Cultural intelligence goes hand-in-hand with emotional intelligence, and it’s an especially important trait for nonprofit leaders because they’re often put in culturally diverse settings. A culturally intelligent person will be able to work well and relate to others regardless of the situation.

When you run a nonprofit, you can also lead by example and show your volunteers and employees how they can do the same. Possessing cultural intelligence means having knowledge of different cultures, being prepared to bridge the gap when there’s a cross-cultural situation, and acting appropriately in diverse settings.

Smartly Manage Finances

Bringing money into a nonprofit is different from bringing money into other types of businesses. Since nonprofits don’t have the main goal of making money, their cash flow comes from grants and loans. These income streams have to be carefully managed so the money can stretch as much as it needs to. It’s not always guaranteed that you’ll get grants or loans on a reliable timetable. Here are a few tips for better financial management:

  • If you’re just starting a nonprofit, save to invest as much as you can afford. It can take some time to get the nonprofit off the ground and start securing grants, and you don’t want to go into debt as you do that. By putting more money upfront, you can buy yourself time to replenish your accounts while you’re operating.
  • The best time to borrow isn’t when you’re desperate; it’s when you’re able to pay back the loan on a regular basis. After determining what kind of loan you’ll get, be smart about how you’ll manage it. Otherwise, you’ll accumulate debt and get yourself into a hole. Make sure you have a fundraising strategy lined up before you take out another loan.
  • Instead of hiring another employee, consider outsourcing. Freelancers may cost more per hour, but you won’t need to pay them for a full week of work if they need less time to complete the task. For example, if you need help with marketing, an in-house employee would have to work part-time or full-time, while a freelancer may be able to get the work done in just a couple hours a day.
  • If possible, keep a savings account so that you can continue to operate even if income dries up temporarily.
  • The key to successful financial management for nonprofits is to resist overspending. That way, you’ll have extra for the things you truly need.

Reduce Chargebacks

Chargebacks are unexpected and can cost a nonprofit a lot of money, so you’ll want to reduce the risk of a chargeback as much as possible. When a person makes a donation by credit card online or over the phone, they can contact the merchant (the credit card company or bank) to refund that money. They can claim something as simple as buyer’s remorse, but chargebacks often occur when an individual doesn’t recognize the transaction.

To prevent this, make sure that the name that appears on credit card statements is obvious — if you can’t tell that the listed name is your nonprofit, the donor may think it’s a fraudulent charge. You can also ask the credit card processor to put your phone number on statements so that donors can contact you with questions about the charge.

Wrapping Up

There’s no better endeavor than helping others. Running a nonprofit isn’t easy, but it is one of the most rewarding jobs you can have. By approaching your management role the same way you would with any business, you can run a successful nonprofit and give back in whatever way you can.

Tim Esterdahl

Tim Esterdahl is the editor of IFCS blog. He is a married father of three and enjoys golf in his spare time.
Tim Esterdahl

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We truly appreciate your support! Through the kindness of the community and generous donations to the Ready Set School! program, IFCS was able to assist 552 students with school supplies, clothing, and backpacks as well as supplies for 300+ students.
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We appreciate the Back-to-School partnership with @DollarTree and Operation Homefront. Through their support, we were able to collect over 1,000 items to go into school supply backpacks. Thank you for the support of our veterans and their families!

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