Recently, I conducted a simple survey to find out more about the needs of smaller and bigger civil society organisations (CSOs) in the field of finance management. I received responses from people from very different organisations. From bigger European organisations as well as smaller local groups, from Africa, Latin America and from former communist countries in Europe and the Caucasus. I was interested to learn about their finance practice. For instance regarding preparation of an annual financial statement and annual budgeting on organisational level. But also about cash flow management; fundraising; and project budgeting, reporting and auditing. Yes, indeed, I am a nosy parker. But I will use the input for developing online courses on finance and organisational management for nonprofits. Because I was quite surprised with some of the outcomes, I want to share some key findings here, too.

Project finance

Almost two thirds of respondents indicated that preparing a project budget, project reporting and project audits are easy for them. This is, in my experience, in line with the activity focus of most CSOs. They can design project activities and matching budgets. And they can usually manage the funds they receive for these well. Certainly well enough to not encounter big issues in project audits. What surprised me is that 30% indicates that project budgeting is a bit to very difficult for their organisation. While 37% found it a bit difficult to make a financial report for a project.

Annual financial report

Around half of respondents mentioned that they are easily able to produce an annual financial report, with balance sheet and profit and loss overview. 22% of the respondents do not produce annual financial data. And 26% finds this a bit to very difficult. This is a picture I can easily recognise with my own experience. Most organisations can relatively easily prepare a profit & loss (income & expenditures) overview. All the same, most have difficulty understanding the balance sheet and face a real challenge in preparing this. As a result, most NGOs do not produce a balance sheet. In case it is needed, they hire an external party to prepare this. Of course there is nothing wrong in hiring external expertise for tasks you cannot get delivered in-house. However, when it comes to finance this can be tricky. Without having some expertise it is hard to understand the presentation of data. And it is even harder to verify if this is the best way of presenting your organisation. After all, the profit & loss statement shows to what extent you are capable of managing your incoming funds in a given year. And the balance sheet shows the longer term financial health and stability of your organisation. These are rather important pictures for the management to understand fully, and to take action upon as and when needed. Not forgetting that funders and investors are interested to assess as well, before deciding on a grant or investment.

Other finance management issues

My survey shows that in general, finance management can be a challenge for non-profits. More than 20% have a little difficulty in managing cash flow. 31% find it hard to prepare an annual organisational budget, whereas 48% says it is very hard to raise all needed funds for the organisation’s activities and aims. Respondents mention they would like to learn more about how they can cover their organisational costs through a mixture of projects funded by different sources. In connection with this, several also state that they would like to see how one system can serve all different reporting needs.

Conclusion

This is a very much simplified and shortened summary of the valuable input I received. It confirms to me that both smaller and bigger non-profits face serious challenges in understanding finance. And consequently, in getting their finances in good order. They find it hard to plan their finance. Probably in part also because of the challenges in fundraising. Once funds are available, it is a puzzle to see how all human resource and organisational costs can be covered as needed. And how all this can be reported in the right way to the different funders. This is where I want to contribute: I want to help civil society organisation’s (finance) management feel in control. So CSOs can pursue their dreams in to the fullest extent possible in a sustainable manner. This is why I want to develop (online) courses for this group of professionals and volunteers, around different aspects of finance management. Practical courses, with theory and assignments and with personal feedback. If you are interested in joining, please do not hesitate to contact me or simply follow me online.

SaveHow I can help

Here is how I can help you set up your nonprofit finance and admin professionally so you can stop worrying about this:

• If you would like to know what admin steps you need to design and implement for proper donation management, my workshop Donation Received – Now What? Can help you. You can get that here: https://www.changingtides.eu/donationnowwhat
• If you have your donation policy and SOPs for managing donations, and you’d like my professional opinion, I create a personal video review for you: https://www.changingtides.eu/reviewdonationssops
• If you would like simple steps to set up and organise your finance & admin foundations guidance by me, you can get a bundle of six simple and short workshops here: https://www.changingtides.eu/financeandadminbundle

If the bundle is too much for you at this moment, feel free to pick one or more of the workshops individually:

• Set up your financial processes: https://www.changingtides.eu/financialprocesses
• Understand important basics of bookkeeping for nonprofits: https://www.changingtides.eu/bookkeepingfoundations
• Be sure you are keeping all the documents you need for project donors, auditors, or officials: https://www.changingtides.eu/documentationfornonprofits
• Plan your cash flow for a year: https://www.changingtides.eu/cashflowfornonprofits
• Get a feel for how time sheets can be helpful to everyone in your nonprofit and set them up straightaway: https://www.changingtides.eu/timesheetsfornonprofits
• Learn how to calculate the price of time spent of your team members, including allocations for general costs that are used in different projects: https://www.changingtides.eu/feesfornonprofits

Please note, the bundle is cheaper than buying all six workshops separately: https://www.changingtides.eu/financeandadminbundle

Here is how I can help you with your nonprofit annual reporting work:

• With my free Checklist you can make sure your annual report is complete: https://www.changingtides.eu/checklistannualreport
• If you have created an annual report and would like to hear my professional opinion, I can create a personal video review for you: https://www.changingtides.eu/annualreportreview
• If you would like a clear process with easy steps and guidance by me, you can join my Course Annual Reporting for nonprofits here: https://www.changingtides.eu/COURSEAnnualReporting

Want to know more and ask questions?

If you want to discuss this more – jump into my nonprofit support community and get input from a wide range of peers and from myself!

Here is how you can join my free nonprofit support community

You can join my free nonprofit support community on the Heartbeat platform here. This group is a safe space for open exchange and discussion on potentially sensitive topics like boards, nonprofit management, fundraising, etc. You can visit the community via a browser or via an app. Here is the link to download the Heartbeat chat app in the Google Play store.

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If you want to support me without getting a paid workshop, course or review – you can donate me a coffee and speed up my thinking process!

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