Nonprofits operate in a complex market full of near-constant challenges and changes. Technology advances, an uncertain economy, changing donor actions, and an increasing demand for nonprofit services are just a few examples of the trials nonprofit organizations have faced in recent years. As we’ve covered before, one of the best ways to minimize the potential negative impacts of these fluctuations is by maintaining effective and up-to-date policies and procedures for your nonprofit. Financially strong nonprofits are better equipped to adapt and proactively respond to change. In this market, the availability of resources, especially cash, and strong cash management practices are key elements of financially strong nonprofits.
Cash Management
Cash management practices include effective and efficient use of resources and maintaining liquidity to maximize mission impact. As you begin to construct the unique cash management and cash reserve policies for your organization, consider the following:
Cash Reserve Policy
When establishing or updating a cash reserve policy, the board should consider the organization’s risks, variability of cash flows, and critical expenditures. This information supports four primary areas of the policy.
By implementing these strategies and practices, nonprofits can optimize cash management, maintain financial stability, and support their mission-driven activities effectively. If your nonprofit is looking for help establishing and implementing a cash reserve policy or other various policies and procedures, reach out to our Nonprofit Advisory Services team. Our experts have decades of experience serving a diverse variety of nonprofit organizations, and they will be able to help you build a manual that echoes the goals, culture, and mission of your specific organization.
