Many of our institutions provide financial services for various non-profit organizations. Most of the time, this comes in the form of deposit accounts. But it we may also have loans or even may serve on a board or committee for a non-profit.
I once served as a treasurer for a non-profit that was recovering from an ex-president who had embezzled tens of thousands of dollars from the organization. This soiled the reputation of the charity among its givers and also in the community. The group went through a forensic audit to uncover how much was lost, why it was lost, and what could be recovered. The group leadership learned quickly that a fun way of contributing back to the community soon became a serious drudgery as they worked to figure out how to survive.
Dangers exist from many sources for non-profits. Embezzlement and waste of funds from within can drain off precious contributions from where they should go and drive donors away. Poor leadership can fail to rally adequate support and energy to keep the organization growing. Reliance upon a small group of large donors can be painful if one decides not to contribute. A lack of fresh volunteers can also doom the organization into failing to innovate and reach out to new people. And for those who serve in leadership, board liability is real. If liability is not there, then a poor reputation for the organization and its leaders may arise in the community.
Insist on top-notch financial reporting. I fired the existing accountant when they could not explain the financials. I also thought that whether or not the bookkeeper was involved in the embezzlement, the fact that it happened on their watch was enough to let them go. We recruited and hired one of the best firms in town and also set up an audit, something I recommend for any non-profit, especially those with revenues over $200,000. Your donors want to make sure their money is spent wisely. Why would you give money to a group that was wasting it?
The financial reporting should include a monthly income statement with a comparison to budget and the past year. If the revenue or expenses fluctuate, looking at the performance of this year’s period to previous years is valuable. A balance sheet prepared according to GAAP should also be presented. Finally, a statement of cash flows is also useful. It is not only necessary to present these to the board, but they must be broken down and explained in terms that the board members can make educated decisions for the group.
Use top-shelf leadership talent. I always think non-profit leaders have often one of the hardest tasks as they do not have the power of the wage to hold over the workers. Since there are also so many good causes around, it is easy for people to leave one group and go work for another. This makes it even more important for the successful non-profit to have excellent leadership. An organization will not grow beyond the leadership capability of its head. If your non-profit or church cannot grow or is losing lots of members, you need to look at the leadership capability.
I once attended a church that suffered from a vacuum of good leadership at the top. In the space of several months, the 1/3 of the other leaders left, the youth group went from over 60 to the single digits, and offerings dropped in half. The worship team left and the attendance dropped by 2/3. In this case, the inability of the leaders at the top were driving the organization into the ground.
Now if you are a leader or volunteer for a non-profit, find a cause or organization you can work passionately in. Life is too short to live half-heartedly.
Keep the cause at the top of your mind. I worked on a board that raised money for college scholarships for needy students. We increased our donations and workers when we began to let our students become our best advertising piece. They were at our telethon, golf tournament, banquet, and other fund-raising events. We had some of them work in the office. We put their stories on our website. The story moved from the “traditions” of the institution to the needy kids. Donations began to pour in. Emotions and belief in causes will often cause people to open their hearts, and give their time, talent, and treasure.