Tips For Business Success For Not-For-Profits

Currently, NFP organisations are experiencing heightened demand for social services. In this context, it’s vital that your NFP organisation continues to self-assess and adapt to remain viable and successful.

To ensure that your NFP organisation can continue to do the good work it does, we offer these five tips for continued business success.

1. Maintain your focus on good governance

As the NFP sector grapples with demand, governance boards need to stay diligent and attentive in their regulatory compliance. The focus of board members should continue to be ensuring the organisation remains fit-for-purpose and capable of delivering its stated community benefits in a fiscally sustainable and compliant manner.

There are numerous and important responsibilities imposed on not-for-profit directors that are legal requirements. For example, directors have a responsibility to exercise their powers and discharge their duties with due care, skill and diligence; acting in the best interests of the not-for-profit company, and for a proper purpose. Any new strategy must be owned by the board and actioned by the executive.

If the executive and board are not actively managing the strategy, compliance requirements and risks of the organisation, they may require the assistance of an advisor to independently assess or audit policies and procedures. The appointed advisor may then recommend changes, and suggest a new methodology on how to establish a framework for the ongoing improvement in managerial and board performance.

2. Stay on top of your finances and cash flow

Cash flow is the lifeblood of every business and NFP organisations are no exception. A cash shortfall can ruin even the most profitable business, which means the executive team need to be across every aspect of their organisation’s costs, from payroll to finance.

This analysis needs to be timely, detailed, and well targeted. To ensure continued viability, the executive management of NFP organisations need to have a thorough understanding of the following:

• Do you know and understand your cash flow, working capital, and monthly cash burn? How much cash do you need every month to meet your business’s basic running costs?
• What does your liquidity look like, and what debt or equity is available, and from whom, to fill any gaps?
• What are your NFP’s debt obligations? How many debts are falling due in the next six to 12 months, and do you have a bank facility to refinance debt?
• Where is your revenue coming from? Are you solely reliant on government grants?
• Is your sales pipeline adequate and appropriate for this new environment? Are you monitoring likely sales and assessing the probability of delays and cancellations?
• Who owes you money? Are you looking to improve results in this area i.e. reduce debtor days, and thinking about the best ways for customers to pay you?
• Do you understand your legal and compliance obligations, as specified in the terms and conditions of all your agreements and contracts? This includes:
  • rental and lease agreements
  • creditors and your obligations, and risks associated with preference payments and the implications of the Personal Properties Security Act
  • staff costs, awards, human resources policies, and superannuation
  • reporting and compliance obligations to Government agencies.

3. Expand your fundraising horizons

In the current economic climate, fundraising revenue is predicted to decline. Therefore it’s important that NFP organisations continue to adapt and look beyond the norm for income.

In-person events have regained momentum, however some not-for-profits have continued to build on the online approaches and digital solutions that were put in place during lockdowns.

Innovation is key here – think carefully about your existing supporters and potential new donors – how can you reach them, solve a problem, or make a stronger impact? Often digital solutions or hybrid events can be part of the solution. If your organisation does not have access to digital skills, consider investing in skills development today.

4. Move to protect your business

Not-for-profit organisations must continue to maintain robust operating conditions. It is important to remain vigilant and to continue to manage risks even as you innovate.

As charities explore new, digital-first fundraising models, it is essential that your organisation remembers the risks associated with these platforms. The direct cost of cyber security incidents for Australian businesses has grown significantly in recent years.

Avoiding this cost and disruption means protecting your business online. Key to this is proper assessment of where you are vulnerable. Internal control reviews (ICRs) can help you better understand your strengths and weaknesses across systems such as payroll, expenditure, revenue and grants, donations and more.

Beneficial for all organisations, an ICR can help identify space for improvement in your control systems, ensuring that risk is adequately managed so that you have the confidence needed to act decisively when challenges or opportunities arise. These control measures can be as simple as ensuring that all your records are up to date, allowing fraud and other discrepancies to be detected more rapidly.

Want to know more about how Bentleys can help you?

Make a time for a chat with us today. We’re here to help you get where you want to be.

Disclaimer: This information is general in nature and should not be relied on as advice. It does not take into account the objectives, financial situation or needs of any particular person. You need to consider your financial situation and needs and seek professional advice before making any decisions based on this information.