For both businesses and NGOs, the financial resources they have are crucial to daily operations and growth. Companies, when making every business decision, wonder whether they will manage to stay within budget, which is usually the responsibility of an entire department focused on planning expenses. The situation should be similar for NGOs, which unfortunately often lack adequate knowledge of financial planning. How to manage financial planning in your NGO? Read our article and learn more.
Financial planning in NGO – table of contents:
- Financial planning – what does it include?
- What is the purpose of financial planning in an NGO?
- The importance of technology
Financial planning – what does it include?Every organization strives to ensure its liquidity, which means possessing such resources that will allow them to maintain continuity of operations, and thus achieve the goals set in advance. In order to get this done, it is necessary to plan, organize, control and monitor financial resources. In the case of NGOs, it becomes more complicated – especially when many entities assume that they should focus on acting for the benefit of the community, rather than exercising control over their receipts and expenses.
However, it should be borne in mind that without properly organized finances, which are necessary both for operating activities (e.g., accounting costs, office maintenance, materials, etc.) and project activities, it will not be possible to achieve the goals set in advance. After all, there is no organization whose operating expenses are zero.
What is the purpose of financial planning in an NGO?
Financial planning allows us to determine what the NGO’s expenditures are necessary to achieve particular goals, and what funds must be obtained to balance the budget. We should ensure that it specifies the planned income and expenses, allocation of funds and the selected sources of funding (local government grants, private donations, EU funds, etc.).
Thus, the plan is a basic way to ensure the maintenance of financial liquidity, especially when there is a risk that some of the funds obtained from grants will flow later than initially expected. A plan (e.g., half-yearly or annual, or as part of a single project organized throughout the year) is essential for building stability – even if it will have to be modified due to a change in the internal or external situation. Its creation will allow us to determine, among other things:
- whether we need to look for a new source of funding to cover our expenses,
- whether we have received the assumed amount of money from a given entity,
- whether we should think about reducing expenses for current operations.
The importance of technology
To take care of better financial planning, it’s worth betting on programs that support this process – especially if they are available for free to NGOs. Using Firmbee, it is possible to have constant control over the budget of a given project, which is an essential element of financial management in NGOs. Thanks to Firmbee, you can:
- organize financial data,
- store financial data in one place,
- assign revenues and expenses to appropriate projects,
- provide access to necessary financial information.
Firmbee’s various financial management functions will make it easier for you to control whether your expenditures exceed the funds received from donors, grants and other forms of support for NGOs. What’s more, with the possibility to share financial results with external entities, the program will ensure full transparency and inspire greater trust among sponsors. This type of financial system will also help you create financial reports and present your total expenditures to government bodies in accordance with legal regulations.
Another way to properly plan the finances of an NGO is to hire an experienced person whose sole responsibility will be to exercise full control over the budget. Then you will be sure that no financial problem will arise that will be difficult to deal with.
“If you fail to plan, you are planning to fail.” – these words apply brilliantly to any business, whether for-profit or non-profit, but in the case of an NGO they take on even greater meaning. This is because NGOs conduct extensive fundraising activities with a never-unknown outcome, while trying to find ways to keep expenses for day-to-day operations and strategic projects as limited as possible. Creating a proper financial plan will avoid problems in the future by controlling the implementation and constantly responding to the changing internal or external situation.
Read also: Effective ways to run an NGO.