For many organizations, the new fiscal year has started and the budget for the year has been established. For others, it is mid-year, and there may be a slight sense of panic as funds are not coming into the organization as had been hoped and planned for. Over the next few weeks, we are going to focus on fundraising plans to help nonprofits and ministries build a reserve fund OR if need be, fund the budget.
Perhaps I just used a term that you are not familiar with in the world of nonprofits —reserve fund. Yes, it is possible and highly recommended that your organization develop a reserve fund. Unfortunately, for many organizations, doing so is a dream. When budgets are built where the expenses total the exact amount of projected revenues, there is no room for a reserve. This isn’t a best practice for our home budgets, nor is it a best practice for nonprofits and ministries.
Just as in our home budgets, we often face unexpected expenses, the same can happen in nonprofits. A reserve fund is a small account that provides some funds for a contingency, or anytime expenses exceed what was anticipated. Depending on the size of the organization, best practices indicate 3-6 months of reserve funds should be set aside.
Obviously, most organizations will not be able to set aside a lump sum of money to total the needed reserve. But, through diligence and frugal spending, funds can be set aside a little at a time. So, even for those fortunate organizations whose budgets are fully funded and they have all the money they need, fundraising can be used to build the reserve account that will exist to stabilize the organization.
So, let’s get started.
Begin by making a list of every asset your organization has. Think about its staff, reputation, services, etc. Include every strength, even those that may not be so obvious or that are hidden. Most organizations have assets or strengths that they never share with others, since this list is a working list internally, I want you to include those.
Let me give you an example to get started. Since people are the number one asset of most nonprofits and ministries, let’s think for a moment about specific and proven strengths.
- Personal connections of staff and board members within particular communities (faith, ethnic, political, etc.)
- Personal connections with funders or corporate connections who could be potential donors
- Good people skills
- Reputation in the community
- Writing or marketing skills
- Event coordinating skills
- Eagerness to participate
- Other special skills and interests
If you can begin to think about these types of strengths for each person associated with the organization, you are going to find that the organization has a lot of assets. Many of these assets are probably not being used to their fullest extent. And many more are probably not needed at the moment, but remember, you are simply creating a list that can be referred to over and over again.
While we all enjoy the process of looking at our strengths and our assets, it is not as enjoyable to review our areas of challenge. Next week, as we continue to develop our fundraising skills we are going to look at these so that we can continue our growth pattern.
Have a nonprofit question? Send us an email, we will be happy to assist.