Accountants working for a nonprofit need to not only help clients save money during the COVID-19 pandemic but also to assist them in increasing their cash flow.
The non-profit world loves accountants. Some are on the payroll, but many are volunteers, serving on the finance committee and as board members. Museums come to mind, but religious organizations, community theatre groups and animal shelters also qualify. They have many people with ideas on how to spend money, far fewer understanding how to raise it or manage it. Let’s assume you are in the latter role.
A nonprofit should be run like a business. Income is supposed to exceed outflow. Although they might have the advantage of an endowment, that should be treated as an individual would their retirement assets: A funding source of last resort.
- Furlough Non-Essential Staff: This is painful, but wages and salaries are often the largest expenses for the organization.
- Defer Capital Spending: If you don’t have the money to cover day-to-day expenses, you can’t afford to expand.
- Cancel Upcoming Events: Let’s say you have a theatre company. A blockbuster show might cost $500,000 to stage, with the expectation of bringing in $1,000,000 in ticket sales. It costs $100,000 to cancel. If all performances are cancelled, there’s zero in ticket sales. You bite the bullet, paying to get out of the contract.
It’s easier to reduce the bottom line compared to driving the top one. Many people in the nonprofit world feel because their cause is noble, everyone should open their wallets, regardless of their personal circumstances. The reality is charitable contributions are the easiest non-discretionary expense for individuals to cut.
Accountants might not be known for their marketing or sales acumen, but this is your opportunity to shine. You know you are heading into a competitive situation where every other organization is going to be looking for money.
