Relaunching your Not-for-Profit – Financial Considerations

By CCVO Guest Blogger Robin Butler, Supervisor NPO Division, The Catalyst Group

With over 20,000 Not-for-Profits and Charities in Alberta, the sector is of vital importance to our community. The COVID-19 pandemic hit a lot of Not-for-Profits hard, especially operation-wise. As relaunching continues to take place, it’s important to keep in mind financial pointers that will set you up for relaunch success.

Budgeting

Boards and management should be budgeting a little differently right now given the extreme uncertainty surrounding the economic climate. Prepare a list of Needs and Wants. This list should include all the items you would have included in a normal year’s budget, but allows you to prioritize them more easily when you have better knowledge of income that will be received.

Needs would of course include your core programs. These are the programs that hit your charitable objective and mission/value statements the most prominently.

Wants may include renovation projects, new programs you were hoping to introduce, or additional positions you wanted to fill during the year.

Separate out revenues you know you can count on, such as contracted amounts from reliable agencies, or donation promises that were made post-COVID-19. The secondary list would include uncertain revenues; amounts you hope you can still receive, and amounts that have no promises whatsoever.

With these separations and notes made, you should be preparing two budgets. One would be based on the “good news” budget, which would include all the uncertain revenues and the “want” expenses, and one on the “bad news budget”, which would remove the uncertain revenues entirely and bring expenditures down to needs only. These budgets should all include anticipated cash flows (ie: when do the revenues come in, when will you need them, and are there capital items you need to purchase that won’t show up on your profit and loss?)

If you’ve prepared a budget like this, you should be able to use it and see where cash flows are matching, or where delays are occurring. This will help you manage your cash flows. You can also reach out to your vendors to discuss the timing of payments. Many businesses are in the same boat, but some have a little more leniency than others. Don’t be afraid to enquire if you can extend your payables when needed.

Rainy Day Funds

Many Not-for-Profits have a crisis account saved up. Discuss with your Board when this fund can be tapped into and ensure you keep it in mind if you hit a cash flow wall. They may be in Guaranteed Investment Certificates (GICs) or other investments that are not quickly accessible, so knowing the requirements ahead of time may be essential.

Casino Funds: If you have a casino fund, review the extended AGLC rules for usage of these funds, and determine if they could help you meet your cash requirements. You can review it here.

COVID-19 Funding

Take advantage of available funding for COVID-19 wherever possible. You can see the funding available for Not-for-Profits through this great guide CCVO has compiled here. While you’re at it, you can also check out CCVO’s Emergency Planning for Nonprofits Guide. It provides practical emergency planning and preparation considerations to assist nonprofits in the event of a second wave of the COVID-19 pandemic. The guide can be viewed here.

If you have any questions, don’t hesitate to reach out. This is unchartered territory for us all and we are all navigating together.

Catalyst works extensively with Not-for-Profits and registered charities on all accounting related matters including bookkeeping, financial and tax reporting, audit support and senior financial professional outsourcing (CFO support).  They also host virtual roundtable sessions to assist charities with their operations.

With a team of dedicated specialists in this area, Catalyst becomes a key member of the Not-for-Profit or registered charity’s team to align performance and organizational goals. There are several web-based programs that can assist in reporting requirements for a charity. Recently, Catalyst was named one of the fastest growing cloud accounting firms in Canada; they would be thrilled to bring their knowledge in this area to your organization. 

Feel free to contact Robin at 403-767-1546 or robinb@thecatalystgroup.ca.