Financial Planning & Analysis

What's So Important About FP&A To An Early-Stage Nonprofit?

To someone who does not have a background in finance, financial planning and analyzing numbers may sound as exciting and palatable as chewing cardboard. I get it.
Nevertheless, your ability to manage your resources is hugely important to gaining the confidence of your supporters. Imagine that you have $1,000 or $1,000,000 to partner with an organization that has a mission that appeals to you, but that same organization cannot demonstrate the ability to budget properly or manage resources. You would look elsewhere! And who would blame you?!!

At one point in my career, I was responsible for evaluating Requests for Proposals (RFPs), to determine who among the nonprofit applicants would receive a grant. There were several points to the evaluation criteria, but without exception, if the applicant did not demonstrate financial competence, it was always a deal-killer.

Financial Planning and Analysis (FP&A) is a crucial aspect of nonprofit fundraising. It involves the comprehensive evaluation of resource needs, and the creation of mission-aligned plans to ensure the organization's financial stability and growth. FP&A helps nonprofits in setting realistic financial goals, present a convincing and trustworthy plan to potential funding sources, and is an invaluable means of monitoring the effectiveness of initiatives and campaigns, i.e., assessing the "bang for the buck". Moreover, by analyzing past financial performance and projecting future trends, your nonprofit can make informed decisions on resource allocation, and identify opportunities for efficiency gains. In this way, you can optimize your fundraising efforts, identify areas for improvement, and ensure the efficient utilization of resources.

With effective FP&A, your nonprofit can better communicate your financial health to donors and stakeholders, inspiring confidence and attracting more support for your cause. It is clear that Financial Planning and Analysis plays a vital role in the success and long-term sustainability of your nonprofit.

"You didn’t come this far in your journey to stop..."