Mar 27, 2014
The recent economic downturn has caused a number of nonprofit organizations to keep close tabs on their cash flows. Bringing money into the charity and monitoring outgoing finances requires vast attention to detail, especially for arts and culture organizations - that not only accept online donations but earn capital through ticket sale admissions, exhibitions or events, retail sales, membership dues, facility rentals, fundraising, campaigns and grants.
With all of these revenue streams in place, keeping track of your organization's assets can be a daunting task. Fear not, though; listed below are four money management tips for arts and culture nonprofits:
1. Outline income channels, information needs: Before a charitable organization can begin processing donations, it must know where the money is coming from, how often, and through what medium. An increasing number of organizations accept donations online now, so if your group tends to benefit from that type of revenue stream, build a strategy that caters to your strengths. By categorizing which channel makes your group the most money, it will be easier to eliminate the ones that are ineffective.
2. There's a difference between revenue and deferred: While some of charities rely on gifts from benefactors, a large number of arts and culture organizations focus on ticket sales for the events that they host. Most charities choose to defer the revenue until the buyer attends the special event or exhibit because if something changes or the show has to be canceled, the nonprofit returns money to the consumer. Industry website npENGAGE recommends groups should credit deferred revenue at the point of sale. Once the event happens, the deferred money is debited and money is made.
3. Keep your books separate: Keeping track of where your money comes from, who's buying your tickets and with what type of payment, how many visitors came to your exhibit and if these people were members or not are all great metrics to study. However, they all don't have to be in one ledger. In addition, don't try and force an established financial tracking system to keep track of ticketing information, it'll just create a mess, npENGAGE says. Keep the donation management software separate from the ticketing software, and keep the financial records on its own as well. The time will come when all of that information needs to be gathered, so make sure your nonprofit will be organized and ready.
4. Swallow your pride: Even if someone in your organization has years of private enterprise experience and knows how to manage money to a certain extent, there's absolutely no shame in consulting an expert bookkeeper. Your nonprofit should be run like professional organization, so treat it that way. Accountants are well-versed in the complicated jargon that often represents tax codes, and chances are they can save you some money in the process. These pencil pushers are great at finding deductions, Forbes says. But on the other hand, the more organized your nonprofit is, the less billable hours it has to pay an accountant, so there's an opportunity to save money on multiple fronts.