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What Does Nonprofit Fiscal Fitness Mean?

I’ve always thought that it meant, good, dependent, diversified streams of revenue. And it does – but fiscal fitness means so much more. In a word, it means: Awareness. Are you aware of your finances?

Or, does this quote strike a chord?

“… many of the challenges we identified in the study are widespread throughout the nonprofit sector, including issues associated with government contract compliance, managing and monitoring cash flow, and accurately budgeting for the full costs of programs.”

- from, “Fiscal Fitness for Nonprofits: Project Puts Chicago After-School Programs and Funders Through a Financial Workout” published by The Wallace Foundation

I recently came across this series of reports from the Wallace Foundation on the fiscal fitness training of Chicago-area after-school programs: See more here.

Not only was I intrigued at how important it is to understand your finances in the ways described in their reports, but also I was relieved to discover that nonprofit financial savvy is within reach. These reports made it clear that this is stuff any of us can get at. You can do this.

You have to do this.

Consider, which of these do you readily know the answer to? Which answers would dramatically change how you raised funds? Which, if given your regular attention, would dramatically affect the outcomes of your program?

What’s the cost per client of each program?
How many clients do we need to deliver services cost-effectively?
What other “business-model drivers” should you consider?
How would you begin to understand your finances in this way?

In the spirit of sharing tools here’s a write-up on “Break-Even Analysis” that can help you begin to see the variables your budgeting – so that you can be prepared with scenario budget planning.

Nonprofit Assistance Fund’s “Making Your Business Model Work: Applying a Break-Even Analysis“

Of course, we have many more resources on understanding nonprofit financial information.