In order to ensure financial stability, a nonprofit should build three to six months of reserves for operating expenses. A general rule of thumb is that reserves should not exceed two years of expenses and should not be below at least one full payroll.
The most important asset of all associations and nonprofits are staff. Hiring and retaining the right staff are critical to ensuring program services and operations are performed at a high-level and that mission objectives are met. The cost of turnover is high and includes severance pay, unemployment taxes, the loss of institutional knowledge, costs to temporarily fill a vacancy, costs of recruitment, and costs to train a new employee.
Process reviews and redesign.
A periodic review of key organizational processes is essential to ensure the organization is running at an optimal level that is efficient and cost-effective. The review may reveal that processes are already close to optimum, or that process improvements or even wholesale process redesigns are warranted. Associations and nonprofits would do well to incorporate periodic reviews at least every two to three years.
Successful organizations develop and implement three-year or five-year strategic plans. Organizations who involve their board in developing their strategic plan will see greater engagement, support, and alignment of organization priorities.
The challenge of donor/member retention, also known as “the leaky bucket syndrome,” is a critical focal point for nonprofits and associations. It’s important to implement steps to identify and enlist new donors/members as well as engage and retain existing ones.
Customer engagement efforts should include regular communications that integrate stories, helpful information, and resources to showcase the needs of the organization.
Given today’s marketing landscape, an organization’s marketing plan should include social media strategy and tactics. As part of that strategy and to protect an organization, it’s essential to additionally establish social media policies and messaging guidelines for staff, board members, and volunteers.
Ideally, associations and nonprofits should review their technologies every three to five years to ensure the systems provide the required functionality to support operations. Key systems include payroll, grants, financial management, and customer relationship management systems.