Cash Position

Many nonprofits struggle with their cash position. They often have long balance sheets in their equity sections with restricted funds and insufficient cash in operations to cover them. They have the assets in their endowments and investments but not in the bank. Sometimes, nonprofits lack an understanding of their revenue cycle or monthly expenses. Often, this is because of accrual-based or modified cash-based accounting. Since the budgets are not on a cash basis, nonprofits look at accounts receivable or timing differences differently than a for-profit enterprises. A nonprofit has to be able not only to recognize revenue but also collect.

Fundraising becomes significant as money is needed to fulfill the mission and vision and run the operations. However, most donors want to give toward specific programs or causes within a nonprofit, which raises the issue of restricted funds. Funds that have restrictions due to timing or specific purpose cannot be pulled into general operations. Nonprofits use a crucial metric of the expense ratio to ensure that at most 25 cents out of each dollar donated goes toward administration or fundraising expenses. However, large donors and grantors are not likely to send money just for general operations. Donors often scrutinize organizations that prefer general operations money due to sustainability concerns.

We at AJG Analtyics understand these challenges and are willing to work through them. We develop fundraising strategies along with financial restructuring to ensure sustainability. We will review the cash flow, create a cash budget, and put the nonprofit on a trajectory to serve its clients and the community. We are here to help with the ever-changing rules and guidelines that nonprofits navigate so that organizations can be true to their founding and core values. AJG Analytics wants nonprofits and their leaders to be authentic and strive for excellence in serving their population or demographic.