When was the last time you measured the financial health of your not-for-profit? Do you even know where to start? The financial health of your NFP is indeed relevant when it comes to management objectives and the overall mission statement. How can you make a difference if your NFP is financially unstable? Here are three quick ways you can quickly check your financial stability and ensure you are achieving your not-for-profit goals.

How Effective Is Your Fundraising?

Do you know exactly how much you are bringing in from your fundraising activities? While the returns can often look good, did you weigh up exactly how much you spent on the last gala or raffle? Work out the expenses to see if it was an effective fundraising period. Divide all contributions (not including grants) by the fundraising costs to see just how efficient your NFP was over the previous quarter or even the past year. This will be your fundraising efficiency ratio and the number you need to better each year.

Are You Achieving Total Efficiency?

Over and above your fundraising ability, is the overall effectiveness of your non-profit. This check will compare total income against total expenses. Deduct your expenses from your income and then divide the result by your income. Compare this against the previous years to see whether you are on target. This figure will give you the net operating ratio of revenue to expenses. Were you more or less efficient than last year? These numbers are very telling indeed!

Examination of Assets vs. Liabilities

As non-profits often rely on donors, grants and fundraisers, there are periods when things can get a little tight. When was the last time you had a look at the assets of your NFP? Your assets are the items which could be sold to generate cash if necessary. Now count up the liabilities. This is money owned or payable such as payroll, taxes, rents, etc. Deduct the liabilities from the asset to discern your worth. You can take it one step further and divide the number by your average monthly expenses. This figure will tell you how long, in theory, you can continue to maintain operations at your current resource level.