Revenue and expense data tell you how money has moved in and out of your organization. However, this information doesn’t tell you what your organization is worth overall. For that, you need to look at net assets: the nonprofit equivalent of equity in the for-profit world, and often considered a measure of your organization’s true financial standing.

This metric is critical for capacity-building, reporting, strategic planning, and many other financial activities at your nonprofit. Strong donor stewardship and impact reporting play a role here, too. Supporters and grantmakers who understand where their gifts landed are more likely to trust your organization long-term.

In this article, we’ll discuss the three major net asset classifications, where they show up on your financial statements, and some habits to promote accurate reporting.

Ask most boards what their job is when it comes to fundraising, and you'll hear some version of "the ask," (if you're lucky!). What often doesn't makes the list is stewardship: thanking donors, keeping them informed, and making them feel like partners rather than a line on a spreadsheet. That usually gets left to the development team, which is a strange division of labor, since board members often bring exactly the credibility and personal relationships that make stewardship land.

If you've ever waited weeks for a simple account statement, or been told you couldn't access your own organization's money, you might assume that's just how it goes with investment advisors. It's not, and we want you to know that your organization shouldn't be treated like that.

While membership dues alone used to be enough to power many associations’ operations, economic and industry shifts have made this strategy riskier. Association executives must intentionally expand alternative income streams to build long-term sustainability.

Your foundation’s brand is not defined by a polished logo or a catchy tagline. It typically rests on its reputation. As the philanthropic landscape evolves, communities and stakeholders are asking for more from funding institutions. Specifically, greater authenticity and open communication.

Receiving an endowment gift is a milestone. It signals that a donor believes in your mission enough to fund it, permanently. But that check arriving is the beginning of a serious set of responsibilities, not the end of the conversation. And many nonprofit leaders are not handed a roadmap when it happens.

A well-governed nonprofit investment program should have more than good returns and a solid IPS. It has independent checks built into the structure, so no single firm has unchecked control over both the management and the holding of your assets. Understanding how third-party custody works is one of the cleaner ways a board can strengthen its oversight without adding complexity.

Your nonprofit needs secure funding to power your programs, and it might be time to consider your financial future beyond the traditional annual giving cycle. An endowment is an excellent option for nonprofits of all sizes to establish long-term financial stability.

An endowment is a pool of assets established by charitable contributions and invested by nonprofits to provide long-term, sustainable financial support for its mission or specific programs, often as defined by the donor(s).

For example, a donor might establish a scholarship endowment at a university. Rather than spending the principal, the university would distribute a portion of the endowment’s accumulated investment earnings each year to pay for students’ education.

However, while endowments can offer perpetual funding, they also come with certain limitations and requirements, meaning nonprofits should carefully consider whether their organization is prepared to properly steward and operate one. This article will review the top four considerations your organization should assess before deciding whether to start an endowment.

A good investment policy statement(IPS) should make investment decisions easier, not harder. It should give your board clarity, protect your organization, and hold up under scrutiny.

Most nonprofits have an IPS. Not all of them have one that's actually doing its job. In our work with nonprofit organizations, we see the same problems come up again and again: documents that are outdated, too vague to be useful, or simply disconnected from how the organization actually operates.

None of these are catastrophic on their own, but they add up. And when a difficult market or a board transition arrives, a weak IPS is the wrong time to find out.

Here are the most common mistakes we see, and what to do about them.

To sustainably fund its mission, your nonprofit needs to not only encourage engagement from its supporters, but also cultivate their loyalty. Donor loyalty is built on trust, so it’s vital to instill confidence in how you’re managing your organization to make a positive impact, especially when it comes to finance. 

While developing procedures for everyday recordkeeping and regular reporting is important, effective nonprofit financial management also involves planning for the unexpected. This is where risk management plans come in. 

In this guide, we’ll walk through four steps for creating a financial risk management plan that can help see your organization through challenges that may come your way. Some of these actions can also strengthen your day-to-day procedures, helping you demonstrate that you’re using donors’ contributions as promised for a good cause. Let’s dive in!