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.

As a nonprofit leader, you have probably heard of the Uniform Prudent Management of Institutional Funds Act (UPMIFA). But are you familiar with what it includes and who needs to follow it? Don’t let your organization pay the penalty of being noncompliant with this important act. This post covers the key components of the law and its goals, who it applies to, an overview of steps organizations should take to ensure compliance with the act, and potential penalties for noncompliance.

Developing a reserve fund is a crucial part of maintaining your nonprofit’s stability and sustainability. As YPTC’s nonprofit financial management guide explains, “When you’re in survival mode, you might spend every dollar that comes in. To be sustainable, make sure you’re building an operating reserve. This can help provide a safety net during times of uncertainty, economic downturns, or other adverse circumstances.”

However, donors might wonder why or how you’re generating enough funds for a reserve in the first place. They might ask themselves: “Does this organization truly need my contributions if they already have enough extra funds leftover to put in reserve?”

To help you balance building your reserve and retaining donor support, this guide offers tips for advancing your reserve strategy while reinforcing donor confidence.

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.

Major campaigns, like capital or comprehensive campaigns, are no small feat. Before you can successfully engage your community and guide your organization to new fundraising heights, you must ensure your stakeholders are ready for such a monumental undertaking. 

That’s where feasibility studies, also known as campaign planning studies, come into play. In this guide, we’ll walk through five fundamental steps your nonprofit must take to plan and carry out a successful feasibility study.