8 Reasons Why Getting on Top of Your Finances in 2024 Will Be Your Most Important Priority to Safeguard Your Mission
We know first-hand that supporting our everyday heroes is critical for the long-term effectiveness and impact of the small charity sector.
In the ever-changing landscape of this sector, small charities face unique challenges when it comes to assuring their long-term sustainability. Limited resources and competing priorities often make it difficult for these organisations to prioritise financial management. And some leaders intentionally shy away from really getting to grips with their finances. Because it just seems too complex to navigate.
However, in 2024 and beyond, getting on top of your finances will be an unavoidable priority for small charities if they want to be assured of their future and safeguard the delivery of their mission.
In this blog, we will explore eight reasons why financial management should be a top priority and the benefits it can bring to your organisation.
1. Financial Stability and Sustainability
One of the most significant reasons why small charities should focus on their finances is to ensure long-term stability and sustainability. By carefully managing income and expenses, monitoring cash flow, and maintaining adequate reserves, their organisation can weather unexpected challenges and continue to provide essential services to their beneficiaries. Building a solid financial foundation will enable their charity to thrive and make a lasting impact in the community.
2. Full Cost Recovery – Confidence to ask for what your services are really worth!
If you are not recovering the full costs for their services, then they are having to pay for it from somewhere else.
It is usually the “nice to haves” that are the first to go i.e. a training budget or an away day. Or they absorb the increased workload internally and further stretch the workforces. This deficit that they are creating and compounding is unsustainable. We know that once they really know how much it costs to run their organisation they will have the confidence to ask for what their services are really worth!
3. Effective Resource Allocation
Effective financial management allows small charities to allocate resources strategically. By understanding the most efficient operational model for the organisation, you can make informed decisions about budgeting, fundraising, and programmatic investments. This ensures that your limited resources are directed towards activities that align with your mission and have the greatest impact. By optimising resource allocation, you can maximise the value of every pound and enhance the effectiveness of your impact. Your funders will like this too!
4. Burnout Prevention and Staff Retention
Working in a small charity often means dealing with emotionally challenging situations on a daily basis. Frontline workers may be exposed to distressing stories, traumatic experiences, and the harsh realities of the communities they serve.
The emotional toll of witnessing suffering and feeling responsible for making a difference can contribute to burnout if capacity to address it appropriately is not secured. The combination of challenging work and under-resourced teams has a domino effect. Once people are overstretched for extended periods of time this leads to burnout, high absence levels and errors, and the lack of capacity because of this only amplifies this further.
Having a complete picture of what is needed in terms of finances, overheads, management and delivery workers to allow adequate time and space for reflection, support and personal and professional development will enable leaders to provide the right conditions for staff to maximise their impact and gain satisfaction in the process.
It starts with the numbers.
5. Transparency and Accountability
Maintaining transparent and accountable financial practices is crucial for small charities. Donors, stakeholders, and regulatory bodies expect organisations to demonstrate financial transparency, responsible stewardship of funds and a strong awareness of what their services cost. And therefore, how their funds will be used.
By keeping accurate records, implementing strong internal controls and gaining a thorough understanding of how your funding resources the different parts of the organisation, charities can build trust and credibility with donors and supporters. This, in turn, can lead to increased funding opportunities and partnerships, opening the doors to new opportunities to grow and thrive.
6. Reserves
Many of the organisation’s we work with worry on a month-by-month basis about making payroll. Having adequate reserves for a rainy day allows some breathing space when cash flow is not great.
If leaders are worrying about cash flow on a basic level, then this leaves little head space to think more strategically. If you’re a leader and you haven’t got your finances in check, it is likely that you’re spending all of your time worrying about it, and not much time thinking about innovation, solutions, impact and strategic development.
7. Adaptability and Flexibility
2024 and the coming years will undoubtedly bring unforeseen challenges and opportunities. By having a solid financial foundation, charities can adapt and respond to changes more effectively. Whether it’s navigating economic fluctuations, exploring new initiatives, or scaling up operations, sound financial management provides the flexibility and agility needed to seize opportunities and overcome obstacles.
8. Safeguard your Finances – Safeguard your Mission.
As a leader of a socially-driven organisation, finances will never be your number 1 priority. But getting on top of your finances in 2024 will ensure stability, effective resource allocation, external credibility, and the space to adapt and thrive in a rapidly changing landscape. It’s the best thing you can do to safeguard your mission and assure your crucial services are here for the future.
Take control of your finances and watch your small charity soar to new heights in 2024 and beyond!
If you would like to learn about how we can help your organisation get on top of their finances in 2024 please book a complimentary call with us by clicking this LINK