According to a report by FSG (nonprofit consulting firm), it’s unlikely that NGOs will survive in their current form. External forces like political, technological, and demographic changes have a far-reaching impact. To survive, they will need to assimilate themselves to rapid change.
Over the years, NGOs developed codes of practice as their mechanism of preventing mismanagement of funds. This attempt has proven to be futile. The subject of the NGO’s future is covered broadly in a report by FSG. The report, titled Ahead of the Curve, Insights for the International NGO of the Future, was sponsored by the William and Flora Hewlett Foundation.
The report studies NGOs with at least $30 million in annual revenue. It describes disruptions brought on by globalization. This writer finds the report to be a bit trite and lacking in examples, however, we can not ignore the findings.
The report encourages NGOs to develop new revenue streams such as commercializing products to capitalize on intellectual property or employing professionals who can enable them to charge a fee for services rendered.
Here are some of the findings:
Implementation of program activities across all regions
The report foresees International NGOs leaving implementation to local organizations and focusing instead on influencing policy through more advocacy-type activities.
This calls for using an automated approach to surviving in a dynamic environment and may facilitate the implementation of program activities across all regions. Another solution is to partner with local organizations, which we already see happening in most African countries.
The size of revenue and staff
Securing future funding for policy advocacy has become tougher. The report cautions NGOs about being too “profit-oriented” and defines success by the size of revenue and staff. To secure funding will require that the success of NGOs be measured by how much good they do.
Synergy with the private sector
Find synergy with the private sector by viewing business as a development partner. This will mean alerting funders of all activities and make sure money is spent on achieving goals.
Important pillars for managing nonprofit finance:
1.Use the right tool for the job
The right bookkeeping system is the first step to manage NGO finances efficiently. The best software choice should record transactions and close off books in real time, as well as meet internationally accepted accounting standards.
2. Organize your finance
Without organized finances, it will be difficult for the organization and its employees to reach its aim and fulfill the purpose of its existence. Well, organized financial resources strengthen fundraising efforts by giving an overview of available funds or the lack thereof.
An inconsistent approach to financial management can cause a host of problems that could have been avoided if finances were more organized.
For example, a financial policy that states that assets must be evaluated every six months. Failure to do so may result in reporting inaccurate annual figures.
3. The system should meet accounting standards
Financial accounting and recordkeeping systems used by NGOs should meet internationally accepted accounting standards. Any accountant, from any country, should be able to access accounting software at any time.
How NGOs can survive
From the FSG report, we can conclude that NGOs should keep a close eye on their spend. The existence of NGOs depend on future funding and to raise funds needs funds. Excellent finance management practices are the throbbing heart that will help nonprofit organizations to survive the imminent ending.
To manage finances effectively, managers should have an understanding of the basic accounting process. Basic financial management skills will help analyze financial statements and know the state of NGO finances.
NGO financial stability is guided by three measures:
- The surplus of revenue over expenses.
- The ability to meet cash requirements to settle bills.
- The relationship between assets and debt or liabilities.
The FSG report also points to the importance of transparency of NGOs operation. This calls for consistency in reporting financial affairs. Transparency is possible when reports are easily accessible.
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