Smart Nonprofit Management

Audrey M. Jones
Volunteer Administration
Volunteer Administration

Using smart nonprofit management tips can assist with a new agency's success or create a more stable foundation for an existing organization. While managers often claim that running a nonprofit agency is similar to managing a for-profit business, the truth is that a nonprofit's legal status, goals and staffing needs differ from those of a for-profit business. Because of this, the accounting, hiring, employee management and daily operations of a nonprofit must be handled differently.

Smart Nonprofit Management Basics

A nonprofit manager oversees the organization's administrative and financial departments as well as its staff. Successfully managing these departments requires considering their individual and collective operations.

Administrative Management

Nonprofit administrative duties include establishing the organization according to state and federal laws, planning daily operations and preparing for the agency's future. None of these is more important than the others. However, because failing to comply with legal requirements may result in financial or other penalties regulatory compliance requires special attention.

First, ensure that the agency complies with the Internal Revenue Service's (IRS) rules for 501(c)(3) or other exempt organizations. Review the organization's IRS filings once a year to guarantee continued compliance. Information about establishing and maintaining tax exempt status is available the IRS website. The IRS has also established a separate website specifically for 501(c)(3) agencies.

Next, accord the organization's daily operations and future planning with the organization's statement of purpose. Adhering to the statement makes it easier to establish how the office should function on a daily basis and to schedule the periodic steps that will help the organization establish its long-term goals. If no statement exists, hold a meeting during which board members, employees and other involved persons can submit their ideas about its contents and wording.

Smart management includes operating between a set of barriers: legal on one side and the purpose statement on the other. Frequently referring to both ensures that your decisions and management are in the agency's best interest.

Financial Management

The financial obligations of nonprofit agencies do not consist solely of tax returns. Nonprofits must account for all income and expenditures like a regular business. Staff members and suppliers can and should be paid as required, but any remaining funds should remain in the agency's account.

The main consideration is whether the organization is earning any income. This does not mean that the agency cannot have a positive account balance, but by no means can the agency have money that it saves for use solely by the board of directors or foundation members. If the agency's money is not handled according to legal requirements, you must change its collection and disbursal methods. Failure to do so may result in the agency losing its nonprofit status.

Smart nonprofit management may require use of specialized software to ensure that the organization's finances are adequately completed and ready for inspection by board members or the IRS. The Nonprofits Assistance Fund offers financial management help to charities, and the Robert Wood Johnson Foundation provides definitions of common financial terms used in the nonprofit sector.

Human Resource Management

Smart nonprofit management relies on staff to keep the agency functioning and thriving. Without employees or volunteers dedicated to or interested in the organization's purpose, very few nonprofits will achieve their purpose. Hire reliable, educated, motivated and involved employees. Do not keep employees who are only there for the paycheck or who stir up trouble, as they dampen the organization's spirit and cause problems.

Employee management is not the only staffing concern for nonprofits. Don't overlook the importance of your agency's volunteers, if any. Expressing appreciation for your volunteers' work often results in their returning time and again to help.

For both groups, though, the most important thing is to be organized, straightforward and honest. Let employees and volunteers know what is expected of them and how they can best perform their jobs. They will appreciate knowing exactly what they should do and will likely complete their tasks with little oversight and without complaint.

Be the Best Manager Possible

In a successful nonprofit agency, the agency's administrative, financial and human resource areas work cohesively to ensure each other's success. Smart management works to make all three areas work collectively.

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Smart Nonprofit Management