There are a number of accepted methods for analyzing the financial success of a particular nonprofit. Generally, some major questions to consider when deciding how well or how poorly a nonprofit is doing include:
- What is the NPO’s yearly income?
- What is the NPO’s yearly spending?
- How do these two numbers compare?
- Where is most of the NPO’s money spent?
- Where does most of the NPO’s funding come from? One person? Many sources?
- How equipped is the NPO to fund programs?
- How will this change in the future?
- How accurate are past budgets?
- How much emergency funding is available to the NPO?
- How much money is owed in loans or credit by the NPO?
Long-range funding, especially, is a gauge of a nonprofit’s marketing and fund-raising ability. Surpluses in the budget mean that an organizer’s treasurer in charge of allocating funds is doing a good job. A review of the finances of a not-for-profit gives the organization a clear idea of how the business is doing, whether it is flourishing or weakening, and how to help the organization become or remain successful.
