During my more than three decades working with not for profit organizations, businesses, and other societies, I have observed that the vast majority of organizations are far less than adequately prepared when it comes to financial planning regarding their organization. As a financial planner for over thirty years, I have witnessed well meaning individuals make financial decisions, that looked good and wise to them at the time, have some dire or near dire consequences i the long run. Many fiscal officers of organizations look at their financial picture in a myopic manner, understanding or at least taking into consideration only one financial aspect. Others have treated the organization's budget process as little more than an exercise, and do not take advantage of the budget as a valuable financial tool.
For any of a number of reasons, there is a tendency for many organizations, particularly small to medium sized ones, to suffer financial hardships on a cyclical basis. One of the major reasons is that most organizations do not adequately qualify and train their fiscal officers, so, while some of these individuals may do a decent job, many do a less than adequate one. Many fiscal officers react instead of acting, rarely taking long term proactive steps, but rather resorting to crisis management. They generally react to financial distress by "tightening the purse strings," which is fine if done prudently. However, in many situations, these fiscal steps do not objectively look at what should be cut, and rather it is either broad based and across the board, or simply putting off non essential expenses until a later time. What these individuals often forget to realize or don't fully comprehend is that cutting certain expenses may have long term negative impacts. For example, while it may be essential to cut costs, the best way to do so is to first examine in which areas things can be done in a different, less expensive manner, and still get the desired results. When decisions are made to reduce certain member services because of costs, the fiscal officer is often not taking into consideration the possible impact on membership renewal, public relations, donor relations, motivation, etc. Many of these individuals ask leadership to accept reduced reimbursements for expenses, not realizing that it is very difficult to get leaders to commit to donating their valuable time and effort, and not reimbursing them may create a resentment or a hesitation by potential future leaders to ascend to higher positions.
The worst scenario is when these fiscal officers ask people to expend funds to, for example, attend a meeting, and not inform them in advance how much or if they are being reimbursed. It would be far better to use a different method of meeting that was less expensive, where these leaders could either teleconference or use various Webinar and other digital, technical techniques. They should evaluate whether some travel is necessary or could be done in a less expensive manner. They should examine their magazines and newsletters and see if there might be an alternative, less expensive manner that might still meet their needs and objectives. In other words, they need to examine the "big picture."
Budgets should be created with "no fat," and "no waste." Budgets should contain specific contingency expenses as part of them, to account for either maintenance expenses or other shortfalls. These reserves should be placed in separate accounts and built up until they were substantial enough to meet potential financial crisis. That is proactive rather than reactive financial planning.
All of these things, and many others, should be part of the training for any individual in a fiscal or financial impacting position. Just as Leadership Training in general is a necessity, fiscal training and programing is often the difference between an organization's financial health and difficulties.
Richard Brody has over 30 years consultative sales, marketing, training, managerial, and operations experience. He has trained sales and marketing people in numerous industries, given hundreds of seminars, appeared as a company spokesperson on over 200 radio and television programs, and regularly blogs on real estate, politics, economics, management, leadership, negotiations, conferences and conventions, etc. Richard has negotiated, arranged and/ or organized hundreds of conferences and conventions. Richard is a Senior Consultant with RGB Consultation Services, an Ecobroker, a Licensed Buyers Agent (LBA) and Licensed Salesperson in NYS, in real estate. Richard Brody has owned businesses, been a Chief Operating Officer, a Chief Executive Officer, and a Director of Development, as well as a consultant.For any of a number of reasons, there is a tendency for many organizations, particularly small to medium sized ones, to suffer financial hardships on a cyclical basis. One of the major reasons is that most organizations do not adequately qualify and train their fiscal officers, so, while some of these individuals may do a decent job, many do a less than adequate one. Many fiscal officers react instead of acting, rarely taking long term proactive steps, but rather resorting to crisis management. They generally react to financial distress by "tightening the purse strings," which is fine if done prudently. However, in many situations, these fiscal steps do not objectively look at what should be cut, and rather it is either broad based and across the board, or simply putting off non essential expenses until a later time. What these individuals often forget to realize or don't fully comprehend is that cutting certain expenses may have long term negative impacts. For example, while it may be essential to cut costs, the best way to do so is to first examine in which areas things can be done in a different, less expensive manner, and still get the desired results. When decisions are made to reduce certain member services because of costs, the fiscal officer is often not taking into consideration the possible impact on membership renewal, public relations, donor relations, motivation, etc. Many of these individuals ask leadership to accept reduced reimbursements for expenses, not realizing that it is very difficult to get leaders to commit to donating their valuable time and effort, and not reimbursing them may create a resentment or a hesitation by potential future leaders to ascend to higher positions.
The worst scenario is when these fiscal officers ask people to expend funds to, for example, attend a meeting, and not inform them in advance how much or if they are being reimbursed. It would be far better to use a different method of meeting that was less expensive, where these leaders could either teleconference or use various Webinar and other digital, technical techniques. They should evaluate whether some travel is necessary or could be done in a less expensive manner. They should examine their magazines and newsletters and see if there might be an alternative, less expensive manner that might still meet their needs and objectives. In other words, they need to examine the "big picture."
Budgets should be created with "no fat," and "no waste." Budgets should contain specific contingency expenses as part of them, to account for either maintenance expenses or other shortfalls. These reserves should be placed in separate accounts and built up until they were substantial enough to meet potential financial crisis. That is proactive rather than reactive financial planning.
All of these things, and many others, should be part of the training for any individual in a fiscal or financial impacting position. Just as Leadership Training in general is a necessity, fiscal training and programing is often the difference between an organization's financial health and difficulties.
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