In the United States, there are many who struggle with various types of disabilities. As the country’s population grows, it seems that the number of people with disabilities is also on the rise.
According to the US Census Bureau, over 42 million Americans were reported to have a disability in 2021. Stats from the US CDC further reveal that around one in four Americans have some sort of disability. To tackle this growing challenge, many across the country have started organizations to support those with disabilities.
A good portion of these disability organizations are currently run on crowdfunds. In fact, according to the Special Needs Alliance, crowdfunding has increasingly been used to raise money for disability organizations in the US.
However, managing funds coming through crowdfunding can often get a bit jarring. On top of that, failing to report how these funds are spent can lead to legal trouble.
That is why it’s now important to have efficient financial management when running a crowdfunded disability organization. So, how do you go about that? Just keep reading!
Financial Management Tips for Running a Crowdfunded Disability Organization
#1: Develop a Comprehensive Budget
With a comprehensive budget, you’ll have a roadmap that you can use to allocate the funds to different areas of your organization. The University of Kansas suggests that your budget plan must consider both the long and short-term expenses of the organization.
At the same time, it’s a good practice to keep track of your funding or donation sources within the budget. When thinking of doing that, first state your funding or donation sources and then outline fixed expenses like salaries, rent, marketing, etc.
Once that is done, go ahead to outline variable expenses like campaign or program costs, and finally, keep track of whether or not you’re going over budget.
#2: Diversify Funding Streams
Any organization supporting adults with developmental disabilities must diversify its funding streams. It’s not possible to rely on just one funding source. Thus, never take that risk with your disability organization.
Having a monthly subscription-based funding option is a great way to have a continuous stream of funding. That way, people can register once and you can charge their cards for accepting their desired donations every month.
Apart from all this, you also need to organize various fundraisers and events. These are vital for diversifying your funding streams and securing more funding for the organization.
#3: Establish Financial Accountability
Transparency and accountability are essential principles in managing the finances of a disability organization. To build trust with your donors, stakeholders, and the wider community, establish clear financial reporting and auditing processes. For this, consider seeking help from an accounting firm.
According to J. Hall & Company, apart from basic accounting services, accounting firms can provide and oversee everything from financial modeling to bookkeeping solutions. Working with these firms shows that you’re being accountable for your finances. That, in turn, demonstrates your commitment to responsible stewardship and can attract more supporters.
Accounting firms can also help with your taxes, even if you’re not fully familiar with your local tax rules. Austin-based small business owner Kristen Franke experienced the impact of an Austin accounting firm firsthand when they faced a similar situation.
Texas tax laws are difficult to navigate but Kristen had help from her respective accounting firm in this regard. The firm not only helped them with their taxes but also provided all sorts of clarity they sought regarding the whole process.
Thus, when trying to establish financial accountability, it’s always a good idea to work with a professional accounting firm.
#4: Monitor and Evaluate Financial Performance
Regularly monitoring and evaluating your organization’s financial performance is vital for making informed decisions and adapting to changing circumstances. Set key performance indicators (KPIs) related to your financial goals, such as fundraising targets, expense ratios, and reserve fund levels.
Review your financial reports on a monthly or quarterly basis to track progress toward these KPIs. If you notice deviations from your budget or financial objectives, take prompt action to address them.
#5: Build a Reserve Fund
Establishing and maintaining a reserve fund is a prudent financial management strategy for any nonprofit organization, especially one that relies on crowdfunding. A reserve fund, also known as a rainy-day fund, serves as a financial cushion to weather unexpected challenges or emergencies.
Contribute a portion of your organization’s fundraising proceeds to this fund regularly. Aim to build a reserve that covers at least three to six months of operating expenses. This fund can be a lifeline in times of crisis, allowing you to continue providing crucial services to individuals with disabilities without disruptions.
Final Note
Managing the finances of a crowdfunded disability organization requires diligence, transparency, and a long-term perspective. Following these tips, you can navigate the challenges of financial management associated with this sector.
Through responsible financial stewardship, your organization can continue to thrive and provide vital support to those who need it most.