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NonprofitMBA Podcast 1.3: Why forecasting is so important to nonprofits

Nonprofit MBA podcastPodcast: Why forecasting is so important to nonprofits

The Nonprofit MBA’s purpose is to provide new business insights and fresh creative ideas for Executive Directors and their teams that will help them improve their organizations.

Transcript and Summary of Podcast Below:

Todays Guest: Raj Thakkar,  Founder & CEO of two social enterprises, FOREsight Financial Services for Good and The Charter School Business Management (CSBM)

Introduction of Stephen Halasnik

Welcome, everyone. My name is Stephen Halasnik and I am a CoFounder and Managing Partner of Financing Solution. Financing Solutions is the leading provider of Lines of Credit to Nonprofits. On a personal level, I have a 25-year career in building companies and I have the privilege to speak with nonprofit Executive Directors on a daily basis. If you like today’s podcast, please feel free to share it with a friend.

Introduction of Raj Thakkar

Raj is the Founder & CEO of two social enterprises, FOREsight Financial Services for Good and The Charter School Business Management (CSBM), which collectively serve 150 nonprofits to responsibly manage the accounting for over $700 million in public funds.  He is considered a national expert on nonprofit and charter school finance and has trained leaders on financial best practices in 25 states. As an Adjunct Professor at NYU’s Wagner School of Public Service, he teaches Understanding Social Enterprise.

Summary of Podcast:

Today, what we are going to be talking about is why forecasting is so important to nonprofits. It’s an area that Raj has direct experience in and when I asked Raj what was one of the top things his firm talks to nonprofit clients about implementing he said forecasting

  • When his firm comes in to help nonprofits 99% of the time there is no forecasting being done
  • When there is forecasting, it is pie in the sky and usually not updated
  • Nonprofits often get line of credit to help with payroll but they wait to the last minute
  • Forecasting helps you know if you will need a line of credit to help
  • You want to get as many of your unknowns, known
  • Forecasting allows you to not get caught by surprise
  • Executive Directors are so focused on operations that they lose sight of financing
  • After Executive Directors have been burned they are willing to do forecasting
  • Raj’s firm will look at everything at the nonprofit to figure out what is going right and what needs to be improved
  • Does the nonprofit understand what money is coming in and when
  • What are the variable versus fixed costs
  • Executive Directors often feel better about doing forecasting later because they want to be in control but the trick is updating the forecast
  • Determining what funds have a probability of coming in is important part of the process
  • Bookkeeper, accountant, and Executives should be involved in forecasting
  • Layout everything on your calendar when funds and expenses are coming in, update it monthly
  • Not a big fan of updating budget a lot because that means the forecasting wasn’t accurate, to begin with
  • Really get a clear understanding in your mind of when funding and big expenses will be coming in and all the details behind it
  • There is no forecasting module in QuickBooks but you can put forecast into QuickBooks as a budget
  • Restricted versus unrestricted funds are very important to understand

Other Nonprofit MBA podcasts:

NonprofitMBA Podcast 1.2: What To Do When Your Nonprofits Mission and Operations Go Adrift

NonprofitMBA Podcast 1.1: Keeping it Personal As Your Nonprofit Grows

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