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Developing a Financial Strategy for Nonprofits

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  • Malki, Elli

Abstract

Nonprofits operate in complex environments in which they often face two conflicting goals. The natural tendency of nonprofit management is to maximize social impact by utilizing all available resources. However, every nonprofit also requires financial stability, which demands limiting expenditures and creating reserves. This article presents guidelines for planning toward financial stability, using real-life examples from three nonprofit organizations. It introduces common measures of financial stability and demonstrates how these indicators can be projected for the relevant planning period. Based on these projections, the article outlines a methodology for determining budgetary planning needs for both the short and long term. Finally, it shows how financial stability measures can be applied to manage risks arising from the significant uncertainty surrounding income in the nonprofit sector.

Suggested Citation

  • Malki, Elli, 2025. "Developing a Financial Strategy for Nonprofits," SocArXiv 5kcen_v1, Center for Open Science.
    • Handle: RePEc:osf:socarx:5kcen_v1
    DOI: 10.31219/osf.io/5kcen_v1
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