Sometimes people working for non-profits or not-for-profit organizations are unfamiliar with basic business concepts and ideas. Non-profits don’t consider themselves to be “in business.” They see themselves as an organization working for the betterment of the community or the world. They are not focused on emptying their customers’ wallets and getting filthy rich. Yet, they are still businesses, so their employees must have the business acumen to run the non-profit successfully.


Understanding Finances at Non-profits

Non-profits need to bring in enough money to cover their expenses, or they will cease to exist. There must be enough cash flow to pay their bills, or they may face bankruptcy. Additionally, suppose non-profits wish to expand their services to the community. In that case, they will need to generate a cash surplus to fund the operation. These are simple business realities. 

You can use the same tools to analyze the health and sustainability of a non-profit as you would analyze a for-profit. 

  • Balance Sheet, to see what it owns and where its funding comes from
  • Income Statement (P&L) to see what money came in during the year and where it was spent
  • Budget to forecast and control revenues and expenditures
  • Cash Flow Forecast to check for day-to-day needs

When working with non-profits like hospitals, halfway houses, or international development funds, the terminology in these documents may change. Profit and loss will be referred to as income and expenses. Equity will be called net assets. And retained earnings will be additions to net assets. Similar to a for-profit business, these metrics must be analyzed and improved regularly. 

Business Simulations for Non-profits

Like any other business, non-profits must have employees with strong business and financial acumen to operate successfully and achieve their goals. The knowledge of finance is what non-profits need to survive and thrive – to provide further and better service to their community. 

Income|Outcome business simulations offer just that, the knowledge of finance. The simulations teach participants key financial concepts and terms to equip them to make better business decisions. Whether you run a non-profit or a for-profit business, Income|Outcome can help you accomplish your business goals by upskilling your employees. 

If you want to develop your employees’ financial and business acumen, contact us today!