Sound cash management practices are important for any business, but they are crucial for nonprofit organizations (NPOs). Vital to their communities, it's a fact that nonprofits of all sects are at risk of failure. The National Center on Charitable Statistics recently reported nearly 30% of nonprofits fail within a decade, almost half of those within the first five years. Reasons for those failures are varied — lack of a solid mission, decision-making struggles among board members, little long-term planning and more. But in many cases, it boils down to finances, and not just fundraising, but financial management practices.
It's a sobering thought, but there is good news to report. NPOs don't have to do it alone. Partnering with a local community bank can provide a nonprofit with the financial expertise it needs to put its finances on solid ground and maintain that stability for years to come.
Partnering with a community bank
Why use a local, community bank rather than one of the giants out there? Larger banks oftentimes do not focus on tools that are especially helpful to NPOs. Local banks typically excel in areas megabanks lack, including:
- Personalized service. When you develop a relationship with a local bank, they know you when you walk in the door.
- Knowledge of your community. Local banks specialize in your community, understand its needs, and are likely already familiar with the good work you do.
- Support. Your local bank is there, when you need it.
But beyond the feel-good benefits of partnering with your local bank, you also need sound cash management tools to help guide and safeguard your finances. It's important for nonprofits to make sure their financial institution has solid cash management tools designed for NPOs in place.
Here are vital cash management tools to look for in your community bank:
Accept payments and deposits
Making the payment process easy for donors and vendors, and the deposit process easy for you, is a vital component in solid money management for nonprofits. Ways cash management tools can facilitate this:
Remote Deposit Capture
Essential in today's banking landscape for businesses, remote deposit capture allows you to deposit checks without visiting the branch by scanning checks on site with a rented scanner. For nonprofits, it means valuable time savings, including streamlined check handling from multiple offices or locations, same-day credit up to 6 p.m. CT and reduced time and money spent on document preparation and transportation.
ACH Origination - Collection
Another essential service in today's digital banking environment, ACH Origination provides a fast, secure and accurate method to collect electronic payments within Business Online Banking. Incoming ACH is an added feature to collections receivables, allowing you added details such as invoice numbers from any bank in the U.S. and an up-to-date record of transactions via online banking or account statements, simplifying your reconciling.
Merchant Card Processing
Merchant card processing refers to the ability to accept card payments. Even though nonprofits are typically non-retail, it's crucial to partner with a bank that offers merchant card processing. Your donors expect it, and the ability to accept card payments can increase donations. Minnwest Bank supports you with this and can ensure fair pricing.
Mobile Banking and Mobile Deposit
Mobile banking allows you to keep track of your finances on the go. Building on the traditional services like viewing balances and paying bills, it helps nonprofits bank within the palm of their hand. Mobile Deposit gives you the ability to deposit a check with just a few taps of your finger.
Make payments and process payroll
In addition to business bill pay, nonprofit specific credit cards, or ATM and debit cards, this is about streamlining your workdays, giving your accounting department some relief and help in processing payroll with ACH disbursements and wire transfers.
ACH Origination - Disbursements
Using ACH for payroll is necessary now for any business, nonprofit or otherwise, to ensure secure funds transfer. It is also used to pay vendors, giving you control of when your payments are sent. It saves valuable time by offering the ability to schedule recurring payments and, in effect, automating that process. Good news for nonprofits who are low on man- (or woman-) power. Using ACH also eliminates the waste and expense associated with paper checks.
Online Wire Transfers
While not as widely used as ACH origination, wire transfers are particularly useful for nonprofits that need to transfer money domestically and abroad. Like ACH, this is a time saver because it's possible to schedule recurring templates for future use. The ability to initiate transfers online, rather than over the phone or in person, make online wire transfers convenient for busy offices, plus save costs. Dual control offers added security when wiring funds, ensuring more than one person can be involved when sending wires.
Automation is critical for nonprofits — every dollar counts in the nonprofit realm, and automating your excess reserves or outstanding obligations is a great way to watch those funds work for you. Sweeps are a powerful tool in which excess funds are automatically transferred to a high-yield savings account or to pay off existing debt... and then back to your business checking account if needed. Included in this service are "sweeps" of several financial products:
Line of Credit Sweep
For customers with an open line of credit, excess funds from your checking account are automatically "swept" into the line of credit to pay down the balance, and automatically swept back in if you fall short of your balance.
Funds Management Sweep
This service allows you to consolidate your balances into one account with same-day automatic transfers. It's a great time saver because it simplifies managing multiple accounts and eliminates manual transfers between accounts. It also helps you optimize your cash by keeping the majority of funds in the best account, allowing your balances to work for you with the most efficiency.
ICS and CDARS
Intrafi Cash Service (ICS) gives you convenience, flexibility and greater security with access to multi-million-dollar FDIC coverage. The Certificate of Deposit Account Registry Services (CDARS) allows you increased coverage while also benefitting from higher returns than other savings options.
Protect and manage accounts
Building your balance is critical for nonprofits. This service keeps your dollars secure by reducing your risk for unauthorized transactions, helping you manage your money and identifying opportunities to cut costs, with:
Ideal for nonprofits with large transaction volumes, Minnwest Bank’s analyzed checking account gives you the freedom to keep your account activity all in one place. You will also qualify for an earnings credit to offset or minimize any activity fees, or service charges.
For both checks and ACH transactions, Positive Pay watches out for fraud and sends alerts when activity is suspect. Positive Pay protects your assets by automatically comparing checks and ACH debits to ensure they are authorized. Enjoy increased peace of mind knowing your nonprofit is receiving increased security against fraudulent transactions.
Security Information and Training
This is training on security measures so you are up on and aware of the latest in banking security.