The best annual budgets align to an annual plan-a written narrative that all staff and board understand about the core activities the organization will undertake in the coming year and how they will be financed. Strong annual budgeting is an essential element of financial leadership. The following is a guide to this way of thinking for an executive-a summary of what we see as the eight key business principles that should guide financial leadership practice.
To do that successfully, the executive director has to be ever mindful of essential nonprofit business concepts and realities. He or she is responsible for developing and maintaining a business model that produces exceptional mission impact and sustained financial health. This is the job of an executive director. Financial leadership, on the other hand, is guiding a nonprofit organization to sustainability. Financial management is the collecting of financial data, production of financial reports, and solution of near-term financial issues. There is an important distinction between financial management and financial leadership.
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