The investments made and donations given to nonprofit organizations keep the operation going and allow them to fund their cause. However, private equity investors aren't just going to hand out funding without doing their due diligence in researching the organization. This is why nonprofit managers must be organized with their finances and bookkeeping, and make it easier for private equity investors to evaluate the metrics that can make or break an investment. In order to be prepared to meet with private equity investors, nonprofit managers should have certain metrics readily available.

Weekly, monthly and quarterly cash flow models
While liquidity is not a perfect science, and investors will never know exactly how much cash flow is needed to keep a nonprofit above water, managers need to be sure someone at the firm is keeping the books every month. These numbers will not only aid in cash flow forecasting, but they will also give private equity investors an idea of how much money they are going to need to pour into the nonprofit. Understanding how cash flow is used on a weekly, monthly and quarterly basis will give nonprofit managers a better opportunity to bring in investments and donations.

Available cash flow
No private equity investor wants to contribute his or her money to a nonprofit that barely has enough cash flow to finance payroll. Nonprofit managers must have a clear idea of earnings before interest, taxes, depreciation and amortizations, which they can then present to private equity investors. The reason investors put their money into an organization is because they believe they will be able to turn a profit. With the necessary amount of cash flow at hand, nonprofit managers will be able to attract more potential investors. 

Expense logs
Monthly expenses for a nonprofit will generally be the same every month, but there will be some discrepancies on a month-to-month basis. When private equity investors are going to inject funds into a nonprofit, these potential investors want to see how cash flow is being spent at the organization. Nonprofit managers must realize that there's a trade-off to accepting a capital injection from a private equity firm; accepting investments often means having to listen and potentially implement strategies suggested by the firm. Although in some cases investors may offer up beneficial solutions, such as how to manage cash flow more efficiently or how to trim costs, in other instances, they may call for certain actions that conflict with a nonprofit's original plans. Understanding how this process works prior to accepting funds is critical for building a positive investor-investee relationship.

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