When people envision credit collection, they usually picture a for-profit company seeking unpaid balances from clients or customers. However, it’s also possible for nonprofit organizations—such as environmental charities or NGOs—to utilize collection agencies to get funds they are owed to support their operational costs. If you oversee accounts at a nonprofit, here are a few points you should know about pursuing help from a debt collection service.

What Types of Payments Do Nonprofits Receive?

The term “nonprofit” can make it seem like an organization isn’t dealing with any money. However, this designation only means that the group isn’t making a profit. They may still be using funds to cover operational expenses or organize charitable projects.

Typically, these funds come from grants or donors. In the case of donors, money may be collected in many different ways—such as in the form of monthly membership dues, auction payments, and pledges.

When Can a Nonprofit Pursue Debt Collection?

Legally-Binding Donations

While a donor may say they will pay a certain amount of money to the organization, these amounts can’t be collected unless there is proof of a legally-binding agreement to pay.

Typically, nonprofits can pursue debt collection for unpaid pledges—or money that is given in exchange for a specific good or service of a determined service. However, it may not be possible to seek collection when an unpaid balance is for services or classes that are offered free to some or paid on a sliding-scale basis.

Violation of Grantor Agreements

If your organization is approved for a grant and never receives funds, take the time to read through the award agreement in full. Some agreements may include specific terms regarding nonpayment—such as those that prevent the recipient from pursuing debt collection.

However, if these terms aren’t present in any agreement and you can prove that you were awarded a grant, it’s possible to seek payment from a past-due grantor.

Why Should Nonprofits Use a Collection Agency?

Compared to for-profit companies, nonprofits depend greatly on the organization’s reputation and overall commitment to mission. When nonprofits attempt to seek repayment independently, they may not always use the correct practices or end up breaking collection laws.

By outsourcing this task to a collection agency, you can ensure that your organization is compliant with laws and employing standards that are designed to preserve reputation.

If your nonprofit is owed money that is appropriate for debt collection, turn to the specialists at Joseph, Mann & Creed. Serving businesses and other organizations throughout the US, this B2B collection agency knows how to pursue unpaid balances in a way that reflects well upon your brand, improves the likelihood of repayment, and complies with the law. To learn more about these services, visit this Twinsburg, OH, commercial collection agency online or call a friendly associate at (216) 831-5626. For more information about this third party collection professional, visit their LinkedIn.