It’s the lifeblood of the nonprofit sector. Fundraising, in all its many forms, brings essential capital to the programs and missions that support our communities.
If you look at most nonprofit budgets, you’ll notice a lot of us pour our funding into two primary categories – program and development. It’s what our donors want, because it’s the key to achieving our missions. The continuing philanthropic reticence to fund luxuries such as “overhead” and “accounting” have much to do with our allocations. (That, in itself, is a whole other conversation, but it plays into this one as well.)
Additionally, if you are a nonprofit executive, you probably are involved in frequent conversations about sustainability – which in essence focuses on the question: “Can your nonprofit exist for as long as it needs to?” In past years, the conversation around sustainability was fairly simple – do you have the capacity to raise the money you need to thrive? Can you write grants? Reach donors? What is your case for investment? As the industry has evolved to grapple with more than one nonprofit business model, the conversation has shifted a little deeper – what is your revenue model? How are you accounting for your money? Do you know what things cost? What is truly profitable? How many sources of income do you have? Good questions all.
But they all focus on the money.
There is so much focus on bringing in funding for programs, and so much energy poured into donor relations, that nonprofits often forget to address some other, really important sustainability elements. Let’s say your nonprofit is a car, and your fundraising is the gas. But your tank has holes and your engine is clogged. No matter how fantastic you are at fundraising, the money itself won’t keep you moving forward.
But if we, as an industry, begin to invest in other critical business areas, we may just find that money flows in faster and “out” slower, increasing the pace, efficiency and quality of our mission-driven efforts.
What, exactly, would that look like? I think it looks different for every nonprofit, but here are some ideas to get you thinking.
INVEST IN A STRONG, DYNAMIC, STRATEGIC BOARD
Let’s face it. A lot of nonprofit executives would rather spend time on anything except their board. But it takes energy, time and resources to develop a board culture that reaps dividends for your organization. If you don’t invest here, you could end up with a disengaged board, unwilling to function as ambassadors or advocates to generate leads for your agency. Or worse, you have an OVER-engaged board, worried about the day-to-day operations, reactive rather than strategic, and usually requiring a lot of (defensive) time from the executive.
What happens when you intentionally invest in your governance? Your board becomes an asset, not a to-do item. Members connect to the mission and help make connections back into the community. They lean into risk and opportunity. They feel they have a role in your nonprofit’s success.
What might this investment look like? So much has been written on how to strengthen your board and enhance your member’s experience, because the return on investment is huge; but you actually have to DO IT! Consider:
- Making an annual board self-assessment a priority, and acting on the results
- Investing in a strong ED-Board Chair relationship and over-articulating the division of labor; monthly wine meetings may help
- Don’t give your board homework – given them opportunities to help propel you forward
- Spend a majority of your face to face time in forward-facing discussion, not updates
BALANCE IN-HOUSE RESOURCES WITH OUTSOURCED EXPERTISE
It’s hard for nonprofits to offer competitive salaries, so when we get good people we often give them “plus” positions (Be a project manager + the graphic designer! Be the office manager + the HR person!). But asking a good employee to run multiple lanes is a recipe for burn-out and slower production (and not-so-good employees find it easier to hide in over-packed scopes). Assuming you cannot hire specific skill sets in-house, when you strategically outsource expertise you offer your team expanded capacity and support that can drive things forward. Consider identifying pain points and missing skill sets in your team…by asking your team! They will welcome this conversation! Ask them: If money was no object, and I could bring you a consultant to help you address some of your pain points, what would that consultant do for you?
- Maybe a 20-hour-a-month grant consultant could catalyze your whole development effort and help hone strategy
- Maybe an HR consultant could come stand beside your HR manager when tough conversations need to happen
- Maybe you can’t afford to outsource your bookkeeping…but you could invest in a financial consultant or CPA firm that provides expert guidance
Don’t go crazy here (I know you won’t). There is a tipping point when outsourcing gets more expensive than cost-effective, or when staff rely on it too much – but careful crafting of agreements (and getting a vendor to also embrace staff development as a deliverable) can make this a really effective investment. These arrangements can also help you clarify the skill sets you DO need to bring in-house.
Another woefully under-capitalized area, Program Evaluation can provide significant clarity on HOW WELL you are doing your work. And while improved program outcomes are the ultimate objective of program evaluation, there may be efficiencies or cost savings to find as well—which helps you make your organization more sustainable.
Can you prove you are making the impact you say you are? Are you too close to tell? Sometimes what we think we are saying about our outcomes – to our clients, staff and partners – is not what we are actually communicating or doing. Staying in touch with your impact – and creating a culture that invites change – gives you rich data to evolve, improve and grow. How?
- Invest in a program or brand assessment to get rich and actionable data from external and internal stakeholders
- Reconsider how you are measuring your impact – does all the data you collect (and that takes so much time to collect) actually help tell the story?
- Reconsider how you are trying to effect change in the first place. Are you deploying your precious resources in the most effective way possible? Are there new technologies to incorporate? Different staffing models to try? Partners to leverage?
And don’t overlook the value of how an evaluation program can help you tell your story even better. The best case speaks to both the heart and the head, and evaluation can generate data, analysis, benchmarking, and testimonials to support it.
MANAGE YOUR RISK
Typically nonprofits are one good crisis away from non-existence. Consider:
- Hackers get into your bank account, and successfully make a wire transfer.
- Your warehouse burns down 🙁
- You don’t manage your staff well, and someone slaps you with a stress claim
- You don’t manage your independent contractors well (AB5!) and the State of California slaps you with an audit and penalties for lost payroll tax
- You have cash in the bank – but it’s not really reserved for a rainy day
- You forget to check on your insurance levels…or even if you have the right types
- You forget to do background checks on your volunteers who might be working with vulnerable populations…and something bad happens
When you are wrapped with the right contingencies you can sleep at night…and ward off an emergency that could cost you reputationally, financially or just in plain time. Something is going to happen. In the face of so many potential emergencies, big and small, risk mitigation should be always on your mind. Some ideas for the scenarios above:
- Have a broker assess your levels of insurance; and revisit your programs to make sure you HAVE the right insurance
- Carve out time for your managers to do worst-case scenario planning
- Make sure you are doing annual capital asset inventories, and that your insurance covers the loss of the most important equipment
- Train your staff on the most recent phishing and hacking scams
- Have an HR attorney… and have them on speed dial!
- Get educated about AB 5 and do an independent contractor audit
INVEST IN STAFF CONTINGENCIES AND SUCCESSION
Another riff on the risk management frame, but this one has to do with your people. If you are a founder, do your people rely on you more than they should? Have you had the same board chair for eight years? Do you spend any time planning for the unexpected departure of your controller who is the only one knows where everything is? If not, the loss of these key people could put your nonprofit danger. People move, people get promoted, people have family issues. Be ready.
- Managers should be having honest conversations with their employees about where they fit, their plans, and their current scopes.
- EDs should be having similarly honest conversations with their boards.
- Practice succession by embracing mini-sabbaticals for key players…not just surviving a leader’s vacation or time out of office, but pretending that person isn’t coming back and dividing their scope. This intentional scenario planning will highlight what CAN and CANNOT be done well without the missing team member.
- Make succession and planning a healthy part of annual conversation
Investment of time and money in these sustainability areas can feel like a luxury. Yet none of these areas are a luxury. And if we had the time to do it (!), we’d probably be horrified at how much NOT investing in sustainability costs us all.
Where is your highest risk?
What is your greatest vulnerability?
What is the one issue that might – if not addressed – knock you down one day?
Invest in the alternative.
You’ll be stronger for it.
And the money will follow.
Charitable Ventures, President & CEO