Even if your organization is not directly impacted by the state budget, you will likely feel the indirect effects. We encourage you to use our Indicators of Financial Crisis tool to be prepared. A stressed organization can make ill-advised decisions, especially in the financial arena – and the results can be damaging. This tool can help you assess where you are financially and plan for the future. Use the tool. You can find the print version here…. Read more »

Earned income which comes from the sale of products or services that are aligned with an organization’s mission is a sustainable source of revenue. For many nonprofits, earned income is their only sustainable income. The term nonprofit is not a business strategy. Unfortunately, many nonprofits that engage in generating earned revenue don’t understand this concept. Sustainable organizations need to generate a profit. For example, Girl Scouts make a profit from cookie sales, and that profit allows them to provide services. Thrift stores that thrive make a profit. And there are many types of nonprofits with various missions, like performing arts organizations that sell tickets. Earned income with a profit that becomes unrestricted funds is a very good thing. The more sustainable unrestricted funds that are raised, the more services an… Read more »

To add as much value as possible to an organization, board members should invest time in training, especially in the area of fund development. Many people who serve on boards report little comfort in this area. Good training emphasizes that each board member brings his or her own strengths to the process and each has a role to play. Creating the infrastructure to build relationships takes time, talent and resources from both board and staff. Nonprofits embarking on this path will want to create a maturation process for donors, encouraging them to increasingly invest in a relationship based on their interests and the organization’s focus. Nonprofits can create opportunities for connecting with donors in significant ways, which can become progressively more individualized and involved over time. Here are some examples:… Read more »

We recently received a gracious note from Josselyn O’Connor, development director at the Kenai Watershed Forum, on the way her organization has integrated Focus on Sustainability into their board meetings. “After reading your book, I knew it would be a great tool as we move forward. I have purchased a copy of Focus on Sustainability for each board member and key staff. We have dedicated time at the next several board meetings to discuss one chapter at a time and work our way through the book. Each board member will take a turn leading the discussion. As we prepare to tackle the task of developing our next 5-year strategic/action plan later this year, I’m confident the insight gained from working through your book as a group will be tremendously beneficial… Read more »

Board members have responsibility to financially support organization A charitable giving strategy clearly increased the board’s own responsibility. Board members can only ask others to give to their organization when they have made their own gift. It’s important that organizations that ask boards to give first adopt a policy of 100 percent board giving in an amount that is meaningful and significant to each member. I don’t recommend setting an amount for each board member to give. When boards have a specific dollar expectation, such as “give or get $2,000,” fear exists that individuals without means or influence won’t be able to serve on boards. Some may think such a requirement will eliminate potentially good leaders with fewer financial resources. It has been my experience that the board members with… Read more »

According to Giving USA, individuals – through both annual contributions and bequests – account for over 80 percent of all charitable giving in the United States. This percentage has had little variation over many decades. Individual giving can become a sustainable income source when approached strategically. An organization needs systems in place to manage donor relationships. It’s also critical that all board members fully participate in fundraising. Relationship-based individual giving done well is a reliable source of revenue. People give money to an organization because they have passion for the mission and they believe the organization is using their gifts to accomplish that mission. Many nonprofits find this process challenging. Raising money from individuals takes time and a commitment to build the right relationships. It is never a good idea… Read more »

Unrestricted funds are interesting because they actually come from the most sustainable revenue streams. That critical support includes committed individual donors and mission-related income. An individual charitable giving strategy succeeds when a donor both perceives that an organization delivers on its mission and feels nurtured in his or her relationship with the organization. Earned revenue succeeds when an organization provides a quality product or service that is valued either by individuals or by institutions. While both require specific infrastructure to implement, these are the strategies for securing sustainable income. Eventually these strategies, when paired with disciplined budgeting, will result in reserves of unrestricted funds. The transition from grant-dependent income to revenue based on sustained charitable giving or earned income is much easier than you might believe. The skills needed to… Read more »

The lack of flexibility from not having sufficient unrestricted funds can lead to loss of focus and often disrupts the board/staff balance. Nonprofits that lose government funding often turn to institutional funders like corporations and foundations. While these sources can be useful for specific projects and capital expenses, they are the least likely to provide ongoing, unrestricted operating revenue. As a result, too often organizations try to re-invent themselves and their programs every few years to appear new to these funders. Increasingly, foundations are re-assessing the need to provide operational support, sometimes unrestricted, to help build the core capacity of nonprofits. This is a great trend. In the past, the rare situations in which such unrestricted funding was provided allowed some nonprofits to view grants as sustainable income. For example,… Read more »

Many people, even those with a financial background, have difficulty with the nonprofit sector’s accrual accounting standards. Most of us think in terms of cash accounting: Do I have enough money in the bank or do I need to charge it? With accrual accounting, it can be easy to believe your organization has enough cash, only to discover that what seemed to be a healthy bottom line was masked by restricted funding. Nonprofit organizations cannot be sustained without a financial reserve. A quick way to gauge this important part of sustainability is to look at the unrestricted income and reserves. Are they clearly presented in your organization’s financials? Are they adequate? Determining the appropriate amount of unrestricted funds for an organization depends on several factors, including the goals outlined in… Read more »

As we close out 2013 and look forward to 2014, we’re especially grateful for the response we have received to our book Focus on Sustainability: A Nonprofit’s Journey, which was released during the Leadership Summit in April. Through the generosity of the Rasmuson Foundation we were able to provide everyone who attended the summit with a copy of the book. We hope by now you’ve all had a chance to read it and perhaps put some of the suggestions about sustainability into effect in your organization. We appreciate the many positive comments we’ve received about Focus on Sustainability. We are currently selling it on Amazon and have been getting orders from all over the country. People who have read the book are encouraging us to keep spreading the word that… Read more »