How do you think about nonprofit sustainability?
There are many ways to think about sustainability. Is our lifestyle sustainable? Do we maintain a sustainable environment? Is my company sustainable? How can I ensure that the nonprofit that I want to support financially is sustainable? I’d like to discuss nonprofit sustainability and different categories that generate a nonprofit organization’s ability to be sustainable.
Let’s first look at a definition. Wikipedia has a great definition of sustainability: They say it is “The capacity to endure”. So let’s think about what ingredients are needed to ensure that a nonprofit endures. Money is important. But it’s much more than that. It’s about the leadership as well. Additionally, when strong and successful leaders put effective succession planning into place, this also ensures that a nonprofit can endure. What about the services and other tools that are used to assist the population that the organization was created to serve? And no organization will endure if they are not monitoring and changing as needed to meet their vision.
Five categories of a nonprofit organization’s sustainability are:
- Financial Strength and Security
It is important to have continuous revenue as well as revenue held aside (for a rainy day). As per The Foundation Center’s Grant Space , organizations should determine their own reserve amount, but a commonly used figure is 3-6 months’ worth of expenses. They also state, “To be a viable operating reserve, there should be a board agreement and policy about how reserve funds can be used: When they can be used, who is authorized to use them, and how this is reported to the board”.
- Great Leadership
As per The Foundation Center, a study conducted by TCC Group shows that “effective leadership is the strongest predictor of nonprofit sustainability”. I also believe that a critical aspect of such leadership is mentoring the next generation of leaders. Organizations should ensure that they have leaders that will lead with the same views and culture that has proven to be successful (while bringing their own strengths and innovations to the organization) when the current leaders leave.
- Solid Programming
If a nonprofit organization is not fulfilling a critical need in the community, there will soon be no need for it. As long as the need is there, it is important to ensure that the program is effectively providing services and/or products to meet the needs of their population.
- Technology and Resources
We do not function in a vacuum. These days we need to collaborate, utilize resources and make use of all the relevant technology available to a nonprofit that is affordable for that nonprofit.
- Monitoring and Adaptive Capacity
If you don’t know where you are going, how will you know if you got there? It is critical to identify key performance indicators and then monitor your outcomes to determine if your nonprofit is reaching its goals regarding mission outputs and vision outcomes. If your nonprofit is not meeting outcomes expectations, make changes!
Where does your organization fall in each of the above categories?
Photo credit to: Microsoft Office Clip Art