As we approach the end of the calendar year, many nonprofits are wringing their hands over just how much money will come in these last two months of the year. Most nonprofits report that between 30 and 45% of annual contributions come in this period. The success or failure of year-end giving has a large impact on an organization, often resulting in decisions about layoffs or programmatic cutbacks, or, if expectations are exceeded, the chance to breathe easier for another year.
There is a fundamental error in this approach to doing business. While it can, and frequently does, lead to survival, it will never lead to long-term sustainability. And that, after all, should be the goal of every nonprofit: be sustainable until the mission is no longer needed.
For some, that death rattle could sound earlier than for others; for the latter, it may never sound. But until that time comes, an organization needs to be seeking sustainability, not survival. With the approach of a new year, and those inevitable new year’s resolutions, nonprofits not already doing this should make – and keep – this resolution: start conducting business like a sustainable organization, rather than simply one that merely survives (sometimes miraculously).
Why do so many nonprofits make senseless mistakes that detract from their ability to be sustainable? So often it is because they are looking for quick answers and fixes. Being a sustainable organization takes a commitment of thought and energy, which also, then, means a commitment of time. And far too often, nonprofits aren’t willing to put that time, thought and energy into ensuring sustainability.
An absurd statement? Think about it: how rapidly do your board and staff run toward strategic planning? Toward understanding the true cost structure of a program, the organization? Or assessing the impact of programs? Taking a risk?
Moving from a surviving organization to a sustainable one takes embracing all of the above, and then some.
So, what are these silly mistakes? Here are a number (but by no means all); some are errors of commission, others of omission.
- Being satisfied with living hand-to-mouth, year-to-year. Why should any nonprofit be okay with that? And while many will say, “We aren’t okay with it; it is simply our reality,” I say it is your reality because you choose to have it be so. I have said this before in a different context, but it applies here, as well: nonprofits settle for mediocrity where the rest of the economy will not. Why is mere survival, in an industry that is supposed to be always working to improve the lives of everyone in our communities, a sufficient and acceptable status quo? Why is there no push for sustainability? Why is it tolerable to end each fiscal year with a sigh of relief, a wiping of the brow, a congratulatory high five and a “Phew! We’re alive to see another year!” instead of ending the fiscal year with a real celebration and plans for how to reinvest the surplus into the improvement of the organization? Sustainability means there is money to invest in programs, staff, space, marketing, etc.—the things that make organizations and staff stronger, and the latter happier (which also contributes to making the organization stronger); it means a minimum of six months of reserve so that if the economy tanks or donors switch interests (or whatever might threaten the financial well-being of an organization) occurs, there is the ability to pivot to scenario B (see item 3, below).
- Failure to understand the true costs of each program and the organization as a whole. Just because donors don’t want to pay for the electric bill and the fund development materials and the receptionist, doesn’t mean we don’t have to account for all of those costs associated with running each program and the organization. Failure to take these costs into account means we think a program is doing better than it really is, a fundraising event didn’t net nearly as much money as we thought and we really don’t have money to make payroll this round. Failure to understand true costs allows an organization to mislead itself—and its donors—as to what financial resources are really needed to maintain and improve an organization’s ability to fulfill those all-important mission promises.
- Failure to protect core competencies. Core competencies are what should distinguish us from our competition, as these are the mission-related things that we do better than anyone else and more successfully than anyone else. These are the things for which our name jumps to the head of the list. We aren’t the only ones who know we do these things better than everyone else; everyone else knows, too. It is our core competencies that attract a steady stream of financial support—be it raised and/or earned—during the good times and the bad. Having this “almost-guaranteed” (as nothing is actually guaranteed) source of income is a huge contributor to an organization’s sustainability.
- Failure to engage in strategic planning and to use both the process and plan as they should. Operating without a strategic plan leaves an organization to be reactive. When an organization is reactive, it is far more likely to chase dollars rather than mission. When an organization chases dollars and loses sight of mission, it fails to recognize and protect its core competencies. Without a strategic plan an organization doesn’t know—and, therefore, its wanna-be supporters can’t know—where it is headed over the course of the next several years. There is no sense of the future in which donors might want to invest, no bigger inspiration for staff than coming into work each day and doing the same ol’ thing, no picture of the future into which all buy-in and want to push to accomplish. There is no picture of why sustainability should even matter. But equally important to sustainability is the planning process, as it is through this process hat the current group of visionaries, thinkers, tacticians, etc., all get on the same page and agree to support the achievement of the agreed to direction and goals. It is through this process that the future pictures—yes, plural, because in this day and age, if we want to be sustainable, our planning process must involve scenario planning—are planned, so that should our first, best-case design for the future not pan out, we have the alternatives already there and ready to go. While sustainability requires flexibility, that flexibility must be planned, not reactive.
- Going for the quick fix. So often, nonprofits take the easy way out which, so often, is not the best way. For example, boards too often will hire the next executive director from the folks already there, even if not the right fit because doing a search takes too much time and work. Supervisors allow staff to remain employed despite their contributing nothing, at best, or being disruptive, at worst, because it is easier than doing the work to let the person go. Programs are continued even when they no longer serve the mission because breaking down the program is too involved. Sustainable organizations don’t carry excess weight; everything has a purpose and there is a purpose of value for everything—and everyone.
- Inability to say no and far too great a willingness to settle. Until a nonprofit learns to say no, it will burden itself with things that will not and cannot contribute to sustainability. No, as much as we would like to, we don’t have the capacity to take on more clients and serve them well; no, we will not apply for this grant because there won’t be enough money to cover our true costs; no, we will not nominate that person for a second term because s/he didn’t do anything in the first term; no, we will not pursue that because it is outside of our strategic plan. No, no, no!
Sustainability is not just about money; it is also about the product—our organizations and the work they do. Weak products can survive; but only strong products will be sustainable.