For better or worse, it’s become very “sexy” to talk about how we can (i.e. should) run nonprofits more like businesses. More earned income, more profit, more efficiency. However, while we have a lot to learn from our for-profit counterparts, it is important to remember that nonprofits and the nonprofit financial model exist in contrast to for-profits for good reason.
So, take a deep breath: you don’t need to convert your nonprofit into an income generating machine to succeed – but you can work to embrace some for-profit skills, to keep your good work going and growing. The following are skills that we can add into our nonprofit, without losing our focus on mission and practice.
Get Strong on Customer Relationship Management
CRM’s help you track and manage all of your customers’ information and touchpoints, so that you can move them deeper into your business. Some nonprofits are intimidated by CRM’s because they’re synonymous with driving sales. But, in reality, nonprofits can effectively use a CRM to streamline any of their stakeholder relationships, in support of their team and their mission!
Most obvious is the potential of a CRM to track donors’ contact information and giving history so that you can more successfully communicate with them on campaigns or appeals. But don’t stop there - it’s also important to track other stakeholder relationships: partners, grant funders, staff/board members, volunteers and even PR contacts. Maintaining a centralized tracking system, allows you to manage relationships over time and ensure more seamless transitions during staff turnovers. Moreover, it facilitates goal tracking for annual reports and grant reporting.
If you have a CRM and it isn’t making your work easier – spend the time to find the technology that is a good fit for moving your work forward.
If you aren’t using your CRM to streamline all of your stakeholder relationship efforts, invest in upgrading your systems and processes.
And, if you don’t already use a CRM, stop reading this and go find a good solution for your needs!
Invest in Project Management
Project management is a particularly important conversation if you’re working with employees who are newer to the workforce. They likely didn’t learn it in college or in a previous job so, while they may be passionate about your mission and bring a compelling skillset, it’s important to consider how you will train them on project management – to help them succeed in their position and to build organizational process around completing work.
Align individual workplans with the annual and long-term strategies of the organization.
Ensure that you’re all using the same systems and processes to monitor movement toward those long-term strategies.
Incorporate check-in’s on project planning (successes, challenges, improvements, support needed) into your one-on-one’s and team meetings.
Develop Systems for Onboarding and Knowledge Transfer
Under-resourced nonprofits struggle to onboard new employees and manage transitions between staff. After all, when you’re operating with a small team, a new employee can represent up to 25-50% of your available resources! But, if we don’t take the time to effectively welcome a new team member or invest in team transitions, we miss out on our best opportunity to set them (and you) up for success. It’s cliché but true: it costs us more in the long term, so make the investment now.
Have current staff track all the actions in their recurring tasks and ongoing program plans, to easily transfer to a new team member.
Map out an onboarding plan to start strong and involve the rest of your team in it.
Beyond that first day or week, consider what support the new team member will need at 30, 60 and 90 days – then make a plan to deliver on the ongoing support as well.
Design for Profit First
Profit First management is getting a lot of play these days, with increasing pressure on non-profits to generate and grow profit. This raises the question: In a mission-driven world, do we really want to “profit off of" our clients, donors or funders? No. But, we do want to ensure that we’re giving ourselves the opportunity to protect against funding gaps and fluctuations, so that we can consistently deliver on our commitments to clients.
Dig into the financial health of your organization: evaluate recurring expenses and cut expenses that aren’t supporting your team or driving your mission.
Build a cash reserve: place surplus funds into a savings account with a target of retaining enough to cover 3-6 months of expenses
Identify your other buckets beyond emergency cash: set-aside income for short-term needs like taxes, but also long-term goals like insurance/benefits for staff.
And…develop Earned Income Lines. This is not an appropriate or available option for every nonprofit but, if it makes sense for yours, make sure that the earned income lines reinforce the mission of your organization and come supported with a business plan that tracks ROI and project costs, in order to understand how each effort is contributing value and honestly costing your organization.
So, when do you say “no” to earned income or other profit first strategies? First and foremost, when it distracts your team and your financial model from its mission. And, of equal importance, if your organization is not actually profiting from the work. In the glamorous pursuit of profit, we can simply forget that staying laser-focused on our “un-profitable” pursuits can oftentimes produce more impact - and even generate more grant/donor funding, as well as community/volunteer engagement - than we realize.
Know your Customer
For how central mission and impact are to the life blood of nonprofits, many still struggle to adequately understand their client beyond the demographic data.
Who are they?
What does the rest of their life look like beyond their touchpoint with you?
What do they value?
How do they talk?
The process of understanding your target client is essential to ensuring that you can represent their needs to your other stakeholders, in a way that is authentic and non-patronizing. And, beyond your clients, it’s essential to understand the lifestyle and values of your donors, volunteers, board members, and others – you can’t reach everyone, so make sure you’re talking directly to the ones that have the greatest potential to drive your work forward.
P.S. Does your nonprofit need support in assessing and refining your financial model or project management processes? Grab your free consultation here
Carrie Ferrence is principal at The Big Lil, where she offers freelance COO support to grow mission-centered start-up’s, small businesses, and nonprofits. As a business owner, nonprofit leader, and change manager, Carrie knows how to step in as your partner for change, when you’re ready to take your enterprise to the next level. Whether you need help on a short-term project or a longer -term solution, she's scaled rates and services so that she can step in as a partner on your team, not just as an outside observer.