In the corporate world, profits are the bottom line. In the nonprofit sector, impact is the benchmark of success. To truly thrive and make a lasting impact, though, it takes funding, so financial sustainability must be a strategic priority.
Too many nonprofit leaders approach their fiduciary responsibilities without any strategy. They invest their efforts in quick or high-profile “big wins,” focusing on “that one” donor or grant or corporate sponsor that will solve all their money woes.
But sustainable, high-impact nonprofits aren’t built on one big win. They’re built on grind and strategy.
Success lies in embracing the grind: committing to best practices and focusing on the details that often get overlooked.
The Devil Is in the Details: Process & Execution
Financial sustainability isn’t just about securing large grants; it’s about meticulous execution of everyday tasks. From donor management to financial reporting, every process contributes to your organization’s overall health.
Mastering Your Donor Database
A well-maintained donor database is the cornerstone of effective fundraising. It allows you to:
- Track donor gifts, contact information, as well as communication and giving preferences.
- Segment your audience for targeted campaigns.
- Generate accurate reports for analysis.
- Automate tasks such as gift receipts and thank you letters to save time AND ensure your donors feel appreciated.
Ensuring that database stays healthy is where the grind really comes into play. That looks like:
- Well-defined processes for data entry
- Consistent and thorough training for anyone involved in entering data/managing the database
- Educating team members on why clean data matters to create buy-in for the resources this work demands
Building Trust Through Transparency
Accurate and timely financial reporting builds trust with donors and stakeholders. Once trust is lost, rebuilding faith in your finances may be next to impossible. Ensure you have policies & processes in place for essential financial management activities. Consider:
- Accounting procedures, with clear guidelines for tracking restricted versus operational funds
- Purchasing processes and authority
- Gift acceptance/conflict of interest policies
- Executive compensation review
- Annual audit requirements
Once you have well-defined processes and policies in place, incorporating staff training will support adherence and consistency. Next, define a plan for how to transparently communicate your organization’s finances to your key stakeholders, including board members, donors, grant funders, and volunteers.
- Make sure your board is engaged with the financial health of your nonprofit by providing regular financial reports and ensuring they have prior review of your IRS Form 990 filing.
- Publish your IRS 990 on your website where it’s easy to locate.
- Consider adding additional context with an annual report that offers a high-level financial snapshot paired with both data and storytelling to demonstrate impact.
- Ensure all donor solicitations are clear, truthful and transparent so donors understand how their contributions may be used.
Create a Culture of Excellence
Creating a culture of excellence means empowering your team to embrace best practices and take ownership of their roles. Provide training, set clear expectations, and celebrate successes. By focusing on best practices and building a culture of excellence, your nonprofit can achieve financial sustainability and maximize its impact.
