Are you doing everything that you can to increase your influence, financial health, and long-term sustainability of your nonprofit? If you are, how are you preparing for the environment of the future, a future which will continue to feature more scrutiny from regulators and donors, competition for donors and grants, and all in all, an increasing challenge to thrive.
To address this, Intacct released a blog series on three trends on which nonprofits need to capitalize in order to thrive—outcome measures, diverse funding, and automation—all critical aspects to maximizing the give and minimizing the waste.
Being able to communicate the accountability and transparency of your organization is pivotal—especially in 2016, with more and more scrutiny into funding sources and metrics turning nonprofit funding or spending discrepancies into media nightmares. Additionally, nonprofit leaders are finding that the speed of business is becoming faster and more dynamic, meaning we are expected to change, measure, adapt, and change again.
To address this, you need to be able to provide, almost instantaneously, a real time assessment of what the organization defines as success or expected performance. This insight and visibility allows proactive management that can help ensure program, performance, and mission success.
Why Providing Outcome Measures is So Important
- Competition for Funding: Nonprofit organizations are experiencing more competition for funding than ever before. Donors and grantors have higher expectations. Often, gifts and grants come with stipulations for performance because the givers want to ensure that their dollars are getting the greatest possible return on investment.
- Government Compliance: Government funding, as well, has strengthened compliance reporting and performance expectations.
- More Information Available: Trust is a critical factor, and more and more people are looking toward sites like Charity Navigator, GuideStar, CharityWatch and more are grading the effectiveness of your organization and sharing it more easily than ever.
Where to Start
The key is not to get too overwhelmed with the ‘who, what, where, and when.’ Start with the basics – based on your vision and mission. Utilize external resources to get started quickly and easily.
Consistent progress is what wins the day. Balance your approach with both program outcomes and financial/operational performance. While measuring and reporting outcomes may require extra effort now, the interest and engagement that this expectation brings is a great thing in the long term for the nonprofit community – as it will bring significant benefits to organizations, donors, constituents, and communities.
For more, see the Intacct Blog: Best Practices for Nonprofits: Outcome Measures.
One of the biggest concerns for any organization is stagnation and complacency. For nonprofits, this means becoming too reliant on one—or few—type(s) of funding. It’s easy to get used to traditional types of funding – and become dependent on them. Most nonprofits are heavily – or even fully – dependent on philanthropy. Philanthropy alone is no longer sustainable for most growing nonprofit organizations. Developing a sustainable funding strategy should be a priority as you budget, plan, and prepare for the future.
In order to address this challenge, nonprofits need to find ways to diversify their funding in order to expand capabilities, reach, and impact. Intacct author Joan Benson offers the following tips on securing additional sources of funding:
- Social Finance: A new trend in the nonprofit world is the rise of Social Finance, an approach to mobilizing private capital that delivers a social dividend and an economic return to achieve social and environmental goals. It creates opportunities for investors to finance projects that benefit society and for community organizations to access new sources of funds.
- Impact Investments: Impact investing has the potential to unlock significant sums of private investment capital to complement public resources and philanthropy in addressing pressing global challenges. These investments are made into companies, organizations, and funds – with the intention to generate measurable social and environmental impact alongside a financial return. Impact investments are made with an expected return of capital as well as a return on capital, and most importantly, a commitment to measure and report the social and environmental performance and progress of the underlying investments.
- Program Investments: These are investments made by foundations to support charitable activities that involve the potential return of capital within an established time frame. Also known as PRIs, Program Related Investments include financing methods commonly associated with banks or other private investors, such as loans, loan guarantees, linked deposits, and even equity investments in charitable organizations, or in commercial ventures for charitable purposes.
- Social Enterprise: The standard definition of social enterprise is applying commercial strategies to maximize improvements in human and environmental well-being, rather than maximizing profits for external shareholders. B-Corps, L3Cs, and Flexible Purpose Corporations have become increasingly popular among for-profit organizations still looking to create a community impact. Nonprofits are starting to leverage this strategy as they seek to create earned income to increase their sustainability and funding strength.
For even more, see the Intacct Blog, Diversify Your Funding.
Stay Tuned for Part 2
In part two of our series, we feature additional insight on what you can do as a nonprofit to improve the outcomes of your organization, focusing on scaling your organization for optimal impact and automating manual processes so that you can focus on what matters: those you are trying to help.
Nonprofits, in the wake of competition, scrutiny, and more, have to make every dollar work or them, while improving the outcomes for those they serve. Doing so requires proven solutions that have helped hundreds, if not thousands of nonprofits to simplify and thrive.
Software solutions like Intacct (Financial Management/Accounting), Orange Leap (Constituent Relationship Management), and Concur (Travel and Expense) have made it easier for nonprofits to manage time consuming tasks more effectively, resulting in maximized return on investment for not only your organization, but the causes you support.