Show me a financially sustainable nonprofit organization, and I will show you an organization that is committed to its vision and mission.
Based on my national and international experience, I can attest that nonprofit organizations serve various purposes, including, but not limited to, providing charity, education, culture, religion, public health and safety, sports, advocacy, politics, philanthropy, fraternity, and civil rights. I also know that some people use the structure of nonprofit organizations to enrich themselves on the backs of disadvantaged people or to fulfill neocolonialist agendas in developing countries. However, this is not the reality of every nonprofit organization. Most nonprofit organizations serve vital functions in societies and communities that neither government agencies nor private corporations are able to tackle. Many nonprofit organizations work and advocate to shed light on abuse, oppression, and exploitation by public and private entities. Many nonprofit organizations implement programs that make a difference in the lives of children, families, and communities. Public charities and other nonprofit entities represent a significant and growing sector not only in the United States, but also around the world.
With greater involvement in addressing social, economic, and environmental issues or challenges in communities, comes greater scrutiny from various stakeholders for accountability and stewardship, especially in times of financial crisis. Consequently, many nonprofit organizations have to face fierce competition to secure funding that will enable them to further their missions over time. The uncertainty of government funding and the decrease of individual contributions in times of financial hardship make financial sustain-ability more relevant than ever before. Nonprofit organizations must be organizationally and financially sustainable in order to pursue their visions and missions. Furthermore, the ability of the leaders of nonprofit organizations to address the financial sustainability of their agencies has become even more critical. In the context of this book, financial sustainability implies that an organization can financially survive to meet the needs of its constituency as promised by its mission statement, regardless of changes in environments and funding conditions.
This book provides leaders and managers of nonprofit organizations with theoretical and conceptual frameworks, approaches, and strategies that will enable them to manage organizations that are financially sustainable. The book aims to equip students and nonprofit leaders with the information and conceptual frameworks needed to do financial analyses, manage budgets, and conduct various operations for organizational and financial sustainability.
The book may serve as an introductory textbook for future leaders of nonprofit organizations, as well as students in schools or programs of nonprofit leadership, human service leadership, social work, public and community health, organization management, public administration, education, and other similar fields.
More specifically, the book will help the reader:
- Explore the history, philosophy, and activities of major nonprofit subsectors, including health, education, the arts, environmental advocacy, social services, and others, as well as the context for nonprofit management, the impacts of the nonprofit sector on society, and the unique challenges and opportunities nonprofits encounter in achieving their aims
- Acquire an understanding of the governance of nonprofit organizations, and the roles and responsibilities of boards, the staff, and volunteers and what makes boards and individual board members effective
- Explore administrative issues that affect the management of nonprofit organizations
- Explore the various theories, attributes, concepts, and components pertaining to nonprofit management
- Discuss the philosophy, approaches, principles, strategies, and conceptual frameworks that may help a nonprofit organization become financially sustainable or take a path toward financial sustainability
- Explore business models that can foster the financial viability of a nonprofit organization Explore the relationship between theories and practices of nonprofit leadership and management and financial sustainability
- Identify areas of concern in nonprofit leadership and management and how such concerns relate to governing, accountability, and stewardship responsibilities of nonprofit organizations
People have a tendency to think of financial sustainability almost exclusively in financial terms. This book argues that financial sustainability involves both financial and non-financial facets. To that end it provides a systemic conceptual framework. The chapters are articulated around four sections. The first part introduces the concepts of nonprofit organizations and financial sustainability. The second part, "Organization and Planning," is about key aspects of organization and planning for sustainability in a nonprofit organization. The third part, "Financial Sustainability," discusses issues that are vital to the financial sustainability of a nonprofit organization. The last part, "Management and Leadership," emphasizes the contributions of management and leadership practices to the financial sustainability of nonprofit organizations.
Chapter 1, "The Nonprofit Organization Universe," introduces the concept of nonprofit organizations in the United States. The chapter addresses the role that nonprofit organizations play in their countries and how sociocultural imperatives determine their missions. The chapter investigates the size and activities of major nonprofit subsectors, including health, education, the arts, environmental advocacy, social services, and others. It sets the context for nonprofit management by exploring the impact of the nonprofit sector on society and thinking about the unique challenges and opportunities nonprofits encounter in achieving their aims.
Chapter 2, "Financial Sustainability," explores the dimensions of financial sustainability, as well as the principles needed to manage a nonprofit organization and generate continuous funding through diverse sources in order to support its vision and mission in a way that is socially and environmentally sustainable.
Chapter 3, "Governance and Financial Sustainability," discusses the legal and organizational roles of the board of directors and special committees in the governance and financial viability of a nonprofit organization. The chapter explores strategies that foster financial sustainability through effective governance.
Chapter 4, "Needs Assessment and Financial Sustainability," emphasizes how financial sustainability is rooted in the investigation and analysis of the needs of a target community. The chapter discusses theories about the needs-assessment process, as well as action steps needed for the development of a community needs-assessment report. The chapter explores facets of financial needs assessment of a nonprofit that can help chart a course to further the vision and mission statements. The chapter argues that needs assessment is linked to the financial sustainability of nonprofit organizations.
Chapter 5, "Asset Mapping and Financial Sustainability," introduces the theories, concepts, and approaches of asset mapping as a strategy to help nonprofit organizations identify obvious and hidden assets within their communities, mobilize them to connect issues and needs with assets, and foster the financial sustainability of a nonprofit organization. Also, the chapter examines the community context of nonprofit organizations in relation to community groups, neighborhoods, and larger social systems that influence quality of life. The chapter includes the concept and theory of community capacity, models of asset-based development for building community capacity, empowering individuals and groups, generating funding from new sources, and creating additional paths toward financial sustainability.
Chapter 6, "Strategic Planning and Financial Sustainability," focuses on the principles, approaches, and processes of long-term strategic planning, the relationship of strategic management and program effectiveness, and the interrelations between strategic planning and financial sustainability. The chapter introduces various approaches of effective strategic planning that are geared to the financial sustainability of a nonprofit organization. The chapter includes a step-by-step development of a strategic plan that flows logically from the mission of the organization, the external environment, and organizational goals and objectives.
Chapter 7, "Budget and Financial Sustainability," introduces the budgeting process as a key component of a financially sustainable nonprofit organization. The chapter further explains the essential role played by budget approaches and techniques in the successful and sustainable operations of a nonprofit organization.
Chapter 8, "Financial Management," examines the financial and accounting principles and procedures related to the management of a nonprofit organization. The chapter addresses frameworks and organizational structures involved in cash-flow management, cost analysis, investment management, the analysis of new programmatic investments, and strategic financial analysis.
Chapter 9, "Financial Statements," introduces the generic structures or formats of three main financial statements: the income statement, the balance sheet, and the statement of cash flow. This chapter explores principles and procedures used to develop various financial statements and links them to the legal financial reporting requirements of a nonprofit organization.
Chapter 10, "Financial Sustainability Analysis," is a study of the tools and techniques of financial statement analysis, which are necessary in order to make a judgment about the financial sustainability status of a nonprofit organization. The chapter includes a systemic framework to analyze the financial sustainability of a nonprofit organization.
Chapter 11, "Financial Sustainability Plan," suggests approaches and best practices in developing a financial sustainability plan for a nonprofit organization. The chapter includes a conceptual framework and a step-by-step process used to develop a financial sustainability plan for a nonprofit organization.
Chapter 12, "Fund-Raising and Financial Sustainability," provides conceptual frameworks and approaches employed to organize fund-raising activities that can generate alternative funding for financial sustainability. The chapter includes an overview of various types of fund-raising strategies, existing sources of funding for nonprofit organizations, and planning of fund-raising activities.
Chapter 13, "Social Enterprise and Financial Sustainability," emphasizes social entrepreneurship as a mission-driven enterprise and a strategy for financial sustainability in nonprofit organizations. The chapter provides introductory information on the field of social entrepreneurship, social entrepreneurship models, and frameworks used to develop a business plan for a social enterprise.
Chapter 14 "Investment and Financial Sustainability," suggests selected investment options that nonprofit organizations can use to strengthen their financial sustainability. The roles of governance structures, accountability, ethics, and stewardship are explored in relation to investment for financial sustainability.
Chapter 15, "Grant Seeking and Financial Sustainability," focuses on how grant seeking can serve as a strategy to generate revenues that may ultimately contribute to the financial sustainability of a nonprofit organization. The chapter discusses the grant-searching and proposal-development process, criteria for writing effective grant proposals, and the best way to use grant awards and contracts to further the financial sustainability goals of a nonprofit organization.
Chapter 16, "Risk Management and Financial Sustainability," introduces the theories and practices of "integrated risk management," in relation to its contributions to the financial sustainability of a nonprofit organization. Topics include, but are not limited to, analytical frameworks for risk assessment and risk management plans.
Chapter 17, "Human Resources, Job Satisfaction, and Financial Sustainability," discusses various concepts related to human resources management, as well as approaches and theories on job satisfaction. The chapter further explains the key roles human resources management and job satisfaction play in the financial sustainability of a nonprofit organization.
Chapter 18, "Service Delivery and Financial Sustainability," is designed to help understand how service delivery and financial sustainability are interconnected. The chapter discusses the roles of client-centeredness, decision making, scheduling, priority setting, effective and efficient flow of services or activities, quality assurance, and continuing quality improvement, and how these factors contribute in their own context to influence positively or negatively the financial sustainability of a nonprofit organization.
Chapter 19, "Program Evaluation and Financial Sustainability," focuses on the role played by program evaluation and performance measurement in influencing the financial sustainability of a nonprofit organization. Topics in this chapter include theories, concepts, and principles of program evaluation, logic models, performance measurement, basic research skills related to program evaluation, development of program evaluation plans for quality assurance, and continuing quality improvement.
Chapter 20, "Community Relations and Financial Sustainability," introduces the institutions and processes that constitute the external environment of nonprofit organizations. The chapter discusses outreach, partnership, advocacy, and public relations as facets of community relations for nonprofit organizations. The chapter examines the role of a culture of accountability, communication, trust, and credibility in the financial sustainability of a nonprofit organization.
Chapter 21, "Information Technology and Financial Sustainability," emphasizes the role of information technology as support for financial sustainability in a nonprofit organization. The chapter discusses the relationships among various aspects of nonprofit management, including financial sustainability.
Chapter 22, "Social Marketing and Financial Sustainability," is designed to provide an introduction to the principles and practices of social marketing and their applicability to nonprofit organizations. It emphasizes the need for strategic planning in the marketing of not only products, but also programs and services. It is intended to enable nonprofit managers to manage their social marketing efforts strategically.
Chapter 23, "Leadership and Financial Sustainability," examines various leadership theories and approaches related to nonprofit organizations. The chapter emphasizes the relationship between leadership and strategic planning, with an emphasis on the influence of leadership on the financial sustainability of a nonprofit organization.
Chapter 24, "Organizational Transformation and Financial Sustainability," argues in favor of organizational transformation as a strategy for financial sustainability. The chapter discusses the context and applications of organizational development, adaptation to change, resistance to change, and transition management.
Each chapter in this book starts with learning objectives. Chapters include boxes that provide additional facts (e.g., history, story, cases, or data) and practical tips. The chapter contents are followed by Questions and Activities that serve as review questions and reflective or application exercises. The Questions and Activities are suitable for self-directed learning and online and face-to-face courses. The book provides ready-to-use frameworks and templates that are easily customizable by leaders and managers of nonprofit organizations.
I hope this book will empower leaders and managers of nonprofit organizations in making decisions that may contribute to the financial sustainability of their organizations.
Emmanuel Jean Francois, PhD University of Wisconsin, Oshkosh