FINANCIAL SUSTAINABILITY PLAN
A financial sustainability plan results from financial sustainability analysis. Therefore, it is based on changing a current situation into a desired situation. A financial sustainability plan creates an increased focus on financial sustainability in relation to the vision and mission of an organization. A financial sustainability plan provides criteria to monitor progress toward financial sustainability and thus serves as a basis to take corrective actions that can help an organization maintain core programs in the event of financial stress.
Social enterprise is a great strategy used to generate consistent and reliable revenues to support programs and services that help fulfill the vision and mission of a nonprofit organization. Income generated from social enterprise is unrestricted and can be relied on if the social enterprise is managed efficiently.
Overturf (2013) has written about the Leon County Community Coalition, a Texas-based nonprofit organization that is likely to close its doors because "government funding dried up." Overturf explained that the organization provided after-school programs for students, drug and alcohol abuse prevention, community-service activities for juveniles involved in the courts, and purchased equipment for law enforcement officers. According to the executive director of that organization, 97% of their budget was provided by the government. Then, the organization received a 30-day notice informing it of the loss of its funding. Fund-raising gives a nonprofit organization the option to diversify its funding sources. Having all income coming from one source is a threat to financial sustainability. Diversifying funding sources enables an organization to remain stable or continue to provide core services or maintain core programs, even if external donors completely or partially withdraw their funding.
Grants bring additional money to a nonprofit organization. Therefore, they automatically help a nonprofit organization provide services. However, grants should be used with caution so that they do not transform a nonprofit organization into a sand castle. The reality is that grant funding is an opportunity for an organization to use restricted resources that can help fulfill its mission and vision while managing unrestricted money to make financial decisions that can help sustain it in an unforeseen time of financial hardship.
Investment is the use of an organization's money to create an asset with the expectation of receiving a return from such a transaction. Many nonprofit organizations maintain portfolios that are managed in the investment market and from which they receive regular income to support their activities while the capital invested remains secure. Further, nonprofit organizations can identify opportunities for innovation and creation of new income-generation services, within the limits of the law, that aim to provide more efficient services or expand programs in a cost-effective manner. This can help nonprofit organizations differentiate themselves from competing agencies and attract social and community support, as well as new donors.
To ensure sustainability, nonprofit organizations should perform systematic evaluation of environmental, social, and financial risks in order to minimize financial liabilities, which can endanger their financial sustainability. Fraud, corruption, financial mismanagement, or a lawsuit can drive a nonprofit organization out of business.