Human Resources and Job Satisfaction
Personnel are one of the greatest assets of a nonprofit organization. To hire and retain efficient and committed employees costs money. Effective human resource management can help with job satisfaction and staff motivation and retention, and can save money for a nonprofit organization. Lack of employee satisfaction can lead to lower productivity and high staff turnover, which can affect the efficiency and effectiveness of a nonprofit organization. On the other hand, a nurturing work environment can contribute to employee commitment, cost reduction, saving, and income generation.
When organizations develop strategic plans, programs, and services based on needs-assessment results, they are more likely to secure community support because activities are rooted in targeted needs that are being met by such organizations. Needs assessment provides nonprofit organizations with information that can help them adapt to change in their external environment. The ability to adapt to changing demographic conditions and other factors is essential for the financial sustainability of a nonprofit organization.
Through asset mapping, a nonprofit organization can identify community resources that can be used to further financial sustainability strategies and plans. Asset mapping helps gather information to initiate and develop strategic partnerships that can help reduce risks, save money, and generate both monetary and nonmonetary contributions, which can strengthen the financial sustainability of a nonprofit organization.
Sometimes organizations provide services that are no longer perceived as critical by their community or funders. This was the situation of Rosehedge/Multifaith Works, a nonprofit organization in Seattle that has been providing housing and services for 25 years to people living with HIV /AIDS. The organization lost a substantial amount of government and corporate support. Bauman (2013, para 1) cited the executive director, who said that, "many funders no longer see HIV/AIDS as the pressing concern it once was." Once funders do not believe there is a pressing need to support the activities of a nonprofit organization, they will stop providing their financial assistance. As a result, the board of directors decided to dissolve the organization. Effective community relations are a contributing factor to the financial sustainability of a nonprofit organization. Nonprofit organizations can develop better, stronger, and smarter collaborations or partnerships with various community stakeholders to obtain additional funding and in-kind contributions to help reduce cost, improve the reputation of the organization, and facilitate greater community commitment to its mission.
Donors support a nonprofit organization because they believe, support, or understand the value of services offered and programs implemented by such a nonprofit organization. They also want to have evidence that the service is of great or at least acceptable quality. If quality is lacking, organizations may lose public support, donors may withdraw their funding, and the organization may not be able to continue to operate.
Technology helps streamline job processes and reduce costs in personnel and time needed to complete tasks. Cost reduction through technology contributes to financial sustainability. Saving through investment in technology frees up additional funds that can be invested in programs.
Social marketing is an effective strategy used to help supporters, funders, and the public at large understand the effectiveness and value of programs and services offered by a nonprofit organization. This in turn contributes to increased monetary and nonmonetary support for the organization. Further, social marketing can be used as a cost recovery strategy for a nonprofit organization. Cost-recovery programs strengthen the commitment of clients to key services and help ensure that such services continue to exist regardless of changes in funding sources.
Program evaluation helps measure performance outcomes. Program evaluation provides data or information about outcomes, productivity, efficiency, and effectiveness, as well as suggestions of strategies for continuous quality improvement. Performance outcomes are related to efficiency, quality, and effectiveness. As previously indicated, the financial sustainability of nonprofit organizations depends not only on financial conditions, but also on organizational efficiency and effectiveness. Program evaluation helps show which programs have the best possible rate of return on investment. Therefore, program evaluation is a contributor to financial sustainability.
Sometimes organizational transformation can be the only option that organizations have to become financial sustainable. They may operate, for instance, on a business model that must be changed radically. Organizational transformation is rooted in the ability of an entity to assess its strengths and weaknesses, threats, and opportunities, and make decisions to reverse negative trends by changing the way it operates. Organizational transformation can help bring new energy that helps a nonprofit organization take a path toward financial sustainability.