LEADERSHIP AND COMMUNITY RELATIONS
Leaders who manage financial institutions or whose responsibilities include the oversight of the financial management of an organization are referred to as "financial leaders." The chief executive officer (CEO) and the chief financial officer (CFO) of a nonprofit organization are accountable to the financial management of the organization before the board of directors and the external stakeholders. The members of the finance committee of the nonprofit organization can be considered financial leaders, depending on the extent of their involvement in the finances of a given organization. Financial leaders of nonprofit organizations develop community relations that can generate great financial returns. In difficult times, cultivating transparent and accountable relationships with donors and clients can turn out to be the equivalent of a line of credit for a nonprofit organization. A proactive relationship with stakeholders always plays well, because this sends the signal that an organization is relevant in the lives of others. This sends the signal of an organization that one cannot let dissolve, given the important community functions that the organization shows it is performing.
LEADERSHIP AND STRATEGIC PLANNING
Obtaining financial resources has become more competitive for nonprofit organizations. With long-term planning, an organization has better opportunities to cope with change and prepare for unforeseen events that would threaten the existence of the nonprofit organization. In that sense, long-term planning can strengthen the financial sustainability of a nonprofit organization. Smart strategic planning and attractive service models can help a nonprofit organization position itself to generate needed revenue even when the economic environment is challenging. This is not possible for an organization that is operating on a day-by-day mind-set. Obviously, the day-by-day operations are important, because this is the very purpose of a nonprofit organization: to provide expedited assistance to people who need urgent help that they will not find elsewhere or from a for-profit business. However, this mission must not stand in the way of a nonprofit organization as it carries out consistent long-range plans that include funding projections and revenue creation.
Stid and Bradach (2009) highlighted the need to follow up on projections of income and revenue creation. Likewise, the use of strategic funding options, such as bonds, can help nonprofit organizations improve their financial position and allow them to take advantage of situations that previously they had not been able to leverage given their financial position (Brinckerhoff, 2009).
FINANCIAL LEADERSHIP PREVENTS POOR FISCAL MANAGEMENT
Further, a nonprofit organization can be well funded, and still find it difficult to continue to provide services over time if there is poor fiscal management and a lack of financial stewardship. This illustrates that although leadership does not necessarily rhyme with money or finance, it plays a key role in the financial performance and sustainability of a nonprofit organization. It is important to remember that an effective leader oversees the overall financial management activities of a nonprofit organization, including fund-raising, budgeting, spending, and reporting. These four functions have almost everything to do with financial sustainability. If a leader is committed to being as effective as possible in being a good steward, a great deal of difference can be easily observed between a nonprofit organization with effective financial leadership and another that does not. This in turn will make a difference as to whether or not an organization engages on a path for financial sustainability. Financial sustainability is an aspiration. It takes visionary leadership for a nonprofit organization to make decisions—sometimes tough decisions—that can further a commitment toward financial sustainability.
LEADERSHIP IS ESSENTIAL TO FINANCIAL VIABILITY AND SUSTAINABILITY
The survival of a nonprofit organization depends on its financial viability. Part of being a financially viable nonprofit organization is the ability to make long-term strategic-planning decisions to anticipate financial challenges and develop strategies to neutralize or adapt to them. Leadership is key. I mean leadership will make a difference. Effective leadership undoubtedly influences the strategic thinking of an organization. Strategic planning definitely contributes to the ability of an organization to survive times of hardship. In fact, the inability to make long-term strategic decisions has caused many nonprofit organizations to fail. Nonprofit organizations that fail to practice long-term planning and fiscal stewardship tend to have poor performance and very few outcomes to document. A strategic leader contributes to the financial viability of a nonprofit organization by building an organization on sound fiscal principles.
With reduction in either federal or state funding, nonprofit organizations can find themselves under a lot of financial stress. In fact, it is easy for a nonprofit organization to dissolve due to a lack of liquidity. The nature of leadership in a nonprofit organization can make a big difference on that front. Effective and skilled financial leaders can foster a climate that strengthens fiscally healthy and future-focused nonprofit organizations. For example, a skilled leader can develop and promote a culture of flexibility and creativity in her or his nonprofit organization by encouraging all internal stakeholders to feed the organization with new a creative ideas that can lead to development of new packages of service opportunities within the broad framework of the vision and mission statements. A culture of flexibility and creativity is inherently linked to continuous quality improvement. In other words, the leader ensures that the organization is continuously assessing its service packages and service delivery systems. This ensures that an organization measures the success or failure of previous plans, adjusts, and adapts to new realities without abandoning its vision and mission. This not only helps uncover issues early or at least on time, but also exposes the organization to the latest advances and opportunities in the sector. It is undeniably a recipe for a competitive nonprofit organization that can be very attractive to donors and contributors, and in turn influence a nonprofit organization's financial viability and sustainability.