Non-Profit Shouldn't Mean "No Money" - 15 Ways Non Profits Can Create Economic Sustainability

These aren’t easy times for non-profits. External pressures from the economy are compromising the philanthropic sector and most non-profit leaders report that there just isn’t as much money to go around anymore.

Like the small businesses that are weathering this economy, non-profits are saying yes to projects but not necessarily yes to more staff. Small business owners and non-profit leaders alike are rightly nervous about adding more fixed costs, but one essential difference between non-profits and small businesses is that even in good economic times, most non-profits revenue sources are inherently break-even, or worse, losses. How many small businesses could stay in business by providing a product or service, which routinely cost them more than they were paid to deliver? Not many, yet this hand to mouth existence is the norm for many non-profits. No wonder their leaders are also dealing with the internal pressures–such as burn out and high turnover–that come with trying to do too much with too little, especially when community needs are higher than ever.

Being funder/donor driven means most non-profits have historically had a lack of agency over what they could say no to. It’s hard to stop doing things with expenses to worry about, even when there’s a huge amount of work involved in getting a donation or grant. One Executive Director I know wryly notes that there is often an inverse relationship between the size of an award and the amount of staff time that has to go into getting it. But the old screen of: “Is it on mission?” “Is it funded?” doesn’t work anymore. Just because a project has a funder attached to it, doesn’t mean it’s sustainable.

Not surprisingly, there’s going to be a dearth of non-profit leaders in the next 5-10 years. It’s tough out there, but the good news is that times like these present opportunities for non-profits to rethink how they do business.Whether funding is restricted versus unrestricted isn’t really the question or the issue anymore – now it’s about working to get beyond break-even and aiming for modest profitability.

Granted, it’s hard to report a cash reserve to funders without them saying, “you obviously don’t need our money”, but struggling to get by no longer works – there needs to be change in how business is thought about and conducted in this sector so it can thrive. This will happen when non-profits start evaluating the opportunity cost of every project and say “no thank you” when it’s appropriate. What does this change look like? Here’s some ideas to take back to your organization: 

  1. Understand that foundations are trying harder than ever to spread the wealth.
    Mobilize around this and decide to agree not to take on any projects that will pay less than the time you have to put into securing them. 
  2. Realize that profit is not a dirty word.
    Think about the language you’re using. Are you really about no profit? Is that inherently sustainable? What alternative terms would be more powerful and accurate for you and your funders? 
  3. Get better at saying no, by not making decisions alone.
    Listen to your staff; not just through financial metrics but also in how the delivery of service is going. 
  4. Discard the notion that saying no means resources will go away, (but be ready if it does).
    Foundations might have been pulling you along because you’ve been in their portfolio. Re-shifting is happening with everyone right now. 
  5. Look at the bad habits/ assumptions you need to eradicate going forward.
    Don’t be afraid to sit down and talk about what’s not working. 
  6. Abolish financial illiteracy.
    There are four or five things about a non-profit balance sheet that you should know. CompassPoint has excellent fiscal literacy classes for non-profits. 
  7. Embed economics into your strategic plan.
    What kind of stuff did you say yes to this year that hasn’t taken your organization where you want it to go financially 
  8. Build clear revenue goals into your operational plan.
    If you haven’t hit your revenue goals for May, re-evaluate your budget and plan for the rest of the year. 
  9. Create 3 budgets – optimal, maintenance and contingency.
    Use values-based decision-making in your approach to budget cuts. If you don’t have the cash it takes to do the work, and be modestly profitable, it’s not sustainable.
  10. Stop thinking of your organization as a pass-through for other people’s resources.
    If grants require you to be break even, round things out with donations or earned income. A hybrid business model is key.
  11. Make financial surplus a line item in the budget.
    Talk to funders transparently about wanting to have a surplus to be sustainable. Economic sustainability means you can be around for longer to do the work. 
  12. Work towards modest profitability.
    Aim for at least 3 months reserve in the ban 
  13. Understand which funders see you as being core to their strategy.
    Deeply understand how they think about their impact and whether you are central to that impact in their eyes. 
  14. Stop writing grant proposals, start interviewing clients.
    Share your client’s stories with funders. It’s not about your organization and what it can do; it’s about the impact you’re having. 
  15. Be clear about your purpose and be passionate about it.
    People naturally support leaders. If you’re engaged, excited and not burnt out, or worse yet, bored, they are more likely to support the cause you’re stomping for.
In good times or bad, social change and economics shouldn’t be at odds in this sector – they’re intrinsically connected and critical to its success and sustainability. 

Natalie Zensius is a marketing communications strategist with experience in both the for-profit and non-profit sectors. Learn more about Natalie at

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