What Is Sustainability?
When talking about the “sustainability” of nonprofit organizations, “sustainability” refers to the ability of the organization to sustain itself over a period of time. In order for a nonprofit to sustain itself, it must not only be operating but fulfilling its mission. Taking steps to ensure the sustainability of your nonprofit will mean that it can continue serving its members and the community for a longer period of time.
What Does It Look Like In The Context Of Nonprofit Organizations?
Having financial sustainability means having the resources to meet the obligations of your mission and to handle unforeseen challenges to the organization. One of the reasons that nonprofits struggle to achieve financial sustainability is that a large percentage of their revenue depends on donors and grants, which can be unreliable. Sustainability can also be threatened by uncontrollable economic changes in the economy. Increased expenses, like rent, can put the mission’s goals at risk.
Leadership Succession Planning
There are times in the life of most nonprofit organizations when there is a need for new leadership. Succession planning is preparation for that time so that an unexpected change does not interfere with organizational goals. Identifying potential leaders and incorporating their role development into the core values of the nonprofit will make the organization more sustainable.
If the pandemic taught us anything it is that adaptive capacity is a critical piece of nonprofit sustainability. A nonprofit can measure its adaptability by looking at its ability to monitor, assess, respond to, and create changes. In order to fulfill your mission for a long period of time, your nonprofit must be able to adapt to the changing environment around it.
Creating a strategic plan is like making a blueprint for your organization’s goals and objectives. Strategic planning is vital to a nonprofit’s sustainability. It allows an organization to clarify its mission, improve decision-making, anticipate changes, and be accountable. Successful organizations schedule strategic planning sessions regularly.
How To Promote Sustainable Practices In Your Organization
We’ve established that nonprofit sustainability is key to fulfilling its mission, but how can you get there? Promoting sustainable practices, like the following, can help your organization continue to serve for a long time.
Having a specific and consistent message allows supporters to understand how important your organization is. Avoid too many changes to the mission as they are confusing for supporters.
Branding and Marketing
Creating a strong brand and marketing it well on social media and in-person opportunities will allow you to attract the right support.
Nonprofits rely on accurate and timely financial reports for their tax-exempt status and to satisfy donors, it is important to set clear expectations within the accounting and finance departments
Monitoring the activities that affect cash will set the organization up with a clear picture of cash needs and sensitivity issues.
Leadership, staff, board members, and supporters should share the passion of the organization. Create a culture where they are encouraged to participate in fulfilling the mission.
Getting to know other leaders in the industry or working with organizations that share a similar mission can help your nonprofit become sustainable.
Ways To Measure The Success Of Your Efforts/KPI’s
A nonprofit organization can evaluate its sustainability by looking at some key performance indicators (KPI), which measure how well a nonprofit is achieving a specific goal. By tracking the progress of the organization, leadership can better decisions and adapt when necessary. Some KPIs that help measure sustainability include the following.
Online Fundraising Percentage
Knowing how much of the donations are coming from online efforts will help leadership make marketing and budgeting decisions. To find this percentage, simply divide the number of online gifts by the total number of gifts.
The conversion rate measures the number of people that acted as a direct result of a prompt from the nonprofit, like an email. The action can be donating, volunteering, another action, but calculating the conversion rate measures the effectiveness of current efforts. This number can be found by dividing the number of people that took action by the total number of invitations.
Donor Retention Rate
This measures the number of donors that return. Counting on reliable donations is a critical part of becoming sustainable. Measuring the donor retention rate can help leaders adapt where necessary to increase or sustain the rate. It is calculated by dividing the number of repeat donors this year by the total number of donors last year.
Case Studies Or Resources For Nonprofit Sustainability
There is a lot of research available about nonprofit sustainability. The Council of Nonprofits provides many resources and tools on its website. One great tool they provide is the Indicator of Financial Crisis, which allows your nonprofit to measure its sustainability.
Speaking with an expert at JFW Accounting Services is a great first step in evaluating or improving your nonprofit’s sustainability. Schedule your call here.
Jo-Anne Williams Barnes, is a Certified Public Accountant (CPA) and Chartered Global Management Accountant (CGMA) holding a Master’s of Science in Accounting (MSA) and a Master’s in Business Administration (MBA). Additionally, she holds a Bachelor of Science (BS) in Accounting from the University of Baltimore and is a seasoned accounting professional with several years of experience in the field of managing financial records for non-profits, small, medium, and large businesses. Jo-Anne is a certified Sage Intacct Accounting and Implementation Specialist, a certified QuickBooks ProAdvisor, an AICPA Not-for-Profit Certificate II holder, and Standard for Excellence Licensed Consultant. Additionally, Jo-Anne is a member of American Institute of Certified Public Accountant (AICPA), Maryland Association of Certified Public Accountants (MACPA), and Greater Washington Society of Certified Public Accountants (GWSCPA) where she continues to keep abreast on the latest industry trends and changes.