Perspective

Breaking the nonprofit financial glass ceiling

A couple of weeks ago, we linked to a story called, “Why don’t we make big bets on nonprofits?” It was one of our readers’ favorites that week, so we are running the sequel here. Read on to see how nonprofits might become more ready for those big bets.

By Nell Edgington

How do we change nonprofits and the nonprofit sector to be able to absorb bigger investments?

The fact is that a financial glass ceiling exists for nonprofits – a limit, which many nonprofits hit, where the money just won’t grow. They may have a great solution to a social problem, but they are unable to attract the money necessary to deliver on that solution.

I see this all the time in my consulting practice. A nonprofit has existed at a certain budget level – let’s say $1.5 million – for years and years, and though they have big ideas for how much more they could be doing, they just can’t seem to get past that $1.5 million mark.

But if we are ever going to truly address the challenges we face as a society, we have to figure out how to grow the finances of our social change organizations, networks, and movements. Certainly funders can help alter this reality. But I think a big part of the change comes from nonprofit leaders who have a vision for growth taking a systematic approach. In my experience, there are four key steps to breaking the nonprofit financial glass ceiling:

  1. Create a Long-term Strategy and Financial Model

I see it time and time again – a nonprofit board and staff want to do more, but they have not articulated exactly a) what it is they want to accomplish (through a Theory of Change), and b)what it will take, in terms of people, money, and systems to get there. Or, far worse, they have articulated what they want to do and what it will take, but they have set that plan aside for the easier path of just “winging it.”

As with anything in life, if you want a different outcome, you have to envision that new outcome and then align your behavior accordingly.

Read the full story at Social Velocity. 
And read the first story: Why we don’t make big bets on nonprofits.
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