Jeanne Bell: Ideas for Leading a Sustainable Nonprofit

Jeanne Bell is the closing keynote at the second annual Conference of Nonprofit Communities of Hawai`i. Jeanne is the CEO at CompassPoint Nonprofit Services and the co-author of Nonprofit Sustainability: Making Strategic Decisions for Financial Viability.

Here are a few thoughts that Jeanne shared in her presentation on nonprofit sustainability.

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Sustainability is an orientation, not a destination.

Nonprofits have dual bottom-line business models. Your business model is your hypothesis about what impacts will incite which users/payers to pay. Sometimes the people who benefit from the services are the ones who pay. Sometimes the cost of services are subsidized. Sometimes the funders are the ones who pay for the services but don’t get the direct benefit.

There is inherently broken logic to the idea that nonprofits should spend exactly what they bring in every year. A lot of boards and funders think nonprofits should just break even and not have any “rainy day fund” or additional money to support the growth of the organization. But you have to think about your business model statement vs. your mission statement. Your business model statement should go beyond the mission to explain how your work is financed. What are clients/funders “buying” from you? Then be ready to adjust and experiment with it. There are problems with the old frames of nonprofit management – the nine-month strategic plan process given the shifting landscape, led by the board who aren’t the most knowledgable about the organization’s business model, that gets implemented over the next five years.

Strategic planning the old way: planning and implementation

Strategic planning the new way: periodic planning, ongoing decisionmaking, execution and learning

Deferred decision-making costs nonprofits money, morale and impact. Keeping someone in the wrong job for a year can cause a drop in morale in addition to costing the organization money. There’s never a time when there’s not a personnel issue going on.

Sustainability involves both financial and program sustainability. One impacts the other.

Every time you write a grant proposal, you’re setting a price for your impact. Our systems tell us that we break even, but nothing ever really breaks even.

Everything looks like a money tree when there is a grant to cover it. A good example is special events – if you don’t track your staff’s time, it looks like it was successful. But if you tracked your staff’s time, it would be a money-loser. You need to have a way to track whether your programs are covered or not.

At any given moment. our organizations are better at some things than others. There’s a lot of reasons not do something, even if it’s on mission. Just because the community or your population needs your services doesn’t mean you’re good at it.

Jeanne introduced the concept of the sustainability matrix (explained quite well on the Greenlights for Nonprofit Success blog). Your mission statement is a bad way to approach decisions. You may be holding onto “stop signs” in your organizations.

Shrinking can be good – think about what impact you want to have in the next few years. Then build your new business model around that. It could mean having a smaller budget, less staff, a shorter lease, fewer programs, etc.

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Learn more about Jeanne’s book here.

More Thoughts on Nonprofit Infrastructure from CompassPoint’s Nelson Layag

Yesterday, several of you dear readers posted some very thoughtful comments on my post, What Does the Future Hold for Nonprofit Infrastructure Organizations? I think we started a rich discussion not just for ourselves, but for our colleagues that are reading as well. Lots of food for thought as we move forward in this new environment. I wanted to highlight one comment in particular by Nelson Layag, who works at CompassPoint, a nonprofit infrastructure organization based in California. Nelson makes some great points about sustainability, quality, and investing in the future. Let’s keep learning from each other!

I want to quickly (okay not so quickly) comment on the idea that charging a fee excludes small nonprofits. I’ve been with CompassPoint for over 15 years and in its total existence of over 30 years (we were formeley the Support Center for Nonprofit Management part of a network of Support Centers), the model has been to charge for services (in general, there are numerous “free” things we do too). What we charge and how we do it is a constant balancing act of what it takes to be a sustainable organization, providing consistent high quality services, and staying on top and contributing to the thought leadership in the sector.

On Sustainability: As the last poster demonstrated, relying on primarily on private funding (especially if it’s relies just a few) to provide your program services is risky. In my years with CP I’ve witnessed organizations either close their doors or drastically change or reduce what it offers. We haven’t been immune to loss of major funding, but having a diversified revenue structure ensured that we not only maintain our current services, but invest and advance our work in the sector.

On Quality: Charging a fee keeps us “close to the market” and demands high quality that will keep the market coming back. We have to stay relevant. The market will not tolerate anything less.

On investing in the future and other products: Our revenue model (including foundation, govt, corporate, and consumer fees) is made so we can invest in other areas – for example, the study (Leadership Lost) that was a major contributor to all the dollars we are now and have been seeing invested by funders in nonprofit leadership was done without any outside funding. We are also able to invest in other free products like Board Cafe, etc.

On the definition of “small”: Really it’s not small vs. big. It’s poor vs. rich. We have large nonprofits with large budgets and staff and that basically have little unrestricted money to spend on outside assistance and small staffed nonprofits that seem to have endless cash to spend on consulting and training. Regardless, even organizations in major need – if you offer services that have value and impact to their cause, see the fee a small investment.

On barriers: In order to stay in biz for as long as we have, we are obsessed with what are the barriers for folks to access our services. Fees are definitely in the mix and need to be constantly attended to, but there are so many other factors of which one of the the biggest we see is time (having the time to take a workshop or work with a consultant) and timing. Time seems to be the most preciousn of all commodities in many of our “small” community based organizations. Geography for in-person services is also a major influence.