Most nonprofits don’t think in terms of nonprofit profitability when it comes to fulfilling their mission. But, today’s nonprofits have to think differently.
They need to create their own opportunities for revenue, relying less on donations and more on profitable strategies to achieve sustainability of their organization to fulfill their mission.
By implementing a strategy for profitability, your organization will have what it needs to dedicate the resources necessary to focus on its mission.
Here are six actionable steps you can take to keep your nonprofit profitable:
1. Strategic Financial Vision
Define how much you need to provide each service so you can plan for obtaining the funding required to keep your programs going. This provides you with a bird’s eye view of which services would be most affected if there was a shortage of funds and which services would prosper with increased funding. Focusing on strategic financial vision also helps your organization make informed decisions on how much and where to seek funding.
2. Diversifying Funding
It is critical for your organization to have multiple streams of funding rather than coming from one source. Building an infrastructure of several funding sources such as government agencies, state programs, and donors can help your organization remain sustainable even when the economy is at risk. Diversification also means offering services to other facilities such as providing behavioral services in schools or foster homes. Another consideration is partnering with other organizations that provide complementary services. You can even partner with a for-profit business looking for partner with a nonprofit.
3. Improving Productivity
In the nonprofit world, nonprofits typically do not get to pick and choose their prices when contracting out services. Therefore, they need to work more efficiently to conserve their funds. Investing in new technologies that free up time will help save money by getting the job done more efficiently.
The growing demand for greater financial transparency, along with easier access to data and customizable financial reporting is motivating more nonprofits to consider emerging technologies. A tech trend worth noting is the rise of application programming interfaces or APIs that integrate various software programs with one another.
Most accounting software providers specialize in one or two main back-office accounting or payroll or HR, but there are so many other tools to help integrate all of these various third party applications.
4. Financial Reports
Generating financial reports shows the results of your programs to funding sources in order to satisfy requirements and compliance. Measuring these outcomes can also be an invaluable tool to reveal how well a program is doing and where to tweak to improve results. This helps your organization become more sustainable.
5. Identify Prime Assets
Sometimes it’s not that obvious to identify your prime assets. Think creative and consider your resources. You may not own real estate, but you may have a board member who can connect you to a local vendor for a percentage of the proceeds for selling specific products. For example, the board member may have a need for gift baskets. You can connect the board member to a gift basket specialty store and insert material about your organization as well as receiving a percentage of the profits. There are lots of possibilities in creating opportunities like this.
6. Crowdfunding Campaigns
Nonprofits are looking for new ways to raise money. Crowdfunding is a good way to generate large amounts of money by accumulating several small donations. These types of fundraisers use social media cause marketing as a way to spread the word without advertising. Anyone who donates can receive a small token item as an incentive. Each crowdfunding campaign can be tied to a specific cause.
Nonprofits face a range of challenges including declining revenue, compliance with government regulations, greater demand for financial transparency and keeping up with new technologies, they are searching for. Staying focused on your mission makes it easier for your organization and board to make strategic decisions and reduce unnecessary spending in order to achieve your goals.
Following these strategies can help your nonprofit become more profitable and sustainable.
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