In the most recent State of the Sector Survey completed by the Nonprofit Finance Fund¹:

• 52% of organizations surveyed in Florida added or expanded services in the prior year
• 30% had operating reserves of 6 months or more
• 38% were able to give raises and 45% were able to hire for new staff positions

Why do some organizations thrive while others barely make payroll?

It’s tempting to think that some organizations are just lucky or have a financial superhero. Perhaps that’s true for some of them, but what we know for sure is that most fiscally fit nonprofits:

• Maintain an attitude of curiosity and healthy skepticism when engaging in financial conversations. It can be SO easy to ignore the skeptical board members and dismiss them as “that’s just cranky Fred!  Every organization has a cranky Fred – that pesky board member who always asks the difficult questions. It was precisely because of a cranky Fred that a local nonprofit was able to weather the economic downturn – he was the one crying “the sky is falling” when no one else wanted to listen – but his persistent questions made the organization take a hard look at strategic changes that would improve their financial future. Today, this organization has a significant level of reserves and investments that generate income equal to 10% of their annual operating budget.

• Understand the inherent risks in their financial model and develop contingency plans. With very few exceptions, no funding is guaranteed. A lot of organizations learn this the hard way, forced to make knee-jerk reactions when they lose a grant or some external factor impacts their ability to generate revenue. Smart nonprofits continually ask, “what if?” and seek alternative sources of funding. While it might seem pessimistic, it’s actually pragmatic and allows an organization to be proactive, rather than reactive.

• Develop realistic financial goals aligned with their long-term strategic plans and rigorously measure progress toward those goals. Knowing where you want to go, whether it’s reducing staff turnover, increasing reserves or diversifying your income streams, creates focus and provides a framework for action and decision making. Measuring your progress allows you to make course corrections when necessary in order to stay on track.

By engaging in ongoing strategic financial conversations and taking disciplined actions based on the outcome of those conversations, your level of fiscal fitness will continue to improve – no matter what your starting point.

¹ 2014 State of the Nonprofit Sector: http://survey2014.nonprofitfinancefund.org/?filter=state:FL

Learn more about evaluating your nonprofit’s financial standing and 5 questions you can ask to test your organization’s financial fitness  in our Is Your Nonprofit Fiscally Fit? class with Pam Williams and Marci Moore on August 5th. 

During this class, you will:

• Learn 5 key questions that will upgrade the quality of your financial conversations and strengthen your organization’s long-term financial health
• Discuss the most effective approach for generating meaningful financial conversations around these 5 questions
• Learn how your organization compares to others around the country in key financial metrics

Click on the class name above to read the full description and register to save your seat (time is running out and seating is limited).

NLC trainers Pam Williams and Marci Moore created Nonprofit Finance Pros to help nonprofit organizations strengthen their financial capacity and successfully navigate financial transitions.