5 Keys to Making Your School or Nonprofit Organization Financially Sustainable

Posted by Don Carmichael on 3/6/17 5:30 AM

Do you ever find that there’s too much month left at the end of your money?

If you’re a board member or key executive with your school or nonprofit organization, have you ever looked at your annual budget and asked the question, “How in the world are we going cover THIS?”

It takes a lot of money to run a private school or a nonprofit organization.  If you’re like most leaders in these organizations, you’ve almost certainly felt the angst and distress of funding your budget month-to-month.  And I bet you’ve had the thought of: “There must be a better way…”

There is good news – there are better ways!

In the vast majority of cases, private schools and nonprofit organizations have the opportunity to grow beyond survival to becoming financially sustainable.  The problem usually isn’t a lack of finances, but a lack of knowledge; financial pressure is almost always a symptom, not the problem.

financially sustainable organization 

Becoming Financially Sustainable – Yes You Can!

In my fundraising work with several thousand private Christian schools, Christian ministries and a variety of nonprofit organizations, I’ve observed that the vast majority of these organizations that struggle financially are in that position because they have no clear plan.  The problem isn’t a lack of money; the problem is a lack of knowledge and smart planning.

So here are five tips to help your organization become financially sustainable:

 

Tip #1:  Have a Plan.

Ninety-percent of all organizations we’ve served only focus on the next 12 months of meeting their budgets.  Study other organizations that are successful in your field.  Learn the best practices that they've adopted and build those practices into your own organization.  At the very least, you need a three-year master plan that defines your mission, direction and funding strategy.

 

Tip #2:   Strengthen Your Current Donor Relationships.

Identify your current donors and place them into three categories based on their total giving amounts. Your top 20% of donors normally provide 80% of your funding, so treat this category with the highest personal attention.  For your other two segments (the next 30% category and the bottom 50% category), use more broad communication tools such as e-mail and newsletters.

 

Tip #3:  Create an Ongoing Method for Adding New Donors.

New donors are the lifeblood of every nonprofit.  If you are going to be financially sustainable long-term, you must have a clear process of bringing in new donors.  How do you accomplish this?  The most effective two methods of adding new donors are: 

  • Having your donors set up meetings for you with some of their contacts 
  • Conducting an annual personal-sponsor based fundraising event where your support base raises money through their individual friends and family networks. Think of a walkathon-type event where money is raised through personal relationships.  Relationships trump cause in donor motivation.  Conducting an annual event where your participants raise money through their unique relationships creates an annual pipeline of new donors – typically adding around 200 – 300 new donors per event.  How would just 100 new donors change your financial picture?

 

Tip #4:  Build Financial Partnerships with Local Businesses. 

Use key visibility events and fundraising events as point-of-entry opportunities to bring local businesses into a corporate sponsorship relationship.  Once you’ve secured a corporate sponsorship, design a monthly plan to serve your new corporate sponsors, adding value by promoting them in a variety of ways throughout the year.  After a relationship is established, ask if they would become a monthly financial partner.  Instead of giving just $500 a year as a corporate sponsor, your goal would be to convert that into a financial stream of $500 per month.

  

Tip #5:  Explore Creative Alternative Monthly Income Streams.

Most nonprofits are dependent on funding their budgets through direct donations.  Depending on the type of organization, additional revenue streams may include fees for services, tuition and grants, but the most creative organizations often become some of the most successful.  One great example of creative revenue generation would be opening a thrift store. A well run, donation based thrift store has been known to generate upwards of $100,000 per month!

 alternative income streams

 

You Can Move From Surviving to Thriving

If your organization is struggling financially, remember that this is most likely the result of a lack of strategy.  Look for people or organizations that have expertise in the areas you need help and learn from them.  In the process, you will build not only a more financially sustainable organization but also a more effective and healthy organization that will accomplish your mission at a much higher level.

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Topics: events, strategy