I know first-hand how two non-profits have failed. Neither can blame it on the economic recession nor on bad programs. They failed because they constantly underrated the real cost of providing services to the community.
According to David Greco, Vice President of the Nonprofit Finance Fund, nonprofits should retool their thinking. Here are some tips Greco gave during a recent workshop in Phoenix:
- Nonprofits should ask funders for the real cost of providing services. Do not bring the cost of programs down.
- Have the discipline to say “No” to funders and others in the community who ask for services at steeply discounted prices. Think like a corporation as the 501-c-3 is just a tax exempt status.
- Educate funders that you are in for the long haul. Discounted services will affect your long-term growth.
- Change from being a program provider to an enterprise. Think business like.
- End the culture of funding programs. Instead, focus on the organization as an enterprise.
- Get real data and use it to highlight the good you do.
- Target growth in unrestricted income as this is your net worth. Have adequate cash in your reserves to grow your organization. Board designated reserves will add to your financial health.
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