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Delaware Nonprofits: Endless Discoveries
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DANA's new President and CEO Sheila Bravo reflects on her discovery of DANA and the nonprofit sector in Delaware.

 

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Sustainability begins with changing Paradigms

Posted By Sheila Bravo, Friday, April 8, 2016

In my travels I have had some robust discussion around the concept of treating nonprofits as businesses rather than nonprofits. There are some who are adamant that they are very different, and to assume similarities can be detrimental to the health and vitality of their mission. Others argue that customer service, operational efficiency, financial management, human resource management, and planning are no different, and therefore to not apply good business practices is a detriment to the vitality of the their organization.

Here is one way to look at it: The difference between a for-profit vs. a nonprofit entity is that one has individuals who profit from the efforts of the entity’s work, while the other takes that profit and plows it back into the entity for investment in future works.  Well, that is the theory anyway. The setback is that somewhere along the line it became social perception that nonprofits should not make a profit. This zero bottom line mentality means there is NO money left, and therefore no way to plow funds back into the entity for reinvestment. It sets up an automatic non-sustainable future.   

It is time to change our paradigm about nonprofits and their profitability. The community created nonprofits to benefit the community. For that benefit to last, the community should pay for what it takes to serve today, and for innovation for tomorrow.  This is not a handout, but rather an investment in our community well-being. This social sector is a robust industry comprised of over 1200 entities that generate over $3 billion in revenue1,  and nearly $2 billion in payroll2 here in Delaware. Their services care for those in need, give us access to art and history, educate us to get jobs, and care for our health. The fact that profits from this social industry are not going to a few individuals, but benefiting the whole community, is a pretty incredible societal payback.  

We, as nonprofit leaders must tell this story; that the cost of benefit includes reinvestment in that benefit. This can include reserves for maintenance and IT upgrades, allocation for talent development and marketing, and funds for future innovation. Nonprofit stakeholders need to understand what it takes to benefit our neighborhoods for today as well as the future, so they have the opportunity to make that investment for the quality of life in Delaware. Not telling that story perpetuates the perception that giving should only be for direct costs expended today, thus slowly starving the very engine that is designed to make living in Delaware great.

So how can you tell that story?  First, Board Members and Executive Directors need the right systems to track and monitor the organization. Then, it is having meaningful reports and projections to understand how the organization is currently sustained.  And finally, it is determining what is needed for your nonprofit to be sustainable in the future. That is a lot to know, and if your leadership is not up to speed on how to do this, there are resources available. Perhaps a business partner or local accounting firm can offer some time to coach your leadership on how to read financial statements, and offer tips on how to determine long-term viability. DANA members can access financial training webinars developed by Boston’s Nonprofit Finance Fund at a reduced rate. And next Friday, DANA is hosting the Nonprofit Finance Fund for two workshops: the first on understanding the basics of nonprofit finances, and the second workshop will be on financial sustainability. This is an excellent opportunity to hear from the experts and receive very helpful examples of how to financially sustain your nonprofit organization. 

The community wants nonprofits to be sustainable and successful. Their ability to do so requires understanding the story on what is needed for that community benefit to prosper. Nonprofit leaders can make that happen with good financial reporting and a plan for sustainability, so your mission can remain a vital component of our neighborhoods today and in the future.  

- Sheila


1Urban Institute for Charitable Statistics, sub-industry charitable entities, 2013  2Bureau for Labor Statistics, segment of nonprofit sector, 2012 

Tags:  Board Member  Board of Directors  Nonprofit Finance Fund  nonprofits  sustainability 

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Seasons

Posted By Sheila Bravo, Tuesday, October 27, 2015

Last week I was driving to Newark to visit a nonprofit and I could not help but admire the colorful array of fall foliage as I drove down the highway.  Each tree, each leaf was uniquely colored. Against the bright, sunny sky, the palette was brilliant.  I began to reflect on the seasons, and how the visual environmental changes give clear signs that something different is going to happen.  There are some signals in the nonprofit environment that we are seeing that change is happening for us as well. After surviving a very difficult recession, it seems the funding landscape is changing again with concerns over corporate foundation giving, government funding, and even individual philanthropy.  

The recent forum that the Delaware Revenue Solutions Working Group held (of which DANA is a partner) brought together members of the government who lead the Delaware state budget discussion.  We listened to them talk about their limited resources and all the challenges that come with balancing a budget.   Nonprofit leaders have had that challenge for years!  In fact, it seems that our organizations are being asked to serve more people with less funding annually.  Potential cuts in government funding is concerning.  In a recent survey by the Nonprofit Finance Fund, 67% of Delaware nonprofits reported that they work to deliver services to the community through state grants and contracts.   And over 77% of people who took the survey indicate that demand for services is increasing.  

There is uncertainty in the economic landscape too, which influences the work of nonprofits. This weekend’s News Journal article, featuring DuPont and its leadership change, describes how nonprofits and communities are impacted when cities lose their companies. Yet, today’s announcement of JP Morgan Chase’s investment in Delaware – projecting an additional 1,800 employees in the next several years – shows signs of hope.  A strong workforce and vibrant companies are important elements to nonprofit health.  Nationally, individual giving contributes 72% of all dollars to nonprofits, with corporations & private foundations give less than 10% overall.   Here in Delaware, we have greatly benefitted from the generosity of our corporate philanthropists.  However, in the past decade we have seen a loss of funding as corporations move away, or consolidate their giving to regional offices. The competition for dollars has gone up with a large pool of nonprofits reaching for the same regional pockets. In the meantime, individual philanthropy in Delaware is not at pace with national trends.  Though the average Delaware household income is 12% above the national average, giving per household is 15% below the national average.  

Did you know: DANA's next training is coming up soon! "Breaking the Starvation Cycle" will explain the U.S. Office of Management and Budget Uniform Guidance on Indirect Costs. Whether your nonprofit receives federal money through grants and contracts directly, or even if it is a pass-through in state and local grants, the OMB Uniform Guidance that went into effect on December 26, 2014 applies to you! This is a DON'T MISS opportunity! Join us on Wednesday, November 4 in Wilmington, Thursday, November 5 in Dover, or Friday, November 6 in Georgetown. 

So what is a nonprofit leader to do?  First, recognize that your challenges are not unique.  And neither are Delaware’s.  Many other states and communities have experienced these challenges as corporations leave for international opportunities, or governments restructure their grants & contracts.  We can learn from the work that other state nonprofits and nonprofit councils have done to hold, if not grow, funding opportunities for nonprofits. 

How did they do it? They came together; they became a unified voice.  And that is our opportunity.  The change in the philanthropic landscape should be a chance for us to talk about the benefits of nonprofits to Delawareans, and then ask them to give.  It is a chance to have productive conversations with our government officials on funding solutions instead of expense-cutting tactics.  And, it is an opportunity for nonprofits to look to each other to see how we can work together to serve clients, patrons, and guests better and more efficiently. 

The funding season is changing again.  But one thing I know from the many nonprofit leaders who have weathered prior funding challenges is WE need to be the change.  We need to change the model. And only together can we make that happen.

-Sheila

Tags:  Delaware  DuPont  funding  government  JP Morgan Chase  Nonprofit Finance Fund  nonprofits 

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