Beyond subsistence: 8 basic business principles for nonprofit sustainability (Part 2)

You’ve had a couple of days to mull over the first four principles of nonprofit sustainability ala an article in the Fall/Winter 2011 issue of The Nonprofit Quarterly. (If you missed the post to which I’m referring, you can find it here.) Now it’s on to another set of pointers for heading your organization in the direction of a more robust fiscal future.

As authors Kate Barr and Jeanne Bell remind us, “there’s a world of difference between financial management and financial leadership.”  The one (management) focuses on data, reports, and near-term issues. The other (leadership) is about analysis, interpretation, and long-term expectations.

No need to  guess about which of the possible approaches to organizational finances leads in the direction of exceptional mission impact and sustained fiscal health.  Barr and Bell are clear. Leadership is the way to go and includes giving attention to the following principles (along with the previous four).

4 MORE OF 8 PRINCIPLES FOR NONPROFIT SUSTAINABILITY

• Rethink restricted funds. Barr and Bell write that the issue “is not whether a grant is restricted, but what it is restricted to.” As I tell client all the time, the annual budget is nothing more than a lengthy list of projects. We simply need eyes to see in new ways what’s been right there in front of us all along.  
• Staff your finance function appropriately. The good news is there’s no need to staff for full coverage of all that a quality finance office should provide. There’s a wealth of free-lance expertise available these days, which makes pairing in-house personnel with contracted help an easy option.
• Provide the board with the “right” financial information. Rather than throwing everything but the proverbial kitchen sink at the board, Barr and Bell remind that “form should follow function” in deciding what information board members need. At the end of the day, analysis and interpretation trump numbers every time when good governance is the goal.
• Manage risks. You know the drill. If anything can go wrong, it will – but not in the same way within every organization. It’s important that you check your organization’s risk factors holistically, deciding which will come as a kick to the shin and which have the potential power of a knock-out punch.

So there you have them —  four more principles of financial leadership (building on the four from an earlier post). Give yourself a pat on the back for what you’re doing well. Give yourself a kick in the pants where you need to improve. And give yourself a break if you can’t accomplish everything within the next few months.

Mission fulfillment with economic vitality is an ongoing , always in process, process.