Nonprofit Sustainability is the Responsibility of Leadership

Money in the bank does not necessarily mean that your organisation will be sustainable.

A strong sense of being mission-driven, measuring impact and sharing results is what leaders of charities and nonprofit organisations (NPOs) should strive to embed into the consciousness of everyone involved in the organisation, this is how an organisation can shift the status quo from fretting over money to creating future plans. 

Using the seven dimensions1 for nonprofit sustainability as a guideline, leaders can embrace these characteristics for determining board competencies and delegation of duties for oversight, good governance and quality performance that will ensure continuity. 

The seven dimensions encompass the following; legal good standing and compliance; organisational capacity and expertise to do the work; financial viability of the organisation; advocacy for the work undertaken that will make a difference; quality and professionalism of service provision; stable infrastructure and building of a brand that portrays a positive public image.

Nearly 122 000 entities are registered with the Department of Social Development’s Nonprofit Organisations (NPO) Directorate.  More than 80 000 NPOs are non-compliant2 with only 19 percent of NPOs financial statements and narrative reports being verified annually by the Directorate.

Does this indicate that a majority of elected or appointed board members of NPOs are blissfully unaware of their fiduciary duties and other responsibilities?

Few board members work closely with fundraisers yet financial sustainability is unquestionably the responsibility of the board. Human resource policies need to be interrogated by the board to ensure recruitment of employees remains equitable, fair and open. So-called operational matters such as these are often left to the executive and put on auto-pilot.

It is often stated by board members that projects are driven by experts ‘we leave that work to the professionals and do not interfere’, abdicating responsibilities, assuming everything is hunky-dory will not lead to sustainability.

“For nonprofits, financial sustainability and programmatic sustainability cannot be separated. It’s not enough to have a high-impact programme if there’s no effective strategy for sustaining the organisation financially. And neither is it enough to be financially stable: we build our organisations for impact, not for financial stability.”
Quote from the book ‘NonProfit Sustainability: Making Strategic Decisions for Financial Viability’, Authors: Jeanne Bell, Jan Masaoka and Steve Zimmerman.

What are the Seven Dimensions for NPO Sustainability?

  • Legal good standing and compliance; this includes not only signing off audited financial statements but making sure that all fiduciary reporting deadlines are met, that all taxes are paid to the South African Revenue Services, that issuance of Section18a receipts to donors are done correctly, that amendments and changes to constitutions, trust deeds and memorandums of incorporations are done in accordance with statutory bodies.    
  • Organisational capacity and expertise to do the work; that a clearly defined vision, mission and set goals and targets have been defined in a medium to short-term strategy. That the programmes and projects being undertaken by employees are professional and that adequate resources are in place. Dedicated staff and committed volunteers including board members have written ‘contracts’ with duties (job descriptions). Technological know-how and access to broadband is a must. 
  • Financial viability of the organisation and its programmes; a revenue plan with financial projections for at least 2-3 years should be in place and approved by the board. Such a plan will include diverse income sources and avoid reliance on a single or few streams - the plan needs to be balanced using a variety of fundraising techniques appropriate to programmes and the mission. Philanthropic gifts should be sought from individuals, trusts, foundations as well as tapping into corporate social investment as well as efforts to work with government departments.  
  • Advocacy for the work undertaken to change the world; Respond quickly to a call for action. Interact with national and local government on policy making, join issue-based coalitions and energetically participate in advocacy campaigns. Lobby for reform to social justice, influence legislation that might affect the sector such as Broad-Based Black Economic Empowerment (B-BBEE) score cards, participate in public benefit taxation laws that enable or disable the NPO sector, encourage ethical behaviour, promote values and sign codes of good conduct.  
  • Quality and professionalism of service provision; focus on the greatest needs in your community and do not proffer projects that are not necessarily going to change the status quo - you need to measure the impact being achieved and effectiveness services to beneficiaries, which will not be cut-back if there is a funding crunch. Ideally other NPOs and government departments recognise your work and beneficiaries are even prepared to pay fees for your services. You confidently demonstrate a social return on investment. 
  • Stable infrastructure and ownership of assets; ensure that there is adequate space and facilities with long-term investments such as endowment funds or a steady flow of membership fees to keep the organisation glued together. Form alliances; build strong relationships with local business and government, encourage co-optiveness and share lessons learned with other organisations and work with many to make a difference in communities or in the country. Make sure that your team members receive opportunities for upgrading their skills by attending training courses and can tap into new technology. 
  • Building the brand and public image; issue positive and regular media messages about your work, self-promote at forums, do public speaking stints and monitor public perceptions - if things do not look positive then jump into action. It is always a good idea to have a communication strategy in place for both internal and external communication. Create solid relationships with the public, local newspapers, radio stations, social networks, schools, hospitals and the police and have a dynamic website that publishes news and uplifting results.

Leadership and board members have to pull all of this together to really make a difference, change the world, eradicate poverty and demonstrate a social shift from good to great while remaining true to their Mission.

  • This article first appeared in the Downes Murray International website

Photo Courtesy: theleadershipchannel


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