Nonprofit Book Review Comparing Three Titles On Nonprofit Sustainability. “Finance Fundamentals for Nonprofits” by Woods Bowman, PhD. “Nonprofit Sustainability” by Jeanne Bell, et. al… “Building Nonprofit Capacity” by Brothers & Sherman I once asked how much I needed to raise for a particular program and the snide financial director responded “As much as possible!’ It was a smug response, when we are trying to balance and prioritize funding opportunities for eight unique programs that existed on eclipsing timelines...with limited financial resources. In the end, I created my own development plan, with internal benchmarks for success – and that plan soon evolved into the organization’s strategic plan, as more funders started to ask for one. It was ultimately responsible for a $1 million capital campaign pledge. In the previous couple of weeks, I finished reading a number of books and articles about nonprofit sustainability. I chose to review the titles above, because they represent three different but ultimately compatible approaches that bring us to the same conclusion – more or less. I can best summarize the common themes with one simple phrase: “the contentious road to long-term financial sustainability links the right financial strategy to program impact.” It’s such an obvious and important part of nonprofit sustainability and yet is rarely weaved into traditional strategic-planning models, leaving the development department to create an independent plan, with goals rarely aligned to their financial drivers. This insight is echoed in other recent titles that I have read on nonprofit strategic planning, business models and even marketing: sell your impact, not the numbers served. Sell the number of lives you have changed with testimonials and longitudinal evaluation studies. Sustainability has become the buzzword for the concept of tethering your program’s noble aspirations to the constraints of a viable business model. From a marketing and fundraising perspective, the simplest example is the familiar Donor Impact Matrix. “Your donation of $1,000 provides a month of housing and food to a homeless family of four.” However, this example is too simple. I hesitate to use it, because the subject of nonprofit financial viability is more complex. It’s not about fundraising and marketing tools. It’s about using financial strategies to make decisions about how to drive programs to produce an ultimate impact on the populations and communities served. The larger the organization, the greater the need for a formulaic approach to the problem. It’s sometimes hard to see the best path forward from the top floor boardroom of the monolithic nonprofits. It focuses more on using these tools to make tough decisions about the organization’s future strategic direction by comparing their relative financial viability to their relative program impact. The truth is…the concepts of financial analysis such as growth rates and ratio analysis are designed for those people making huge decisions about the allocation of capital. Its application to the decision-making of smaller, grassroots nonprofits is less relevant. It’s not irrelevant, but the results must be reviewed within a greater, qualitative context, built on the consensus of major stakeholders. The author of Finance Fundamentals for Nonprofits: Building Capacity and Sustainability is an economist and he writes for economists. Though he naively suggests that his book is suitable for a novice, I must demur, with respect for his due diligence and a breadth of knowledge on this topic, exceeding my own. It is a very advanced treatment of the subject – and would intimidate the novice. Each chapter dissects different types of nonprofits (service providers, cooperatives, membership organizations, etc…) and explores the financial formulas – and their fancy variations – that indicate long-term financial integrity. It is a dissertation on the subject, citing numerous economists that have also examined the economic dynamics of the nonprofit sector. It better suits financial professionals making high-level decisions for large nonprofits. Despite its academic rigor, it does provide the reader with an interesting overview of the different nonprofit models and related laws, regulation that define them. While I cannot recommend the title above to those without a strong academic background in financial analysis, I can suggest a great alternative that leads the reader down the same path to financial and programmatic success. The authors of “Nonprofit Sustainability: Making Strategic Decisions for Nonprofit Viability” take the read reader by the hand, walking through a series of practical, qualitative exercises that grades the programs and their financial, assigning the most appropriate fundraising strategies to each program directive; so that this important driver is not lost during the strategic-planning process. If you are new to the topic, and you are the leader of a community-based nonprofit, this book is painless and produces relevant insights into the best financial strategies that yield the greatest benefit to the populations and communities served. I also picked up “Building Nonprofit Capacity” by Brothers and Sherman because it examines the question of sustainability from another interesting angle, looking at the nonprofit’s place on the organizational lifecycle. I found the observations on financial sustainability through the vulnerable fledgling years especially helpful. Too often, we launch nonprofits without adequate capital – (or the champion who has the capital) - to sustain a hungry baby nonprofit through its infancy and thriving, but awkward adolescent phase. It complements the second title with its emphasis on qualitative methods and simple charts, though some of the concepts used seem contrived and too simple. However, there are enough pearls of wisdom between the pages to earn its place on the reference shelf. amazon/Nonprofit-Sustainability-Strategic-Decisions-Financial/dp/0470598298/ref=sr_1_1?s=books&ie=UTF8&qid=1375844038&sr=1-1&keywords=nonprofit+sustainability
Posted on: Wed, 07 Aug 2013 02:58:06 +0000
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