As social sector leaders, if we are to achieve real outcomes and positive social change in our communities, we must end the culture of scarcity that has plagued the sector for decades. All of us – funders, nonprofit leaders, board members, donors, and government – need to challenge the myth that social sector organizations are not sustainable, and that their business models are fundamentally broken.
These beliefs are not reality.
Nonprofits can be profitable and they can be sustainable all while delivering real impact.
But we will not get there with the same scarcity mindset that promotes organizations spending 90 cents out of every dollar on programs – all while starving the organization and its necessary infrastructure. We will not get there is we don’t understand what it really costs to deliver outcomes. We will not get there with outdated business and revenue models.
As I recently wrote about, the world in which we are operating is undergoing some fundamental and rapid shifts. And if we want to be sustainable and deliver on mission, we can no longer adhere to a failed charity mindset that values sweat equity over profitability and starvation over sustainability. We need a new approach.
Nonprofits must bring on even greater professional talent, adopt cutting edge technology, and be even more flexible, responsive and innovative than ever before. And you don’t get there by starving your organization.
Leaders, board and staff must adopt new paradigms for carrying out their work. They must align their business models and fundraising strategies with their ability to deliver their mission and impact. They need to Think Money First!
Thinking money first means understanding what it really costs to deliver great outcomes over the long term.
It means recognizing that being a 501(c)(3) is just your tax status and not a business model;
It means accepting that nonprofits are corporations and like any corporation, nonprofits need profits to prosper and continue to deliver on mission;
It means investing in human capital, in infrastructure and capacity, in working capital, in change capital, and in long term reserve needs;
It means adapting your business model to reflect the realities of today’s social sector and focusing on delivering customer value; and
It means holding one truth central if you want to deliver on mission now and in the future:
No Money. No Mission.