Is your NFP growing at a sustainable level? If not, what’s holding you back from achieving success? If you are like most nonprofits, you may be shortchanging your capacity to serve by spending too much of your time and donations on expanding program services and not investing enough funding on capital growth.

To build a strong, sustainable organisation that generates actual impact, you must find a way to develop both!

Lay a Strong Foundation

Donors are typically willing to fund services, and reluctant to cover core expenses, but your ability to offer programs and services is dependent upon being able to cover the costs to develop a sound organisational structure.

Make sure that the donors understand your NFP’s true costs to provide programs and services, including the indirect costs that your organisation depends on to exist. To deploy effective programs, you must first be able to cover the costs that relate to supporting your core functions, such as talent acquisition, staff development, Information Technology, strategic planning initiatives along with typical overhead costs including facilities, utilities and so forth.

Look for grants and other sources of funding that include monies to cover overhead and other indirect costs. Ask key donors to consider contributing for specific capital projects that increase your capacity to provide services. Avoid accepting funds that must be spent providing services that are not in direct alignment with your core mission and goals to avoid mission creep and stretching your organisation’s resources too thin.

Establish Operating Reserves

While you’re not “in business” to earn a profit, that doesn’t mean that your organisation can safely operate at a loss, either. Many NFPs, however, do just that, with a significant number going over their budgets by 40% or more annually. No organisation, or individual, can continue such an irresponsible financial path indefinitely.

No matter how well your nonprofit seems to be operating now, unexpected events and downturns can and will occur at some point in the future. While you want to include adequate funding for both programs and building capacity in your budgets, it’s also wise to add operating reserves in your budget. When you incorporate funding for operating reserves in your budget, it makes it easier for excess to be saved. These funds can be reinvested in your nonprofit to cover operating expenses and other costs that might threaten capital building projects in the future.

Placing a greater emphasis on increasing the strength of your organisational structure and your financial stability will also improve your ability to provide meaningful services that create genuine benefits for your service recipients. Not only will you be successful at creating an impact in the short term, but these steps will ensure that your organisation is financially secure and able to continue to meet the needs of your service community for the long-term, which is the true meaning of success!