Nonprofit Sustainability

I woke up this morning to sad news: After helping people for 122 years,  Hull House in Chicago will close today.  It was the model for settlement houses and public services worldwide.  As the article notes, the decision to shift the revenue stream focus from private to public dollars proved to be a costly mistake – not just for the employees, but more importantly, for all of the individuals that Hull House helped and all the future individuals that they would have helped.  This is a great – and saddening – example of the importance of maintaing diversified funding streams.  I know it is very difficult for nonprofits in times of economic stress, where the need for their services increases while the resources to provide those services decrease, but this is the reason why leaders in every nonprofit organization need to think long term.  This includes figuring out how the organization can make a profit in order to put money aside for these times.  However, making a profit by securing unrestricted funds is always easier said than done, but it does not diminish its importance in any way.

Nonprofits need to do more than engage in strategic planning.  They need to think strategically.  There are two bottom lines for nonprofits: the mission and financial.  Hull House has done an excellent job with focusing on the mission.  However, its closing notes that this was done at the expense of the financial bottom line.  A great book that nonprofit leaders should read is Nonprofit Sustainability: Making Strategic Decisions for Nonprofit Sustainability by Bell, Masaoka, and Zimmerman.  It is a quick read but filled with useful information on how to move an organization toward financial sustainability.  This is the first book I have my UNF graduate students (MPA students and the Graduate Nonprofit Certificate students) read in the Nonprofit Financial Management course, and I have received great feedback from them about the book.  The matrix map also provides a useful tool to visualize the activities that a nonprofit engages in and how they relate to the organization’s finances, and assists leaders in their decision making when it comes to finances and programs.

The closure of Hull House is a sad day for all those involved.

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