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The views expressed are those of the author and do not necessarily reflect the views of ASPA as an organization.
By Mobola Owolabi
November 20, 2015
With the recent push for government organizations and agencies to become more efficient and responsive, there has also been a push for nonprofits to follow suite and become more resourceful in how they are organized and how they carry out their missions. As referenced in The Jossey-Bass Handbook of Nonprofit Leadership and Management, nonprofit organizations are progressively under more pressure from their funders, boards, clients and other stakeholders to demonstrate they are carrying out their mission effectively and proficiently. This increased pressure shows a greater demand for more efficient evaluation and oversight of the work these nonprofit organizations perform.
Many nonprofit organizations use benchmarking to measure their success, as well as analyzing the financial vitality of the organization. Benchmarks compare the organization’s practices with similar organizations in the field (who are doing exceptionally well) and measure it against the organization’s work. These benchmarks can help a nonprofit assess their current and past strategies and identify new opportunities for growth.
Using financial information to measure the health and success of a nonprofit is done to ensure the organization is financially efficient and spending less than what they raise for their programs or services. Financial information can also show whether an organization can sustain its programs or services in the long run and if they can adapt well to change. Nonprofits that can demonstrate financial stability and flexibility often experience consistent growth and can often pursue long-term goals rather than relying on short-term efforts to raise revenue. By implementing long-term goals, these organizations can hone in on what programs or services are critical to their mission and focus on how to make the most of their available resources and finances.
The merits for using financial information to gauge the success of a nonprofit are not necessarily the best methods for measuring the performance, health or stability of these organizations. Nonprofits are typically client- or user-based, so looking at their finances is different from looking at the finances of a for-profit company. That said, analyzing a nonprofit’s financial effectiveness can illustrate how well they manage their assets on a daily basis.
As demonstrated in Dana Hall: Funding a Mission, many nonprofits can be stable and perform their mission with relatively low funds. While they may/may not be successful in the long run, nonprofits can stay afloat by implementing fundraising efforts, reaching out to donors, offering new programs or services and/or creating innovative goals that will help them generate revenue. While many of these objectives are short-term goals, they can help push these organizations in the right direction and help them begin a strategic planning process that can result in long-term financial stability.
Although financial information can assist with determining the stability of a nonprofit, it is not the only factor that should be examined. The Jossey-Bass Handbook of Nonprofit Leadership and Management showcases the ways in which external stakeholders are extremely important in determining an organization’s survival and growth. The Handbook mentions that one of the best indicators of effectiveness is showing how successful the organization is at attracting external stakeholders and determining how stakeholders view the organization. Innovation and adapting to change should also be metrics that are considered when gauging a nonprofit’s success. Economic climates change, leadership changes and if an organization is able to withstand some of these changes and still successfully carry out its mission that says a lot.
Although funding is constantly changing, the demand to seek new opportunities often puts stress on employees. With the mounting strain of financial stability, having a collective bargaining unit can help ease some of the pressure placed on employees. How? When people think of collective bargaining, they typically think of for-profit companies, unions and negotiations. While most nonprofits do not require the backing or support of a union, collective bargaining is something nonprofits should start to consider for the future of their organizations.
While it may seem unnecessary, having a voice for employees can assist with the stress and long hours that are associated with working in the nonprofit sector. Collective bargaining can provide employees with input on how the organization’s finances and budget constraints will affect their work lives and work-life balance. A collective bargaining unit can include mutually agreed provisions on how employees and management will deal with finances year-by-year, work-life balance issues, competitive salaries, benefits and much more.
There is a major intersection between the nonprofit sector and public policy/administration. In order to keep highly qualified and motivated individuals interested in nonprofit work, collective bargaining is something more nonprofit organizations or professionals should start considering.
Author: Mobola Owolabi is currently a senior project manager for the Center of Hospital Innovation and Improvement in Philadelphia, Pennsylvania. She specializes in various policy and quality improvement projects. Ms. Owolabi holds a bachelor’s degree in organizational communication from Old Dominion University and a Master of Science in Public Policy from Drexel University. Email: [email protected].