Never let your bookkeeper tell you if your nonprofit has had a good month or a bad month. That’s because they are basing performance based on spending deficits or operating fund surpluses. But is that the definition of success or excellence in the nonprofit?
Certainly, we need adequate funding to support the mission. Just like for-profit organizations, not all costs are equal. Some are:
- wasteful
- duplicative
- excessive
- deadwood (as in certain staff members)
If there is a shortage of donations and if costs need to be pared back, that’s a different conversation. If so, what defines a nonprofit’s good month or bad month?
What Is a Nonprofit Good Month?
I’d love to hear your answer. If you are not sure how to respond, let’s start with four questions:
- About how many people are we serving and impacting?
- How does that compare to the recent past?
- Will this number go up or down over the next year? (I love this question because the answer is always, “It depends.”)
- If our funding were cut in half, how many people could we still be serving holistically?
Those four questions determine whether we have a good month or another time period we are measuring. Accordingly, the financial narrative should never be the lead on whether we have a good or a bad month. Acting on and performing the mission determines that.
We Still Address Financial Matters in the Nonprofit
We can agree that financing the mission and managing and monitoring the nonprofit’s financial affairs are critical, but they’re still not the main thing. But in financial meetings in the future, the conversation should shift to the following:
- Are our financial resources adequate to support the mission today? This is forward thinking.
- Will we have the financial resources to further the mission, especially as we expand our reach? This is forward thinking.
I’m a forever student of the nonprofit world, and I continue to learn more about these organizations every day. No matter what, I will always keep the mission front of mind.
