A nonprofit is a business! Every nonprofit needs to run like a business in order to be successful. A nonprofit organization is just the flip of a for-profit business. Whereas a for-profit engages in a set of activities in order to make money, a nonprofit organization takes money in order to engage in a set of activities. Notice that both need money and both run activities – it’s just the order that is different.
As a nonprofit, in order to survive you must have money. You might think that you just need to fundraise, but that is not the ideal way to run an organization. We want to create a model of a self-sustaining nonprofit where you use your assets and leverage them to bring in money outside of flat donations dependent on the kindness of others.
As the manager of a nonprofit, you must look at this as running a business and take a salary. If not, there is no one who will dedicate themselves and put in the time to making this set of activities work and bring this idea to the public.
So how do you create a self-sustaining nonprofit?
Mark has a vision for a nonprofit that provides therapeutic resources. He understands that this means he is going to have to do a lot of fundraising as therapeutic services are a constant drain on money – paying for therapy, referral agents and the like. Mark is totally stuck. Just the idea of how much money he will need to raise is paralyzing him.
Mark doesn’t realize that there is more than one way to create such an enterprise, and they do not all include endless fundraising.
Let’s begin with taking a step back and a look at Mark’s goal. What does he want this organization to achieve?
What is he hoping to bring to the world?
When Mark looks deeper, he sees that what he really wants to do is support people on their journey towards mental and emotional health and help them pay for healing services. Paying for their therapy is only one piece of this, and when explored with an out-of-the-box paradigm, (and a good consultant), Mark was able to begin finding ways to achieve his dream without tons of cash on hand.
Here are some of the ideas Mark and I came up with:
- Mark can run one-day seminars where there are speakers and group support sessions. The speakers can either be volunteers or sponsored one-to-one. The venue can also be paid for by donors or it can be rented by using attendee fees.
- Mark can charge group memberships. Members can benefit from anonymous group teleconferences where they can support each other.
So far Mark has spent no money at all, but nevertheless, has yet to reach his dream where he will help subsidize therapy for those in need.
Returning to our out-of-the-box paradigm, we can apply the One Child Matters strategy, where donors are matched one-to-one with those in need. Mark could match anonymous true stories to donors who want to help specific people on their journey towards health. In this way, there is no financial drain as he isn’t paying for therapy until he finds a direct sponsor.
However, we cannot forget that every nonprofit manager must take a salary. With Mark’s setup of activities, how can he take a salary?
All money coming in is going directly to fund the activities. If Mark tries to run this organization in his spare time, it will not turn into the dream he has for it. If he wants his vision to really materialize, he will have to really dedicate himself and quit his current day job. Since this is necessary to the survival of the organization, the simplest option is to take off a percentage of all money that comes in as direct sponsorships (and be transparent about it).
And there you have it: A fully functional nonprofit, with a salaried director – and no intense or ongoing fundraising activities.
How can you apply this paradigm to your Jewish organization?
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Estie Rand is an internationally acclaimed lecturer and business consultant specializing in helping small business owners and nonprofits bring in more money with less headache. She can be reached at estie@strandconsulting.net for all your business and nonprofit related questions in areas of marketing, profitability, growth strategies and more.
