This week I attended the Georgia Center for Nonprofits’ joint presentation with Bank of America on Linking Mission to Money. Allen Proctor, a consultant who has a book with the same title, was the presenter. To a room full of nonprofit staffers, board members and others, he assured everyone that losing money on a key mission activity was OK for a nonprofit to do, as long as there was money made overall.
He gave interesting examples of organizations that are doing this well and encouraged nonprofits to think creatively about how they could remain true to their mission while counteracting financial loss in that area with gain in another. Goodwill makes millions of dollars each year in revenue from their stores, yet they see their key mission as job training and employment readiness for the disadvantaged, a mission that will lose money every time.
Here are a few tips that he mentioned that will benefit the financial health of nonprofits:
- There have been no decades without a recession. Set aside reserves in good times because the organization will need them when things get tighter.
- Educate your donors about what happens to the business side and the mission side of your organization when the economy shrinks.
- Decline grants that will make you lose money.
- Compete with for-profits whenever possible. Proctor mentioned an AIDS clinic with a commercial pharmacy in direct competition with the Walgreens and CVS in their town, and a Meals on Wheels kitchen that operated as a corporate caterer in the afternoons and evenings.
- Merge with a similar organization in a neighboring place. Collaborate. Reduce costs from each organization while increasing service.