A recent study by the Center on Philanthropy at the University of Indiana revealed a serious disconnect between what nonprofit managers think they know about finance and what they actually know. Although 75% of those surveyed considered themselves financially savvy, only 36% actually answered the basic finance questions posed correctly. Ouch!
As the philanthropic public becomes more financially sophisticated and demands verifiable performance from the charities they support, nonprofits will have to step up and become more accountable if they to garner support if they expect to survive. Gone forever are the days of public support on autopilot as well as passive private support.
This lack of financial acumen—or apparent concern—is particularly acute among midsize nonprofits who continue to struggle and have yet to recover from the immediate past recession. Half of the organizations that were surveyed in the study had less than three months’ cash reserves.
Doing “good” is good. Doing good without an equal focus on doing well financially, however, endangers not only the organizations but the purpose they serve. It’s time that nonprofits got over their aversion to engaging donors as investors. Without it, there’s very little future.
Principle 2 of The Eight Principles of Sustainable Fundraising® is Begin at the Beginning™. Develop your organization’s vision and message from the donors’ point of view first and you cannot help but build support from among those who share your core values and concerns.