Nonprofit Finance Fund Survey Highlights Boards and Funders

Nonprofit Finance Fund Survey Points to Boards and Funders

More than 4,000 nonprofits responded to the Nonprofit Finance Fund (NFF) survey this spring about their financial affairs and the results were incredibly disheartening. NFF President and CEO Antony Bugg-Levine called the nonprofit sector “a system increasingly under pressure and one that will crack.”

Only 43 percent of nonprofits have more than three months of cash reserves, while only 56 percent broke even at year?end. These abysmal statistics caught the attention of author and consultant Alice Korngold, who reported two important themes resulting from the NFF’s spring study that point to board engagement and community funders.

Board engagement: The NFF’s 2012 survey revealed a declining trend in board engagement. Specifically, 60 percent engaged their boards two years ago, 51 percent one year ago, and only 43 percent plan to connect with their boards in the coming year.

Community funders: As for the survey results on funders, 54 percent of nonprofits reported their funders were most likely to discuss supporting program expansion. Yet, a mere 12 percent would entertain funding on facility reserves, and only 21 percent were open to operating expense support.

Two themes converge: You can argue these themes are potentially interdependent. If nonprofits would provide the structure and culture for boards to assume their leadership role in the organization, it’s likely they would experience more success with funders.

Board members have the unique benefit of appearing quasi?objective when appealing to funders while at the same time, having exceptional knowledge of the organization they represent. Funders would be more receptive to appeals for reserves or operating funds if board members were involved in legitimizing the critical need from their perch at the top. Korngold adds, “Boards must take their roles seriously in advancing nonprofits.” Without question, a board member’s testimony alongside a senior staff member adds strength and credibility to any ask.

Korngold claims, “Funders must invest in organizational vitality and effectiveness.” While funders certainly share the responsibility in getting smarter about the importance of overhead support, nonprofits shoulder the task of working with their board to present a stronger case to funders.

Find out if you’re ready to make a stronger case to funders with your board by reviewing Indiana University Center on Philanthropy’s statistics about nonprofits’ financial acumen and Execute Now!’s recommendations for overcoming these statistics. You can also read Korngold’s list of seven action items nonprofit leaders must consider and four recommendations for nonprofits to build a case for sustainable nonprofit management.

by Erica McGeachy Crenshaw, President/CEO of Execute Now!, Inc.

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