If you have not noticed, we are living with a new normal where information, technology, chaos and innovation are disrupting and supplanting the status quo. In the non-profit sector, I continue to find that many organizations are still not facing reality, but social entrepreneurs, leading non-profit organizations and businesses are having tough conversations and moving things in wholly new directions. One of those tough conversations revolves around money.
What is it about money that prevents some people and organizations from having an honest discussion? The fact of the matter is that money is an absolute necessity for families and also businesses. Families need money in order to obtain housing, food and have essentials met and non-profit or for-profit businesses require money in order to produce goods and services, operate or meet their respective missions.
Non-profits should understand that if they do not make money a key topic of conversation, the organization will likely struggle for every small victory rather than thrive in order to make a measurable difference toward their mission and goals.
Many non-profits that do not talk much about money are missing an opportunity because money provides the following:
- Money is measurable – Profit and loss statements, balance sheets or the amount of money in a bank account or credit line are all measurable tools. Numbers are black and white and there are no ways to shade what numbers mean.
- Money marks engagement – Money means that you have engaged someone. If someone is willing to spend money on a company’s product or services or donate to a particular cause, the organization has motivated this individual mentally or emotionally.
- Money expands capacity – Professionals in the non-profit industry have heard of the “non-profit starvation cycle”. This essentially means that donors prefer to give all of their funding to programs and no dollars toward operational costs. This would not be acceptable by investors in business. Every business requires operating money and there is a movement afoot in the non-profit sector to end the starvation cycle. All of this is essential to invest in and expand capacity.
When I was in the shoe business, it was very clear and apparent to me on a daily basis that wherever I worked, the company had to make money and we had to sell shoes. We needed the money in order to finance research and development, for payroll, marketing and new business.
When I left the shoe business and became a social entrepreneur, I never forgot the lesson that the issue of money was something I had to keep top of mind. It is a mentality that I wish more non-profits would manage to obtain. I still travel and hear the same old thinking about how they must do more with less.
- “Non-profits can’t be managed like for-profit companies”.
Yes, they can to a great extent, especially when it revolves around money and resources.
- “People don’t have much to give”.
Yes, they do. I have found that many non-profits are often too timid to ask and when they do, they don’t ask their most loyal supporters for amounts they could easily donate.
- “If we make too much money, then people will think we’re in it just for the money”.
No, they won’t if you communicate effectively and clearly. People want to be part of a winning team and if you are making a measurable impact, growing and thriving, people will want to support the organization and do more for it.
But first, non-profits need to be able to talk candidly about money, what is needed and what it can do.