How Healthy is Your Nonprofit?
It’s time for your next nonprofit board meeting. Are you feeling anticipation? Excited? Anxious? Dreadful? Hopeful? I’ve felt all of those, sometimes more deeply than others. It accompanied board service as a volunteer and running a nonprofit as paid staff for decades. What typically mattered was my time being well-utilized, and if I could contribute to needed change. Was the nonprofit impactful, effective, efficient, future-oriented, and sustainable? In other words, was the nonprofit healthy?
We see doctors for annual wellness checks or participate in corporate wellness programs. They emphasize a preventative attitude and a periodic check on our health and wellbeing. Likewise, your organizations must understand their status, environment, vulnerability, and of course the tried-and-true SWOT (Strengths, Weaknesses, Opportunities, and Threats) analysis. However, there’s much more about which to be concerned if nonprofits want to “stay well.”
Successful organizations understand the days of limping along, doing what we’ve always done, and treading water until the next big fundraiser just isn’t going to work, at least for long. In fact, in the words of Will Rogers, “Even if you’re on the right track you’ll get run over if you just sit there.” Never has it been more important for leaders to take stock of the health of your organization and take prescriptive and proactive measures to right the course.
I developed a Nonprofit Health Index (NHI) that I encourage organizations to utilize and help them get a broad overview of the health of their organization. The quick 20 questions derived from my experiences will help determine if an organization is on track and utilizing best practices in the industry. Using the personal health analogy, think of it as a CBC (Complete Blood Count) lab test that reviews your overall health. The NHI provides a snapshot in time of basic nonprofit expectations that should be foundational to your nonprofit.
The index is one measurement, there are other ways to help assess the organization with an informal “organizational health audit.” During that process I recommend that you conduct an informal analysis and review your organization’s performance by rating these four key areas with a maximum score of 25 points each.
HR Utilization and Satisfaction
Human resources in nonprofits deal with more than staff. It includes your volunteers of which your board is an important subset, constantly take their pulse.
Today more than ever volunteers need to be valued and understood. Depending on the generation, they may want quick-hit projects and short-term assignments or longer-term commitments and relationship-building opportunities. The ability to assess, adapt, and prioritize their needs and involvement level is paramount.
Are you providing basics like policies, job descriptions, evaluations, satisfaction, orientation, recruitment, etc? Most volunteers for your organization come from environments where these practices are commonplace. Your provision of them is bound to make their involvement a bit less stressful. Not only will it impact their experience, but it will also shed a light on the perceived health of the organization.
Efficient & Effective Operations
As Peter Drucker said, “Efficiency is doing the thing right. Effectiveness is doing the right thing.” A healthy organization is both efficient and effective. It all begins with a strong mission, vision, core values, and case statement. A future-oriented board, sufficient technology, adequate plant and equipment, active planning for business continuity, board-driven strategy, and policy-driven decision making will all contribute to a healthy outcome. How does your operational checkup rate?
Well-Managed and Reported Finances
Transparency and sustainability are at the pinnacle of organizational wellness but can present some challenging goals for nonprofits of all sizes. As an example, they may require a new perspective for organizations that rely heavily on special events, requiring the ability to turn on a dime when operating in environments like the pandemic. Diversification of the funding base is certainly desirable among grants, revenues, sponsorships, and donations. Relationships are key but challenging for some since it hinges on a strong development program.
While the development of funding is imperative, so is its reporting. Donors, funders, prospective supporters (and the IRS) need to know that your finances are in order, hence the 990. How do you carry that focus to your budgeting, board reporting, and shared public reports? Are you getting financial points here?
Let’s face it, the nonprofit sector continues to see explosive growth, which ultimately means more competition for the donor dollar. Your programming needs to do more than just exist, it needs to thrive and be transformational in what it offers. Change people’s lives, ensure that more pets are adopted, and provide experiences that leave attendees wanting more. Are you helping drive those goals? Be the best at making a difference, don’t just say you are. You’ll grow excitement with the former and end up on life support with the latter.
Only stage special events that provide a significant ROI, build a database, or raise awareness if that’s your area of need. Events are time consuming and be sure you include opportunity costs in your analysis.
Now that we’ve reviewed these healthy indicators how did you rate? If you scored above 90, you’re in the healthy organization category, 80-89 you’re in good health but could use some improvement, 60-79 you need to make some significant changes, <60 your organization needs some intensive care.
David J. Fry, CDT, MPS is President/CEO of Effective Advancement Strategies in Greensburg and consults with businesses and nonprofits throughout Indiana. He may be contacted at firstname.lastname@example.org