I was honored to introduce Robert Egger, founder and president of the DC Central Kitchen, at the Nonprofit CFO of the Year Award Luncheon Tuesday at the Mayflower in Washington, DC.
As I worked my way around the room at the reception at the start of the event, it was inspiring to hear discussions from CFOs at nonprofits big and small. It was striking how similar their concerns are: Will they be able to continue strategic funding of their organization’s work? What is the new revenue model in the new philanthropic normal? How do they juggle all their priorities?
Although they are rarely visible to the donating public, the CFO role is absolutely critical to the success of a high-performing nonprofit. I salute the important and essential work they do in making our organizations successful.
From our viewpoint at GuideStar as both a provider of nonprofit information and a nonprofit ourselves, we have a unique vantage point of the sector. Tens of thousands of nonprofits – and people who interact with nonprofits – come to our site every day. Nearly 25 reporters call us every week. Many of them are looking for how to find a high-performing nonprofits.
Two characteristics about high-performing nonprofits in particular are piquing people’s interest these days: sustainability and impact.
In this difficult economy, with revenues expected to decline or remain flat over the next few years, while at the same time, demand for services is increasing, nonprofits are being asked to demonstrate that they have the ability to not only hold on during these tough times but have a plan for being robust and reliable financially. After all, if you’re not strong financially, how do you expect to make a difference in addressing serious social issues?
And by the way – hope is not a business plan. All across the country nonprofits are learning how to think creatively about the diversity and strength of their revenue streams, including new ways to generate earned revenues. At my organization, GuideStar, I’m pleased to say we continue to offer over 98 percent of services at no charge to our users, while generating nearly 100% of our revenues from earned revenues. Our business plan includes a mix of renewable revenue streams from product sales and membership combined with philanthropic grants and contributions.
As an example, the DC Central Kitchen has developed one of the strongest and most innovative business models in the country. It mixes plentiful earned revenues with a creative way to employ hundreds of workers and create new careers.
I shudder when I hear politicians say that they want to run government or nonprofits like a business, because they rarely have the background to truly understand. Yesterday’s speaker knows what that means, combining the best of social activism with financial strength.
The other issue we hear about frequently at GuideStar these days is impact. With money tightening and services increasing, the public is increasingly asking the question: what is your organization trying to do and how successful are you in achieving it? So many nonprofits have wonderful charitable missions at their core but have failed to take proactive steps to measure progress and chart their impact.
What is the role of your nonprofit’s CFO?