For a nonprofit to be sustainable, there must be the appropriate balance between mission and money. Almost all nonprofits focus extensively on mission, it's less common for a nonprofit to focus on money and on the balance between the two.
Let's look at the keys to a sustainable nonprofit.
Strong mission: From a sustainability perspective, having a strong mission means being one of the key providers of program and services in your community that people need, want and value; measuring the outcome of these programs and services; and using these results to “sell” your programs and your organization to your funders.
Secure funding sources: A sustainable nonprofit should have diversified funding sources and not be overly reliant on a single funder. Ideally, this means multiple types of funding. It's okay to have a single program focus as long as multiple funding sources are available to support this program. It’s not okay to be reliant on a single program and single funder.
Operate like a business: A sustainable nonprofit will be operated like a business and have appropriate management controls, policies and procedures, metrics, and management and staff accountability.
Focus on the numbers: In a sustainable nonprofit, the financial review will go well beyond a quick look at the budget. Senior management and board members will be well-versed in finance and will be actively involved in reviewing and projecting the financial operations of the organization.
Surplus: Rather than focusing on merely balancing the budget each year, a sustainable nonprofit will plan for and actually generate a surplus each year. This surplus can provide cash reserves and a rainy day fund when things go wrong, and can be a source of funds to grow the organization.
Contingency plan: A sustainable nonprofit actively plans for the future including looking at the biggest threats to the organization and planning for those threats. When bad things happen, the organization already has thought about these events and has a plan in place.
Once you understand what it takes to be sustainable, you'll be in a better position to prepare your nonprofit for survival. It’s never too soon to evaluate the sustainability of your organization.