The sustainable nonprofit is a myth

I used to work in state government, and for years the long standing notion was, “You don’t get paid as much here as the private sector, but the benefits are great and you’ll have great job security.”

Until the benefits weren’t so great anymore (namely health insurance) and the job security went out the window when not once, but twice, in a 10-year span the Legislature tinkered with funding and budgets were slashed so deep layoffs were swift and unforgiving.

So when nonprofits think about how to be sustainable, let’s get one thing clear: you’re never truly sustainable. No one and no organization is. You’re better off thinking about being “insured for success”.

For our part, our clients tend to live off of one of three main funding mechanisms:

  1. fMemberships
  2. Individual donors
  3. Large donors (plus a handful smaller ones)

Except the only way to make individual donations work is to be at a huge scale (think political donations). This usually means a huge geographic area or a huge pre-existing presence. You’re not likely to bring in $100,000 a year on $10 donations at a time. It’s not impossible, but it doesn’t seem like a good place to start.

So that leaves memberships and large donors as the go-to for most nonprofits. Sure, there are other ways, like state funding, but that’s effectively the same as “large donors”.

Large donors leave you in a perilous state where the government, foundation, or funder pumping money into your organization suddenly pulls out. That’s a disaster and a terrible situation that should have been avoided and planned for from the beginning. It’s the nonprofit equivalent of having a grandmother that constantly spoils you. Right up until she dies.

So what’s a nonprofit to do? Memberships are an interesting strategy, and it’s one that answers a lot of qualms some people have about nonprofits.

For one, memberships work best in associations or groups of like-professionals. But you can think of memberships as “ongoing donations”, but more lucrative than a single individual $10 donation.

It’s a mix of individual donations and large donations, and it puts nonprofits in a position to say, “We’re operating more like a business.” For some, that’s cool. For others, not so much. Your mileage may vary.

But what does a person get for their membership?

This is where you can get creative. Imagine you’re an organization promoting adult literacy. What about having a book club and, for some groups, maybe inviting your recent graduates with other members? Or, just have a general book club meeting for the heck of it to build relationships with others in the community.

But what if you’re something more specific, like a child-focused group, or take an example of an organization that donates clothes.

Sticking with our clothing donations, what about a fashion-magazine style series of posts that makes people feel good about getting donated clothes? That can be placed on a drip-feed system where all posts become freely available eventually, but new posts sit behind a paywall for would-be donors to get in on the early season styles.

We’re believers in promoting organizations and work through a long-term series of publication-quality posts and stories. There’s more to promoting your organization than just standard business cards and ad placements in newspapers.

Because to insure yourself against future funding failures, particularly from large donors or government funding, you’ll be glad you have a backup revenue stream to float you in the lean times.

About the author

Justin Harter

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