Some Fresh Thinking
It may be a coincidence, but on the heels of Lucy Bernholz’s thoughtful piece, It’s not a recession, it’s a restructuring, there has been a lot of discussion about the relationship between nonprofits and money. From unpacking the complexities of nonprofit funding to re-framing the idea of financial markets to everything in between.
Nonprofit Funding: It’s Not One Size Fits All
Ten Nonprofit Funding Models: A Proposed Lexicon
Social Standford Innovation Review points out one of the reasons that nonprofit financial models are more complex than for-profit ones:
When a for-profit business finds a way to create value for a customer, it has generally found its source of revenue; the customer pays for the value. With rare exceptions, that is not true in the nonprofit sector. When a nonprofit finds a way to create value for a beneficiary (for example, integrating a prisoner back into society or saving an endangered species), it has not identified its economic engine. That is a separate step.
The article, Ten Nonprofit Funding Models from the goes on to identify different models, arranged by the dominant type of funder – individuals and/or foundations, government, corporations, and a funding mix.
So, What’s the Best Model for My Organization?
When trying to figure out your organization’s funding mix, it’s important to remember that there is no one right answer. Blue Avocado elaborates in Just Tell Me: What’s the Best Way to Raise Money? Choosing the Right Revenue Strategy:
The decisions you make about your revenue strategy – that is, who should be supporting your work and how to go about soliciting that support – should be based not only on who is most likely to give you money or pay for your services, but what makes the most sense in terms of who you are, what kind of change you’re trying to make in your community and how your funding sources can help you get there.
And Is Profit Important?
Not-For-Profit Accounting addresses a frequently asked question, Why Nonprofits Have Profit
In order for an organization to do its work and carry out its mission on an ongoing basis it must generate more income than the expenses it incurs. It must make a profit. Any organization, either a for-profit or a nonprofit, that does not take in more money than it spends will fail in the end.
Fresh from the Farmer’s Market: This Week’s Harvest
- A Social Solution, Without Going the Nonprofit Route from the New York Times
- Increasing Service Opportunities Would Revive Nonprofit Finances, Report Says from the Chronicle of Philanthropy
- Academic Endowments: The Curse of Hoarded Treasure from Business Week