What Nonprofits Can Learn From Corporations
– by Madhavi Muralidharan
While so many large corporations rake in consumers’ money and grow larger every day, it seems unfair that thousands of even the most well-intentioned and passionate nonprofit organizations often struggle with financial and organizational sustainability. The eternal question of whether man is intrinsically altruistic or selfish aside, how do growing nonprofits deal with the fact that selling donors an opportunity to be compassionate is not always as easy as selling customers a trendy new product? And how do so many nonprofits with small budgets that cannot afford to hire employees, entice committed, long-term volunteers without the promise of monetary compensation?
In addressing these questions, the social sector has come up with several different solutions over the years to build a sustainable model for doing good, such as for-profit social enterprises – especially notable is the recent rise in innovative organizational forms such as benefit corporations (B-corps). Gone are the days when grant-writing alone could be a viable funding source for most nonprofits. Foundations’ grant budgets just don’t increase at even a fraction of the rate of non-profits’ needs for funding do — there are over 1.5 million nonprofit organizations in the U.S. alone! Grants aside, only some are able to successfully keep a large enough audience of donors engaged over time in order to keep growing.
In my personal experience volunteering for, working with, and learning about nonprofits, I have come across some wonderful organizations that have addressed these common challenges using smart and successful models that really speak to the heart of financial and organizational sustainability (the bread and butter of good business). Here, I profile a few of these nonprofits that can serve as examples for launching other nonprofits forward.
Achieving Financial Sustainability
Sankara Eye Foundation (SEF) is a nonprofit headquartered in the Bay Area that raises money in the U.S. to build eye hospitals all over India. The funds raised in America go towards construction of new hospitals and free eye surgeries for the curably blind, poor, generally rural population in India. The problem with simply supporting these surgeries is that as the number of hospitals grows, a larger and larger percentage of funds is diverted to supporting surgeries in existing hospitals, making funding the construction of new hospitals exponentially more difficult. In an ideal world, the growth of incoming donations would keep pace with the expanding scope and impact of a nonprofit; unfortunately, this is not usually the case.
Therefore, SEF came up with a plan for “self-sufficiency” – each hospital they build would have to support itself eventually. The plan, in effect now, is a 70:30 model: 70% of the surgeries done at the hospital are done free of charge for poor patients brought in through rural outreach programs, while the other 30% are for paying patients who walk into the hospital on their own with the ability to pay for care. Not only does the revenue from the paid portion finance the free surgeries, but the model also keeps in line with the organization’s mission: there is no lessening of impact, as even patients who walk in and cannot afford care are directed to go through the free outreach program instead. This policy is maintained on an honor code system, which has been working without abuse. Using this plan for self-sufficient hospitals, SEF has built 9 hospitals to date and is still able to expand at a rapid pace. SEF’s success shows that growing nonprofits struggling with financial sustainability may achieve greater long-term success by focusing on developing the self-sufficiency of their projects rather than on trying to increase donations at the same pace as their growth.
If you are a nonprofit, questions you can ask yourself include: What can you do to generate revenue within the context of the work you do (like SEF does)? If this is not possible, what are other potential sources of income that are still consistent with your mission? Common and successful examples that come to mind include t-shirts, wristbands (e.g. Livestrong), pins (e.g. breast cancer), etc. Though these may not necessarily directly relate to the positive impact being made by the organization, their role in raising awareness for the cause and generating revenue to fund the nonprofit’s work keeps such methods in line with the mission.
Keeping An Engaged Workforce
Another nonprofit I would like to highlight is Rooms that Rock 4 Chemo
(RTR4C). Based in San Francisco, RTR4C’s mission is to transform drab chemotherapy rooms into beautiful, calming spaces that accelerate healing. A typical project involves taking over the rooms for a weekend and bringing in a whole crew of designers and painters to renovate the rooms. The best part is that all of the work that goes into these projects is volunteer labor. However, as the scope of the organization increased and as more potential projects came up all over California and beyond, RTR4C faced the question of how to guarantee that committed volunteers would show up to projects in their areas. When a nonprofit focuses on only local projects, a core group of local volunteers naturally tends to develop; however, RTR4C’s growing geographical reach meant that they needed to engage new volunteers for every project.
To solve this challenge of maintaining a sustainable organizational structure, RTR4C focused on making the project experience one that energizes a local sense of community wherever they are. The volunteers who participate in the projects feel more like they are at a fun gathering than donating free labor. In my experience, there were free RTR4C t-shirts given out, good food, and a fun environment – having been to two of their projects, I remember coming out of the experience feeling like I had gained something (beyond the usual warm, fuzzy, post-volunteering feelings) more than I had given. I think RTR4C’s successful efforts really show that for a growing nonprofit, building a committed and reliable volunteer force realistically involves more than just finding the “right” volunteers who will work simply because they care. It is equally important to make each project a fulfilling experience and ensure that volunteers go home at the end of the day feeling like they received something in return for their labor (whether it be physical tokens or the feeling of having had a really fun day).
As a nonprofit, there are several things to keep in mind when it comes to retaining a committed workforce: is the work given to volunteers engaging? Is what you are asking reasonable? Do volunteers leave at the end of the day having had a great experience? If they leave happy and satisfied, then they are more likely to spread the word about your organization – engaging your volunteers is much like customer service in this sense. Though the example of RTR4C included t-shirts and food, there is so much that can be done completely cost-free to improve the experience. Music can lighten the mood, facilitation can add a personal touch, and any mundane task can be made into a fun social gathering by inviting volunteers to work together!
Though nonprofits may face several challenges in financial and organizational sustainability that vary based on factors specific to each nonprofit, I think the above-profiled stories both ultimately point to the same idea: rather than short-term fixes that keep the organization going for just another day, innovative thinking and fundamental, structural change either within the organization or in the work they do can go a long way toward achieving a long-term, sustainable vision.