The Business Savvy Behind Nonprofit Success

David LePage's picture

Among nonprofit organizations in Canada, there’s few bigger successes than Momentum, in Calgary. With an annual revenue of over $5m, and 18 programs serving 4700 clients per year (most of them living on household incomes under $20,000), Momentum is huge compared with most of the nonprofits I know – and I know a lot. And it’s all happened in the last 20 years.

How have they done it? “We’ve learned to take money seriously,” is what Walter Hossli, the Executive Director says. He has written an article for the ejournal i4 about it – not about Momentum, really, but about the concepts and practices you apply when you do take money seriously, and what happens as a result. Read Walter's article.

Don’t be fooled. Momentum remains totally focussed on its mission of Community Economic Development (CED). It “takes money seriously” by managing money and piling on the financial skills, staff, and organizational capacity essential to delivering on its mission. Momentum knows that, to deliver on your mission, you have the business acumen – the business savvy - to make that happen.

Operating a nonprofit requires that you blend business savvy with mission delivery, or as I often say, that you “blend dreams with numbers.”

By their very nature, nonprofits are complex. They are incorporated to deliver on a defined and measurable public service. Whereas for-profit corporations can focus on shareholder returns, nonprofits must deal with the expectations of multiple stakeholders in terms of community service. But the costs of operating a successful nonprofit are the same as for a for-profit, from building overheads and salaries that will maintain staff, to administration and financial supports, all the way to providing an environment that inspires the entire organization to do its best.

Driven by the need to merely survive, however, many nonprofits get focussed on grants and fundraisers. If you’re not careful, you become driven by the varied expectations of your assorted funders, and not by your own mission and purpose. For lack of business savvy (costing contracts properly, building surpluses and reserves, as Walter lists) you literally lose control of your own organization.

Revenue diversity is another big one. Momentum looks at the diversity of its revenue sources, and assesses it in terms of security and change: the current sources to be maintained and the new sources to develop in order to carry out strategic plans for delivering on the mission.

As Walter says, this is about “organizational culture.” Which staff behaviours does your nonprofit reward? What accomplishments does it celebrate? If you really do care about outcomes and impacts, not just activity and funder reporting, your organization has to put business savvy and strategic risk-taking right up there.

What a great lesson for all of us in the realm of CED and social enterprise! I wish I could have said it as well as Walter does.

Read Walter Hossli's article, Financial Management for CED Organizations. Disponible bientôt en français.

David LePage is Program Manager of Enterprising Non-Profits and Co-Investigator, BC-Alberta Social Economy Research Alliance (BALTA). He is also a member of the Canadian Community Economic Development Network, the Social Enterprise Council of Canada, the Social Enterprise Alliance, and the Social Enterprise World Forum collaborative.