Finance & Strategy

Real world nonprofit finance matters, and real world thinking about strategies for financial, programmatic, and leadership sustainability. This column is written by Steve Zimmerman, principal of Spectrum Nonprofit Services.

photo of Steve Zimmerman

How do federal funding threats affect you?

It's time for our next Blue Avocado Poll. Does your organization rely on federal funding? Are you discussing the possible budget cuts at the federal level? What are your contingency plans? Please take a minute to tell us what you are seeing, and we'll share what we learn in the next issue. (Responses are all anonymous.)

Beyond the multiple-choice questions, we also invite you to tell us your stories about the potential effect of funding cuts for your organization. Sharing your contact information is totally optional, but if you do, we'll follow up to find out more and plan content for Blue Avocado that can help.

Begin the survey here!

A Milestone in Nonprofit Lending

Hello Avocados! We wanted to share this exciting milestone from the Nonprofits Insurance Alliance of California, founding and ongoing sponsor of Blue Avocado.

In January 2017, the Nonprofits Insurance Alliance of California (NIAC) reached $2 million in lending through its pilot loan program. The Loan Fund offers short-term credit to small and mid-sized nonprofit members of NIAC.

When NIAC first developed the fund we wanted to create an efficient solution to the cash flow needs so common in nonprofits. We received survey responses from 300 nonprofit organizations and found that getting access to cash flow loans through a quick and efficient process that demonstrated understanding of nonprofit financials was darn near impossible. Many nonprofits showed a need for short term loans while waiting for confirmed grants and contracts to be funded. Thirty years ago NIAC took up the challenge of proving that nonprofits were not poor insurance risks and we decided it was time to try to show that nonprofits were also good credit risks. So, we developed a pilot program in 2014 with $1 million of loan capital. Another $500,000 in loan capital was added the next year to meet demand. The NIAC Member Loan Fund provides 12-month loans up to $50,000 at a fixed six percent interest rate.

Nonprofit Mergers Are Like Falling In Love

A question was recently submitted to American Nonprofits about the organizational and legal issues of merging two nonprofits, by someone right in the middle of such a merger. We asked Ron Kratofil to share tips and resources for that situation.

The continuing pressure to do more with less and the growing challenge of maximizing our community impact have created a challenging environment for nonprofit organizations. So where do concepts like merger and acquisition fit into our evolving discussions? Having had the opportunity to be involved in both a full blown merger and an acquisition, I can relay to you the lessons I have learned.

Is Your Nonprofit Ready for a Capital Project?

I have an almost-two-year old who just discovered Mega Blocks and how to stack them as tall as possible before they fall. That usually leads to some two-way negotiation about where the next block should go, to avoid a cascade of blocks and tears. (Sometimes the game is to build it high and knock it down, but that's a Blue Avocado article for another day!)

Here's where I tell you that nonprofit construction projects are something like negotiating with a toddler still practicing his stacking.

Fortunately, a real expert is here to move us from an awkward metaphor to some practical tips because a capital project -- maybe you've outgrown your space or had a piece of land gifted to you from a donor -- can be an incredible opportunity. But only if you are prepared. Kate Stephenson is a partner at HELM Construction Solutions in Montpelier, Vermont, and former nonprofit executive director herself. Here are her field-tested tips for your next capital undertaking:

Financial Prospects for Nonprofits: How Does Your Nonprofit Rate?

Blue Avocado bubbles with insight because you, our readers and our writers, are astonishingly smart. We've heard great ideas from you along with suggestions for how we can be even more relevant with what we publish here on the site, so this issue we're doing something new.

Starting with this issue of Blue Avocado we're including a poll. Please take a minute to let us know what's happening where you are, and you'll see the aggregate results in the next issue, along with content that takes your responses head-on. (Responses are all anonymous.)

Take the Poll!

Everything We've Been Taught About Major Gifts is Wrong

Of course, by "everything" for purposes of this article I mean "three big things." But conventional wisdom can lead us astray when devising effective fundraising strategies. Like leprechauns, these mythical truisms can mislead us into thinking we should be chasing pots of gold that will always remain out of reach:

Myth #1: People have been acculturated to resist asking people for donations. Training them in "doing the ask" and inspiring them about goals are good ways to overcome this resistance.

Actually, only a few people are very resistant to asking strangers . . .

Why Don't Foundations Build Capacity in Fundraising?

Foundations often encourage nonprofits -- especially grassroots organizations -- to develop non-foundation income streams as part of sustainability. So then why do so few of our grantmakers invest in building the capacity of those groups to raise independent money? Aaron Dorfman of the National Committee for Responsive Philanthropy takes on this mystery:


Said a major grantmaker: "The most significant regret I have in looking over my 15 years as a leader of two big philanthropies is that, while we thought a lot about sustainability at the Open Society Foundations and at the Atlantic Philanthropies, we rarely made grants to strengthen organizations' fundraising." -- Gara LaMarche . . .

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