Money is Not the Problem

Our nonprofit consulting work often involves a snapshot assessment of an organization’s current status. How are the board, staff, and programs functioning? What sorts of fundraising strategy and tactics are in place? Do internal operations and external communications seem appropriate and healthy? In addition to conducting personal interviews, reviewing documents, and observing meetings, we frequently use electronic surveys to gather peoples’ opinions on what is–and is not–working.

Not surprisingly, when we ask about an organization’s weaknesses, popular answers from board and staff include “We need money,” “Lack of funds,” “Not enough money,” and so on.

You know the old saying, “There are no wrong answers”? Well, this is the exception.

Nonprofit leaders often think that their lack of funds is their primary challenge.

They’re wrong.

A lack of money is not the problem. It is a symptom. The problem is always something else.

Without exception, we have seen over and over that “the problem” is actually one or a disastrous combination of the following:

  1. The board is too small. This invariably means that the board does not contain the range of skills and perspectives needed for sustainable success.
  2. The board governance is weak. Attendance, participation, understanding, trust, accountability, engagement: entire books are written on this subject. If this were an easy issue, we’d all be wealthy. Sadly, too many well-meaning people have never experienced a nonprofit board functioning properly, so they don’t even know what they’re missing.
  3. The mission is unclear or poorly defined. There must be a vision of why you exist and where you are trying to go. This statement of purpose needs to be concise, clear, repeatable, and memorable.
  4. There is no roadmap, i.e., how that mission will actually be accomplished. Nonprofits that are struggling are often trying to do too much on too many projects.
  5. Leaders, both paid and unpaid, fail to recognize the critical distinction between leadership and management. You need both on your team, and these people need to know when to demonstrate each as situations dictate.
  6. Planning is unrealistic or nonexistent. Operating by crisis and hand-to-mouth feels like the way the game is played, as if being frantic and operating on the thinnest shoestring keeps you credible and authentic.
  7. There is no strategy to fundraising. There is a rich tapestry of ways that nonprofits can tell their story to those who would be inclined to support them, but weak organizations get stuck trying the same ineffective tactic over and over.
  8. Relationships have not been cultivated with the “other two” sectors (private and public). Yes, these things take time. Start before you’re broke. You won’t have a harvest of food for tomorrow if you don’t plant something today.
  9. Media or community relations are weak. See explanation for #8.
  10. The impact of the organization is not being measured or evaluated properly. The funding world, from individual donors to international foundations, doesn’t essentially care how small you are or how lean your budget is. They want to see that you make a demonstrated, credible difference.

Every one of these factors contributes directly to whether dollars are coming in. The next time you find yourself thinking or saying, “We just need more money,” consider that your energy is better spent on something besides staring wishfully at your balance sheet. Remember that nonprofits do not close their doors because they “…have no money.” They end up closing their doors because they failed in some other respect–which ultimately resulted in no money.

3 Comments

  1. Kevin Johnson
    May 19, 2011

    Well said. in several philanthropy surveys, the most recent with 304 respondents, this sort of thinking is clearly the kind that gets in the way. The more successful groups focus on vision, building relationships, and good planning.

  2. Jane Pellicciotto
    May 25, 2011

    Excellent post. Even the name “nonprofit” is a problem because it keeps orgs in a mindset that is anti-business savvy. We forget that nonprofit doesn’t mean no profit, it just means profits don’t line a CEO’s pockets.

    Organizations often go the cheap or free route. This works well in some cases but free, ironically, costs.

    To your #10 point: I see this more than anything. Few projects have specific intended results. Fewer have a way of being monitored or even measured. Even soft results are valid as are anecdotal results. But to miss out on knowing how effective a strategy was is to take that same route next time. Orgs. tend to think of “what it is” before thinking about “why” or “who” and what the message is.

    The only thing I would add is either too much personal ownership by staff on a project, causing them to not seek buy-in by key decision makers. Or else decision by committee with no key decision maker. Both lead to poor, watered-down, ineffective work. And sadly, loss of valuable dollars.

  3. […] are precious. Instead of putting their resources towards a well-conceived and executed effort, they put them towards poor planning, beaurocracy, and mistakes. Even worse, they were planning for the negative instead of the […]

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