Welcome to “Organizational Sustainability Part Two” brought to you by the at CAFÉ technical assistance center.  Prior to beginning this training you might want to download the additional documents that we have provided for you because these can be used throughout the training.  That would include the organizational sustainability screening, the organizational longevity plan, and the nonprofit development and sustainability resource sheet.

In our previous training, “Organizational Sustainability Part one”, we discussed nonprofit trends, understanding and planning for: Financing, Diversifying resources, Leadership, Direction, Accountability, Targeted sustainability for organizational longevity.  If you did not tape “Organizational Sustainability Part one”, you may want to take that now prior to taking part two. 

In this training we’re going to focus on putting the fundamentals into practice, developing directions for sustainability, and building organizational potential and longevity. 

So let’s get started.  The sustainability markers were going to work with today surround accountability, Financial Security, organizational operations, and relationships.

I would like to offer a few reminders first.  This training sparks ideas and promotes generalized understand.  Follow-up is necessary to facilitate responsible planning.  A plan that is not executed and monitored results in wasted time and resources.

Let’s talk about the culture of sustainability.  The culture of sustainability should be integrated across all aspects of the organization.  It should be a part of everyday functioning of the organization and its staff and it should be an ongoing process. 

As we integrate the culture of sustainability at all levels of the organization, we’re talking about the board, the executive administration, staff, volunteers, and are partners.  And it’s imbedded in all programs and activities, and you have to think about what role would this play in the sustainability of our organization every time you plan or implement a program or activity.

So, the culture sustainability is not a timed activity.  It’s not a destination.  And it has to be addressed at each program and activity level and it moves across each funding stream.  No one funding stream is seen as the sustainability potential for an organization.

So, in developing a culture of sustainability, you have to define what sustainability means to your organization, established the role of the board and the staff in promoting sustainability and develop a process for addressing organizational sustainability needs all across every organization and funding stream.

The sustainability building blocks include accountability, Financial Security, organizational operations, and relationships.  You’ll find that those are integrated throughout this presentation and we’ll talk about them often.

Accountability is the foundation of sustainability.  A lack of accountability interferes with the capacity and the ability of the organization to appropriate funds.  It can contribute to the demise of leadership and / or the organization.  Sustainability is not dependent upon size or developmental level of the organization.  It is most positively a prerequisite of longevity.

Establishing accountability requires that you assess requirements for each program and / or funding source, review regularly these requirements with staff and the board.  Have an outside review of all IRS and funding contractual requirements on an annual basis.  Even if you have an audit, do an additional check and balance system to make sure that you’re fulfilling all your requirements.  Know Where you are weak and use a formal planning process to monitor and improve accountability and your weak areas.

Financial Security is the capacity to access the dollars necessary to meet the mission and insure organizational growth according to the market demand or the need.

Financial security requires funding to meet your needs, diversified funding resources, financial checks and balances, and financial empowerment.

Funding to meet your needs would include money to keep you afloat, funding to run your business, to maintain your effort, to grow, to promote the longevity of the movement, to whether the economy, and to maintain your mission.

In other words, we need money and to get it we have to raise it.

Some sources of funding, and most typical sources of funding for organizations like nonprofits, is grants, purchase orders, donations, memberships, fund raising, services, and in kind donations.

Diversified funds come from a variety of sources that are not dependent upon one another for continuation.  For example, an organization that has funding from Federal grants, state contracts, foundation grants, charitable giving, and membership dues, has diversified funding because not all of their money as Federal, not all of their money is government, and they have different kinds of funding such as that from foundations, charitable giving and memberships.

Remember when your mother said not to put all your eggs in one basket?  Well, it’s true for the sustainability of your organization.  Your funding must be diverse – no more than 30% from the same source.  “Yikes” you go.  Many many organizations that we work with today have all of their funding from one source.  It requires more than one service or product, and the sales of those services or products that meet the mission in order to diversify.

Some financial checks and balances include: written financial policies and procedures, all revenues and expenses are accurately recorded and at managed, resources are mission driven and allocated appropriately to programs that achieve the mission of the organization to enabled proficient oversight by management, and to support all of your fund raising activities.  And there has to be accurate and timely financial reports that enable management and encourage the board and funders to track the use of all of the funds that you bring in.

Financial checks and balances are also demonstrated by the indicators of good overall Financial Health, such as covering current liabilities with current cash and receivables, increasing total revenues and / or decreasing total expenses and increasing total net assets each year.  These are all just good business.

Financial empowerment allows an organization to have the funding and capacity to use that funding in a manner that promotes the mission of the organization at.

What about that financially empowered organization?  Well, they had more revenue than expenses in the last seven out of 10 years.  They have on hand cash operating reserves of at least 90 days.  In other words, even without any additional funds coming, they could function and pay their bills for lease 90 days.  They receive 5% of their annual operating income from the Endowments or charitable contributions, and they have a business income that is nongovernmental.  In other words, most of their funding that they receive does not come from government.

And they practice bottom up budgeting.  In other words they know how to budget so they can meet the basic needs of the organization and on top of that do the things that they’re being paid to do.  They share financial information with all of their partners, and they can borrow money if necessary.  Let’s suppose that one of their contractors can’t pay on time for a variety of resources and then they can be paid so that they can pay their own expenses.  They can go to the bank and borrow some money for a limited amount of time in order to meet their obligations.  And an organization supports its mission with rapid response mission reserve.  In other words, if something comes up within the population that they’re serving that needs to be tended to immediately they do have some money on hand that they could use to address that need.  And they are financially flexible.

Organizational operations are critical because organizations that are not operational are not sustainable.  This includes personnel, staff, policies, office management, building and equipment, and yes, volunteers.

Sustainable operations have written policies and procedures that are compliant with acceptable human resource protocol.  They have ample staff and volunteers to accomplish the activities.  And they have access to office space and equipment.  Without these basic infrastructure needs the operation cannot continue.

In addition to all of this organizations need to have relationships.  This relates to the organization’s capacity to engage diverse partners.  Partners that represent a wide variety of stakeholders.  To define partner roles and relationships and to perform the necessary outreach to ensure that you, your organization, has population based representation.

So how do we get there from here?  Let’s talk a little bit about strategic planning.

First we need to do an organizational assessment, or screening as I like to call it, to find out exactly where we are.

This screening should give you an organizational snapshot of what you have, what you don’t have, and what you’ll need in order to provide for sustainability and longevity for your organization.

Now, if you’ll take out your organizational sustainability screening form that we provided you as a download and look at the different target areas.  We’ve already organize these according to the areas that we’ve been discussing.  On the first page we have accountability, Financial Security, and organizational operation.  It’s a simple yes or no.  Either you have or you do not have it.  So take a few minutes and go through and fill out the first page.

Once you’ve done that then turn to the second page and finish the relationship section.  Again, identifying a yes or no for whether or not you have each and every element.  The areas of concern that you should be worried about is anything that you said no to.  If you said no to anything in the above four areas, this is an area of concern and you need to write those areas down under accountability, if its accountability, Financial Security, organizational operations, and relationships.  This gives you a snapshot of exactly how your organization is doing in the arena sustainability.

Once we know we have some vulnerable areas or some areas of concern where you said no on the checklist we have to be strategic and mission driven in addressing them.  You want to be outcome motivated.  In other words you want to see outcomes that you can measure and you I have a process for doing that.

So we need to develop a plan.  This plan has to be developmental based upon the needs of your organization.  If you’re an organization who is just getting started with the funding budget of maybe 10,000, or 20,000 dollars, certainly you’re not going to have the same developmental capacity or ability to address areas of concern as an organization that has a million dollar budget.  It also needs to be priority driven.  You can’t do everything at Once, so you’ll have to identify what you think you need to focus on the most.  It has to be targeted and very specific because that’s the way that we measure it.  It also has to be feasible or doable.  We don’t want to set goals for you that you can accomplish.  We need to make sure that everything right down is something that your organization could reasonably do in a short period of time.

So we’ve provided you with an organizational longevity planning form.  And at the top of the form we have areas.  Your target, which is the area of focus so for you it will be accountability, financial sustainability, etc.  Vulnerability is your potential weakness or area a potential concern – those areas you said no on the checklist.  Change points.  Exactly what are you going to do about it.  And technical assistance needs.  There’s a lot of technical assistance out there for organizations – where were you get that help?  What kind of help do you need?  Do you need additional resources necessary for improvement?  And then checkpoints.  When and how will you check back and know where you are in the process?  How will you know if you’re actually accomplishing your goals?

Now the way the we apply this accountability is the nonprofit rules, regulations, governance, contractual obligations, grants requirements, state and Federal reports, and that everything you do is mission driven.  Financial Security encompasses diverse funding streams, unencumbered funds, multiple funding streams of varying amounts, no funder greater than 30% of the total budget, financial strategies, and business plans.  Organizational operations includes: your personnel, staff, organizational policies, office of management, building, equipment, and your volunteer system.  And finally, relationships includes: the diversity of your partners, their roles, defining those relationships, doing outreach, and population base representation.

So why don’t you take a few minutes now to at least put down your vulnerable areas – those areas where you check “no” on the screening.  List those.  If it was accountability, listed under vulnerability, accountability.  The same with Financial Security, organizational operations, and relationships.  Once you’ve done this, you’ll have a snapshot of exactly the areas you need to address.  Finally, you need to take this to more than just you within your organization.  Your board, your partners, and others can help you figure out what you’re going to do about it.  They can help you identify the technical assistance needs that you’ll have to have and identify where you’re going to have a checkpoint – where you’re going to look to see if you’re doing what you said you were going to do.  Are you meeting your goal?  Are you getting things taking care of?  Are you going to do this every month, or are you going to do it every three months?  Here’s an example.  A vulnerable area might be that you did not have a checklist for all the deliverables that are due under a specific grant.  So, the change point would be that you’re going to develop a checklist and the calendar to make sure that your meeting all of your obligations.  The technical assistance needs that you might utilize might be the CAFÉ TA center.  And the checkpoint would be that are going to have this done in a month and that you’re going to check it monthly after that to ensure that your meeting all of your obligations.

There are many outside resources to assist you.  You can ask for technical assistance from a multitude of technical assistance centers you can also look on the Internet.  You could ask your peers, other organizational leaders to assist you.  You can participate in formal training and utilize professionals whose job is to provide technical assistance to organizations that are developing their sustainability potential.

Please check out the nonprofit development and sustainability a resource sheet that we have provided for you.  Here you can find links to training, technical assistance, resources, information, and guidance to help you as you develop the sustainability and longevity of your organization.

In closing, there are many facets of sustainability and they do not all involve money.  Organizations must tend to every area of the organization if you are to be sustainable assessing organizational sustainability and identifying areas of concern should be a regular activity and organizational health.  Targeted and formal strategic plans based upon the mission will help guide your organization as you seek longevity.  There are many outside resources to assist you you can ask for technical assistance from a multitude of technical assistance centers you can also look on the Internet you could ask your peers other organizational leaders to assist you