Year end is a crucial planning time for nonprofits

The end of the year is a good time for reflection and intention setting — not just personally, but also for nonprofit organizations. “We’re talking about strategic growth and what does it mean and why is it necessary,” says Terrence Phillips, a partner in the Bonadio Group’s assurance division. “To be viable in the future, you need to grow.” Nonprofits can start that process by conducting a self-assessment, determining where the organization is now and what its needs are, Phillips says. Those needs can then be prioritized in order of importance to tackle. “Doing a proper needs assessment is really critical,” he says. As part of that process, an organization needs to identify where its growth will come from. Will it be organic, will it come from programs, or will it come from benefactors? Are any mergers or acquisitions on the horizon? Assessing that information can help an organization identify alternatives in funding. If growth is coming from programs, nonprofits should plot the roadmap to the next generation of services and how it will get there? Often, there is a misconception that a nonprofit organization can’t be profitable, Phillips notes, but profitability (producing a surplus) is necessary to keep the organization alive and fulfilling its mission. “You need to be financially viable, and the only way you’re financially viable is to have a surplus,” he says. The difference is that a nonprofit organization needs to use the money it raises to further its mission. However, that can be accomplished in a number of ways to help keep the organization financially secure. For example, a nonprofit can invest those funds in staffing. “Getting good people is really competitive,” Phillips says. Generating enough revenue can help a nonprofit offer competitive salaries and benefits packages in order to attract top talent. It’s also important for nonprofits to stay on top of their industry, both at the community level and the state level, he says. Making sure the organization aligns with the state’s strategic plans can open up funding opportunities, he adds. Finally, organizations should review any potential partnerships or affiliations with other organizations that can strengthen the mission as well as the bottom line, Phillips says. Many larger nonprofits have begun offering management-service agreements, which generates revenue for those organizations and frees people up at the other organizations to focus on the mission. It all comes down to the that self-assessment, Phillips says, and determining if the organization has the right players and tools to achieve its goals.