5 Sustainable Habits Your Nonprofit Can Implement Today

Thursday, August 27, 2020

Nonprofit financial sustainability is necessary for organizations like yours to develop lasting strategies that help you not only maintain your current standing but also grow.

CharityProud’s article on sustainability explains that economically sustainable nonprofits “operate within their financial means and use their inherent resources responsibly. Your resources include both tangible (donors, technology) and intangible (staff skillsets, community partners) things.”

This means that in order to increase your sustainability as an organization, you need to first improve your organization’s efficiency of your resources.

More efficient relationships with your supporters mean that you won’t need to spend as much money on your donor acquisition strategies. Meanwhile, efficiency in your technology resources means that you can fill in the gaps in your strategy using tools that are already available in your toolbox. These money-saving opportunities also help to increase your financial efficiency, which in turn, makes your nonprofit more economically sustainable. 

In this article, we’ll dive deeper into several efficiency strategies your nonprofit can take to gain better financial sustainability. These strategies include:

  1. Create goals related to financial sustainability.
  2. Accurately track your nonprofit’s finances.
  3. Actively engage your current donors.
  4. Diversify your organization’s funding.
  5. Report on your nonprofit’s financial goals.

Nonprofit sustainability has become more important, yet even more challenging in the midst of the COVID-19 pandemic. While in the beginning of the pandemic, many small to mid-sized nonprofits struggled to keep the doors open, it’s time now to consider the future — both for the rest of 2020 and for the years to come.

As everyone adjusts to the new normal, we recommend that you begin thinking about how you’ll sustain your nonprofit through the rest of the pandemic and beyond. Let’s get started.

1. Create goals related to financial sustainability.

When your nonprofit launches a fundraising campaign, your goal is more than simply “let’s raise as much money as possible.” Rather, you probably set a goal that looks more like this:

Let’s raise $10,000 through our peer-to-peer fundraising campaign to build a new playground for the kids at the local community center.

The goal itself is specific and it motivates supporters since they know exactly what impact their gift will have: it will help build a playground for local kids.

Your sustainability goal should be similar. Craft a very specific goal related to your nonprofit’s sustainability. When it’s specific, measurable, and discusses the impact, you’ll better motivate your team to succeed.

To craft this goal, consider the following questions:

  • What does success look like to you when it comes to sustainability?
  • How will you achieve sustainability? (We’ll cover some aspects of this later.)
  • Why is sustainability important? What will it help you achieve?

As you’re walking through these questions, you may find that it’s helpful to have an open discussion with a nonprofit accountant about opportunities to become more sustainable.

Jitasa’s article about working with a nonprofit accountant explains that one of the duties covered by your accountant is comparing your income and expenses with your budget. Because this individual reviews this data in an in-depth fashion and on a regular basis, they’ll likely be the one to find opportunities for higher efficiency and improved sustainability.

For example, your accountant may find that your nonprofit frequently goes over budget in your fundraising expenses. In this case, they may recommend that you work to increase your donor retention rate to bring down acquisition costs. Or, maybe they’ll recommend that you invest in a single software solution that can host peer-to-peer fundraising campaigns and online donation pages so that you don’t have to pay for two separate systems.

Using these recommendations, carefully craft your organization’s goal. Then, tell your staff how they can help achieve it!

2. Accurately track your nonprofit’s finances.

This habit goes hand in hand with setting your nonprofit’s sustainability goals. It’s impossible to set a concrete and measurable goal if you don’t have data you’re basing it off of. It’s also impossible to track your progress if you don’t have effective processes in place to collect relevant data metrics.

Keep in mind that each of your goals will likely have a few different metrics that you’ll want to track. For example, let’s say your nonprofit’s goal is to improve your stewardship strategy by sending emails twice as frequently to increase your yearly retention rate by 10%. In this situation, you’ll need to track metrics such as:

  • The frequency that your emails are sent out.
  • The open and click-through rates that show how supporters engage with those emails.
  • Your donor retention rate before and after you start sending more emails.
  • Any feedback that supporters send your organization about the change.
  • Your fundraising revenue resulting from repeat donations and the ratio of revenue from recurring donors to the total.

This list will look slightly different for each nonprofit depending on the goal that you’ve set for yourself.

We recommend that your nonprofit analyze your software to see where these metrics are collected. From here, inform your nonprofit bookkeeper about the goals so that they can keep an eye on the financial implications. They may even be able to pull reports for you!

We’ve mentioned that nonprofit retention is a great way to increase your organization’s sustainability initiatives. This is because a small increase in retention can make a major impact on your nonprofit’s financial performance.

According to further research, around 70% of donors only give one time to nonprofits and the recapture rate of lapsed donors is only around 5%.

However, once you’ve captured a donor’s attention and they give a second time, it’s much easier to engage them for longer because they’ve now given the golden donation. They’ve shown a certain level of dedication in your organization and a willingness to continue contributing. That’s why capturing this second gift is so important for donor retention.

But how can you increase your retention rate? By maintaining donor engagement through stewardship and appreciation.

Some strategies you may consider implementing to increase your own retention rate can include:

  • Call your donors to get to know them better. Rather than strictly emailing supporters, calling them establishes a more personal connection as they can hear your voice and you can hear theirs. Make sure to conduct your research before calling to deepen this connection by using their preferred name, mentioning their most recent interactions with your team, and discussing their interests. Conducting this research about your supporters can also help you prioritize the order in which you call them. This ensures you don’t overlook valuable supporters on your call list.
  • Send heartfelt thank-you notes. Set yourself apart from other nonprofits who simply send a confirmation email after supporters contribute to their cause. Consider taking your appreciation a step further by handwriting thank-you notes to express your genuine gratitude for supporters in a more personal way.
  • Tell impact stories to your supporters. Stories are an important part of helping your supporters feel connected to your cause. To tell an effective story, consider discussing how your organization was able to help a specific individual in an impactful way. By associating a face to your mission, your supporters will have an example of exactly who and how their gift helped. Write impact stories in your blog, on newsletters, on social media, and using other marketing platforms that your supporters engage with.

An effective retention rate is directly related to your nonprofit’s stewardship strategy. If you work to develop deeper connections with your current supporters through better communication, you’ll likely find they’ll be more willing to give again. Over time, they’ll probably give larger donation amounts, too!

4. Diversify your organization’s funding.

During the COVID-19 pandemic, you probably ran into some fundraising roadblocks. This is to be expected given the economic downturn. However, this doesn’t mean that all nonprofit funding hit an unexpected wall. Other revenue-generating activities have maintained strong even throughout the pandemic.

If your nonprofit relies too heavily on a single revenue source, a disruption in that source will send your organization spiraling. However, if you diversify your funding sources, your nonprofit will find that a single disruption won’t hurt your nonprofit as badly.

As your nonprofit develops its strategic plan, be sure to incorporate various fundraising sources. Focus on developing all of them to be as effective as possible. Some of these revenue sources you can use to diversity your fundraising include:

  • Classic small-scale fundraising. You can use various types of campaigns like peer-to-peer, crowdfunding, (virtual) event registration, donation pages, giving days, and more to raise funds while broadening your supporter audience.
  • Major and mid-level donations. Major gifts likely make up a large portion of your fundraising dollars. Be sure to also reach out to your mid-level donors. This not only diversifies these large gifts, but you can also encourage those mid-level donors to increase their support and become major ones down the line.
  • Grant applications. Writing nonprofit grant proposals may seem like tedious work at times, but it’s a very important part of your nonprofit’s funding strategy. It can take the pressure off of your classic fundraising efforts and can provide integral funds for specific projects at your organization.
  • Cultivating sponsorships from local businesses. Sponsorships are a great way to gain funds for your nonprofit’s upcoming events and activities. Creating partnerships and developing lasting relationships with local businesses can help you attain these sponsorships both now and in the future.

As you can see, there are many opportunities that your nonprofit can take advantage of in order to raise revenue. Pursuing multiple avenues will help your nonprofit remain (at least mostly) financially stable even if external crises occur.

5. Report on your financial goals.

As your nonprofit tracks the metrics related to your sustainability goals, it’s important that you pull regular reports on these metrics to share with your team.

Informing your team of your progress is a great way to motivate them to continue down a successful path. If they don’t know how well they’re doing, it’s easy for your team members to lose their drive when working hard to reach your specific sustainability goals.

However, this isn’t the only reason your nonprofit should pull regular reports regarding your financial stability goals. With the right reports and resources, your nonprofit can be transparent with your supporters about the progress you’ve made.

To communicate your progress with supporters, you may choose to:

  • Publish a version of the reports you pull for your team members featuring important metrics.
  • Summarize the metrics in your reports as they occur over time.
  • Rely on filing your Form 990 (which you can learn more about here) to reflect your progress from year to year.

Pulling frequent reports on work toward your sustainability goal will help hold you and your team accountable. Plus, it’s a great way to show supporters that you’re improving and maximizing the use of their support for your mission.

Financial sustainability is challenging, even in the best of circumstances. Disruptions in the economy and other aspects of the world make it even more difficult for small to mid-sized nonprofits like yours. But it’s vitally important moving forward now in our new normal and to set up your organization for future success. With these five habits, your nonprofit will be on the right path to achieving sustainability. Good luck!


Author: John Osterburg

Jon Osterburg has spent the last nine years helping more than 100 nonprofits around the world with their finances as a leader at Jitasa.