The Money & Mission Balance

How much of a reserve fund should you have?

We can debate exactly how much is too much some other day, but I bet you know your nonprofit should have a much bigger reserve than it has now.  Could your organization survive another Great Recession?

The challenge we all face is finding that balance between “Money” and “Mission.”  Nonprofits don’t exist to “make money.” But we need it to fuel our efforts – short run and long run.  This past Spring I co-taught a graduate fundraising course for our Center for Philanthropy & Nonprofit Leadership at University of Maryland.  Our mantra was “No Money, No Mission.”

If your organization wants to exist to serve others in the long run – which most nonprofits do – then I suggest that you budget effectively for the long run by proactively setting up a Long Term Investment Fund.

Here is the budgeting process I recommend:

1.  Conservatively forecast revenue.  NOTE: Don’t start with expenses on what you WANT to spend.  Start with reasonable forecasts for revenue and then set expenses.  Otherwise, you will tend to overestimate revenue.*

2.  Liberally forecast expenses for programs/activities that you would like to undertake. 

3.  Add an additional expense line in the amount of 2% of revenue for “Long Term Investment Fund”

4.  Eliminate expenses until you have a projected surplus of 2% of revenue

If you follow this faithfully then you should produce a solid surplus every year that can go into your Long Term Investment Fund (reserves).

And yes, you will probably have to cut some funding from programs in the coming year in order to meet the surplus and reserve targets.  Maybe you don’t get all the way to the 2% targets in the first year you do this, but I encourage you to work toward them.  Otherwise, you will never have enough of a reserve.

This is really not about Money vs. Mission.  It is about Mission today or Mission today AND tomorrow.  It is hard to discipline one’s self for today because you are CEO now or Board Chair now, but you need to think of tomorrow and being prepared to withstand another Great Recession.  Those you serve will need you then even more than they do now – and you need to be there!

No Money No Mission!

*Forecasts are reasonably predictable – based on data.  Goals are what you WANT.  Forecasts are what you are sure of and they belong in budgets – not goals.

For more ideas on how you can lead breakthroughs in your organization, follow this blog and check out my web site at www.SheehanNonprofitConsulting.com   You will find free resources you can download, including a Breakthrough Strategy Workbook that you can download at no cost.  You can also check out my book, Mission Impact:  Breakthrough Strategies for Nonprofits, and buy it if you are interested.  And you can follow Sheehan Nonprofit Consulting

Your Summer Staff Retreat

Many organizations like to take a day during the summer to call a “time out” and gather the staff together for a retreat.  Depending on the size of the organization, this could involve everyone or, at larger organizations, departments may end up having their own retreats.

What makes for a successful retreat?  Here are some tips:

*It’s a Retreat.  Some organizations say they want a “Charge” or an “Advance” – not a “Retreat.” There is a time and place for all of these.  The type of “Retreat” I am referencing is when we have all been working really hard all year and we want to relax, celebrate, pause, and reflect.  You can Charge later.

*Get Away.  It does not have to be held at a fancy, expensive lodge in the woods.  It can be as simple as a local park or conference room at a hotel.  Just get out of the office.

*Unplug.  Turn in all smart phones at the beginning of the day and give them back when the day is done.  Have one phone number that everyone can give out for emergencies.

*Set Clear Expectations/Goals/Agenda.  A “Retreat” means something different to a lot of people.  Make clear what the expectations are for the day.

*Don’t Over-Program.  The idea is to relax, celebrate, pause, and reflect.  Give yourselves time to do that.

*Highlights for the Year.  Take some time to reflect upon the most important accomplishments for the year.  Celebrate!  You have been working hard.

*Lessons Learned.  This can start as an individual reflection and then move to the organizational level.  What have we learned about how to do our work most effectively?

*Small Groups.  Do a lot of activities in small groups with reports back to the larger group.  Mix the groups up so people get to know others even better.

*Reconnect to Mission/Vision.  Make sure to wrap up with some activities that remind everyone of the important work that you do, the impact you make, and your visions for the future.  Success stories are a nice way to do this.

*What else?  There are lots of other productive activities you can do to round out a solid staff retreat – ropes course, team-building exercises, personality assessments, etc.   

Take some chill time this summer to Retreat with your team – to relax, pause, reflect, and celebrate the Mission Impact you are making.  You all have been working hard!  You deserve it!!!

For more ideas on how you can lead breakthroughs in your organization, follow this blog and check out my web site at www.SheehanNonprofitConsulting.com   You will find free resources you can download, including a Breakthrough Strategy Workbook that you can download at no cost.  You can also check out my book, Mission Impact:  Breakthrough Strategies for Nonprofits, and buy it if you are interested.  And you can follow Sheehan Nonprofit Consulting on Facebook.