Part one of a two part series
We recently had the opportunity to work with nonprofit consultant Kim Moss. He is a wealth of knowledge with 34 years experience in nonprofit administration. He knows about taking care of business. Yes, nonprofits are all about vision and mission. But, if business practices are not in place, it can be challenging to make an impact. We asked Moss to share his observations related to the challenges that nonprofits face when they go through a period of growth.
Moss began with the positives associated with growth. He shared, “A growing nonprofit organization can be exciting for the staff, Board of Directors and the people it serves. New and/or expanded programming can also convey a message to the agency’s supporters that ‘everything is on track’. However, healthy growth must be strategic and planned for it to be a longstanding asset to the organization. In contrast, growth that is poorly planned can be detrimental to the overall health of the agency.”
Here are four questions that Moss suggests nonprofits ask themselves when growth is in their future.
- Is the growth mission-based or are we chasing dollars? When funds are available, an agency can find itself easily lured by the thought of expanding current services or adding new services. But it must determine if the funds will help meet its mission or will they draw the organization into areas of service for which the agency has less expertise and is outside its mission.
- Is the growth based on a plan? Every agency should have an overall comprehensive plan which it follows closely. This plan will help the agency remain focused and help ensure that the growth is based on much prior consideration from the Board and staff.
- Is the growth financially sustainable? An agency must consider what the actual cost of the growth will be by developing a budget that outlines all revenue and costs associated with the expected growth. If the growth is grant-funded, it is important to remember that grants only pay a portion of the actual cost of a project. Usually, a maximum of 10% (often less) of the project cost is allowed by a grant funding entity to be allocated to administrative costs. The agency must consider its administrative cost (usually between 18% – 25%) and take into account that the difference in what is being funded and the actual cost of the project will be the responsibility of the organization.
- Can the agency’s infrastructure manage the growth? It is important to keep in mind how the growth will affect the staff. Does the Executive Director have the skills necessary to manage this growth? Will current staff be required to supervise the new staff? How will the growth affect the work load of the business office staff? How will the growth affect the amount of space available in the building where services are provided?
You can reach Moss at (901) 482-9504 or MossConsulting1@gmail.com