A recent article
has come out from Stanford
Social Innovation Review
titled,
The Nonprofit Starvation
Cycle. It is
written by Ann Goggins
Gregory and Don Howard.
I believe it is one
of the most important
articles written in
many years.
Allow me to quote the
opening statement which
is the thesis for the
entire article:
"A vicious cycle
is leaving nonprofits
so hungry for decent
infrastructure that
they can barely function
as organizations – let
alone serve their beneficiaries.
The cycle starts with
funders' unrealistic
expectations about how
much running a nonprofit
costs, and results in
nonprofits’ misrepresenting
their costs while skimping
on vital systems – acts
that feed funders’ skewed
beliefs. To break the
nonprofit starvation
cycle, funders must
take the lead."
That really says
it all. Those of us
who work as leaders
or consultants with
nonprofits and ministries
have always had to teach
or justify why infrastructure
is important. We have
had to apologize for
our administration and
fundraising costs. There
has been a growing trend
to believe that program
costs are "real ministry"
and administration and
fundraising costs are
"extra" and "where the
nonprofit abuses the
donor". These myths
and misunderstandings
cause many organizations
to downplay, mislead,
or even cut their important
infrastructure costs
in hopes of impressing
on the donors how little
they spend on overhead.
The Better Business
Bureau accepts a combined
administration and fundraising
percentage of between
20-35% as balanced and
proper for a nonprofit.
I know of ministries
that have fundraising
costs at 3-5% and think
they are doing a good
thing. With this low
amount spent on fundraising
they are not growing
their infrastructure
for development for
the present and future.
According to a recent
ACSI report, over 200
Christian Schools closed
their doors fall of
2009. From my consulting
experience and as a
director of development
of a Christian school,
I believe those schools
were not prepared to
weather the current
economic storm due to
lack of infrastructure
in development, finance,
and student marketing.
Infrastructure
to the nonprofit is
the foundation upon
which our programs or
front lines ministries
are built. I use the
term Front Line Ministry
and Support Ministry
to demonstrate the balance
needed in an organization.
Support Ministry is
comprised of finance,
marketing, development,
administration, operations,
and facilities. These
are the "unglamorous"
departments of our organizations.
Yet, they are truly
a ministry, to donors,
clients, and beneficiaries.
Without these Support
Ministries, there would
not be a Front Lines
Ministry.
I
always ask, "What does
the donor care about?"
I believe they care
about what it REALLY
costs to carry out the
ministry or nonprofit
cause. That means we
must tell them that
infrastructure (administration,
development, marketing,
facilities, etc.) is
part of the cost of
every Front Lines Ministry
program. We must learn
how to tell the truth
to our donors or funders
as the article points
out.
Here are
some suggestions for
those of us within nonprofit
organizations.
- We must educate
our donors as to
the true cost of
Front Lines Ministry
- We must begin
to present administration
and fundraising
as ministry and
not as a necessary
evil.
- We must do a
better job of presenting
infrastructure as
the foundation to
the future of our
organizations.
- We must move
from SURVIVAL to
STABILIZATION strategies
within our strategic
planning.
- We must use
articles such as
The Nonprofit Starvation
Cycle as educational
tools for our staff,
board members, and
key donors. Information
such as this should
not be just for
executive staff.
I encourage everyone
reading this to find
this article, download
it, and present it where
possible in your organization.
Then write to me and
to others and share
what reactions you receive.
We can encourage one
another with ideas of
success that sends and
reinforces this message.
Our nonprofit organizations
and ministries are critical
components of our communities,
our society, and our
ministry calling. We
must do the right thing
to ensure that our organizations
are built to continue
their vital services
now and long into the
future.
Blessings
to you,
Dr. John
R. Frank, CFRE
