Recently, we explored how to Reframe the Overhead Narrative to seek funds for basic operating expenses when you are out to change the world. Let’s take it a step further.
The capacity to stay afloat in the long-term is a day-to-day concern for nearly every nonprofit and community benefit organization.
The stakes are high, the resources are stretched thin and the urgencies of the moment often understandably overshadow what you need for success in the distant future.
It is a common concern for funders as well. Some funding applications will now ask you for your plan to ensure your impact after their funding has concluded. They want you to prove your commitment and ability to continue your work after their grant money runs out.
Here are six expenses that every nonprofit and community benefit organization should prioritize for lasting sustainability, along with a few tips on how to work them into your funding asks.
1 | Fair Living Wages
The people in your organization are your greatest resource, and the quickest way to lose them is to pay starvation-cycle wages. Now, before you let loose the wail of, “But we don’t have the budget to pay them what they’re worth,” understand this:
Turnover is expensive.
It may be one of those sneaky, hidden costs that you don’t see as a glaring line item on your budget, but nonetheless, it is most certainly reflected in your bottom line.
A study by the Center for American Progress estimated that turnover costs could be anywhere from 20% to as high as 213% of the base salary of replaced employee.
What does this mean in practical terms? For example, if you are paying someone $50,000 a year and she quits, you’ll end up spending $10,000 in lost productivity and in the process of recruiting, hiring and training someone new to replace her. That cost only increases when her role is vital to the mission and the work that you do.
Something to also keep in mind here: Many of your funders may well be business people. Approach your funding ask from this perspective, and you could find not only that they totally get it, but that they appreciate your strategy and foresight.
2 | Professional Development
Along with living wages, investing in your team’s professional development will serve you well. It nurtures growth, loyalty, and engagement. It increases the capacity to take on complex initiatives. And it tangibly shows that you care about your team.
The tip when asking for professional development funding? Make it all about strengthening your team’s ability to carry out the mission.
3 | Communications
The benefits of investing in communications are endless. Remember, it is not enough that you are doing good in the world. You must also be able to amplify it. Investing in communications enables you to share your work in creative, groundbreaking ways and reach new audiences, including donors. It brings a level of cohesion and clarity to your mission. It transcends dry data metrics and breathes life into your impact. It sets you up to be an influencer and thought leader in your community.
All of which can only boost a funding ask. Plus, people who excel at communications are a joy to be around.
4 | Fundraising
Our favorite topic on Open Rivers!
Yes, fundraising is a necessary expense. And, ironically, it is perhaps the single most difficult thing to fundraise for.
Many foundations will not allow their grant to be used for fundraising activities. Individual donors often prefer to see their dollars go directly to programs. And whatever you do to fundraise, it can never appear extravagant or wasteful. It is such a touchy subject that even the IRS requires charities to separate out their fundraising expenses on their tax returns so that everyone can see exactly how much is spent on this alone.
Yet it takes ongoing resources to cultivate a reliable tribe of supporters. Fundraising is not a one-time expense. Fundraising is a slow-moving long game and the expenses associated with it are not going away anytime soon. This is where you must be mindful that you are prioritizing unrestricted support in your funding asks.
5 | Sound Financial Practices
Whether it’s purchasing accounting software, training your team, outsourcing the bookkeeping, filing your taxes or paying for an annual independent audit of your records, you can’t avoid financial expenses. If you are a 501(c)(3) organization, you are held to an even higher standard with an added level of scrutiny in all financial matters.
6 | Work Environment
Quality chairs. Ergonomic workstations. Plants. Coffee and tea. Decent lighting. Up-to-date technology. None of these things need to cost a fortune. And then there are the many ways to improve a working environment that are all about culture, such as transparency, recognition, flexibility and gratitude. Investing in your work environment can take many forms, but it is critical that it is prioritized.
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