Great Schools Now Blog

MB Financial Bank: How Nonprofits, including Charter Schools, are Turning Survival into Sustainability

Nonprofits from virtually every sector, including education, are exploring new strategies for surviving budget challenges by putting in place tools, programs, and structures that will yield long-term benefits.

Here are just a few strategies:

1. Focus on core programs that support the mission

Nonprofits are seldom judged by their financial statements, but rather by the effectiveness of the core programs that deliver on their mission. Making good financial decisions about these programs during dire budget situations is imperative; straying from your mission can have long-term consequences, both in state funding and donor support.

The Wallace Foundation, a national philanthropy that supports and shares effective ideas and practices, recommends understanding the true costs of all programs in order to develop accurate, realistic budgets and monitoring the financial status of individual programs and the organization as a whole on an ongoing basis.

These analyses may lead you to dial back or cut non-core programs and activities, particularly those that do not directly or measurably support the mission, allowing your organization to conserve dollars until – or if – state commitments are met.

2. Explore mergers and partnerships

The Nonprofit Finance Fund reports that 51% of nonprofits have collaborated with another organization to improve or increase services offered, and others have merged. In Chicago, Thresholds and New Foundation Center merged earlier this year to “…preserve and expand critical community mental health services in northern suburban Chicagoland.”

In offering guidance to other social services agencies, Thresholds CEO Mark Ishaug says, “No small service provider needs to go out of business because of an uncertain funding environment – we need to think strategically about merger opportunities that are of enormous benefit to both organizations, and more importantly, the clients that we serve. We hope that this example of a mutually beneficial merger (with New Foundation Center) serves as a model for other social services agencies in Illinois.”

3. Focus on marketing and communications channels

Even in good times, effective donor communications are critical. In fact, a survey by the Network for Good reports that, “…for every 100 new donors that come through the door, 105 walk out,” and “… one of the best ways to improve your donor churn rate is to improve your donor communications.”

Many nonprofits found that particularly true during the state budget crisis. Even though financially stressed, they realized that it was not the time to cut back on communications and marketing. Instead they found that getting their organization’s message to supporters, donors, potential partners, and clients was crucial. Communicating your coping strategies and commitment to your mission and core programs can help reassure key constituencies during challenging times.

If improving your marketing and communications efforts allows adding to your staff, be sure to look for the specific communication skills needed to reach your particular donor base and a track record of success. If hiring staff isn’t an option, pro bono marketing help may be the answer. Consider the following resources: The Taproot Foundation, Cause Marketing Initiative Medill, LinkedIn, and Ad Council.

4. Partner with universities

For many organizations, the cutbacks on staffing that came with the budget crisis added stress, particularly for those whose mission and services to clients make it difficult or impossible to use volunteers. University internships – both graduate and undergraduate – can help provide fewer interruptions in service delivery in tough times and is also a sound way to identify future hires. A few local universities to check out for internship opportunities include the University of Chicago and University of Illinois Springfield. You may also post internships here.

5. Form a Junior Board

According to the Case Foundation’s 2015 Millennial Impact Report, 72% of millennials are interested in participating in a nonprofit young professionals group. You can tap the fundraising energy and awareness-building of millennials by recruiting a junior board, which can also be a long-term play.

Here are a few tips for Junior Board success:

“¢ Engage your Board of Trustees (BOT) and invite them to Junior Board events and meetings
“¢ Empower Junior Board members with opportunities to attend or present to the BOT or committee meetings in order to provide a roadmap to     BOT future opportunities and ensure consistency between boards
“¢ Assign an employee as the Junior Board liaison
“¢ Encourage volunteering within the organization to connect Junior Board members to the mission of the organization

Navigating through the uncertainties of a budget crisis can put significant strain on any nonprofit, including their students and supporters. But there may be a silver lining: by focusing on the mission and core programs and finding partners, collaborators, and resources to support programs, organizations have proven they can not only survive, but build a stronger platform for stability and success in the future.

Collaboration with your bank could also be the key to navigating this uncertain budget climate. Make sure your bank understands the nonprofit sector and mission-driven organizations.

Disclaimer: The information contained within this report has been obtained from sources deemed to be reliable; however, we do not guarantee its accuracy. You should make your own independent evaluation of the relevance and adequacy of the information contained in this material and make such other investigations as you deem necessary, including obtaining legal, financial, and/or tax advice.