The economy’s slow recovery has prompted many nonprofit leaders to wonder how to prepare for what could be an even tougher and longer road out of the recession than anybody expected. While concerns about the possibility of a double-dip recession come and go, it is probably wise to follow the old adage to prepare for the worst and hope for the best.

Here’s what it means to prepare:

Shore up the revenue and find your weak spots

Don’t assume that because you have always received a grant from a particular donor that you will continue to receive one next year.  Reach out to your longtime grant makers, arm them today with real information about the value of your work. Do it now even if your annual report is not due until December. Look for reasons to remind them why your work—and hence their money—is essential.

Listen and try to understand how your grant makers are think…

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Today’s economic realities have prompted many nonprofits to consider new business models so they can better serve their constituents while ensuring their own financial solvency.

These adjustments are taking many forms. Some organizations are investing in new ways to deliver programs and services, while others are making their current activities more effective and efficient. Change can mean restructuring operations, collaborating more formally with similar nonprofits or, as now happens with greater frequency, trimming the size of the group’s staff as well as its programs and activities.

Regardless of what form it takes, change isn’t easy for many nonprofits. It’s time-intensive and expensive, and it involves risk.

What makes some organizations more likely than others to adopt change effectively? A history of surpluses? A board that is willing to step out of its…

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The job market is full of visionary people hoping to find a job at a nonprofit.

They are idealistic young people who envision jobs that are the perfect nexus of “helping people” and using what they have learned in their academic studies. They are nurses who hope to run free clinics and fine-arts majors who want to start community theaters.

And they are sometimes for-profit employees looking to make a career switch or nonprofit professionals looking to start or move up in an organization.

These budding nonprofit leaders bring with them the passion for service, creative rigor, and intellectual curiosity required to inspire people and communities. Why is it, then, that so many new managers find themselves burned out, off-mission, and out of cash in short order? In a word, finance.

Many experienced nonprofit executives avoid telling young people how much of a leadership job…

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As the economy continues its slow recovery, nonprofits and donors are more frequently trying to understand the role of financial reserves—a tool that may have been an option in the past but is now a must-have for organizations that hope to maintain stability in turbulent times.

In particular, people want to know how reserves compare with endowments, because both are ways for nonprofits to help secure the organization’s future.

Reserves are a lot more flexible than endowments—and often more appealing. The money and the interest from a reserve are governed by a nonprofit’s board and can be used for many purposes.

Endowments tend to last a longer time than reserves but are much more restricted. Typically, nonprofits can spend only the interest generated by investing the money in an endowment, and donors can place many restrictions on how the money may be used….

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The executive directors of children’s museums are some of the most creative people on the planet.

Introducing kids to learning, play, and problem-solving is their life’s work. Yet as I found out when I recently gave a talk to a group of museum leaders, these proven innovators face limits in their ability to experiment, to test fascinating concepts that could substantially improve their organizations’ enterprises or the nonprofit world at large.

For most of them, two things stand in the way of carrying out good ideas: They lack the money to carry out ambitious changes—what the Nonprofit Finance Fund calls change capital–and they are surrounded by boards, donors, and others who fear failure.

Change capital is to the nonprofit world what venture capital is to the for-profit world. It is money that can be used for excellent growth opportunities and to incubate…

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The grim economic news of the past week underscores why life in the nonprofit world isn’t going to get better anytime soon. Economists agree that this will be another “jobless recovery” where the gross domestic product will continue to improve but employment figures will stagnate.

At the same time, we seem to be ready as a society to tighten our belts and go down the path of “all cuts, no new taxes” to balance state budgets as well as to trim the burgeoning federal budget deficit. It sounds good to those who believe that government is rife with waste and inefficiency.

But in neighborhood after neighborhood, we will see the devastating impact of budget cuts on social services that will disproportionately punish the most vulnerable in our communities.

Nonprofits won’t be able to make up for the government reductions with money from private donors.  Giving from…

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“May I interest you in a susu account or would you like to hear about Sharia-compliant lending?”

Those kinds of solicitations are not something many of us in the nonprofit world hear very often—or would understand.

But if we are in the business of investing, lending, or giving in diverse
communities, we must do better at increasing our understanding of how
culture matters in the handling of money.

After all, many of the inequities that philanthropy seeks to eliminate are rooted in cultural bias—and many of the opportunities for change are rooted in cultural awareness.

For example, those who work with African or Caribbean communities should
know that susu collectors are popular in these cultures, and they made the
idea of giving small loans popular long before microfinance became trendy.
And if we work with Muslim communities, we must understand that Islamic law,…

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As elected officials focus on ways to close the deficit, they are making decisions that are likely to make the cash crunch for nonprofits even tighter than they already are.

That’s why many grant makers are looking for new ways to lend organizations money or arrange for new pools of funds that charities can borrow from.  If these efforts are successful, they will shift the landscape for nonprofit capital and create new opportunities.

Nonprofits use debt for many purposes: to purchase equipment, buildings, and other assets; to cover money owed by the government; or smooth uneven cash flow from ticket sales or fund-raising events.

Without access to debt, many nonprofits would have to stop paying staff members, eliminate programs, and even close operations. However, while nonprofits rely on debt, in the past two or three years, credit markets have tightened. Some nonprofits that…

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As my husband and I stood surveying what seemed like 100 feet of snow that fell on our roof throughout the winter and taking bets on the likelihood of its collapse, he uttered these dangerous, divorce-inducing words, “You didn’t forget to put a new roof in our budget?”

Did I budget? Of course I budgeted, for all these kinds of possibilities. But I had also nagged about the need for us to consistently save for the work in spite our list of less practical but more enjoyable expenses.  The undeniable truth is that real estate, be it a family residence, a theater, or a school, requires constant care and feeding.

Many nonprofits, like weary homeowners, defer routine building repairs or dealing with other deteriorating systems often to the point of jeopardizing the soundness of the both the facility and the program. Take, for example, a child-care center whose boiler regularly…

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Over the past few months, the Nonprofit Finance Fund has had the opportunity to work with several foundations and regional associations of grant makers across the nation on efforts to rethink how they can better use their grant dollars to achieve more and better results in their communities.

Time after time, I have been struck with the deep desire by foundation program officers and staff members to change what many understand is a flawed system. Too often, foundations bear the brunt of the blame for creating many of the problems facing nonprofits.

As Ann Goggins Gregory and Don Howard suggest in the Stanford Social Innovation Review, the problem boils down to “funders’ unrealistic expectations about how much running a nonprofit costs.”

Laying the blame and responsibility on the doorstep of grant makers and their “unrealistic expectations” might play well with many people who…

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