A few years ago, at a Council on Foundations conference, I was reviewing the program with Lew Feldstein, the longtime New Hampshire Charitable Foundation leader, and I said, “Do you realize that the word ‘money’ is completely absent from the program?”
We scanned the text. It was chockablock with words like leadership, innovation, passion, justice, transformation, impact, scale, and strategy. But there was no mention of money. No finance. And certainly no accounting.
I asked Lew, “Why don’t we ever talk about money? However painful it is to admit, at the end of the day, the main reason nonprofits come to foundations is, well, for money.”
He said simply, “It’s not what we care about.”
This new blog—Money and Mission—is, in a real sense, about why and how we should care about how money works (or doesn’t). It will be led by several of us who work with nonprofit organizations at the Nonprofit Finance Fund.
To be sure, in recent years grant makers and nonprofit leaders have done a better job of discussing money and its place in the nonprofit world.
Grant makers are now talking about capitalization and finance and asking better financial questions when screening potential grantees.
More sophisticated online financial-analysis tools are on the way, so we can get away from the overly simplistic and context-free ratios showing how administrative costs compare with program spending and use measures that make direct and fair comparisons. What’s more, some of the groups that rate the performance of nonprofit organizations are catching up with financial research on topics such as the cost of overhead.
And the Financial Accounting Standards Board, the organization that sets the accounting rules followed by most nonprofit groups, has gathered a committee of experts to advise it on topics that affect nonprofit organizations.
But we have more work to do.
Great ideas, deep caring for those in need, creativity, resourcefulness, a service ethic, and an expansive vision for the future are abundant in the nonprofit world. But we lack the financial capacity to meet these ideals, and our financial habits undermine efforts to build it.
We need to think of finance as more than a muddle of fund raising, budget monitoring, and compliance with overhead rules.
The current, tough economic environment is spurring needed change. Now, understanding money concepts like risk, leverage, and accounting, seems to be a moral imperative.
Never did grant makers, board members, government officials, and managers of nonprofit organizations need so urgently to understand and skillfully wield money as a tool.
This blog seeks to continue and extend the conversation about money, welcome more voices, and hear questions, comments, experiences, and ideas from all sides.
We’ll be contributing to the conversation, with diverse opinions from both inside and outside the Nonprofit Finance Fund. We hope to hear from you as well.
4 Responses to Why Nonprofit Groups Should Talk More About Money
jcravens42 - August 13, 2010 at 3:51 pm
Great blog! I had a very large corporation call me with an idea for a “partnership” activity. It sounded like a decent idea, in line with our mission. When he was done with his pitch, I thanked him, told him I would love to talk further, and that I would be happy to start exploring how much participating in such a partnership would cost. There was a long pause… and the person actually ended up apologizing and saying that he had never considered the cost to our organization to engage in the joint activity. We ended up scaling back the idea, and the corporation did, indeed, cover all of our costs to participate. Activities cost money. Why be shy about saying so — and putting a price tag on such?
katebarr - August 13, 2010 at 4:09 pm
I’m thrilled to read this! Our experience at Nonprofits Assistance Fund in Minnesota is very similar. There is new attention being paid by nonprofit leaders and boards to concepts like business models and financial planning that corresponds to strategic planning. Understanding costs, as the previous commenter points out, has to be standard practice for nonprofits. Making decisions about costs and subsidy isn’t possible without the information. There are many other topics that I look forward to reading about in these posts. We’ll try to also contribute to the discussion.
clara_miller - August 17, 2010 at 3:10 pm
I love the story about the “long pause” to consider that nonprofits have costs, too! And Kate, thanks for the very encouraging comments! I look forward to engaging with you as we go forward.
allanshore - August 20, 2010 at 12:38 pm
Finally! Good topic. Great topic! But I also want to say that just talking money from the viewpoint of agency administrators is probably not sufficient. When I was an ED I tried to start an empowerment-based auditing process wherein the entire staff (mostly youth and young people) were asked to learn what an audit is and how what they do supports a stronger financial base for the agency. Needless to say, most people didn’t get it and, as a result, we didn’t move into a new level of organizational engagement. Also, I’ve developed more recently some ideas for new fundraising strategies that involved larger views of money as a key element for ongoing and sustained advocacy–perhaps the most effective part of social justice and change. Unfortunately, people and organizations in these areas are way too far behind to be thinking about this and thus have a hard time with many of the newest of financial/economic trends. Of course, part of this comes from the fact that most talking about money really means talking about loans …! There really needs to be a much broader discussion to give true substance to double and triple bottom line evolution. Love to read and discuss more about these topics.