Navigating a Changing Landscape: Financial Adaptability Nima Krodel, Vice President April 27, 2017

Transcription

1 Navigating a Changing Landscape: Financial Adaptability Nima Krodel, Vice President April 27, 2017 nonprofitfinancefund.org 2017 Nonprofit Finance Fund

2 Nonprofit Finance Fund: Where Money Meets Mission NFF envisions a world where capital and expertise come together to create a more just and vibrant society We unlock the potential of mission-driven organizations through Tailored investments Generosity of Spirit Rigor Without Attitude Strategic advice Accessible insights Guided by our Core Values Responsiveness Leading By Doing nonprofitfinancefund.org 2017 Nonprofit Finance Fund 1

3 Recognizing Our Shared Context Growing Community Need Voluntary Public Funding Challenges Inequality How can we reorient to advance a just and secure New Mexico? Uncertain Political Environment 2

4 Moving From Sustainability to Adaptability Sustainability (is not enough) The ability to generate resources to meet the needs of the present without jeopardizing the future. Static understanding of the future Internally focused Adaptability The ability to adjust to new conditions and generate resources and services that meet and improve current and future outcomes. Dynamic understanding of the future Internally and externally focused Accounts for accelerated rate of change in the sector 3

5 MISSION SUCCESS mission success 4

6 Adaptability: What s Required to Advance a Just and Secure New Mexico? FINANCIAL Resources to Support Short & Long-Term Goals INTELLECTUAL Program Approach & Performance Mgmt HUMAN The Right Amounts & Types of Expertise SOCIAL Collaboration & Partnership 5

7 Nested Within a Societal Framework FINANCIAL Resources to Support Short & Long-Term Goals HUMAN The Right Amounts & Types of Expertise INTELLECTUAL Program Approach & Performance Mgmt SOCIAL Collaboration & Partnership Identifying inequity Empowering through knowledge, exploration and exposure Leveling the playing field 6

8 The (Well-intentioned) Status Quo Surpluses Reserves Restricted project $ Risk Mission Success Results Funders breaking even = victory they don t need my money protects impact I need to be confident that things will go as planned I want to invest in what works Nonprofits surpluses provide breathing room funders won t provide them so I ll ask for money I can get I ll take it, but where will overhead come from? I ll tell a positive story; funders don t want to hear about risks I ll meet the compliance needs, but exhibiting impact is tricky Partnerships Full Costs I should participate in strategy and management to steward my investment I ll fund part of this work; someone else can do the rest only significant commitments can buy real influence I ll have to do it for less; I have no other funding options 7

9 Building Adaptability: Intellectual FINANCIAL Resources to Support Short & Long-Term Goals HUMAN The Right Amounts & Types of Expertise INTELLECTUAL Program Approach & Performance Mgmt SOCIAL Collaboration & Partnership Intellectual: Performance Management Using information to enhance services & decision making 8

10 How Are You Engaging With Information?? Conducting a evaluation Reporting for funder compliance Referring to existing studies and evaluations? Tracking community needs? Developing a theory of change performance mgmt. Using data to access funding?? 9

11 From Compliance to Strategy: Who is benefitting? Demo graphics Government Funders # of classes Foundation Funders Internal Decisionmakers? Baseline scores # of students Client Stories Individual Donors 10

12 Building Adaptability: Human Capital FINANCIAL Resources to Support Short & Long-Term Goals INTELLECTUAL Program Approach & Performance Mgmt Human Capital: Role of Culture, People, Processes HUMAN The Right Amounts & Types of Expertise SOCIAL Collaboration & Partnership 11

13 The Role of Human Capital Human Capital alignment and buy-in is important at all levels (board, management, and staff) Time and attention to: Culture Organizational Design Job Functions Decision Making Staff Board Mgmt 12

14 Building Adaptability: Social Capital FINANCIAL Resources to Support Short & Long-Term Goals HUMAN The Right Amounts & Types of Expertise INTELLECTUAL Program Approach & Performance Mgmt SOCIAL Collaboration & Partnership Social Capital: Collaborations & Networks Connections with communities Commitments to partnerships 13

15 Your Organization is Part of a Broader System of Stakeholders... $ $ $ 14

16 Working Across the Network How do networks and relationships affect your ability to deliver on mission? How do you interact across the system to: Agree on shared mission goals? Assess community needs? Coordinate to improve services and programs for the benefit of your communities? nonprofitfinancefund.org 2016 Nonprofit Finance Fund 15

17 Financial Capital FINANCIAL Resources to Support Short & Long-Term Goals HUMAN The Right Amounts & Types of Expertise INTELLECTUAL Program Approach & Performance Mgmt SOCIAL Collaboration & Partnership Financial Capital: The alignment of financial resources to deliver and support mission in the immediate and long term Business Model Capital Structure Planning for the Full Costs of Adaptation nonprofitfinancefund.org 2016 Nonprofit Finance Fund 16

18 Components of Financial Health Business Model Income Statement How an organization makes and spends money in service of your mission Key questions: Does revenue meet and exceed expenses? Do you have a history of stable surpluses? Capital Structure Balance Sheet The nature, distribution of your assets, liabilities, and net assets Key questions: Do you have the right resources to improve your programs and invest in the short and long term? 17

19 ..They are Related Consistent surpluses Business model Capital structure Reinvestment into the business model 18

20 Recognizing the Full Costs to Deliver on Shared Mission Goals Nonprofit is a tax status, not a way of life Full costs > Operating Expenses > Direct Expenses Full costs include business model and capital structure needs 19

21 What s Required to Adapt Across the System? Culturally competent and effective programs that reflect and meet the community need Ability to collect and analyze financial and program information to make decisions Enough capacity and the right skills on staff Staff and board don t feel tired and panicked Capacity to engage in partnerships and networks to orient towards stronger communities Cash flow is easily managed Investments are available and made to support mission delivery Innovation and change (such as growth) are possible 20

22 A Call to Action for Funders & Nonprofits To meet community needs within our constantly changing environment we must build and maintain an ability to adapt. Building adaptive capacity requires a link between intellectual, human and social needs to financial needs. Work together to acknowledge inequity and privilege within the system, redefine funding norms, and advocate for what it will take to achieve a just and secure New Mexico. 21

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24 Thank You! To Stay Connected Learn More Twitter Facebook Our Blog Sign Up nonprofitfinancefund.org; payforsuccess.org twitter.com/nff_news facebook.com/nonprofitfinancefund philanthropy.com/blogs/money-and-mission nonprofitfinancefund.org/sign-up RSS nonprofitfinancefund.org/news/feed Get in Touch! Nima Krodel 23