Expert advice for Not-For-Profit Organisations.
I have worked on numerous Not-For-Profit (NFP) organisations over my career at Accru Melbourne and looking back I’ve noticed a considerable shift particularly in the last few years. Maybe that shift is coming from within these organisations or maybe it’s due to external pressures, or even a combination of both of these factors. Wherever this shift has come from, I believe it has been a long overdue and important shift.
Going back ten to fifteen years ago, just about every NFP I worked on was a not-for-profit in every way. The organisation would have a zero budget and the aim for the following twelve months was to break-even. If the first cut budget showed a surplus then it would need to be revisited and an expense line would need to be adjusted in order for the mandatory break-even point to be achieved. Boards and management generally cringed when it looked like a surplus could possibly the result for the year and measures including increasing expenditure would need to be taken.
Budgeting to break-even breeds inefficiency, stalls innovation and condemns an organisation to a relatively short existence. Just like Darwinism, only the fittest will survive! In recent years some NFP organisations have seen the light and decided to change the culture within. Efficiency and innovation have been the clear winners here. Without the change many of these organisations would have not have had their funding renewed or been successful in winning new tenders as the government sought out the larger and more efficient organisations.
A lot of NFP organisations are now run like for-profit businesses – and they should be! They are efficient, maximising returns on investments, donations and employees whilst reducing costs such as professional fees, printing and travel. Many organisations empower their program managers or equivalents to take ownership of their budgets and produce efficient spending and therefore results. Boards no longer cringe when a surplus is budgeted and many have embraced the reality: that to remain commercially viable organisations need to be efficient and innovative.
My contention has always been and still is: the more efficient a NFP is, the faster they can achieve their stated objectives. Increased returns on investments, donations and employees simply means there are more funds for the betterment of the objectives of these wonderful organisations. There’s nothing wrong with a NFP simply doing more good work!