And to the naysayers....

My last two posts address the importance of nonprofits living within their means. Even as I wrote them I am aware of nonprofit organizations that overspend believing that their donors will come through for them and the donors always do come through, and so the organization continues living from donation to donation. However it has been my experience that for every organization that manages to survive using that philosophy there are three other organizations that have to close their doors because they relied on that philosophy. I am also seeing that larger donors and funders are increasingly becoming more discerning. They are looking for financial healthy organizations to give to, where they believe their money will be handled wisely and can make a long term difference because the nonprofit will be around for the long term.

“The Millionaire Next Door” applies to Nonprofits too

In their book “The Millionaire Next Door” authors Thomas J. Stanley and William D. Danko, systematically illustrate the point that the secret to becoming a millionaire has nothing to do with your inheritance, your nationality, or even the job that you have, it is a function of saving more than you spend. They provide example after example and study after study back up their point. This is another great application for nonprofits to apply in financial management. Spend less than you earn. Save money.

Nonprofits argue—we can’t do that. The needs are too great.

Let’s look at this from another angle. When a nonprofit has cash flow problems and is always running short on funds, how much time is spent trying to figure out which bills to pay first, calling creditors, paying late fees, etc. That is time that could be better spent meeting those needs. Instead it is wasted time and costly decisions are sometimes made in haste. And it is all because the nonprofit did not live within its means. Think what you could do with more money. Want to have more money in the future? Manage it well in the present.

"Feed the Pig" applies to Nonprofits too

The American Institute of Certified Public Accountants (AICPA) has a clever advertising campaign www.feedthepig.org to encourage saving among consumers. (Feed the pig being your piggy bank). You do not have to look far to see the detrimental impact of America’s spending habits on the economy.

How do we save? Simple, spend less than you make. The same seemingly simple philosophy applies to nonprofits too. No matter how great the need, how successful the program—you need to live within your means. You cannot start a new program based on what you think donors might give to you once they see the success of the new program if you don’t have money saved to kick off the new program. You can’t keep running a program when funding was cut for the program three years ago and no new sources of funds have been developed. Nonprofits that are successful for the long run have learned that you can’t spend what you don’t have.

AI-It is all in the questions

The website Appreciative Team Building gives this summary—“an appreciative approach starts with a series of questions about what is already working, in order to uncover the root causes of team success” When you read about AI you might conclude that it ignores problems that exist or by only focusing on the good things an organization doesn’t get the full picture. This could be possible. However, I like the summary noted. You can still look at a problem situation and ask “how have we overcome problems successfully in the past?” or “what is working well and why” and “how can we take why this is working well and apply it to this, that is not working well” It would be tempting for an organization to use AI to avoid talking about very real problems that could threaten the organization if they were not addressed. It is important to design the questions carefully to address issues in your organizations.

Just Starting Out with Appreciative Inquiry

About two weeks ago I attended a seminar from the Association of Fundraising Professionals on the topic of Appreciative Inquiry. First of all, kudos to the speakers who had us work through an example to illustrate the more complex elements of Appreciative Inquiry. Most of us in the audience were new to the concept and a bit skeptical. The practical examples helped us see the enthusiasm that develops when issues are explored using positive inquiry. It would be hard to adequately discuss the elements of appreciative inquiry here so I’ll refer you to one of the websites that I found the most helpful. This group, Appreciative Team Building, presents a concise discussion of AI.

There are a lot of elements of AI that I can see would be beneficial to organizations. It can enhance the traditional strategic planning process, especially for organizations that have been through the process several times before and might be looking for a different approach. Even in informal planning processes, reframing a question from a positive standpoint can open up dialogue that helps find solutions. It is a process that I would like to explore more.