It’s Time For Not For Profits to Get Creative About Finances
Monday, 13th February 2017 at 4:22 pm
There are no doubts that the not-for-profit sector in Australia is struggling. Funding is becoming harder to obtain and competition is increasing, writes Mimmie Wilhelmson from Akolade. Attend Akolade’s 2nd Annual Not-for-Profit Income Generation Forum on 7 and 8 March to hear this and other issues being addressed by sector leaders.
Despite the decrease in government funding, the 2015 Not-for-Profit Finance & Governance Insights report found that 63 per cent of large NFPs primarily rely on government funding and 85 per cent of all NFPs find it difficult to find consistent and regular income.
“The biggest challenge is the slow but sure decline of the traditional business model,” chief executive officer of Diabetes NSW Sturt Eastwood said.
“Not for profits need to become more commercial in their approach to revenue generation.”
Although there is less funding available for NFPs, the demand for their services is still there. But if organisations don’t manage to secure funding and successfully look after their finances, they won’t be able to provide any services at all.
There’s a lot of passion in the sector, but the commercial knowledge is limited, according to Eastwood. Eastwood explains that the need to diversify one’s income streams is crucial. The days of volunteers rattling a can on the street to collect money is no longer working as an income stream and the return on these activities is dwindling.
Organisations may need to look into options such as becoming a social business or social enterprise, forming new partnerships and diversifying their service set.
He urges NFPs to start testing what they do in the marketplace, just like commercial business do, to see what services and products work best.
“In the not-for-profit sector we tend to do the same thing. Is this a world-class product that is delivered well? We never really had world competition,” Eastwood said..
There is also an increasing need for NFPs to be transparent with how they spend money. They need to show accountability as more donors ask to see where their donations are going.
“You have to be very careful and clever on how you use money. You have a greater duty of care to use donated money carefully.”
It is evident that the not-for-profit sector is undergoing one of its biggest challenges to date, and if organisations don’t take control of the situation and become more business-minded, they will be forced to close their doors.
Hear more from Sturt Eastwood and other NFP sector leaders who will share their knowledge and expertise at Akolade’s upcoming 2nd Annual Not-for-Profit Income Generation Forum being held on 7 and 8 March 2017 in Sydney.
By targeting four main focus points – diversifying income streams, developing partnerships and mergers, improving fundraising and marketing strategies, and developing a financially agile management model – attendees receive holistic strategies to increase income and cut spending across all levels and departments within their organisation.