Achieving outcomes is one way to measure accomplishments, of course, but at its most fundamental, success for a nonprofit means having sufficient staffing, resources, experience and credibility to make a lasting difference in the lives of people and the community. And to do that, you usually have to start small.
When he joined the XYZ University Foundation as CFO seven years ago, Charles Vincent (not his real name) found an organization in financial disarray. XYZ took great pride in ensuring that the university and its students were well supported. However, as Vincent soon discovered, the foundation was not bringing in sufficient funds to sustain that level of commitment to the university.
“When I arrived here, we were cannibalizing our endowment and expending unrestricted resources that we didn’t even have,” he recalls. “We were also borrowing from our restricted funds to pay for current commitments — robbing Peter to pay Paul, if you will. I had to put the brakes on the whole thing. I was probably the most unpopular person on campus when I broke that news.”
Vincent, who had been a public accountant for a major financial services firm prior to joining the foundation, saw his job as not just establishing financial stability and growing the endowment but also encouraging people to think about how to support the university, now and in the future.
He began by reducing spending from 5 percent of the endowment to a more sustainable 3 percent. He also changed the valuation period from a single, year-end point in time to a rolling, 12-quarter average. Combined with a reduction in unrestricted support to stem the losses, the ultimate impact was a cut of nearly 50 percent in the amount of funding the university was receiving from the foundation, a painful scenario that had everyone shaking their heads and asking how this could happen.
To help people understand and support these changes, Vincent also encouraged the university foundation to become more transparent. “People viewed the foundation as a deep pocket,” he says. “They saw money going in, but no one knew what it was being used for. Once people were able to see the true picture, they started to get it.”
Vincent also began working closely with the foundation’s fundraisers, encouraging them to focus less on the number of donors they had and more on the individual revenue streams. He helped allay donor concerns by accompanying fundraisers on visits to explain why alumni could now feel safe making gifts to their alma mater again and encouraging development officers to partner with deans to explain how the foundation could help their colleges.
These innovations, each of which grew from Vincent’s initial interventions to stabilize the foundation’s teetering finances, have resulted in a steady increase in revenue that will help ensure the institution’s long-term sustainability.
By starting small, Vincent achieved something big.
This post was adapted from “It’s All Relative: How Your Organization and Its Myriad Stakeholders Define and Measure Success,” by Paul Lagasse, Advancing Philanthropy, Fall 2016 (reprinted with permission). You can read the whole article here.
