I’m still thunderstruck by a concept that I bumped into a few years ago. I found it in a  paper whose title is a mouthful: Supporting Financial Vibrancy in the Quest for Sustainability in the Nonprofit Sector. It was authored by Marilyn Struthers of The Ontario Trillium Foundation.

In the paper, Ms Struthers poses that we build financial vibrancy in our quest for organizational sustainability. The article outlines six capacities that contribute to financial vibrancy and the creation of resilient and adaptive organizations rather than merely stable ones.

But tucked away in all this very compelling analysis,  under a box four pages into the study, was the sentence that left me speechless:

“Financial vibrancy is the capacity of an organization to make the transition from one sustainable moment to the next.”

I experienced a moment of ultimate clarity, marveling at the purity, the honesty of that statement.

When I share this marvelous saying with the participants in my workshops, I can see a great burden of guilt fall from their shoulders. Smiles emerge.

Nonprofit organizations exist in an incredibly dynamic world. The ground is shifting even as I write, with great uncertainty about the economy, about the future of employment, about cuts to government funding, unending technological innovation, coming shifts in our ecosystems, and even about our very security and survival.

“Experts” glibly chastise nonprofits for so many wrongs — chasing grant funding, for not having diverse revenue streams, for scorning individual giving, for lack of board fundraising. Yet, the reality is that there are no best or right answers for any nonprofit. Each must craft its way, unique to its own circumstances and opportunities.

I share the pain of my nonprofit colleagues, having shouldered that  Sisyphean task of revenue generation myself. I marvel that there are any strong spirits left at the end of the day.

Me, I’m still humbled that given all the financial handcuffs nonprofits wear that so many have carved out, no matter how awkwardly, business models that enable their work to continue, some for decades, others for centuries.

That was one definition of sustainability offered by Margo Flood, Executive Director of the Environmenal Leadership Center and Chief Sustainability Official at the new student plenary at Warren Wilson College last week. (One of our sons transferred there this year).

If you’ve been following this blog, you’ll know that one of my great concerns is the concentration of the resources of the nonprofit sector in the hands of so few organizations. Fewer than 6% of US institutions hold more than 80% of the income and assets of the sector.

I’ve asked the question before “How much is enough? Philanthropic greed”

That’s why Ms. Flood’s definition resonated so strongly with me. What would happen if all philanthropic institutions held themselves to the standard of taking no more than their fair share. Perhaps more philanthropy, bequests, grants and government funding would flow to organizations that are just as worthy (maybe even more so) but without the class connections and fund development capacity that accrue to many of the largest institutions.

The report is worth looking at, even if you aren’t from the Bay State, as it provides a very intriguing analysis of nonprofits by size and business model. The report categorizes the sector into three segments based on budget size and “value proposition” as follows:

Grassroots organizations create civil society through grassroots action and volunteerism. They have budgets below $250,000.

Safety net nonprofits provide a societal benefit and a “safety net” through the delivery of services and quality of life contributions. They have budgets between $250,000 and $50 million.

Economic Engines provide large scale services and contributions to the state’s economic health and competitiveness. These are the largest institutions, primarily universities and hospitals (60%), that represent just 2% of nonprofit numbers but 80% of assets and 72% of their spending. (GG: It’s interesting to me that the description of these economic engines says nothing about their charitable purpose. Why is that?)

The report looks at success from a financial perspective only. To me, it displays the Nonprofit Finance Fund’s bias that a nonprofit needs to have a budget in the over $50m category to be considered financially robust.

In my book, any nonprofit that has lasted for 20 to 150 years and continues to achieve important societal outcomes, while nimbly executing on a measly budget (by report standards) of a cool $1-5 million without accumulating debt, is doing pretty well and shouldn’t feel that it hasn’t worked out a viable financial model.

I’m not disputing the financial difficulty that so many nonprofits face and the harsh reality of living payroll to payroll. But having worked at an organization that had an annual budget of $25 million, let me tell you, there was no edge-of-the-abyss financial struggle going on there.

While the report has many recommendations worth echoing, the little hairs on my neck are standing up as I fear that it could result in discounting the resilient financial model of many small and very worthy organizations and push much needed financial resources into the pockets of some of those mega organizations that frankly, in my estimation, don’t need another charitable dime. See our earlier post How much is enough? Philanthropic Greed.

glg