Giving Compass' Take:

• Rebecca Coker, Neela Pal, and Miguel M. Salinas explain the importance and process of building financially resilient nonprofits.

• How can you work to better financially support your grantees? 

• Find out how to prepare your grantees for market downturns. 

It’s been a decade since the “nonprofit starvation cycle”—the downward spiral of unrealistic funder expectations that ultimately leads to underfunded grantees and continued funder misperceptions—gained notoriety. Yet, despite growing awareness in the sector, some organizations continue to have a reactive and stressful relationship with their financial health and performance. The organizational symptoms are all too familiar: conflating finance with bookkeeping, managing year to year without a multiyear plan, and underinvesting in operations, to name a few.

The David and Lucile Packard Foundation’s Local Grantmaking Program has seen a consistent trend of financial instability among some of its grantees. In a 2018 survey, “long-term financial stability” was the foremost issue among the 112 grantees included, with 61 percent listing it as a top concern, and many organizations reporting low confidence in their ability to steer their organizations to a place of fiscal strength.

This data led the foundation to seek insight from national capacity builder Fiscal Management Associates, LLC (FMA). Together, we built a multiyear partnership to provide comprehensive support for 10 grantees, creating a hands-on learning experience for organizations that had withstood the test of time despite limited resources. The average organizational age was 50 years, with budget sizes south of five million.

Read the full article about building financially resilient nonprofits by Rebecca Coker, Neela Pal, and Miguel M. Salinas at Stanford Social Innovation Review.