Nonprofit organizations face extraordinary challenges in a constantly evolving business world. Prioritizing planning for financial resiliency is needed now more than ever to ensure continuation of service delivery. Planning will help ease concerns of uncertainties for the future. So, how can leaders support financial resiliency through planning?

 
Why should you plan?

Planning for financial resiliency is the act of thinking ahead to reach a desired financial goal. It will produce stability and adaptability during times of change or crisis while also preparing the nonprofit for periods of recovery. Planning is an active engagement of adapting and learning while supporting the mission of the nonprofit, which leadership can use to help guide decisions in the future. Developing a plan and clearly communicating how that plan supports the vision of the organization is necessary for nonprofit leadership to build resiliency.

Where to start?

Nonprofit leaders should focus on building financial reserves as well as implement strategic and contingency planning, while clearly defining how these strategies support their organization’s mission. Communication is key to developing and implementing these tools for financial resiliency. Start by analyzing the specific needs of the nonprofit, what are the goals, values, and intentions? How can implementing a strategic plan support the mission of the nonprofit and build financial resiliency?  

Financial reserves

The nonprofit should provide an analysis of comparable organizations and industry standards for reserves to support the levels set by the organization. Leaders will provide transparency by developing processes to disclose the policy and report on the levels of reserves held.  This analysis should also clearly define what reserves are realistic for the nonprofit’s specific needs and how it supports its goals. Nonprofits that develop a reserve policy that strengthens the needs of their organization will increase financial sustainability. Embracing this process, developing a policy, disclosing levels of reserves, and having the support of the board will also strengthen financial resiliency. 

Strategic and contingency planning 

Strategic planning creates a more methodical approach to decision-making and project management. The nonprofit’s leadership team will analyze the short term and long-term goals of the organization. Identify what success means to your organization, so it is identifiable if the organization is achieving what they want along the way.  This will provide the framework for the organization to enact processes and support leadership in implementing the plan. Look at current issues facing the sector and develop steps to walk through how the organization would address the scenario. Planning for crisis, meaning anything that can disrupt mission delivery, like financial difficulties and changes in policy, is necessary to building financial resilience. When enacting a contingency plan, leadership should focus on being a team player: strategic, transparent, quick to respond, self-composed, and prepared. What would the organization do to sustain mission delivery? 

Leadership will need to be resilient in their approach to facing challenges, by being clear on the issues and the resources needed to address them. Identify the specific need of the organization for implementing a process to build financial resiliency, clearly communicate the need and how it supports the mission of the organization and gain the support and buy-in from stakeholders. Once the issues are identified, plan to spend the time necessary in the development, implementation, and monitoring of the plan. Embrace the process, think long-term, be open to diverse opinions, learn from past mistakes, and bring in as many players as possible for diverse perspectives; take that first step toward financial resiliency! 

Melissa Sullivan is a 2022 graduate of the Master of Nonprofit Leadership and Management program at Arizona State University and a member of the Nu Lambda Mu Nonprofit Honor Society. She is a Director of Finance and Administration for a nonprofit health care organization in San Diego, Ca. She has worked in nonprofit health care for the past 10 years.

Graphic by Lillian Finley

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Effective, motivated boards are critical to a nonprofit organization’s ability to develop its capacity and achieve its mission. Board Governance Training consists of a series of topics that break down the best practices and responsibilities of an effective governing body. It's available in-person, virtually or hybrid, depending on your organization and needs.

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Illustration by Lillian Finley, ASU Lodestar Center.

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