Nonprofit operations are not sexy – or are they?

Nonprofit operations may not seem sexy, but they are key to building capacity and resiliency. And what’s really not sexy is a nonprofit organization with outdated systems that cause inefficiency or non-compliance; or practices that contribute to someone’s burnout.

During a recent a presentation about shared services someone asked, what’s sexy about nonprofit operations and why should we pay attention?

Admittedly, when you first learn about a nonprofit organization, the mission is probably what sparks your interest. The back-office of an organization, the accounting, finance, information technology, human resources, and other administrative services, is not as immediately eye catching. Yet we know that these functions are essential. 

In a recent conversation, an Executive Director of a newly forming nonprofit recognized the need for operational support. “My Board wants me to focus on the strategic direction of the organization and not on administrative tasks, but right now there is no one else to do them. In the short-term, board members will be supporting in these areas. Board members that have been recruited have skills that are needed.”  

More resources exist for for-profit startups. When an entrepreneur starts a small business, there are public structures to provide consulting, support, and resources to help set up effective operations, including through the Small Business Administration (SBA). While nonprofit entrepreneurs can utilize and adapt the SBA’s services, there is no dedicated Small Nonprofit Administration, despite the reality approximately 2/3 of nonprofit organizations that report any expenses have budgets under $250,000 per year. 

A $250,000 nonprofit budget typically translates to an organization with a staff of one or two people who are responsible for all operational functions in addition to mission-related activities. In practice we frequently see an executive director who is responsible for accounting, finance, information technology, human resources, and marketing – in addition to leading programs and services. 

This increases organizational risk because no one person can be exceptional at every operational and programmatic function. There may be gaps in service quality if, for example, best practices are not followed, or systems are not updated. This also can contribute to leadership burnout because it is very hard to balance so many competing priorities and also have very little capacity to consider alternative ways of doing things. 

The founder of a 5-year-old environmental group recognized the need for operational planning, budgeting, and funding as she looked back on her experience, “I created a business model that never included staff and I’m paying for that now. I took classes to build my skills, but I did not want continue to do everything.”

Maybe our interest in operations is changing. Over the past year the COVID-19 pandemic caused many nonprofit organizations to pivot. Funders had a choice about what to do when funds were allocated for programs that couldn’t be provided as proposed. Some funders responded by allowing organizations to re-purpose funds to make operational investments, for example, to support technologies and systems for remote work.

National networks and local networks also offered new ways for nonprofit leaders and back-office service providers to share information and best practices, for example, to help organizations navigate the PPP loan application process. 

Outsourcing and shared service providers, including fiscal sponsors, continued to offer different collaborative back-office services to suit the needs of nonprofit organizations. 

Looking forward, as nonprofit organizations transition back to the workplace, we suggest that the back office must continue to be a priority. As we’ve learned over this year, an organization’s operations can strengthen stability, resilience, and responsiveness and when we invest in the back office, we increase overall capacity for mission impact.

 

This article is the first in a series, based on conversations between Jackie Cefola and Debra Box about nonprofit shared services and related topics. Jackie Cefola, principal of Jackie Cefola Consulting, is a trusted advisor to nonprofit leaders who are starting up new collaborations, often related to shared services. Debra Box, principal of In the Box Consulting and former President and CEO of Support KC, where she helped nonprofit organizations to focus on their missions by providing integrated expertise in financial management and support services.

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