Study: Growth Is Good, But Managing It Well Takes Skill
August 6, 2017 Most, if not all, nonprofits view growth as key to organizational well-being, but, according to a recently completed study of nonprofit financial professionals, growth can affect their ability to manage risk.
The study, commissioned by Abila, a provider of software and services to nonprofits, found that 80% of 301 respondents to a survey of U.S. nonprofit finance professionals agree that growthwhether increase in services or an increase in fundingis very or extremely important to them.
Other findings include the following:
- More than half of respondents said they will apply for new grants during the remainder of 2017, look for new ways to generate revenue, and increase fundraising efforts.
- Two-thirds said budget planning and training of new staff are at least moderate, if not major, challenges of organizational growth.
- Sixty-two percent said as their organization grows, their ability to manage risk becomes somewhat or much harder. While virtually all were confident in the ability to manage risk, only 27% said they were very confident.
- Concerns regarding fraud accompany growth: 33% said organizational growth opens them up to greater potential for fraud or accusations of fraud.
- While growth is thought to improve relationships with major funders, respondees expressed concern about the impact of growth on morale, ethics, and transparency, with younger staff more likely to equate growth with better morale.
Recognizing that growth brings potential risks and rewards, Abila suggested that nonprofits may want to consider the following to prepare for successful growth:
- Challenge your team to keep a rolling budget that includes forecasts several years out. Be sure to include key activities that support your planned growth, including new personnel and other associated costs.
- Diversify revenue sources and look to expand fundraising efforts, create new service-based revenue, or acquire private grants through foundations and corporations.
- Evaluate each potential strategy through a risk management framework outlining factors such as additional staff needs, what might go wrong, contingency plans, dependencies, and any new laws or compliance considerations.
- Include staff training and succession planning as a part of your growth plan.
- Create a plan to communicate change to staff, funders, and other stakeholders.