Nonprofit Opportunities
Sarasota, Florida is well known for and justifiably proud of its nonprofit sector.
Nonprofits are a significant contributor to the local economy in Sarasota. They manage sizable financial and other assets. They provide employment opportunities, directly or indirectly, for a substantial number of people in our community.
There are well over 1,500 nonprofit organizations in Sarasota, one of the highest concentrations in the country. And there is no doubt that nonprofit investments of both financial and human resources have delivered a higher quality of life in Sarasota than we would have without our philanthropic community.
Even better times for nonprofits could be coming. Looking ahead, at demographics, incomes, and net worth, it is possible that the Baby Boomer generation, comprising one-third of Sarasota citizens age 65 and above, could transfer the largest amount of wealth in U.S. history to nonprofits.
All these encouraging signs notwithstanding, there is another side of the nonprofit reality that we must come to grips with.
Most nonprofits are small, often start-up organizations, susceptible to the same vulnerabilities as small businesses...and to certain vulnerabilities unique to the nonprofit world.
The facts. According to Guidestar, 50% of current nonprofits have less than one month of operating revenue. That means they are living on the edge, hand to mouth, month to month. Guidestar further reports that 30% of nonprofits lost money and ran an operating deficit over the past three years and that 8% are practically insolvent, meaning their liabilities exceed their assets. Looking at another source of nonprofit physical health, 501(c)(3) filings, 12% of nonprofits disappear (no longer file tax returns) after five years, and nearly 20% disappear and go out of business after 10 years.
What does all of this mean to those of us actively involved with nonprofits?
One, do not be mistaken: Nonprofits are businesses, and not-for-profit is a misnomer. Tax-exempt organizations must at least break even and ideally run a consistent, small-but-steady surplus to ensure smooth, sustainable operations.
Two, cash is critical. Nonprofits had better know and understand their sources and uses of cash. Their sources are more varied, complex, and nuanced than a for-profit business’s, and they depend first and foremost on donations and grants (unless they are one of the fortunate few nonprofits with a huge endowment). Nonprofits should know their uses of cash in detail and be able to track where every dollar goes.
Three, costs matter. In a sector where every dollar counts, ineffectiveness and inefficiencies create problems that can quickly become fatal. Every dollar should be managed carefully and spent as if it is your own.
Four, these are purpose- and values-based organizations. Values underpin principles and business strategy. Clear goals and strategic choices drive operating plan priorities and excellence of execution. Focusing on the few things that really make a difference is often the difference between success and failure. Distractions, mismanagement, mission creep, and strategic fuzziness or misalignment can be crippling.
Finally, choose your board and management well. Every position is important. Everyone needs to understand and buy into the goals, strategies, plans, and key measures. Everyone has to play her/his position and do her/his job. Everyone has to make a significant contribution to the success of the organization.
A.G.’s perspective: Viable and sustainable nonprofits
At the Bay Park Conservancy, we are a very lean, highly focused, “all-for-one and one-for-all” board and management team. We work from principles through process and people to strategy and plan to deliver a transformational public park on Sarasota Bay that will be open, accessible, free, and welcoming to the full diversity of the Sarasota community—today and for generations to come.
We partner with the city. We partnered with the city and the county on the recently approved tax increment financing for the Bay Park and new Sarasota Performing Arts Center. We represent and serve the broad community. We partner with the leading Sarasota foundations and with the philanthropic community, which have funded all four years of design and planning and all operations to date. We have cash in the bank to fund capital and operating plans at least a couple of years out. And we have a strong and broadening base of supporters, donors, and volunteers—Friends of the Bay—who will provide the funding and human resources we will continue to need as we transform park possibilities into reality for our community.
Our guiding principles, plan, process, people and partnerships are the key to The Bay’s viability and sustainability. Read The Bay Park Conservancy’s 2020 Annual Report here.
About the author
A.G. Lafley is the former CEO of Procter and Gamble, who worked for decades in and with large public companies. Over the last 15 years, he has turned more of his attention, energy, and time to small businesses and nonprofit organizations. He currently serves on the boards of Omeza, Snapchat, Tulco, Hamilton College, and as the founding CEO of the Sarasota Bay Park Conservancy. A.G. is the author of two best-selling books, The Game Changer about innovation and Playing to Win about strategy, as well as numerous articles on leadership, management, and business strategy for Harvard Business Review.