Thanks to the hard work of many amazing people and organizations, we are finally moving away from the ridiculous notion that “overhead” is a useful indicator of nonprofit effectiveness. Great studies are coming out pointing to just how crucial it is to invest in nonprofit infrastructure, and there are useful alternative ways to talk about your budget structure.
As an operations management geek, this is really exciting to me. Now we have all this data reinforcing how important it is to invest in finances, human resources, IT, and other aspects of operations. But over 60% of nonprofits have budgets of under $500,000 per year – and half of those have budgets under $100,000! When your nonprofit has a mere handful of paid staff (or none at all), how do you ensure that you have the infrastructure you need for everything to run smoothly?
We have been thinking about this a great deal at Rainier Valley Corps, and talking to everyone ever about how to do this well. We learned that while staffing is a critical component of capacity building for many organizations, that is still not enough.
Thankfully, lots of creative thinkers have been tackling this problem for years. Here’s some cool approaches we found:
- Share Office Space – With gentrification slowly squeezing nonprofits out of spaces they’ve occupied for years, it’s a great time to think more creatively about sharing space. Not only does it open up your office space options, but it also realizes creative savings – no need for your own printer, copier, meeting space, or receptionist. And you get to spend more time with other awesome nonprofit folks! The Hillman City Collaboratory is a great example of this here in the Rainier Valley, with more and more great spaces popping up.
- Outsource – Don’t lean on that awesome volunteer for your accounting. They are great in a pinch but when you find yourself having to spend yet another hour digging through QuickBooks trying to find where that grant money went, you’ll wish you had taken another path. There are some impressive organizations that focus on serving nonprofits in one specific area. For example, Jitasa manages finances for nonprofits, and has gotten really, really good at it, pouring all their resources into figuring out how to do it better, and giving you an entire team of finance experts to work with, ensuring that you get beautiful monthly budget-vs-actuals and barely spend any time on your 990s.
- Incubate – Find an umbrella organization that acts as your 501c3, and handles all aspects of finance, HR, and legal needs in one place. The Executive Director job is impossible, but this approach makes it far less impossible. CultureWorks is doing this in a particularly creative way, mixing their consulting and organizational planning services together and focusing on arts organizations, all with their excellent values at the forefront.
This isn’t an easy issue to fix, but we owe it to the many small, innovative, and striving organizations working in many far-flung corners of the world to figure out more, and better, ways of doing it well. There are many organizations that should never “go to scale” or “go big” because they do something unique that serves a very specific population or purpose. Often, these organizations serve a specific community of color or tackle a very particular equity challenge. That’s awesome. We need these small but mighty organizations.
Rainier Valley Corps is determined to figure out how we can most effectively provide operations support to our partner community-based organizations. Do you know an organization that’s pulling this off? We would love to hear from you!