Non-profits operating like a business
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Kristin Park Special for The ABG Aug. 3, 2006 12:00 AM Arizona's non-profits have a history of being grass-roots organizations that stem from heartfelt motivation and passionate missions. But strong emotional ties to a particular mission can push finances to the background. That's changing. As non-profits become more affected by business trends, from a falling stock market to inconsistent government funding, some are pursuing outside business planning services to help them increase their financial sustainability. Alexis Walker, chief executive officer of the Volunteer Center of Maricopa County, recognizes the need for balance as non-profits retain the passion behind their missions while strengthening business practices. "Non-profits have always had missions, long before the for-profits. The non-profit culture has already affected the private sector in this regard. Now, it's time for the non-profits to learn from the for-profits and enter the cold, hard world to sustain themselves. But, of course, without losing their soul," Walker said. The Volunteer Center of Maricopa County offers management consulting, planning and marketing assistance to non-profits through its Executive Service Corps of Maricopa County. Walker said that the first three non-profits that requested the service all needed help with business planning. "I was really surprised by this, but it made me feel better that non-profits are wanting to pay more attention to their finances," Walker said. The Nonprofit Finance Fund, based in New York City, is a non-profit that uses resources donated from across the nation to help other non-profits achieve their goals. The fund's Nonprofit Business Analysis service is being sought by more and more non-profit leaders. "More non-profits are asking the question, 'What should our balance sheet look like to carry out our mission?' They need a comprehensive look at where they stand, with real data, as they focus on good business practices," said Clara Miller, NFF president and CEO. Allison Rapping, CEO of Phoenix-based Alliance of Arizona Nonprofits, has seen non-profits move toward increased business planning with remarkable creativity and innovation. "In the current market environment, I do think non-profits are more and more being asked to do more with less and having to really evaluate their business practices. And I've seen some incredibly well-run non-profits come out of the process. I'm in awe of some of their business practices and innovations they've created with such limited resources," Rapping said. Rapping points to HomeBase Youth Services, a Phoenix non-profit that has largely focused on business planning since its inception in 1991. The non-profit was recently recognized for its business practices by Charity Navigator, a national
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Non-profits operating like a business
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evaluator of charities. According to Charity Navigator Executive Director Trent Stamp, HomeBase Youth Services received the highest possible rating, four stars, for outperforming "most charities in America in its efforts to operate in the most fiscally responsible way." According to the organization's 2005 annual report, HomeBase provided services to 2,260 youths, with 79 cents of every dollar received by the non-profit benefiting youth programs and services. Patricia Leach, president and CEO of HomeBase Youth Services, is dedicated to taking the message of her organization's success to other non-profits, both in Arizona and around the country. She readily offers advice on important businessplanning principles. "I think it's certainly on the minds of a lot of people," Leach said. "For a for-profit business, the byproduct is revenue. For a non-profit, the byproduct is better program outcome. And you still need structure, order and strategic planning to succeed in this." Leach said she believes that the stronger non-profits have long focused on a business-planning model and she does not consider it a particularly new trend. However, she said she applauds the newer and smaller non-profits that are beginning to follow the model. "To have long-term viability is not about waking up every morning with a dream, but rather with tangible expectations and outcomes," Leach said. Janet Kington, director of fund development with the Girl Scouts, agreed with Leach and has noticed more non-profits doing appropriate financial analysis. "I'm delighted to see how many smaller non-profits are taking business planning seriously," Kington said. Kington said she does not believe that such a focus hinders the organization's mission. "We feel that it (business planning) can be a tool to help us better serve our mission rather than lose touch with our mission." Like Kington, Walker is behind the non-profit and for-profit sectors moving closer together. "I find it hard to believe that a non-profit would lose its identity by seeking to be stronger financially. A non-profit's identity is too solidly in the heart," Walker said.
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