How sustainable is your NFP?

Many people have a wrong idea of sustainability – they study the financial reports of an organisation and, depending on the results, proclaim the company sustainable or not. It is important to know, however, that there is much more to viability and sustainability than finances, and, as Ken Leigh says, financial reports can’t show us whether the organisation is developing properly, are the stakeholders happy with it, how effective the performance is, etc.

In order to analyse your NFP’s sustainability you need to take into consideration a lot of factors.

To start with, you need to find if your organisation is viable, that is, if it is able to maintain the inflow of resources required to cover all the strategic outflows, risks and operatipons. If possible, organisation growth without ceasing the service is a further evidence for viability. On the other hand, sustainable are those organisations which manage to achieve their plans for inflow and outflow in the long term (5+ years), having in mind that the conditions may change to a certain level.

All this, however, is related to money and looks at the accounting and quantitative data. In order to understand the sustainability of your NFP organisation, you need more and, fortunately, the input resources you need to assess are provided in the Better Boards Integrated Viability Model (illustrated in the scheme below).

How does the model work?

With the help of this framework, you can find out if and how sustainable your NFP really is. Of course, a full analysis will include all the four components of the model – Organisational Motivation, Environment, Organisational Performance and Organisational capacity and will try to assess and, where needed, develop all the 22 factors that form them. However, this may be quite a serious task to undertake and unless you are planning to outsource the sustainability analysis, you can focus on one or a couple of factors that are vital for the continuity of service, that is, for the ability of the organisation to adapt to the changing markets.

In order to do so, choose a factor from the scheme above and try to ask important questions that will help you assess the current situation of your NFP with regards to that particular factor and component. For example, if you choose the Financial Viability factor under the Organisational Performance Component, you can ask a questions regarding the surplus of the organisation, the quality of existing funding sources, the assets and liabilities, the revenues and expenses, etc. Once you have the questions, you can present them to your stakeholders in a form of your choice., as an interview, as an open-ended questions, surveys or interviews.

After you have received the answers to the questions, you will have information for the sustainability of your company. In order to analyse it, you will need to make sure you have interviewed the right stakeholders, asked the appropriate questions, chosen the best format and used an advanced data analysis method that will help you get the final report in a particular form of your choice.

In short, the sustainability of your Not-For-Profit organisation is more complex to analyse than check out the financial reports. However, the process of assessing your NFP is not an important one as it will provide you with insight regarding the ability of your company to survive the constant market changes and continue to provide service; therefore, it is important to carry it out as soon as possible and if necessary take certain steps to improve your organisation’s sustainability.