Real learning gets to the heart of what it means to be human. Through learning we become able to do something we never were able to do.
― Peter M. Senge
― Peter M. Senge
Predicting the future is not usually part of an Executive Director, CEO or board member’s job description, but it is a critical part of the role, particularly when it comes to securing future revenue. Nonprofits are not always considered businesses, but they still have to generate enough revenue to keep the doors open. You may not be worrying about how your 3rd quarter financials will impact the company’s stock price, but since 2008, the marketplace for social sector investment has been changing and understanding your position in that market is critical to your mission and your stakeholders. In The 21 Irrefutable Laws of Leadership, John C. Maxwell writes about the Law of Intuition. He defines leaders’ intuition as a simple equation: facts + instinct + intangibles (the intangibles being cohesion, fatigue and team enthusiasm). For Maxwell, leaders are able to read the current situation, the trends, the available resources, and, perhaps most importantly, to read themselves. So why is predicting the future so hard in the social sector? Firstly, our revenue models often make it hard to think multiple years into the future. Secondly, executive directors, like great escape artists, are often the kind of individuals who seem able to achieve miracles. Just when others think that your nonprofit is about to go under, you pull back the curtain and your staff and board members are amazed to see that the shackles are off! Of course, there are limits to how many last minute miracles you can pull off. For many years now, I have been recommending that organizations go through an exercise that helps give them with the tools they need to visualize their revenue future. I believe that all nonprofits (and all small businesses, for that matter) should create an eyes-wide-open three-year projection alongside their annual budget. This recommendation is usually met with a sidelong glance or a sigh, but nothing makes a prediction clearer than seeing it in black and white – or sometimes, sadly, in red. For those who take on this useful exercise, I recommend four guiding principles.
When you’ve done all that, take a step back. What do you see? As a purpose-driven leader you must look honestly at your projections and ask how they will impact the people and communities you serve. So, having analyzed your future funding forecast, what can you do next? If the forecast is bleak, it may be time to reach out to your must-trusted advisors to assess whether a merger, a strategic alignment or even a graceful wind-down is in order. If the forecast is stormy, which path seems the least uncertain? Research shows that when people or organizations need to grow, or when they are facing challenging times, the optimal response is to do the things that they do best. If individual donors are the backbone of your fundraising efforts, focus on them. If foundations are your fuel, figure out how to leverage those relationships to help you last out your future financial storms. If the forecast is only partly cloudy, perhaps trimming costs may be in order. If the forecast is for smooth sailing and sunny skies, either you are the darling of your supporters or your issue is growing in salience or profile. Either way, now is the time to focus on growth and on building financial reserves, because the weather always changes. Note: For more on this subject, please see Is it Time to Close?, a material created by Adam Tenner and Sharp Insights, LLC. Comments are closed.
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