The Nonprofit Financial Model Never Worked; Here's a New Model That Does

The Nonprofit Financial Model Never Worked; Here's a New Model That Does

Imagine if your company's investors expected you to end your year without generating a dime in surplus. Welcome to the nonprofit sector, where your investors are foundations, and they expect multi-million dollar enterprises to end their year with zero. This makes nonprofits dependent supplicants year after year--unhealthy enterprises with no cash reserves, and no capital to strengthen, diversify, or build their operations.

Ah, you say, nonprofits should not make a profit. Actually, they should not accumulate profits and return them to investors (shareholders) or to employees in the form of bonuses or unreasonable compensation. But nonprofits do need to accumulate reasonable cash reserves in order to run sound businesses, grow to meet community demands, and invest in new services that respond to community needs. The current financial model makes such sound financial practices nearly impossible.

Nonprofit Finance Fund Capital Partners has a new way: "philanthropic equity"

See continuation on Fast Company here...

Korngold Consulting LLC assists corporations in building fully integrated, high-impact CSR strategies, including leadership development through nonprofit board service.  Korngold Consulting trains and places business executives on nonprofit boards, and consults to nonprofit boards and leaders to strengthen governance for financial and strategic success.