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Sustainable Business

Building financially sustainable nonprofit organizations

The financial landscape for nonprofit organizations across the country is changing. Traditional sourcing of funds are flat or declining, while the need for the community-based services and economic opportunity tools nonprofits offer is increasing. Nonprofits are facing many challenges including: meeting payroll, funding goals and covering fixed expenses. Without an evolution in the way nonprofit organizations acquire and use financial resources, fewer people will benefit from their services and fewer nonprofits will survive.

Recognizing this, and inspired by existing social enterprise models within our network, NeighborWorks America has acted to equip the more than 245 local nonprofit organizations in the NeighborWorks network with training, technology and technical assistance to create and sustain mission-oriented revenue streams.

Text graphic that states: Organizations participating in the NeighborWorks social enterprise pilot increased earned revenue by 101 percentNeighborWorks America partnered with the Stanford Social Innovation Review on a special supplement issue, “NeighborWorks America Leading Innovation,” to introduce this comprehensive framework of business and culture change. The first part of this effort focused on a path to business sustainability tailored for nonprofit organizations engaged in providing homeownership services in their communities. This pilot, called the Sustainable Homeownership Program, has seen tremendous results for the NeighborWorks network.

Results show that participating nonprofits reduced the costs of serving customers, increased the number of customers served and increased the percentage of costs covered by earned revenue and leveraged new technologies to grow more efficiently.

At the center of this effort is a commitment to a social enterprise paradigm. The goal is not to transform NeighborWorks nonprofit organizations into commercial enterprises solely focused on bottom line results. Instead, our goal is to create a mission-driven model for robust community development that incorporates enhanced appetite for risk and clearer understanding of how the work that is done and the people that are doing it contribute to more resilient communities and organizations.

The techniques and strategies presented in the supplement can be applied across the NeighborWorks network and be among the tools organizations will use to identify how their lines of business and service can be transformed into revenue generating sources of mission-based capital. These approaches can also help the organizations analyze new areas of service to enter and how that entry will help build stronger communities and stronger organizations.
For more information, please contact:
Donna Tally
dtally@nw.org