Rule #15: The greatest weakness of the nonprofit is only managing the expense side of the ledger

As the story goes, this rule began in the form of a question that was put to a famous management guru. He was also a man of deep integrity and faith. Someone once had the foresight to ask him, “What is the greatest weakness of the nonprofit?” Rule #15 is my elaboration of his answer.

When I first heard this insight I didn’t fully understand what he meant, “They only manage the expense side of the ledger.” I’m a bit challenged by balancing my checkbook. (Okay, my wife does it.) But the longer I have served as a fundraising consultant for not-for-profit organizations and ministries, this concept has become much clearer.

As a consulting firm, it is both our privilege and responsibility to create value by offering insights, analytics, strategies and creative approaches to those we serve. These services are most often offered in the form of recommendations, which, as you know, may or may not be accepted.

The rejection of a solid recommendation is one of the most difficult experiences a fundraiser or consultant has to face. It’s devastating to watch as a proven strategy is left lying there on the table. There are usually two reasons for the rejection of a recommendation:

1. Expense

2.A low tolerance for risk (even calculated risk)

The more I experience these two factors the more I gain understanding of this rule.

Having served six years working in not-for-profit leadership, I am the first to admit there are many factors or pressures faced by organizations that are not always evident to those of us on the “outside.” One significant difference between a not-for-profit and a for-profit entity is the not-for-profit is entrusted with allocating the expenditure of donated dollars. I see the prudence in maintaining this perspective. Often, when I encounter the question, “What would our donors’ say if they knew we were investing their gifts in this way?” This rule is a comfort to me here. It leads me to carefully and humbly ask, “What would happen if a donor knew you had passed up a significant opportunity to invest in your organizations’ ability to deliver increased services, and you didn’t take it?”…

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