Comments on: Sustainable Nonprofit Operating Models

By: Jeremy Gregg

Jeremy Gregg — Sat, 05 Apr 2008 02:46:39 +0000

We raise about $1-1.5M of our $9M annual operations budget from individuals, and around $200K directly from churches. We are seeking ways to aggressively expand that, but we are not sure if the invest of time and resources will yield the significant capital that we need to fully realize our capacity.

I’ve thought about contacting Good Capital about this, given their interest in healthcare, but am not sure how to build the proposal. The clinic is based on a charitable model, and the fees collected from patients barely represent 20% of the overall costs (not including the doctors and nurses, who are provided by partners).

By: Dave Stoker

Dave Stoker — Fri, 04 Apr 2008 19:26:02 +0000

Here are two examples we’ve collected that have dealt with clinics:

http://www.citizenbase.org/en/node/2876

http://www.citizenbase.org/en/node/2879

I do not know the details of the Central Dallas Ministries but perhaps you have a large natural citizen base starting with your church membership that you have not yet fully tapped. I think of volunteer hours, connections to in-kind donations, a built-in marketing team.

By: Sean Stannard-Stockton

Sean Stannard-Stockton — Fri, 04 Apr 2008 16:12:40 +0000

Jeremy, your question is a good one. I’ll note that Citizen Base, which Dave mentions above, lists faith organizations as ones with a natural “citizen base” of sustainable support. You should check out the website.

Rather than respond to you directly, I’ve asked the people at Nonprofit Finance Fund to respond to you. Not sure if they’ll have time.

By: Jeremy Gregg

Jeremy Gregg — Fri, 04 Apr 2008 06:51:08 +0000

Thanks for taking the time to respond. This is helpful, although I still struggle with understanding how I might adopt these same principles at my organization, Central Dallas Ministries.

Our 2008 operating budget is just over $9 million. Much of that is secure through federal grants and such, but a significant portion — over 50% — comes from charitable donations. We have thankfully increased charitable giving by 20-30% each year for the past few years, but this is hardly a “model” for sustainability.

We definitely put the *faith* in the “faith-based organization” title.

One good example is our health clinic: it’s annual budget is over $2M. About half of that comes in the form of in-kind support from our major partners at the Baylor Health Care System. We also charge about $200K or so per year in fees to clients.

That leaves a sizable chunk — $800K, or 40% — to be entirely funded by charitable gifts. This inevitably causes an enormous drain on the general/unrestricted fund.

I would love to find a way to craft an argument for large amounts of “growth capital” for this clinic, which will soon double its capacity by expanding to a new facility. Without a massive infusion of cash, I am not sure how we can navigate this transition…

Ideas?

By: Dave Stoker

Dave Stoker — Thu, 03 Apr 2008 16:36:58 +0000

“The growth capital that VolunteerMatch is looking for is not sustainable funding. It is a onetime investment that will be used in part to build a sustainable stream of fees and donations.”

This is the model I’m working with at Ashoka’s Citizen Base Initiative (www.citizenbase.org) currently done through an idea competition model.

I completely agree that a ’sustainable’ nonprofit does not mean they must have social enterprises or earned income streams attached to their organization but they do need a base of support that is stable and predictable in feeding resources to the nonprofit (can be money, volunteer hours, in-kind, stable partnerships).