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Sustainability and outcomes

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Non-profit, focused on outcomes

Non-profit, focused on outcomes

Few days ago, I attended the General meeting of the non-profit association I am treasurer of. As each year since 3 years now, I presented the financial statements to the attendees, and the budget for this year. These two documents were approved, and employees were happy about the good results of the association even if we are crossing difficult time.

I was happy of course of this, but I remember people did not have always the same reaction. When I joined the board of directors 3 years ago, some people did not see positively a financial consultant joining a non-profit association. There were probably scared about some confusion with profit and non-profit. Such reaction was understandable, as the finance people are often seen as non-flexible people, only focused on profit and performances. Here is probably a confusion that could be done by employees of a non-profit, but by financial people too.

My first challenge was to be accepted by the people of the organization. My ambition to join this project was not to have power or to tell people how they have to do, but only to join an interesting social project as volunteer, and bring some competences in order to contribute to the success of the common project. My first thought was that I had to learn about the different activities of the organization, the interactions between the stakeholders of the different projects, in order to have a global picture of the association, to understand the work of each people and to be aware about the difficulties they were facing. This was a first condition for an efficient and harmonious collaboration. By showing interest to the work of each employee and volunteer, by asking some question to them about the different aspects of they job, I was showing my real and sincere interest in this project, and people began to trust me, as they noticed also that I did not interfere in their job. Each people his own competences.

There was clearly a need to professionalize the financial and administrative processes, in order to manage things on an efficient way, but also to provide credible financial information to the requesting subsiding authorities and potential partners. It was important to deliver a clear message about this need to get a structured financial process and to explain why. The accounting and the production of financial statement are not only legal obligations, but they represent also a financial management tool. This tool allows organization and her management team to have a clear picture of the financial situation on time, but also to have a “business” decision support. We know all that the business environment is not always a quiet story, but the non-profit environment is not quiet at all too, when your sources of financing are non-recurring sources, and that you are facing some regular crisis situations. In such situations, it is important to show that you have things on control, but also that you are able to define alternative strategies and to express what precisely your needs are, when you meet some potential donator or sponsors. People need to understand that financial tool is needed to ensure the sustainability of the project.

Here again, we speak about the confusion done by some people about things that are totally different. Indeed, what I mean here is that financial management does not mean profit. A non-profit organization does not focus on profit, but it is important to keep an eye on the balance between the expenses and the revenues, in order to preserve the owned capital. The goal is not to earn money, but to avoid to loose money. If it is the case, some decisions need to be taken in order to preserve the funds of the organization, but also to ensure the quality and the continuity of the activities and the provided services. It is not financial performance that is the focus in such environment, but the outcomes. If we try to reduce some operating and administrative expenses, it is not to save the integrality of the money, but to invest in more projects, responding to a demand and contributing to the goal of the association. The saved money will not be distributed to some shareholders, but will be reinvested in future project. This is a difficult part of the equation, to be able to have a long term vision with short term financial vision.

A long term vision is necessary, and projects have to be defined to materialize this vision. An appropriate strategy has to be implemented, in order to reach your defined goal. With these criteria, you focus on the sustainability of your project and the outcomes. These two factors contribute to social cohesion and personal satisfaction of people.


Written by Eric Saint-Guillain

April 19, 2013 at 22:52

Non-profit organizations, an added value for the society.

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In our society where economy is an important component creating wealth, I often heard critics about the non-profit organizations and associations. People are wondering if the subsides these organizations are receiving are correctly used. In other words, people are wondering if the institutions which do not create economical wealth, are not a charge for the society, and if there are useful. It is of course a pertinent question and people have the right to know how the taxes there are paying are used. People have the feeling that the taxes they are paying are not correctly used, but does it mean that non-profit activities are useless for the society? It should be a quick and wrong conclusion.

Non-profit organizations and associations, in different sectors, cultural or social are playing an important role in the society. We can see different interesting aspects of this sector of activity, but there are also conditions that need to be filled and which are filled in a lot of cases, making that people can have the feeling that their money is correctly used. What are these conditions?

  • Selection of project and the benefit they will produce: there are several needs to be covered in the society, needs that the private sector is not covering because there is no link with their activity and because the final goal is not the profitability. A detailed presentation and activity plan, and determined goals need to be presented in order to see what are the positive effects on economical, social and local level. The allocation of subsides need to be voted by a committee including independent members.
  • Project management and competences: non-profit organizations and associations are non-profit enterprises. It means that they have to face several challenges and issues on financial, legal and organizational level. In order to reach the goals on an efficient way with the allocated funds, some skills and competences are needed. As investing time myself in non-profit associations, I often see some lacks in term of competences, which has a negative impact in term of sustainability.

  • Concrete results: The associations launching projects have to produce concrete results, to justify the allocated amounts. They have the obligation to show the return on invested amounts, not on an economical point of view, but on social, educational, environmental level, depending of the scope of the project.

  • Financial sustainability: The allocated funds have to be spent correctly and each association has to implement controlling process in order to maintain the finance in break even. By creating debts and not paying contractors or employees, you do not reach the social goal of such organization. This is in my mind the weakness of some associations. The goal of a non-profit organization is not to make profit, as the name is saying, but it does not mean that the financial management is useless. I often see projects failure due to lack of management, with negative consequences.

These are some conditions needed to ensure that subsides are usefully allocated to projects. The quality of a project can be measured by the provided benefits. These benefits can be found on different levels, and make that non-profit activities are complementary of the economy. What are the benefits?

  • A positive contribution for the society: the associations are covering a range of services to the society, services not ensured by the private sector. It goes from social or medical services for aged people, for people facing temporary difficulties, also services in the education giving an access to knowledge and culture for everybody.

  • Local employment: this sector is creating local employment. Employment is a important key of social integration.

  • Local economical benefits: these associations are using local services. There are in fact a vector of wealth redistribution, as the allocated subsides have to be spent. The money they are receiving do not remain blocked and sleeping on bank accounts. It has a positive impact on local economy.

  • Personal positive effects: Some non-profit organization and associations are working with volunteers. Some studies show that people having a volunteer activity are in a better psychological and physical health. As mentioned, age is a question of mind. It is not because you reach a certain age that you are unable to contribute to a project, that you are unable to have activities. The fact to contribute to the community, empower the feeling to be useful and the feeling of social integration. We can see also a positive effect and cost reduction for the social security. If people are going well, they need less medical services. Globally, and as already mentioned in other postings on this blog, people need to have a project, to face challenges. The gained successes are an important factor of self- trust and wellness. Such activities have to be recognized, and encouraged. People should be encouraged to do an activity with the rhythm it agreed to them.
  • Social and educational benefits for the community: some social activities, related to education, are contributing positively to a better social and public environment. For instance, structures taking care of the children during holidays or when they are coming back from school and when the parents are still at work. These structures where animators are helping them to do the schoolwork, or by organizing games or activities, avoid these children to stay in the street, abandoned to the boredom, and avoid them to go to delinquency.

By mentioning these points, I tried to show that non-profit organizations and associations have a positive function in the society, on social and economical level. They have to be seen as a complementary activity of the economical activity. Do not forget that the economy is providing taxable wealth and that of course, without a strong economical activity, the public and associative world can not work. It is a question of balance, where each actor has to play the game, by respecting rules and with transparency, where initiatives have to be encouraged and supported.

Written by Eric Saint-Guillain

March 28, 2011 at 07:19