Community work often comes with significant financial pressures. Organizations may have ambitious goals while struggling to sustain existing programs. Staff may be underpaid, workloads may be difficult to sustain, necessary programs may be reduced because resources are limited, and some organizations may face uncertainty about whether they can continue operating.
Sound familiar? The question in this section is: How can organizations reduce these risks? And, if financial instability is already affecting your organization, what can you do to strengthen its long-term sustainability?
Securing and sustaining financial resources is not a process reserved for specialists. Staff members, board members, volunteers, community partners, and others can learn to participate in resource development. With planning, appropriate skills, relationships, and sustained effort, organizations can build a stronger financial foundation for their work.
However, financial sustainability rarely happens effectively without planning. "If we need it, it will come" is not a reliable strategy. Organizations sometimes begin important work with the intention of figuring out the funding later, only to encounter financial strain, difficult choices, or unsustainable commitments.
In this section, we'll look at the basics of planning for the financial sustainability of your organization. We'll discuss what financial sustainability means, why it matters, and how to plan for it. Finally, we'll close with some practical lessons from people with experience doing this work.
What is a plan for financial sustainability?
A financial sustainability plan is a tool for helping an organization or initiative - and, more importantly, the goals and community priorities it supports - remain viable over the long term.
A financial sustainability plan is not just about raising money. Funding will probably be an important part of the plan, and organizations may obtain resources through donations, grants, public funding, fees for services, contracts, or other sources.
But money is not the whole story. A financial sustainability plan can also identify other resources, such as in-kind support, volunteers, shared staff or facilities, partnerships, donated equipment, technical assistance, or opportunities for another organization to assume responsibility for an activity or program when that makes sense.
A simple rule to go by: If a resource helps sustain your organization or its work, and you otherwise would have had to pay for it, it may be appropriate to include that resource in your financial sustainability plan.
Like other organizational plans, a financial sustainability plan includes objectives, strategies, responsibilities, timelines, and action steps for securing and sustaining resources. These elements should be made as concrete as possible.
For example, a partial list of what your plan will probably include:
- A list of the resources, activities, and needs required to carry out the work
- The amount or level of resources required to sustain each item
- Current resources
- Additional resources required
- Potential funders, partners, supporters, or other resource sources
- The amount or type of support that may be requested from each source
- How support will be requested, by whom, and when
Your plan should consider both short- and long-term sustainability. It may address what your organization needs six months from now as well as where you hope the organization and its work will be several years in the future.
It is also important to remember what a financial sustainability plan is not. Financial sustainability supports your mission; it is not the mission itself. The purpose of securing resources is to make it possible to continue doing meaningful work.
Planning for financial sustainability is therefore one part of sustaining your organization, initiative, or community work as a whole. It can help create the stability needed to focus on priorities such as improving health, strengthening neighborhoods, supporting education, advancing equity, building community connections, or pursuing other organizational goals.
Pay careful attention to finances, but keep funding decisions connected to your organization's mission, values, community commitments, and intended impact.
Why should you complete a plan for financial sustainability?
Developing a financial sustainability plan takes time and effort, particularly for organizations whose staff and volunteers are already managing substantial responsibilities. A clear plan, however, can help reduce uncertainty and make resource development more intentional.
By developing such a plan, your financial position may become more secure, which can support:
- Greater focus on your mission. With more stable resources, staff and volunteers can spend more time on the organization's purpose and less time responding to immediate financial crises.
- Stronger organizational capacity and stability. Adequate resources can help an organization hire enough qualified staff, provide fair compensation, invest in training and professional development, maintain necessary infrastructure, and carry out its work effectively.
- Easier transitions. A sustainability plan can help an organization prepare for changes when a grant ends, a contract changes, costs increase, or another source of support becomes unavailable.
- Meeting funding or organizational requirements. Some funders require a financial sustainability plan as a condition of support. Having an existing plan can help an organization respond more effectively to such requirements.
When should you develop a plan for financial sustainability?
It's never too early to begin planning. If your work requires resources and is intended to continue over time, financial sustainability should be considered from the beginning rather than only after funding becomes uncertain.
Organizations that have been operating successfully for some time should also review their sustainability plans periodically. An annual review, or another schedule appropriate to the organization, can help determine whether assumptions, costs, funding sources, and priorities have changed.
If your organization's financial condition is already unstable or moving in an unsustainable direction, a more comprehensive review of the plan may be necessary.
How do you plan for financial sustainability?
Every organization is different, and its financial sustainability strategy should reflect its mission, community, scale, resources, structure, and circumstances. For many organizations, however, a process like the following can provide a useful starting point. Adapt it to fit your needs.
Before developing your plan, think carefully about what financial sustainability actually requires. If an initial grant was for $100,000, for example, don't automatically assume you need another $100,000 the following year. Review what the funding accomplished, what the community and organization need now, and whether activities should continue in the same form. Some programs may need to expand, some may need to change, and some may be more appropriately sustained by a partner organization.
Also consider how different funding strategies may affect your organization, its accessibility, and its relationships with the community. For example, could a high membership fee create financial barriers to participation? Could a new facility or funding model unintentionally make some community members feel that the organization is less accessible to them? Could requirements attached to funding conflict with your mission, community priorities, or organizational values?
The lesson is to think broadly about both resources and consequences from the beginning. With that in mind, let's look at a step-by-step approach to developing a financial sustainability plan.
Decide who will develop the plan
If you have developed a financial sustainability committee, that group may take primary responsibility for the plan. If not, consider creating a committee or temporary working group. Board members, staff members, and people with financial or fundraising knowledge may be important participants. Depending on the organization, it may also be helpful to include people with direct knowledge of programs, participants, community priorities, and partnerships. Shared leadership can make the planning process stronger and reduce dependence on one person.
Let people know what you are doing
Keep relevant staff members, board members, funders, partners, and others affected by the plan informed about the process. They may have information, concerns, ideas, or opportunities that the planning group has not considered.
Open communication can also strengthen trust and reduce uncertainty. Financial decisions often affect programs, staffing, partnerships, and community commitments, so people should understand what is being considered, why decisions may be necessary, and how they can contribute relevant information or feedback.
Conduct an internal financial review
Identify the resources, obligations, revenue, and expenses your organization currently has. You need to understand your current financial position before deciding where you are going. Consider:
- How much money and other financial resources you currently have
- How much revenue you reasonably expect in the coming year and, where possible, in later years
- Where those resources come from
- How resources are currently allocated among programs, staffing, operations, and other needs
- What debts or other financial obligations the organization has
Much of this information may already be available in your annual budget or other financial records. Review those materials and make sure the information is current and understood by the people developing the sustainability plan. If your organization does not yet have a written budget, developing one should be an early priority.
Determine how much money you need
This step builds on the financial review. Consider what resources are necessary to sustain the organization's essential work and what adjustments might be possible if funding were reduced. The purpose is not simply to cut costs, but to understand what is necessary to maintain responsible operations and protect the most important elements of your mission.
This step has two parts: identifying activities that are essential to your mission and estimating the full cost of those activities, along with the organization's general operating costs.
What you are currently doing
Make a list of what your group is currently doing that is:
- Essential to your mission and community commitments
- Appropriate for your organization to carry out
What is essential may not always be obvious, and people involved in the work may reasonably have different perspectives. For example, if an organization is working to reduce pregnancies among adolescents, it might consider whether an after-school program that provides supportive activities, mentoring, relationships, and connections to resources is an essential part of that strategy.
Decisions about what is essential should be made thoughtfully and, where appropriate, with input from staff members, participants, partners, and community members affected by the work. Labeling something "non-essential" for purposes of calculating a minimum operating budget does not necessarily mean that it should be eliminated. The goal is to understand the minimum resources needed to sustain the organization's most central responsibilities.
The second question - whether an activity is something your organization itself should carry out - is equally important. Some activities may be essential to achieving a community goal but may be more effectively or sustainably provided through a partnership with another organization that already has relevant expertise, infrastructure, or relationships.
For example, a neighborhood revitalization coalition may identify access to employment opportunities as an important priority. Rather than creating and operating its own job training program, the coalition might partner with a community college, workforce development organization, or youth employment program that already has relevant expertise and infrastructure. The coalition can still help shape the effort so that training reflects residents' goals, local employment opportunities, and barriers to participation.
Before completing your list of essential activities, make sure it reflects what the organization truly needs to sustain its mission and commitments. Additional activities can be added or expanded as resources become available.
What each of these things costs
Estimate the full cost of continuing these activities. Include program expenses as well as staffing costs, compensation, benefits where applicable, training, accessibility needs, technology, evaluation, and other resources required to carry out the work responsibly.
Organizations also have costs that are not tied to one particular program, such as rent, utilities, insurance, technology, communications, accounting, administration, and other shared operating expenses. Include these costs when estimating the resources required for sustainability.
Decide how much money and other resources you want
After determining the minimum resources needed for core operations, consider what additional resources would allow the organization to strengthen or expand its work.
Think about your long-term goals. If adequate resources were available, what could the organization do differently or more effectively? What community priorities could it address? What investments would strengthen quality, accessibility, equity, staffing, partnerships, or infrastructure?
Seek ideas beyond the financial planning group. Talk with staff members, participants, community members, partners, board or advisory members, and others with relevant knowledge about where they believe the organization should go and what resources would support that direction.
Even without adding new programs, the organization may need resources for technology, equipment, accessibility improvements, staffing, professional development, evaluation, communications, facilities, or other organizational needs. Include these resource priorities as well.
Make these goals concrete. What resources would be required? Would you need additional staff, staff with specialized training, new technology, expanded facilities, transportation support, interpretation, or another form of capacity? Estimate the cost and timing of each priority over a realistic planning period.
Compare the amounts set out in the previous three steps
Compare your current resources, minimum operating needs, and longer-term resource goals. How large are the gaps? What financial and other resources would be needed over the next several years to maintain essential work and pursue priority goals?
Set objectives
Using the information you have gathered, decide which funding and resource objectives are realistic and appropriate to pursue.
If your organization already has most of the resources required for its goals, objectives may focus on maintaining those resources, strengthening reserves, replacing expiring funding, or making selected investments.
If there is a large gap between current resources and your longer-term goals, prioritize rather than spending so much time on fundraising that the organization's core work suffers. Consider which goals are most important, feasible, and aligned with community priorities at this stage.
From these choices, establish specific short- and long-term financial objectives. A short-term objective might involve securing funding for two additional positions. Longer-term objectives might include developing an operating reserve, endowment, multi-year funding relationships, or more stable facilities.
Consider the available possibilities
Brainstorm potential funding and resource strategies.
What are different ways to obtain resources that make sense for your organization?
- Sharing positions, facilities, equipment, or other resources with partner organizations
- Becoming a line item in an existing public or organizational budget
- Integrating activities or services into organizations with compatible missions
- Applying for grants
- Using existing personnel and organizational resources more effectively
- Soliciting in-kind support
- Conducting fundraising activities
- Using third-party reimbursement or other appropriate funding mechanisms
- Developing an equitable fee-for-service structure when appropriate
- Securing public funding or tax-supported revenue
- Developing endowments, planned giving, or other long-term giving arrangements
- Establishing membership fees or dues while considering affordability and access
- Developing a business or earned-income plan
- Developing a mission-aligned earned-income or social enterprise strategy when appropriate
- Transitioning appropriate programs or activities to partner organizations that can sustain them
Another way to look at it: Finding resources through partnerships
Many of the strategies above can be pursued directly by your organization. Community organizations also frequently work with public agencies, schools, businesses, funders, coalitions, and other partners toward shared goals. Different organizations may have access to different funding streams, facilities, staff expertise, relationships, or other resources that can support collaborative work.
For example, a community violence-prevention initiative may partner with public agencies, schools, health organizations, neighborhood groups, or other organizations that have access to funding or resources the initiative itself cannot obtain. A school district or health agency may also have resources related to substance use prevention or youth well-being. Any shared funding arrangement should have clear roles, expectations, accountability, and agreement about how resources will support the shared purpose.
What partnership possibilities exist in your community?
Decide which funding possibilities you will follow up on
Now, consider which possibilities make the most sense for your organization. Questions that might help shape your decision include:
- Which approaches are feasible with our current capacity?
- Which possibilities have a reasonable likelihood of success?
- Which approaches fit the skills, interests, and strengths of the people involved?
- How might each funding strategy affect what we do, whom we serve, and how we operate?
- Which approaches are most consistent with our mission, values, community commitments, and long-term goals?
Strategize how to secure the resources you need
Who will you need to work with to implement your funding strategies? What shared goals or interests could support a partnership? What value does the proposed work create for the community, for partners, and for potential funders?
Funders and donors make decisions based on many factors, including mission, community priorities, expected impact, evidence, relationships, public benefit, organizational capacity, and their own funding strategies. Understanding those priorities can help you identify where genuine alignment exists.
The goal is not to reshape your organization simply to satisfy a potential donor. Instead, understand what funders support, communicate clearly how your work aligns where it genuinely does, and avoid funding arrangements that would compromise your mission, community accountability, ethics, or organizational priorities.
Foundations and other funders usually provide guidelines explaining their priorities, eligibility requirements, timelines, and application procedures. Read and follow those guidelines carefully. Understanding funder expectations can help you decide what to request, how to frame the request accurately, and whether the funding opportunity is a good fit in the first place.
Develop a timeline
The timeline should identify the actions to be taken, when they should occur, and who is responsible for carrying them out.
Develop a draft of your plan
This draft should incorporate the information you have compiled so far, including:
- Your current financial situation, including your annual budget
- Your short- and long-term financial goals
- The broad strategies you will use to pursue those goals
- A timeline with specific actions and responsibilities
- A one-page executive summary at the beginning of the document summarizing the major points
- The executive summary should provide a concise overview of the organization's current financial position, goals, strategies, and major actions so readers can understand the plan before reviewing the details.
Incorporate feedback on your plan
Once you have a draft, invite feedback from groups with relevant knowledge or a stake in the plan. Depending on your organization, these may include:
- Staff members
- Board members
- Participants, people using services, or community members affected by the work
- Community partners and leaders
- Current funders and other relevant resource partners
Feedback can strengthen the plan by identifying unrealistic assumptions, overlooked needs, unintended consequences, or additional opportunities. People who will be responsible for implementing or affected by the plan may also have information that the planning group does not.
Meaningful involvement can also strengthen understanding and shared investment in the plan. When people have opportunities to contribute to decisions that affect their work or community, they are more likely to understand how those decisions were made and how they can participate in implementation.
When asking people to review financial information, explain the numbers clearly and provide enough context to interpret them. A large organizational budget, for example, may include salaries, benefits, facilities, insurance, program costs, technology, transportation, contracted services, grants to partners, and many other expenses. Staff members may reasonably have questions about compensation or proposed program reductions, and those questions should be addressed transparently rather than dismissed as misunderstandings.
Similarly, debt or a projected deficit should be explained in context so that people understand the organization's actual financial position, risks, and plans. After stakeholders have had an opportunity to comment, the planning group should review the feedback, revise the plan where appropriate, and communicate how significant concerns or suggestions were addressed.
Implement your plan
Once the plan has been reviewed and revised, begin carrying out the agreed-upon actions and responsibilities.
Monitor and evaluate your progress
Implementation is not the end of financial sustainability planning. Continue monitoring revenue, expenses, funding risks, progress toward objectives, organizational capacity, and changes in community or program needs. Adjust the plan when circumstances change or when strategies are not producing the intended results.
Remember: planning is ongoing. Financial sustainability plans should evolve along with the organization, its community, available resources, and the environment in which it works. Resource development is no exception.
Tips from the field
Financial sustainability can be challenging. The following lessons can help organizations approach the work more intentionally:
- Build and maintain relationships, stay informed about community and funding developments, and participate in relevant networks.
- Identify someone, or a small team, responsible for monitoring potential funding and partnership opportunities and sharing relevant information with the organization.
- If resources allow, consider hiring or contracting with an experienced grant writer or resource-development professional. If that is not possible, seek review and guidance from someone with relevant grant-writing and subject-matter experience.
- If your organization does not yet have the legal or administrative structure required to receive certain grants, an established tax-exempt organization may sometimes serve as a fiscal sponsor or lead agency, depending on the circumstances.
- If you enter such an arrangement, establish roles, responsibilities, decision-making authority, financial procedures, administrative costs, reporting requirements, and benefits to each organization in advance.
- Funding opportunities often have short timelines. Maintaining relationships with potential funders and partners and having well-developed program ideas, budgets, and action plans can help your organization respond when appropriate opportunities arise.
- Build appropriate relationships with elected officials and policymakers so they understand the community issue, relevant evidence, and the importance of the work.
- Diversify funding and other resources so the organization is not overly dependent on a single source of support.
- Maintain continuity in your mission, values, relationships, and commitments while remaining willing to adapt strategies as community priorities, evidence, staffing, and circumstances change. Avoid making the organization's sustainability dependent on one person, one funder, or one way of doing the work.
Some of these tips have been adapted from The Spirit of Coalition Building.
In Summary
Developing a financial sustainability plan takes time and ongoing attention, but it is an important part of sustaining an organization or initiative. A strong plan connects financial decisions to mission, community priorities, staffing needs, organizational capacity, partnerships, and long-term goals.
Financial sustainability is not simply about raising as much money as possible. It involves understanding what resources are needed, identifying diverse and mission-aligned ways to obtain them, making informed choices about priorities, involving people affected by those choices, and regularly adjusting the plan as conditions change. Done well, financial planning can give an organization greater stability and allow more attention to remain focused on the work and community outcomes that resources are meant to support.