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Mar 28, 2024 | Blog

5 Steps to Building Financial Resilience at Your Non-profit

By Omar Visram, Co-Founder and CEO at Enkel

In the shifting and often unpredictable non-profit sector, financial resilience emerges as the cornerstone of sustainability and growth. Canadian non-profits face a unique set of challenges and opportunities. The complexities of navigating funding avenues, adhering to a multifaceted regulatory environment, and responding to the increasing needs of diverse communities require a nuanced and strategic approach to financial management. The resilience of a non-profit is not just about surviving the present; it is about strategically preparing for the future, ensuring that the organization can continue to fulfill its mission effectively, irrespective of the financial climate. Below are 5 important steps towards building financial resilience. 

1. Diversifying Revenue Streams 

The importance of diversification cannot be overstated in the context of financial resilience. By exploring a variety of funding sources—including government grants, private donations, corporate sponsorships, and revenue-generating activities— non-profits can create a financial safety net. This diversification serves as a hedge against the volatility of any single income source. 

The Toronto Symphony Orchestra (TSO), for instance, has adeptly diversified its revenue through ticket sales, government and corporate grants, and philanthropic contributions. This strategy proved crucial during the COVID-19 pandemic when live performances were suspended, and the organization had to pivot to virtual events. The diversified income streams helped sustain operations and keep the music alive for their audience. 

2. Crafting a Financial Contingency Plan

A comprehensive financial contingency plan is critical for any non-profit seeking to safeguard against financial downturns. Such a plan should clearly outline actionable strategies for cost reduction, criteria for accessing emergency funds, and protocols for communicating with stakeholders during crises. 

Facing unprecedented demand during the pandemic, Food Banks Canada activated its contingency planning. This included launching special fundraising campaigns and working closely with corporate partners to secure food donations. Their proactive approach enabled them to support increased needs across their network of food banks. 

3. Building Strong Relationships with Donors and Stakeholders

The foundation of financial resilience is also built on the strength of relationships with donors and stakeholders. These relationships should be cultivated through transparent communication, shared values, and active engagement, going beyond mere financial transactions.

Known for its deep community roots, Vancouver Foundation excels in building meaningful relationships with donors and community organizations. Their approach to engagement includes regular updates, community consultations, and transparent reporting, which has helped them mobilize support effectively during times of need.

4. Embracing Technology and Innovation

In the digital era, the strategic use of technology can significantly enhance fundraising efforts, operational efficiencies, and community engagement. By adopting innovative tools and platforms, non-profits can expand their reach and adapt more swiftly to changes in the landscape.

The Canadian Centre for Non-profit Digital Resilience (CCNDR) exemplifies the power of technology in fortifying the non-profit sector against the challenges of the digital era. The CCNDR is at the forefront of helping Canadian non-profits navigate the complexities of digital transformation. By offering resources such as technology assessments, professional certification courses, and access to discounted software, the Centre plays a crucial role in ensuring that non-profits are not just surviving but thriving in a tech-driven world. Their approach demonstrates a comprehensive strategy towards digital resilience, focusing on aspects such as digital literacy, shared platforms, and effective use of data. The CCNDR’s initiatives underline the importance of a coordinated effort to leverage technology, ensuring that non-profits can reach their clients and funders more effectively and efficiently.

5. Promoting Financial Literacy and Training

Financial resilience is strengthened when the entire organization, from the board of directors to staff members, possesses a solid understanding of financial principles. Financial literacy empowers individuals within the organization to make informed decisions and contribute positively to its financial health.

The Calgary Foundation not only manages its finances prudently but also offers financial literacy workshops to its grantees and the broader non-profit community in Calgary. By promoting financial education, they help strengthen the sector’s overall resilience and capacity.

Building financial resilience in the Canadian non-profit sector is an ongoing journey that requires diligence, creativity, and strategic planning. The examples highlighted demonstrate that with the right approach, organizations can not only navigate financial challenges but also thrive, ensuring their missions continue to benefit communities across Canada. By diversifying revenue streams, preparing for financial uncertainties, fostering financial literacy, maintaining strong stakeholder relationships, and embracing technology, non-profits can create a sustainable path forward.

Enkel Backoffice Solutions is an accounting firm that provides managed bookkeeping, payroll, AP and AR services for not-for-profit organizations. Enkel strives to provide non-profit executives and board members with better bookkeeping and accurate financial reporting, so they can make better decisions and focus on achieving their goals. Learn more here. 

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