We need to go beyond a simple spend less - earn more strategy although we still need to find as many ways to spend less as we can and of course we need to seriously consider all the possible ways to ethically increase revenue.

 

Finding effective ways to cope with touch times is typically complex, The Oertel Group suggests a three-pronged approach:

1. Assess each of the organization's efforts using some form of a "bottom-line" matrix that evaluates a combination of financial sustainability, mission match and program outcomes.
2. Clarify the organization's cost and revenue drivers and then examine the details of all of the spending and income mechanisms.
3. Rethink the relationships the organization has with the community.  Look for partnerships, alliances, co-location and synergistic opportunities.

One form of assessing an organization's efforts is described as the "Dual Bottom Line". Adapted from Boston Consulting Group's well-known Growth-Share Matrix, this is a tool that you can apply today to an analysis of your nonprofit's programs.

The matrix places mission impact on the x-axis and financial sustainability on the y-axis. So, a program in the lower left corner has low mission impact and low financial sustainability--and is something you'll want to close down soon. Meanwhile, a program in the upper right corner has both high mission impact and high sustainability. That's a sure keeper. Simple though it is, the matrix can help bring focus to some confusing situations and help clarify the tough decisions.

 

A structured way to evaluate an organization's expense and revenue might entail examining all the possible ways to cut or contain costs by looking at the details of the following:

• Analyze purchasing - are you getting the best price, do you really need every item being purchased, can things be reused or refurbished instead of buying a new one, etc.
• Adjust payables - can you consolidate or restructure debt, delay or reduce payments, perhaps some things could be done using a barter arrangement, etc.
• Evaluate facilities and infrastructure - can you share space, sub-lease, move to a smaller facility, telecommuting, delay maintenance, eliminate vehicles, save energy, etc.
• Modify staffing - reduce hours, freeze position hires, cut salaries, eliminate raises, use volunteers, consolidate workloads, etc.

Using a similar process an organization would look at the revenue side as well:

The third suggestion is a simple concept with complex practicalities.  It is simple because it just asks that the organization consider working more closely with others - creating expanded opportunities and perhaps containing costs through sharing.  It is complex because it requires thinking through all the options and evaluating the long-term consequences for each potential partnership.  For example an organization that rescues stray kittens might look for an opportunity to co-locate with a pet supply store where the rent is reduced but the service is now linked for good or for bad with a specific for-profit pet supply store.