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Daily Buzz: Risk Factors for a Starvation Cycle

Devoting most of your nonprofit’s budget to programs can leave it vulnerable

Nonprofit programming is often the life force of the organization, and as such it tends to receive most of the budget. In fact, 72 percent of organizations allocate 80 to 100 percent of spending to program-related activities, according to the 2019 Nonprofit Standards report [PDF].

Sure, devoting most or all of your nonprofit’s budget to programs can further its mission and improve engagement, but it can also leave your organization vulnerable to a starvation cycle, “a phenomenon that occurs when an organization chronically underfunds vital infrastructure like technology and employee training,” says the report.

Another key finding: About 1 in 4 organizations said disconnection from their mission was a high or moderate employee satisfaction issue.

“This may be of even more importance when an organization is financially strapped—more than a third of organizations that experienced net loss in revenue last year rank disconnect from the mission as a high to moderate challenge, compared to 21 percent of those with net income,” the report says. “It’s clear that nonprofit employees value both the financial and social aspects of nonprofit work; savvy organizations will need to effectively address this both to gain and keep top talent.”

Please select this link to read the original article from Associations Now.

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