What is Financial Stability?

Not-for-profit organisations talk a lot about financial sustainability, but what is it?

Sustainability can be defined as meeting the needs of the present without compromising the ability to meet future needs. Sustainable organisations have two requirements to meet – a programme of activity that continues to have impact and meet the needs of stakeholders; and the financial resources to continue to run such programmes.

If an organisation offers great impact but cannot build up its financial reserves over time, it risks becoming unsustainable. Conversely, if financial resources are strong but the organisation lacks impact or purpose, it too risks an uncertain future. So organisations need to consider how their business model looks when considering financial health and programme impact.

Jeanne Bell in her excellent book “Non-profit Sustainability” has developed a Matrix upon which to map the business model, through which sustainability can be more clearly seen. For any leader, Board member or Trustee it’s a great methodology for reflecting and understanding how sustainable your organisation’s business model really is.

You can read more on this at https://nonprofitquarterly.org/2014/04/01/the-matrix-map-a-powerful-tool-for-mission-focused-nonprofits/

Accounting and Finance Solutions are experienced in working with organisations to develop and implement sustainable business models. For more information, please contact us.

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