Just a few years ago, being innovative was key to a new organizations success. But, as time has gone on, debate has hatched over what can truly be defined as innovative and unfortunately, it has become clear that even with initial funding, it is difficult to keep an innovative program afloat. There have been a huge variety of conversations and articles dedicated to the conversation of innovation, both sharing its importance and questioning its long-term impact. However, recently much of the innovation buzz and discussion has dissipated, but fear not, it is has been replaced by our new friend, organizational sustainability!
So, what is sustainability? I grew up thinking that sustainability referred to recycling and using products over and over again. In the Jewish organizational world, the definition is not about the environment and actually describes the hope of many funders that they will be able to provide a grant for 1-3 years and that during that time, a stream of revenue will be created to replace their funds in future years. It is an excellent thought, coming from a good place and an idea that seems quite basic. When one invests in a company, the goal is to give it enough funding to launch the product to the point where income becomes more than expenses and a profit is turned. Why would anyone invest in a company that has no plan for solvency? Though it is well-intentioned, this definition of sustainability often does not support the mission and work of a non-profit.
So, what does it even mean for a Jewish non-profit to become sustainable?
My short answer is probably not what funders are hoping to hear: There is no silver bullet; sustainability means building a product or program that provides far more value than what it costs to operate. In other words, organizational sustainability is achieved once the funding market (not just one individual funder) agrees that the outputs of the organization are greater than the inputs. More and more often I have been hearing stakeholders use terms like earned revenue or revenue generating to describe activities that will make a non-profit sustainable. These terms are usually poorly defined in the Jewish nonprofit sector. At Moishe House, we want to spend our time and energy building the best possible product and program, sustaining our innovation as well as our organization. Everything else is a distraction to the core of our work.
Similar to the very loose definition of overhead costs, earned revenue is becoming an incredibly flexible term. As the pressure mounts from funders to increase sustainability, the creative presentation from grantees will grow as increasingly more organizations begin to show contributions as revenue generating. For example, local communities work hand in hand with Moishe House to support local houses, usually in the form of monetary contributions. But, 100% of those funds go directly back into the local community so it does not actually generate revenue because expenses balance it out.
In my opinion, earned revenue or revenue-generating activities are not the keys to sustainability. Rather, as we begin 2012, here are the key areas I want to focus on for Moishe House to become a sustainable organization:
Growing our diverse funding base
- Individuals; Specifically, we need to grow support from individuals who are committed to our mission.
- Partner organizations
- With no hard assets or endowment, we must build a reserve of at least 6 months operating expenses.
Strong Board of Directors
- The Board ultimately signs on to take responsibility for the long-term success of the organization. A huge focus has to be giving the Board all the tools and information to further develop our governance and fundraising. They are the greatest ambassadors to other like-minded community members and we need to empower their success.
- As we grow, we have to conscious of staying lean and effective. Additional dollars, if there are any, should go to building our reserve
Bet on winners
- If a particular program or direction is not working, we have to discontinue it, learn from it and put our resources into the areas that have the deepest impact.
I imagine the conversation of sustainability will quickly grow amongst organizations and funders, and my hope is that it will be relevant and realistic. Rather than using a term that sounds great but lacks meaning, lets talk about what is really needed, at the core, for an organization to be strong and sustainable. Once we decide what that is, lets invest in it, with the goal of organizations being able to maximize their impact for as long as their work is relevant and necessary. Yes, the conversation started with innovation, but as the topic of sustainability grows momentum, it is important to keep realistic goals in mind for a strong future in the Jewish organizational world.
David Cygielman is CEO of UpStarter Moishe House.
This piece was first published at eJewish Philanthropy.