Nonprofits and Squirrels (What does it mean to be financially stable?)

This article was originally posted on the Cleveland Foundation site on October 21, 2010.

That’s the question posed and answered by a terrific new tool for nonprofit organizations hot off the press from NORI – the Nonprofit Operating Reserves Initiative Working Group. Cumbersomely called the Operating Reserve Policy Toolkit for Nonprofit Organizations (available here), the toolkit is nevertheless the most comprehensive and user-friendly document to support nonprofit financial best practice that I have ever seen.

It is a tome, to be sure, but my guess is that any financial officer worth his or her salt will drool over the comprehensive rationale presented here and wealth of illustrative models and downloadable worksheets. And every executive director will want her or his financial officer to take it home for the weekend and memorize it.

As one who has championed the development of operating reserves for arts organizations for many years now, I can’t tell you how happy I am to see this toolkit come out – and from such prestigious and smart people – a number of whom have worked in Cleveland with our nonprofit arts organizations through the Cleveland Foundation’s BASICs and Arts Advancement programs:

  • Gail Crider
  • Bess Foley
  • Mary Ann de Barbieri
  • Russell Willis Taylor

Sponsors for the Toolkit include:

  • Association of Fundraising Professionals
  • National Arts Strategies
  • Guidestar USA
  • BoardSource
  • National Council of Nonprofits and many others

The foreward to the document is titled “Nonprofits and Squirrels” and lays out the arguments that every executive will need to address the critical issue of developing working capital/operating reserves. And the preface to the document literally pleads with nonprofits to use the toolkit – “Use these tools. Please. Copy, paste, customize.”

So we are doing our part. We urge you to go to the National Center for Charitable Statistics website, download the document and, if you haven’t already developed an operating reserve policy and fund, launch a conversation inside your organization about taking the steps necessary to secure your future in the inevitable and continuous changes that will continue to challenge the nonprofit sector.

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