Some notes about working at a nonprofit with a budget smaller than $100,000

June 3, 2016

I recently polled subscribers of the Small Nonprofits newsletter about the nonprofits they work for. More than 70% of the respondents said they worked for a nonprofit smaller with an annual budget of less than $100,000.

That’s pretty small!

As I’ve mentioned (probably too many times) I used to be the director of a nonprofit movie theater. We had a budget of about $900,000 by the time I left, which had grown by a couple hundred thousand from when I started. (I’m still pretty proud of that—one of the reasons I talk about it a lot!)

What I have spent less time writing about is my other job: my three years as Executive Director of City Club, a civic nonprofit with a budget of less than $100,000. Half the time it was just me and half the time I had a part-time employee. We were small.

One of the reasons I think I haven’t written about that time as much is that much of my thinking about small nonprofits has been informed by my work at larger ones. After leaving the Grand Cinema, I worked in development at a large Catholic high school and saw the inner workings of what a truly professional fundraising system should look like. Not everything they did made sense at a small nonprofit (like auctions), so I did my best to separate the wheat from the chaff and wrote The Little Book of Gold. I wanted to provide the basics of professional fundraising on a scale that made sense for a small nonprofit.

But let’s talk about managing small nonprofits. Here are some guiding principles that might help you.

Invest in data and communications

It’s worth paying a mailing service like Mailchimp or Constant Contact. It’s worth paying credit card fees so you can accept donations on your website or have live ticketing on a service like Eventbrite. It’s worth paying for a donor management system. Everything you want to do to take your nonprofit to the next level requires solid tech. When I was at City Club, I focused heavily on leveraging technology. We used my iPhone and Square to process payments. We used Eventbrite to process tickets. We used a professional donor management system. I worked as hard as I could to reduce the time needed to administer City Club so I could focus on fundraisers and membership and supporting the board.

Side note: don’t make snap judgments about age and technology. I worked primarily with people who were late-career or retired and 90% of them had no problem with Eventbrite or Square. Handling a credit card over the phone or accepting checks from the remaining 10% was still a significantly reduced burden on my time.

Every (earned) dollar counts

You know this. I know this. The ED of a small nonprofit is incredibly conscious of every $5.00 the nonprofit spends, and rightly so. But this can be taken to an extreme. Here’s a lesson from personal finance. It’s easier to earn your way to wealth than to save your way to wealth.

What do I mean? I mean that it’s easy to get wrapped up in small amounts of money. At some point, trying to save $200 is just not worth it if it means you aren’t focused on trying to earn (or raise) $1000. That $1,000 is going to have an outsized impact on your small nonprofit that is much greater than the $200 you worked hard to save.

(The counterpoint to this: be ruthless about cutting recurring small expenses. Do you really need a second phone line for a fax machine anymore? Pricing out a new alarm system that will save $40/month will mean a savings of almost $1,000 after two years.)

Budget for a reserve

Nonprofits should strive to have at least three months of operating cash in reserve. The good news is that for a small nonprofit that means you need a lot less to hit this goal! 😉

Seriously, though. A $400 surprise expense should not bankrupt you. Donors and board members should have no problem with you establishing a cash reserve to weather a slow time or a transition. City Club had almost no cash reserves when I started and it took more than a year to get out of that situation. But we got there, even if sometimes it was two steps forward, one step back. By the time I left we were at three months reserve (and then some!). Even when it’s hard, you’ve got to make this a priority. Don’t spend every cent you have.

Leverage the board

An Executive Director at a small nonprofit needs a lot of support from the board. And yet, they need a lot of flexibility to set daily and weekly priorities and to be able to act quickly and independently. Having board members poke their nose in too often may not be welcome or desired.

The board of a small nonprofit should focus on fundraising (thanking donors, inviting friends to an annual event), building their own skills, and serving as ambassadors to the nonprofit. They should do operations or administrative tasks only when specifically invited by the Executive Director. This involves some understanding up front about “hats.”

A board member needs to put on a “volunteer hat” when they are stuffing envelopes or doing other operations or administrations tasks. In these situations the ED is in charge. These kinds of situations usually are best when they are concrete and finite. Asking the entire board for help “with marketing” might create a wild goose chase but having a savvy board member “post an event to Facebook every Monday” is much clearer and easier to manage.

Get Bigger

I say that with my tongue in my cheek a little bit, of course, but if you want your mission to last, you should work to grow bigger. If you are a “very small” nonprofit, aim to be a small nonprofit. Grants, fundraising, and earned revenue can help you grow and serve your community even better. If you are a small board with a volunteer ED (or no ED at all) there’s a resource that might help you do this. In “The Little Book of Boards” I wrote a chapter with a lot of tips for managing the work of the nonprofit as well as the work of growing the nonprofit and improving the board. I’ve pulled the chapter out and included it as a downloadable chapter below. There’s a specific guide for how to raise the money to hire your first ED that you might find helpful too.

Get the free chapter specifically for nonprofits without a paid Executive Director.

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