Today at Funding for Good we want to talk a bit about nonprofit infrastructure.
Let’s be honest: infrastructure doesn’t have quite the curb-appeal of programs. Particularly when it comes to donors. Why get bogged down in databases when you could be serving communities?!
Time and again, we’ve seen how US-based nonprofits, particularly those without a business plan, tend to invest in everything but infrastructure and operations. And yet these same areas inevitably become an organization’s achilles heel.
Why is it so hard to spend resources strengthening our nonprofits’ infrastructure?
Operations and infrastructure work best when the experience of the user (such as staff and board) is seamless. This isn’t simply about physical infrastructure like office space. It’s about everything that goes into enabling your nonprofit’s day-to-day functions. Ideally, your operations function smoothly behind the scenes, enabling your programs to shine.
Unfortunately, this expectation of seamlessness can also make it hard to distinguish between infrastructure operating efficiently and infrastructure that simply doesn’t exist.
Few people within an organization notice a lack of infrastructure until it becomes a crisis—or until you sit down to make a business plan.
The energy crisis in Europe illuminates how this can play out on a massive scale.
Business Crises Happen Quickly. Is Your Nonprofit Infrastructure Ready?
The reasons for Europe’s energy crisis are complex. There are complicated geopolitical factors at work, including Russia’s invasion of Ukraine. But within this tangled knot, there’s also a striking story about the importance of infrastructure.
Fortune explains that “while Putin may have provoked the crisis, it has also revealed cracks in Europe’s energy system.”
Those cracks have grown quickly.
In May 2022, EU leaders “called the bloc’s electricity market ‘well-functioning.’” Yet mere months later, energy costs are rising so fast that companies are having to “rewrite business forecasts six times in two months.”
Changes in infrastructure take time, yet crises happen quickly. Which often leaves leaders scrambling for band-aid solutions that can be painful, expensive and ultimately less effective.
How Business Planning Can Help
While your US-based nonprofit hopefully isn’t as complex as the EU’s energy markets, (if it is, maybe we should talk!) far too many organizations rely on outdated processes and systems.
How many nonprofits do you know with barely-functioning donor or member databases? How many have no database at all? How often do organizations rely on one individual—usually an Executive Director—to hold the majority of donor and partner relationships?
Yes, we’ve been there too. Key nonprofit systems, such as grants management, are often built in crisis, rather than proactive planning.
So how can you get out of this cycle?
Business planning. At Funding for Good, we often see how business planning helps organizations realize they need to invest in operations and infrastructure. Organizations identify operating gaps before they become a crisis. Then board and staff together commit to prioritizing forward-thinking infrastructure investments.
How do you know your organization’s infrastructure might be lacking? Consider these questions:
- How many people within your organization understand how your internal operations work? Or what internal operations even means for your nonprofit?
- Is your data and relationship management based on a few people personally keeping track of lots of information?
- Have you invested in not just databases, for example a donor database, but also data and workflow management—and the staffing to support it?
- Are the resources your staff needs to function—equipment, software, logins—managed centrally in a way that’s streamlined and user-friendly? Or is your team constantly scrambling to find out who has a working password?
- Have your previously-established systems become so complex that few know how to navigate them?
- Do the tools you’re using look and operate like they were built in 2004?
- Was the last time you assessed your internal operations more than three to five years ago?
If you answered yes to one—or more—of these questions, it’s time to invest in business planning.
Creating a Nimble and Sustainable Organization
One thing that’s surprising about the European energy crisis is how the situation in Spain and Portugal differs from much of Europe. “Cut off from the web of pipelines and huge supply of cheap Russian gas that power much of Europe,” Spain and Portugal built a much more diversified and sustainable energy infrastructure.
This is what business planning can help your nonprofit achieve.
Business planning enables your organization to proactively plan for capacity building. This includes ensuring you aren’t neglecting your nonprofit’s infrastructure.
This level of clarity also puts your organization on a stronger and more sustainable funding path. More and more funders are providing capacity building grants and rethinking the previously limited “overhead rates” allowed in project grants. To secure these funds, you need a compelling plan for how you’re going to use them. Your business plan provides exactly that.
Is Your US-Based Nonprofit Ready to Invest in Infrastructure?
We started this article pondering why it’s so easy to neglect an organizations’ infrastructure.
The answer: many leaders just don’t know how to talk about it.
Fortunately, a solid business plan can make investing in your nonprofit infrastructure pretty exciting—for your staff, board, and donors alike.
