Grants are often a priority for many nonprofits. Creating self-sustaining programs should be as well.
Budgets are ending, new budgets are being approved, and so on. As we close out one fiscal year and look towards a new one, organizations have the opportunity to work with staff and boards to evaluate programs and projects. Grants and self-sustaining programs are keys. The challenge is figuring out what to do to make sure the foundations are in place to build sustainable bases.
Every nonprofit I know that has an incredible program, also has a dream….the dream that one day that program will be capable of supporting itself. Programs that are heavily dependent on grants tend to have warped life cycles. Self-sustaining programs are the goal.
Let’s put this into perspective.
If you sow a few tomato plant seeds in a little pot, make sure they are planted in nutrient rich soil, water them regularly, and make sure they have plenty of sunlight, you can expect to see small sprouts grow into a nice sized plants this season. In fact, you expect those plants to produce fruit at the end of summer. If you have an especially green thumb you might even win the blue ribbon at the local fair for your amazing tomatoes!
A normal gardener does not plan for their seed to produce tomatoes in one day or for it to shrink and grow in height randomly each week. The healthiest plants follow the order of nature. They start small and grow bigger based on the environment and support they receive. We expect the survival of the fittest.
Perhaps those of us in the nonprofit world should take a lesson from nature as we grow our programs. We tend to dream big and expect fruit immediately. Grants often create the illusion that we can bypass all the nurturing , weeding and watering and jump straight into the final harvest. Non-profits with the good fortune of receiving a grant to fund 100% of their program during its implementation stage tend to struggle the most when they are forced to prune back during the following years. The reality is that grant funds are not and will not always be readily available.
Believe me, I’ve been there. When there is a program that is fully funded by grants, nonprofits are often restricted from or hesitate to charge a service fee. The community gets conditioned to expect programming at no cost. Staff is so busy working to produce the grant required results that they often don’t have time to begin sowing new donor relationships or evaluating long-term sustainability options.
The organization I currently work with is growing quickly and we are seeing increased demand for our educational/outreach programs. There is just one program. None of those programs are funded by grants and our program director was hired as a part-time employee. I committed to transitioning this amazing staff member from 30hrs/week to 40hrs/week within a year, but we cannot make that jump without evaluating program demands, true program costs, and realistic fees.
We have been thrilled to see how our programs are slowly starting to pay for themselves, but we are still two or three years away from being able to say ours are self-sustaining programs that can support 100% of all the associated expenses.
The strategies below are working for our organization and I hope they are helpful for you!
1. Evaluate program demand
- If program demand is low ask “Why?” If it is lack of interest or another provider does it better, consider eliminating that particular element and focus on other areas.
- If program demand is low due to lack of PR/awareness, work with local experts, media, professionals in the field, potential referral sources to get the word out.
- If program demand is high evaluate both short-term and long-term capacity. (How many programs/participants can you realistically serve each year?)
2. Evaluate service fees
- If you do not currently charge for a service, why not?
- What do similar organizations in your region charge for comparable programs?
- What process will you use to create competitive/realistic fees?
3. Evaluate the TRUE cost of your program
- Staff salary
- Fringe benefits- FICA, Medicare, benefits, etc.
- Program materials- educational, office, etc.
- Outreach/PR- cost to design marketing materials, ads, additional PR
- Transportation/Travel- reimbursement for staff mileage, cost to transport program participants/volunteers if applicable
- Technology/Communications- computers, software, IT support, cell phones, IPads, for program staff or usage
Sometimes it is difficult to look at the list above and break it into a specific service fee. Our staff use the following short version to establish fees for groups participating in our educational programs.
- Staff time- (planning time + travel time + program delivery time x $25/hr)
- Materials- Average of $1-$3 per participant depending on activity
- Mileage- cost of staff travel at $.540/miles (current federal reimbursement rate 2016)
- Contract help- fee for additional educators for program delivery.
This means a 3 hour program for a group of 40 students might cost $275 or less than $7/student.
Not only is this fee comparable to a visit to a local science center it also covers our true costs.
It is important to remember that not 100% of your program staff time is spent on program delivery. These program fees only cover time staff is planning for or delivering scheduled programs, so you will need to figure out how to pay salaries/fringe benefits that aren’t yet covered through service fees.
Self-sustaining programs vary and are different. In our case, we have diverse school/community groups that request programs throughout the year on an hourly basis. Other programs serve the same program participants until they complete a skill/certification.
They key is balancing the communities needs with your ability to deliver quality and applicable self-sustaining programs at a competitive price.
Evaluate your program and establish a 3-5 year plan for increasing sustainability. You might consider grants, program fees, individual donors, sponsors, or a wide variety of revenue streams in each development stage.
Set your program up for success…be realistic and be sure not to put all your eggs in any one basket!
If we can help with Board Solutions or Development Coaching, let us know. Maybe you just want a few hours of consultation with one of our nonprofit experts – we can help. You may also find some Upcoming Events to attend or helpful information in our Free Stuff section. As always, Keep Growing for Good!
