In this episode of The Nonprofit Counsel Podcast, we dive into the world of nonprofit sustainability, strategic partnerships, and the critical role of financial health with two seasoned nonprofit experts, David O'Brien and Matthew Craig, co-authors of "Building Smart Nonprofits: A Roadmap for Mission Success."

David O'Brien, retired from the finance industry, shares his journey into the nonprofit sector. Frustrated by the financial struggles faced by impactful organizations, he pursued a Masters degree in nonprofit leadership at the University of San Diego. The catalyst for his and Craig’s book was the realization that nonprofits need a long-term funding model, much like one that for-profits utilize, focusing on sustainable cash flow rather than relying on sporadic events like galas. This amazing book emphasizes the importance of transparency and adopting business-like strategies for long-term success.

The Boom of Collaboration

Matthew reflects on the "Pandemic Pivot" and how nonprofits considered partnerships and mergers to weather the financial storm while staying true to their missions. The collaborative spirit between nonprofit and for-profit organizations became crucial for survival. Sharing resources, capital, and knowledge proved essential, leading to a beautiful synergy between the two sectors.

Program-Related Investment and Capitalizing on Intellectual Property

The conversation shifts to the innovative concept of Program-Related Investments (PRIs) and leveraging intellectual property for revenue generation. Trust-based grant-making and partnerships with private foundations create sustainable solutions for nonprofits in the way of volunteers, donation support, and capital. In their book, O’Brien and Craig spotlight nonprofits that thrived by monetizing their intellectual property and leveraging the expertise within their respective boards.

Embracing Change to Better Help the Community

Feeding San Diego serves as a case study on embracing change for community betterment. This inspirational nonprofit recognized a glaring issue with their food drives: most donated food was filled with preservatives, not fresh, and some even bordering on expired. Essentially, the people who needed help from this kind of nonprofit were getting the food nobody else wanted. By moving away from traditional food drives and forging partnerships with for-profit businesses, they provide fresh, high-quality food to those in need. The lesson here is clear: listen to internal ideas that can lead to impactful organizational changes.

Matching Money with Mission

The importance of aligning funding sources with core values is highlighted. Avoiding the trap of accepting grants from incompatible sources prevents the creation of a "Franken-Profit" and guards against mission drift. May Harris emphasizes the potential legal consequences of failing to maintain alignment with the organization's original mission.

Closing Thoughts

​In essence, their advice converges on the idea that nonprofits should leverage their strengths through collaboration and prioritize financial resilience. As we wrap up this episode, David and Matthew leave us with a clear message: by playing to their strengths, forging impactful partnerships, and maintaining financial robustness, nonprofits can navigate challenges, stay true to their mission, and contribute to a more sustainable future.
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In concluding remarks, David O'Brien advises nonprofits to focus on what they do best and partner with others for success. Matthew Craig, drawing on his finance background, underscores the critical role of a strong balance sheet and a healthy reserve fund in weathering unexpected challenges such as the recent pandemic.

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