Measure Your Mission, Your Two Bottom Lines

November 10, 2020

In this episode of the NP Local podcast, co-hosts, Jason Cass and Scott Niermann, MPA, CFRE, discuss the definition of nonprofit and finding a way to measure its mission, as well as the three parts of a bottom line.

Episode Highlights:

  • Scott thinks that most well meaning nonprofit staff may lose focus on the financial side, and others that are very focused on the financial side, they lose the mission. (3:48)
  • Scott mentions that the bottom line is the idea that we must have a financial bottom line. (4:04)
  • Scott shares that the second bottom line isn’t necessarily financial, it depends on the type of organization you’re with and what ways you choose to demonstrate the impact to your supporters. (4:17)
  • Scott mentions that a nonprofit doesn’t have shareholders. (4:40)
  • Scott shares that if we’re not paying sales tax or real estate tax on a piece of property, we have a responsibility not only to our donors and constituents but also, to the community as a whole because we get special tax treatment from the IRS. (4:47)
  • Scott mentions that according to GuideStar, about 50% of nonprofits have less than one month of operating revenue. (7:18)
  • Jason shares that there are two different mindsets if we’re not dealing with shareholders, those who are worried about the financials and sometimes lose focus on the mission, and those who are focused on the mission that they don’t understand its financial aspects. (7:47)
  • Scott shares that nonprofits need the financial bottom line to reinvest in themselves, reinvest in their business, and their community. (8:33)
  • Scott mentions that the third bottom line is a communication goal that every organization needs to have. (13:36)
  • Scott shares that the ROI or yield, is a measure of fundraising effectiveness. Therefore, your return on investment for the dollar spent demonstrates the effectiveness of your fundraising and your spending. (15:47)
  • Scott mentions that plan giving is the one on one discussions in estate planning, among those who are closest to your organizations. (16:22)
  • Scott shares that fundraising efficiency shows how efficient you are and how much money comes out of that dollar raised for the other costs. (18:48)
  • Scott mentions that you should remember who you are as a nonprofit, remember your mission, and find a way to measure that mission. (21:13)

Key Quotes:

  • “The double bottom line is the idea that we have to have a financial bottom line, we are a business, we have to keep our doors open. We want to reinvest that income each year back into the mission and making our community better changing lives.” – Scott Niermann
  • “We’re in the business to improve lives or the life of the community as a whole. So what that means is when the social good and that mission and impact in the community is our number one goal. Our profits don’t go to shareholders, they go right back into the mission, and invest in the organization, just like you would invest in your business.” – Scott Niermann
  • “If you’re focused on the mission of the nonprofit, but you’re not so much in understanding the bottom line, this will give you some insight to why that person on the financial side is going drive home the need for you to be effective, efficient, and productive in the money driving organizations in the processes that you create.” – Jason Cass

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