Vicki Burkhart’s Case for Investing in Nonprofit Operations

Vicki Burkhart’s Case for Investing in Nonprofit Operations is a solution for getting the infrastructure you need to achieve the results you want in your organization.

Earlier this year, S&P Global reported that “The median ratio of operating expenses compared to total revenues for companies rated BBB- or higher rose to 83.7% in the fourth quarter of 2023 from 82.2% in the third quarter.” I can almost hear the gasps of my nonprofit colleagues reading this, since rating organizations such as Charity Navigator and the Better Business Bureau assign high value to nonprofits that limit operating costs – including fundraising expenses – to the 30% to 35% range.

We could spend all day debating the differences between for-profit and not-for-profit enterprise and all night grousing about the unfairness of it all, but the fact remains that there is enormous pressure for nonprofits to keep overhead at painfully low levels. Our time here is better spent acknowledging the importance of investing in operations and thinking creatively about how a nonprofit with a limited budget can achieve the kind of infrastructure that supports an ambitious mission and vision.

You know as well as I do that infrastructure is essential to a nonprofit’s success. Human resources management, marketing, bookkeeping, legal, technology, and yes, even fundraising, are what keep an organization in business. You can provide the finest programs anyone has ever seen, but if the payroll (or the tax returns, utility bills, rent, etc. – take your pick) isn’t processed on time, you won’t be providing them for long.

I have long recommended fractional team building as a way for any organization to access the operations expertise they need at a cost they can afford. It is an idea whose time may have come. Shiftbase recently touted the efficiency and responsiveness of fractional staffing for startups, pointing out cost savings related to salaries and benefits and the ability to allocate resources more strategically – benefits that hold true for small nonprofits. But I would argue as well that organizations of all sizes can benefit by engaging expertise on an as-needed basis, without the commitment required for typical staffing scenarios.

Many organizations don’t need a full-time professional for every operational function, but with traditional staffing arrangements, they either do without (risky and ineffective), or they create a full-time professional position to gain the expertise they need in a specific area, adding “other tasks” to fill out the job description (wasteful). Fractional staffing makes it possible to engage experts in a variety of areas for the precise time and duration needed. Think of it as “right-sizing” your team.

It can be challenging to imagine how this might work in real time, so I thought I would share a couple of examples. By bringing in exactly the fractional expertise they needed exactly when they needed it, these nonprofits were able to put crucial foundational systems into place. The results they achieved illustrate the efficiency, effectiveness and – importantly – the flexibility of a fractional team approach.

First is a poverty alleviation organization that has a new, first-time executive director who inherited a staffing model that was struggling to keep up with basic operational needs. A fractional senior operations expert was able to identify and assess the organization’s piecemeal systems. The fractional operations director further supported and guided the executive director, key leaders, and the board as they sought outsourced human resources services and revamped their finance management. In just four months, the organization achieved cleaner day-to-day operations, and is now on track to create a new sustainability/fundraising plan by the end of 2024.

With the organization on a steadier operational foundation, their leadership has the freedom to engage in high-level thinking about their strategic plan. Going forward, the organization has the option to bring in additional fractional experts to round out the team. Fractional staffing can be a short-term option to give the organization temporary relief – and an expertise bridge – until they can responsibly expand the staff. Alternatively, a fractional team, adjusted as needed, can become a permanent element of their human resources strategy. The important thing is that the organization’s leaders can make choices that best serve their mission.

Another example is a youth development organization with one employed staff member, an executive director, who very quickly determined that he did not have the time, nor the experience, to be an effective operations manager. His strength was in programming and developing volunteers to help expand the opportunities available to the youth in this community. He needed administrative and operations expertise to underpin the programs he envisioned.

The fractional staff members in this case included an operations manager who “cleaned up” overdue compliance issues and a nonprofit-trained virtual assistant who created process documents to enable submission consistency year to year. Knowing that maintaining an accurate log of “what comes next” was critically important, the fractional team worked with the executive director and volunteer coordinators to create a workflow platform that allowed everyone to monitor and manage activities. They no longer needed to guess who was responsible for certain tasks, now that they had a reliable system that kept track of assignments, completions, deadlines, etc. Getting current with all policies and procedures, and systematizing tasks, changed the game for all involved, allowing them to put the right operational staffing into place while also focusing on program development and fundraising.

Nonprofit organizations are created by passionate leaders who want to make a positive impact on the lives of others. But many of these well-intended initiatives will struggle because they lack a solid infrastructure and sufficient operational foundations to support effective programming. In some cases, they also lack the finances to retain full-time staffing to cover the diverse functions represented by operations. Fractional staffing offers an affordable and flexible solution for strengthening infrastructure and expanding staff expertise, enabling these organizations to move forward in ways that best serve their communities.

Vicki Burkhart
Founder and CEO, The More Than Giving Co.
www.morethangiving.co

Vicki Burkhart’s Case for Investing in Nonprofit Operations was first posted at INSIDE CHARITY

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