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Taking Stock of Your Nonprofit’s Revenue Potential

November 21, 2014

Headshot_nancy_osgoodIf you've ever worked in retail, you're familiar with the taking-inventory drill:  The store closes early and the employees hunker down and count the merchandise.

Taking inventory is the process of counting and valuing what a store has in stock. Although time-consuming, it has many benefits:

  • It flags issues before they become larger problems.
  • It provides an explanation for bottom-line results.
  • It creates a benchmark.
  • And it helps management decide whether or not to invest in additional stock before expending resources to buy more.

So what do retail practices have to do with nonprofit leadership and revenue?

As nonprofit leaders and trustees, we need to "take stock" of our organization’s revenue on a regular basis. Doing so in a thoughtful, deliberate way allows us to avoid the risk of "buying more"― that is, pursuing new opportunities ― before we've "sold" what we already have.

Several years ago, I developed a tool for doing just that. Imagine a tool that allows you to look at the trends in performance of all your revenue streams at once over a five-year period. The Revenue Inventory™ allows you to see and understand both missed opportunities and growth opportunities through the lens of past performance. 

I promise – you will be astounded with what you find. No matter how rigorous an organization's reporting is, the Revenue Inventory never fails to produce real and previously unidentified revenue opportunities. Equally important, it has kept many an organization from marching down the road  – however well-intentioned ― to shiny, new revenue opportunities that fail to materialize or don't deliver as promised.

Still not sold? Allow me to share a powerful example involving a recent nonprofit client of mine that serves special-needs children and their families. Stakeholder feedback suggested it had a "public mandate" to serve low-income families with special-needs children, but the organization lacked the resources to provide those services. It did have some experience with earned income (education programs sold to social workers and families) and wanted to launch more such programs to help fund what it saw as its mandate. After completing the Revenue Inventory, here's what we learned:

  • Net revenue from education programs was actually negative and participation was waning.
  • Annual fund, conference, and gala revenue had all grown substantially on a year-to-year basis for five consecutive years, and all were delivering significant net revenue.
  • However, retention within every single one of the above areas was abysmal ― the vast majority of participants/donors were participating only once, despite strong program quality ratings and high levels of satisfaction among participants/donors.

But the "gem" of our findings was this: the organization was leaving money on the table. By refocusing on one activity, retention through relationship management, the organization was able to dramatically increase its unrestricted revenue in areas where it had already demonstrated consistent, sustained success ― without introducing a single new program! 

The Revenue Inventory process provides ample opportunity to explore new opportunities as well. (I'm am only suggesting you consider "new" in the context of what your organization already is doing.)

Curiousity piqued? Join me to learn more about the Revenue Inventory™ and other tools that can contribute to your organization's sustainability when the Foundation Center and I present the webinar Building the Bottom Line: Growing and Diversifying Your Revenue on December 9, 2:00 pm ET/11:00 am PT. We look forward to seeing you!

Nancy Osgood is founder and president of The Osgood Group, a management consulting firm that helps nonprofit organizations and socially focused businesses improve their performance, effectiveness, and sustainability.

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