Can we all just admit there is no such thing as nonprofit sustainability?


fish-959636_640pdA few weeks ago I called up a program officer of a foundation to discuss my organization’s amazing idea to bring more immigrant and refugee leaders into the nonprofit field. “That’s a great idea,” said the program officer, “but what’s your sustainability plan? We don’t tend to support projects unless we know they will be financially independent in the future.”

“Well,” I said, “I have a great plan for that. Have you heard of teeth tattoo? No? You will! Dental adornment is going to be the latest thing, believe you me. Think about it: the Seahawks logo on your incisors! We will open a teeth tattoo parlor, and it will generate literally billions of dollars, enough to fund the project forever. But we need seed money. So how about 50K from you guys?”

All right, I didn’t say that. I waffled something that sounded intelligent—“We are building up our base of individual donors, establishing relationships with local businesses, and using the Synergistic Paradigm Action Matrix in order to find the nexus between our strategies and adaptive advantage”—like a good grantseeker is trained to do.  We talked some more. Then I hung up and unwrapped a bar of dark chocolate and ate it, both me and the chocolate 72% bitter.

Many foundations (and some donors) have this crippling fear that we nonprofits will become dependent on them. Like those Millennials who move back home to live with their parents after grad school and refuse to leave. Because of this fear, most foundations give one-year grants, usually restricted. Tough love, you know. And who could blame these funders. I mean, if my kid comes back home to live with me after grad school, I would make it as miserable as I can for him in order to encourage him to break out on his own and not become a leech; that’s called good parenting.

The concept of sustainability is ubiquitous, overbearing, and frustrating, as I explained earlier in “The sustainability question: Why it is so annoying.” Many funders and business people seem to believe that if nonprofits just try hard enough, they’ll reach this state of funding Nirvana and be self-sufficient and “sustainable.” And if they’re not actively working toward reaching fiscal enlightenment, they shouldn’t be supported.

Here’s the issue: This magical land of nonprofit financial self-sufficiency does not exist, and funders’ and donors’ unwillingness to admit this perpetuates an inefficient funding system that stymies us nonprofits’ abilities to tackle society’s most challenging problems. Consider:

First, the top nonprofits in the US still rely on a combination of funding including grants and government support. Take a look at the Nonprofit Quarterly’s 100 biggest nonprofits. Together their revenues total about $75 billion. Yet only 26% ($19.1 billion) are from program revenues and 4.7% ($3.574 billion) in investment income. And these are all huge, well-known orgs. If giant, successful organizations with awesome brands like YMCA, Goodwill, Catholic Charities, and United Way still rely on government and foundation support, then why the heck is there constant expectation that a nonprofit, any nonprofit, would be able to be self-sufficient?

Second, funders’ “tough love” stance is paradoxically the thing that prevents sustainability. Starving nonprofits with purposefully small restrictive one-year grants decreases their chances to achieve this elusive state of self-sufficiency. Each time a grant runs out, it’s like pushing a reset button; every time we reset something, we waste time and energy for it to ramp back up. And not funding something unless it has a clear strategy to be sustainable prevents it from developing a strategy to be sustainable. To quote one of my ED friends who is also equally frustrated over sustainability: “To not fund a promising project because it hasn’t figured out how to be self-sustaining is like not giving someone a heart-transplant because you don’t know if this person will live. Sigh…I’m getting a drink. I don’t care that it’s 1pm.”  

Third, the pressure on nonprofits to be self-sufficient can lead to mission creep, wasted time and resources on stupid stuff, and warped public perceptions.  When they work, earned income ventures are great (Just wait until the teeth tattoo parlor is up and running!) But often, the siren song of sustainability leads nonprofits to stray from their path and tackle projects they have no skills or business tackling. Many of these ventures fail. My last organization was tempted to open a café. It would have been a disaster if we hadn’t had a very wise and business-savvy mentor tell us we were insane. Meanwhile, one photography-based nonprofit I heard of had its status revoked because it was generating too much earned income and the public and IRS didn’t believe it was a nonprofit any more.

Fourth, and most importantly, can we just admit that nonprofits by our very nature will always be reliant on funders to support our work? Read this awesome and spirited defense of general operating funds, written by Grantmakers for Effective Organizations (GEO). Funders and nonprofits have a symbiotic relationship, like these fish and the sea anemonies. Ideally, we do our work, and funders raise money to keep it going. What is so wrong with that? Why am I, as an Executive Director, spending 80% of my time trying to find and Frankenstein bits of funding together instead of focusing on developing my organization’s project to bring more leaders of color into the field? (Psst: It’s been hard to recruit and retain leaders, any leaders but especially those of color, because they know that 80% of their time will be spent trying to find and Frankenstein bits of funding together). 

Expecting nonprofits to be self-sustained seems to be perfectly normal. But imagine what it would be like if we imposed this onto other important fields, like public education:

Program officer: So, tell me about your project.

Principal: We have been working on this program called “Fourth Grade.” I think it aligns really well with your K-to-12 priority. Students, many of whom are low-income, will attend a total of 8 hours of programming per day. They will develop skills in math, reading, writing, science, as well as skills such as teamwork and critical thinking.

Program officer:  That does align very well. What is the program budget?

Principal: $150,000 for the next fiscal year. This covers 1FTE teacher, as well as rent, utilities, supplies, trainings, etc.

Program officer: While the budget is reasonable, we can’t pay for more than 15% of any project. And, unfortunately, it can’t go to things like rent or utilities at the school.

Principal: Uh…we’ll find someone else who will pay for rent and heat…

Program officer: Now, what is your sustainability plan? How will you keep “Fourth Grade” running once our one-year grant runs out? We don’t tend to support projects unless we know they will be financially independent in the future.

I’m married to a teacher, and she works insane schedules every day, putting in three to six extra hours at home to grade stuff and prepare lessons. The work itself is ozpddifficult enough. Imagine if we force teachers to also focus on fundraising and sustainability the way that we force nonprofit professionals to. We don’t do that to teachers, because we know that their job is to teach. So why don’t we apply this basic concept to nonprofits: Our jobs should be to provide counseling, help people find food and shelter, remove kids from abuse and neglect, advocate to change unfair laws, take care of veterans, comfort the lonely, reduce damage on the environment, etc. We as a sector were formed because the business sector and the Government either ignore these issues or just suck at solving them. But every day, we spend endless amounts of time and energy playing nonprofit funding hot potato, which is not nearly as fun as that may sound. (“1 potato, 2 potatoes, 3 potatoes–lost it. 4 potatoes, 5 potatoes, 6 potatoes–audit”)

Nonprofit self-sufficiency does not exist, or is very rare. Chasing after this concept called “sustainability” is like searching for the fountain of youth, or El Dorado, or the Holy Grail, or a copy of the original Star Wars movie that has not been bastardized by George Lucas (Han shot first!). I’m not saying that we nonprofits should take things for granted, expect funding to just flow our way without effort, and not worry about sustainability. Like any organization—businesses, schools, faith-based groups, etc.—we must strive to maintain our work for as long as it’s needed. But the current funding system is ineffective, forcing us to spend considerably more time and energy than we should on trying to stay alive instead of focused on actualizing our missions. We need to admit that most nonprofits by their very nature are not ever going to reach financial independence, and that it is OK.

Until all funders and donors agree that we have a symbiotic relationship and not a parasitic one, I’m going to keep working on that teeth tattoo parlor as an earned-income strategy. When it opens, 25% off your first teeth tattoo if you mention this blog post!


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40 thoughts on “Can we all just admit there is no such thing as nonprofit sustainability?

  1. Joan Garry

    God knows this post points out a key issue for foundations — their inability to see general operating expenses as core. Foundations have a tendency to want to underwrite artwork for the walls of your house before you can afford to pay to have them sheetrocked. That said, it may be useful to distinguish between “sustainable” and “self sufficient.” Nonprofits are by their very definition NOT self sufficient. Like Scarlett O’Hara, we often ‘rely on the kindness of strangers.” I argue here that ‘sustainability’ is a very different metric. A sustainable org has the infrastructure and donor pipeline and messaging that brings new donors up the $$$ pipeline in the event that larger dollars fall through — from foundations or others. As for sustainability, this is a different measure. Does the org have what it needs to do its ongoing work? Is the foundation of the org strong? Is the mission clear? Is there a remaining need. Take my good friends at Freedom To Marry ( They have a remaining need but it looks like a case is winding up to the Supreme Court. In our favor, marriage becomes a national right for all citizens. And Freedom to Marry either declares victory and closes its door or what? Struggles desperately for relevance? If the latter, THAT is a sustainability issues. I enjoy your blog very much!!!

    1. Vu Le

      Thanks for the comment, Joan. I completely agree there is a difference between “sustainability” and “self-sufficiency” and should have pointed it out in the post. I think the main issue is that many funders, like the one I talked to at the beginning of the post, still seem to confuse the two, thinking they are synonymous. “Sustainability” the way that many funders think of it, does not exist.

    2. Terry Hull

      It is Blanche Dubois in Streetcar Named Desire who relied on the kindness of strangers. NGOs have to avoid Blanche’s fate by ensuring that friends and family come together to give the support that is needed. Trouble is, many of them, like Rhett, just don’t give a damn.

  2. Elizabeth Brooke-Willbanks

    While I’m intrigued by the idea of teeth tattoos, I really do not like the Seahawks at all. Can I get the NE Patriot’s Flying Elvis? If yes, then sign me up. Love your blog.

  3. Ryan Ripperton

    Brilliant. Vu, I’d like to be you when I grow up. Such a great post — having the confidence to tackle a critical issue in a well-researched, thoughtfully considered way, while still be accessible and informal. I absolutely love the symbiotic vs. parasitic analogy at the end. Well done — I’ll be sharing this post widely.

    1. Vu Le

      Aw, thanks, Ryan. What a nice comment. I really appreciate it. This type of feedback keeps us writers going. We have terribly low egos, you know.

  4. Nina Simon

    I think there’s a whole other problem with the sustainability question: it presumes that there is some “steady state” level of budget and impact that is either a premise or a goal for the organization. In my experience, organizations that are really pushing themselves to do killer work and have as much impact as possible are often intentionally unsustainable. They are building the plane as they fly it… but they are more likely to soar than those who are on the ground surrounded by airplane plans in fancy conference rooms with ergonomic chairs.

    I wrote a bit about this a few years ago in a museum context, might be of interest…

    1. Marisa Vrooman

      With regard to the idea that those who are building the plane as they fly it are the only ones doing “killer work” – I disagree (not that one needs a fancy conference room with ergonomic chairs). I think in order to sustain and stabilize one’s infrastructure (plane), capacity (fuel), and staff (pilots) in order achieve long-term impact (which research proves you need to be around for a while to do) you need a clear strategic plan, a highly-functioning board of directors, a competent and well-trained staff and a strong evaluation plan. Otherwise you are at risk of blowing funding, burning bridges, alienating your constituents (i.e. imploding upon re-entry, chasing dragons, or other such myths.)

      1. Nina Simon

        Great point, Marisa. I certainly don’t think that these fast-moving organizations have the exclusive on “killer work.” I do think that often, funders start from a presumption that every organization has a very stable set of expectations about budget, staffing, and services. New startups and organizations in transition often do not.

        1. Marisa Vrooman

          Very true – I’ve been involved with fast and furious start up enterprises, large and inflexible nonprofit institutions and now I work with a small, strategic, well-thought out nonprofit – young but steady and I have to say that I think the third does the best work with the longest-standing impact. Plus – I’m not burning out! What a novel idea 😉

    2. Vu Le

      Thanks for the shoutout and endorsement of NWB at Museum 2.0 blog, Nina! And great point on the importance of not always stressing sustainability for its own sake.

  5. Christine

    I enjoy the blog a lot but worry that the emphasis on fundraising from foundations create a false impression. According to Bridgespan, foundation support comprises only about 2% of overall nonprofit funding. (SSIR has published several pieces on this topic.) In the NPQ report, “Public Support” conflates foundation grants with individual donations, and the latter are a much larger share of nonprofit support. Maybe it’s time for a column telling nonprofits to stop believing foundations are Keyser Söze. It’s giving foundations a mythical power not connected to their actual size.

    1. verucaamish

      A LOT of public support does not go to the type of organizations that Vu and I have worked in. Primarily ones that work with low-income communities of color. When you look at where all of those individual giving dollars go to, the vast majority go to churches and other religious institutions. I can tell you for the organizations I’ve worked for serving AAPIs we can’t even get 100% board participation. Only 4% of the budgets of LGBTQ groups come from individual giving and I would say that number is even lower n the AAPI community. It’s a lot about perception and culture. There is a service model that AAPI organizations operate under where community members would never thing to give to those organizations. I’ve worked with organizations that do small business development and helped launch small business for low-income folks to become middle class. A well meaning consultant advised to to do a solicitation letter. The result? A lot of angry phone calls from people who had been helped wondering why an organization that clearly had the means to help those folks start their businesses would need their help.

    2. Vu Le

      Christine, you bring a good point, and the funding power dynamics is something I want to talk about in a future column. But verucaamish’s point is salient as well. Many orgs that are led by and serving communities of color do not have a strong base of individual donors. Most of them have less than 5% of their budgets coming from individual donors. Foundation grants does play a huge part in ensuring these organizations remain in existence, because no one can do what they do as effectively.

    3. peripus
      Agreed. Sustainability usually means not becoming a business but increasing individual giving, which is a much larger portion of charitable giving and renewable. Giving to education and social services is as large as religious giving. The challenge for grassroots orgs in communities of color is connecting to wealth. Major donors are the source of most indiv giving. Foundations ought to make it their job to help such grantees make those connections. Grassroots orgs need to develop internal cultures of philanthropy to enact practices that acknowledge that the org can’t exist without investors.

  6. blueforestprincess

    I wrote my dissertation on the sustainability of non-profits in developing countries and spent time in Uganda doing case-studies using a literature review to determine whether or not nonprofits contribute towards sustainability. It is such a delicate and complex thing to achieve; and there are many outstanding factors that contribute towards its success. Firstly, how is it measured exactly? It might be something one can even see at first. How does sustainability manifest itself? There is not a simple answer to this. Scholarly articles point out many overlapping ideas of what sustainability is; I was able to identify 5 major generally agreed characteristics through rigorous research. The issue of the state of government the nonprofit is in also contributes towards it’s ability to be sustainable, is it in stable condition? What are the corruption levels of the state?
    Is sustainability possible? There are several factors to consider here. Donor-relationships are very complex-and donor’s themselves can even disturb the process of sustainability (fascinatingly enough).
    The point of all this is, what does this imply for non-profits? Does it mean they stop helping- to what extent do they help or hinder a nation?
    Non-profits should be set-up in a very particular way-this is clear. There needs to be relationships of accountability in place, accountability towards donors, towards themselves, towards the people they are helping, towards their mission statement…etc Are these systems of accountability in place? If they don’t exist-what’s the point?

      1. Chris Corrigan

        It’s not a bad idea to ask a funder what they mean by sustainability and to show you the other examples that they are proud of. You know the ones where their 15% of funding paid for half and egg and a stick of butter and the organization was now raking in $40 million a year in gross revenues.

      2. blueforestprincess

        Sorry, just saw this now for some reason. I would be happy to share my research with you or anyone who is interested. Please send me your email and I can forward you my dissertation.

    1. Chris Corrigan

      I don’t know about accountabilities. I have seen almost every successful non-profit produce reports that basically say “Thank you for your $47,000 donation. We effected a 16% decrease in illiteracy in our neighbourhood as a result.” And the truth is that 16% of the population moved away because the real estate market crashed and folks got evicted. And this LOOKS like accountability, but who actually is accountable for change in a non-linear complex system? One organization I recently worked – who believe that social change is linear, predictable and kknowable – said that over the past 15 years, since they were in business, there has been a 30% increase in the form of violence they were set up to counter. I pointed out that the reason for that was probably that they have been in business for 15 years. Maybe they were the cause of this increase? Oh NOOOO! Not us! But it is worth pointing out that complexity cannot be managed with accountability. What is needed is much closer working and learning relationships so that funders can work with non-profits to address challenges and then learn together about what is actually working. Otherwise, our annual reports make for entertaining reading about a system that demonstrated perfect “accountability” as we head to hell in a hand basket, lying to each other all the way.

      1. blueforestprincess

        Accountability is a major problem with non-profits and there should be more systems in place to monitor this. Most countries receiving donations don’t have a budget nor infrastructure to even begin to handle this problem. NGO’s basically monitor themselves and hope for the best, so to speak. This isn’t good enough, in my opinion, and there should be higher standards regarding this issue. This is why I spent time researching this problem. Most American’s don’t even realize how important of an issue it is-and that it can affect them personally, in which organizations they choose to donate to and how.

        1. Chris Corrigan

          The problem is when funders confuse accountability for funds (like through audits and so on) and a demand that a non-profit be accountable for a direct causal link between funds and outcomes. Solving homelessness for example, is not a linear problem, but very few funders accept a complexity view towards addressing that problem. When it comes right down to it, they want a direct accounting for the dollars they spent against outcomes. That creates some real problems for non-profits who are then faced with actually telling mistruths about impact. And then people bray for “more accountability.” We need much more nuance and discernment about this issue and many more ways of funders and non-profits being in relationship.

  7. Alan_Muller

    Well, this is not my world. Grant funding for “environmental” NGOs is largely focused on *preventing* them from doing much that is meaningful. Oil money, gas money, dirty chemical money…this is intended to ensure that the main product of the grantee is self-congratulatory bullshit.

    1. Generic Reader

      Not sure what ENGO Alan_Muller’s working for, but as the grants manager for an ENGO myself, we don’t accept any oil money, gas money, or chemical money (or nuclear money, or tobacco, or arms)–and we are not in the minority. Seems the gift acceptance policies wherever Alan’s working need a serious re-write.

  8. Laura Goodwin

    Don’t we already have a noun for the kind of “sustainable organization” being sought by these funders? I think it’s called “A Business.”

  9. Joel Barker

    Vu, I think you present a lot of great information here. This topic definitely resonates with a lot of us in the nonprofit community, but I have to disagree with your main point that nonprofits are not – or can not – be sustainable (or self-sufficient).

    Even if we eliminate nonprofits like Blue Cross Blue Shield, hospitals, and foundations – which by most accounts often turn enormous profits every year – there are many nonprofits that are sustainable. I know you are probably refer to us nonprofits with “boots on the ground” providing direct services, but there are many of us nonprofits providing direct services that are sustainable organizations.

    Nonprofits can and do use several different sources to sustain their missions. Yes, many depend on grants and fundraising as part of their business model. Sometimes this is by choice, other times it may be the only way a program can receive the means necessary to survive. Philanthropy is such a wonderful gift for donors, nonprofits, and nonprofit clients.

    You very accurately point out the struggle that nonprofit leaders face regarding how to fund a program or increase earned income to support programs. So many of us face this challenge. That being said, to suggest that we should carry a banner of unsustainability as an entire sector I think is harmful.

    Sustainability can and does exist. I believe striving for this should be part of your personal mission as a nonprofit leader. As an executive director, you are tasked with leading a mission-focused business. Your task is to develop a business plan that supports this mission. How you do that is up to you and your board. No one, and especially not me, will say it’s easy. It’s not! That’s probably why 8 out of 10 small businesses fail within the first 18 months. Building a sustainable business – nonprofit or for profit – is very challenging. That’s why we need more smart people and dedicated people (like you) to take jobs in the nonprofit sector.

    I encourage you to read posts from Nonprofits Assistance Fund ( Kate Barr and her team are very skilled and smart when it comes to nonprofit finances. I think you’ll find their advice helpful in creating a sustainable nonprofit. (Also, I think they’re self-sufficient.)

    Thank you for your post and for your service to your community through your nonprofit leadership position!

    1. Vu Le

      Joel, thank you for the thoughtful comment. I think the main issue is more philosophical than anything. Sure, if we scrappy nonprofits who are serving the homeless and poor and at-risk kids try really, really hard, we may be able to reach self-sufficiency. But is this really a good use of our time? Do we ask the police to fundraise? Do we ask teachers? How about EMTs? If our public schools try hard enough, I’m sure a few of them will reach self-sufficiency. I don’t know, maybe they require all teachers to spend 25% of their time working with their students to sell some awesome calendars or something. But is this a good use of their time? Teachers should be spending most of their time teaching. Police should be spending most of their time protecting the public. EMTs should be spending most of their time helping injured people. It would be ridiculous for us to ask an EMT “Well, what you’re doing is great, helping injured people is really important, but what is your sustainability plan?” So why is it OK for all of us nonprofits, who have a lot of serious stuff in society to tackle, to be constantly asked this? If society–funders, donors–values what we do, it should pay for it; that way we can focus on addressing problems that no one else wants to deal with. We have 58,000 veterans sleeping in the streets each night, and we ask a homeless shelter “So…what’s your sustainability plan?”

  10. Brambo412

    Maybe nonprofits can only be sustainable in the way that foundations can only be fundamentally sustainable with new tycoons giving to them.

  11. pawiba

    Some of the densest (and most afraid) people I’ve met have been foundation program officers, only exceeded in denseness and fear by corporate giving staff.

    That said, this mindset is a built-in hazard of a capitalist society, where most people consciously or unconsciously measure one another’s worth by how much money they have (or appear to have).

    A lot of today’s major donors are hedge fund managers – i.e., people whose only talent is making money out of money for other rich people. They have no skills or talents for making the world a better place. And they want to do three things with their money: 1) create a terrific life for themselves and their families; 2) not pay taxes, and 3) make an impact /leave their mark on the world in a fast and impressive way. They have no understanding of process; all that matters is results (Mike Bloomberg’s philanthropic machine is famous for this philosophy – “we will only invest in something that has a measurable result right away”).

  12. madmaeve

    Omg, THANK YOU. I’ve been saying this FOREVER (ok, for at least the last 7 years when the board at my org ceased to have any constituency representation and had only funders sitting on it, who LOVED to throw the word sustainability around, no matter the topic).

  13. Don Mercer

    Wonderful article and comments. I spent 13 years as the CEO of two nonprofits and founded a third and I can say that the frustration is real. I remember years ago saying the same thing that there is no such animal as a self-sustaining nonprofit. Yet I tried my best to generate additional income.

    Here is another view of the problem with funding organizations: the way they define success. Success, in part, to a foundation is measured by how many organizations they help and how many they get started. If they continue to give to the same organization year after year, it limits their ability to do something new. [I know that’s not the only measure, but it is an ingrained mind set.] How many foundation CEO’s report to the board with pride that they have supported the same nonprofits for the past five years and they are all doing great. None that I know. New is the key to their success, but new is the enemy of sustainability for many.

  14. Denice Rothman Hinden

    Your post is certainly thought provoking. I like to think of sustainability as an aspiration that nonprofits that want to be around do need to bring intention to on-going. Funding is a key part of that and so is strategic and creative thinking about how to use the funds to be positioned to keep attracting more. Keep stirring the pot! I like to read your posts! Thank you!

  15. david noble

    Lovely promo for your consultant firm advice. Well done. There IS such a thing as non-profit sustainability. Open-minded leaders are finding how to make that work for them every day.

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