Changemaker Conversations: The Podcast for Nonprofit Leaders · Alyssa Conrardy and Lindsay Mullen

Fix Your Funding Part 1: Diagnose What’s Really Wrong With Your Nonprofit’s Financial Health

·37 min·3 clips

One nonprofit anticipates a 25% funding cut next year from a 50-year source, while another loses over $1 million annually.

This episode features hosts Alyssa Conradi and Lindsay Mullen, principals at Prosper Strategies, addressing a widespread financial crisis in the nonprofit sector. They introduce a three-part series designed to help leaders diagnose and fix funding problems, beginning with a clear assessment of their organization's financial health. The hosts cite specific examples, including an organization anticipating a 25% funding decrease and another facing a sudden $100,000 shortfall due to a canceled federal contract. They identify four key financial metrics for diagnosis: operating reserves measured in months of cash on hand, the unrestricted revenue ratio, budget surplus or deficit projections, and revenue diversification percentages. Alyssa explains that a healthy operating reserve is typically four to six months, but many organizations now operate with one to two months of cash. They discuss how a high percentage of restricted revenue can limit flexibility during a crisis, with a general benchmark of 40% or less being preferable. A surprising insight is that while the total dollars donated are up, the number of individual donors is declining, creating long-term vulnerability. They emphasize that a projected budget deficit, calculated by adjusting original budgets with current realities, often reveals a more urgent picture than year-to-date numbers. Lindsay, drawing on her experience as a board chair, argues that transparently sharing these specific metrics with the board is a critical leadership and trust-building exercise. The hosts stress that boards need this detailed financial story to fulfill their oversight duties and become effective partners in a crisis. The tone is educational and conversational, blending strategic advice with empathetic acknowledgment of the sector's stressful climate. Nonprofit CEOs and executive directors grappling with funding instability would find this episode immediately useful, while those seeking immediate tactical fundraising solutions may prefer to wait for part two of the series.

As heard by us

A practical check on nonprofit financial flexibility for leaders who need the numbers to be clear.

This episode treats nonprofit funding as a practical health check and keeps its focus on the metric that matters most here: the restricted revenue ratio.

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Get a clearer read on how much of your nonprofit’s revenue is actually flexible.

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