The 5 Stages of Financial Wellness
Humanity Financial Management Inc.
Financial Well-being for Social Purpose
Welcome to the first of a series of six articles intended for:
This inaugural post is an introduction to a developmental paradigm that, we contend, can clear the pathway to financial liberation: bringing the numbers to life for all stakeholders; advancing your group’s case with funders; and materializing the impacts that your organization envisions.?
If you’re reading this, it’s likely that you’ve been ‘swimming in the water’ of the community sector for some time.
Conceivably, you’ve championed more than one organization over time, and have noticed that each holds varied levels of financial competence and awareness; which seem to be connected to their success in making social, community, cultural, or environmental impacts.?
You may have witnessed the group that you serve now: either enhance its financial health over time; or possibly slide backwards, in the face of the surprising termination of a relied-upon funding stream, or the departure of an effective team member.?
Or you may notice that the Board seems to be disconnected from the financial realities of the organization. We’ve seen some instances where the group had significant financial surpluses, while its leadership operated under the assumption that they were just making ends meet.
A decade ago, Humanity Financial shifted their accounting practice from assisting traditional businesses, to supporting social purpose organizations. As the Humanity team forged client relationships and became steeped in community-based financial practices, Gord Holley, Humanity’s founder, began to wonder:
Accountants instinctively seek patterns. Their uncanny superpower is to recognize those patterns and make meaning of them. Gord began to notice the areas of financial turmoil and triumph in the organizations that Humanity was serving.
The financial practices of struggling groups fit a certain pattern. Models of success in community aligned with other, different financial strategies. Gord then noted the gradations in between, until he was able to pinpoint where new clients were situated in this continuum of ‘financial wellness’.?
Five distinct stages were documented and examined. A developmental pathway for community organizations’ financial health was mapped out.?
‘Once organizations learn about the 5 Stages of Financial Wellness, they all want to be at Stage 5. Before understanding the entire five-stage pathway, many had believed that there was no greater success possible than at Stage 3.’
After Humanity became expert at identifying ‘the stage’ where each client was situated, the team then focused on triage: shifting stressed and overwhelmed people who are caring for charities, non-profits, and Indigenous communities and nations, from scarcity to abundance.?
‘The 5 Stages of Financial Wellness is a paradigm for organizational development. Once organizations recognize which stage they’re at, they can note the elements that keep them there, appreciate the benefits of the next stage, and arm themselves with the tools to move toward the final stages.’
The fifth stage unlocks an environment that some groups and their leadership dare not allow themselves to dream of. Among the hallmarks of the fifth stage is financial surpluses after impact goals are reached and admin costs are covered. Revenues are coming from the ‘right’ places, fitting the organization like a glove.
This new reality makes room for contingency planning, new goals, plans for bigger impacts, and, now that the organization’s own sustainability is locked in, even the capacity to assist other communities or organizations.?
领英推荐
On the ground, attaining the fifth stage of financial wellness could look like: reasonable task levels with no more staff burnout, shorter work weeks, higher pay, and work-life balance.
From all levels of the organization, the view from the fifth stage is the mental bandwidth to dream and act strategically: choice and options. The numbers are truly alive, infused throughout the organization, allowing them to proactively and confidently navigate an ever-changing and increasingly challenging external environment.
Humanity even intuits a ‘stage six’, which could look like obsolescence of an organization altogether: because the group has achieved absolutely everything that it had set out to do.
Stay tuned for future newsletter editions, which will take a deeper dive into each of the 5 Stages of Financial Wellness: including ways to identify where your group is on the pathway to financial liberation, and how to accelerate your impacts by moving through the stages.?
This information is offered with no strings attached, and at no cost. We’re looking forward to sharing detailed information about each of the stages, and invite your feedback on whether the patterns that we’ve observed in the field – and our recommendations – align with your experience. We’re interested in enhancing our theory, using feedback from readers like you. Reach out to us at?[email protected]
We are activist accountants, working alongside nation builders, change makers, and fearless leaders in service of others, across Canada.?
Our primary goal is to build or supplement internal financial capacity for our clients, which include:?
We actively engage the organizations that we serve to move beyond reacting to financial challenges; and activating regenerative thinking and strategies.?
Collectively, we fight for something bigger and better, including social justice, environmental sustainability, and economic inclusion and equity.??
Our office is headquartered in West Vancouver, British Columbia, Canada, and our reach is nationwide. Contact us at [email protected]