Exploring Stage 5: Financial Liberation

Welcome to the final article in a series of six, intended for:

• leaders of Canadian charities and non-profits, including Board Directors;
• those serving a financial function within the social purpose environment; or
• people who steward a First Nation government or an Indigenous community.

Our inaugural post was 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. Every subsequent post has taken a deeper dive into each of the 5 Stages.

Our final post details the characteristics of Stage 5: financial liberation.

Stage 5 – financial liberation… confidence, credibility, and impact!

In our most recent instalment, we suggested that at Stage 4, the door begins to open to a whole new landscape. Organizations at Stage 4 have activated improvements in financial performance, and increases in financial health and sustainability. These groups have become stronger, and are positioned to manifest lasting and meaningful community impacts.

This strength spreads from the Financial Department and into the entire organization.

These groups are at ease engaging in proactive thinking about long-term financial and organizational health and sustainability.

And engaging with the idea that they just may achieve their missions!

It’s a pleasure to serve a group that’s at Stage 5. The Treasurer role is a ‘light lift’, and everything is ‘good news’, with the freedom to pivot as needed. The work is energizing. Success breeds success: new funders, donors, volunteers, and staff are attracted to the organization, excited to participate in palpable change making.

At Stage 5 (depending on the nature of the group’s reason for being), they may start thinking about what it would take for their organization to actually achieve its mission and put themselves out of business.

In other cases, they imagine expanding their work to other areas – whether of geography or influence.

The health of the financial department positively influences the rest of the organization, which fires on all cylinders. All departments now communicate with each other, as a cohesive organism.

Groups at Stage 5 consider their organizational health and long-term sustainability. They have the capacity to continue to serve their communities while also advocating for the change required to spark and maintain enhancements to wide-reaching systems.

To do so, these organizations evaluate their goals and capacity for mission achievement.

• Do we have effective strategic plans or frameworks?
• Do we have effective operational planning and budgeting systems?
• Do we have an effective theory of change, and logic models focused on how we engineer positive impacts in the communities that we serve?
• Do we have effective program evaluation systems to assess the impacts that we make?
• How is our performance management? Do we regularly achieve our short-term and long-term goals?
• How is our project management? Are most of our projects completed on time and on budget?

The key is their ability to measure outputs, outcomes, and impact: and its demonstration to funders. This, because funders are motivated to support organizations that can generate the greatest bang with their own precious bucks.

Stage 5 organizations make an intentional shift from raising funds as they always have. This change is crucial for long-term fund development.

• Given the impact that we want to have, are we using the right business structure and funding model?
• What core fundraising capacities and competencies should we develop?
• Do we have the best funding mix for our organization with respect to short-term vs. long-term funding? And with respect to restricted and unrestricted funds?
• Are we attracting funding from the best sources, given our cause??
• Are there other sources of funding that we should consider?
• Are we using optimal strategies to attract these sources?
• How might we develop plans to generate our own sources of revenue, and reduce our reliance on external funding sources?
• Have we considered our own return on investment (ROI) in fund development? That is, how much effort (resources) do we need to expend, to attract the funding? (Is this funding source ‘worth’ it?)
• Have we built an effective case for support that persuades our best funders?

Evaluating all aspects of long-term fund development strategies has a significant effect on the efficiency and effectiveness of fund raising. This must include measuring and demonstrating impacts.

Tapping into diverse unrestricted revenue streams from sources that may include social enterprises, partnerships, sponsorships, and memberships amps up flexibility to enact big social contributions.

And finally, organizations at Stage 5 have defined detailed and specific plans to advocate for and achieve the fundamental systems change that would either put them out of business, or greatly evolve their offerings.

• Do we have the right people and plans in place, to provide community education and engagement?
• Do we have plans to educate political leaders and other influencers as to why the systems change that we’re advocating for is essential? And how do we connect to these folks in a way that’s meaningful to them?

Although many groups may not currently have the size or scale to be able to mobilize enough support to effectively advocate for the systems change that they envision, organizations at Stage 5 are proactively equipping themselves with capacities and competencies that they will need in order to eventually do so.

The internal view from Stage 5 is financial confidence. The external view is financial credibility. Can you imagine what this will be like for your organization and cause?

Your feedback is welcomed. Do 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.

About Humanity Financial Management Inc.

We are activist accountants, working alongside fearless leaders in service of others, across Canada.

Our primary goal is to build or supplement internal financial capacity for our clients, which include:

• charitable organizations,
• Non-Profit Organizations,
• First Nation governments, and
• Indigenous communities.

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 based in West Vancouver, British Columbia, Canada; and we serve change makers across the nation. Reach out to us at [email protected].