• Nancy

    Member
    October 25, 2024 at 3:26 pm

    Jeffrey,

    Some time ago, I figured out that nonprofits were a lot like dogs. There are giant great danes like hospitals and universities. There are small yippy dogs like the two or three person advocacy nonprofits. There are working dogs like human service groups and there are poodles like some of the arts group.

    This realization came to me while watching the Westminister Dog Show. First dogs are judged on the Best of Breed. The Best of Breed competes for Best of Show. The Best of Show is not the prettiest dog or the smartest dog or the fastest dog. The Best of Show is the dog that represents his/her breed better than his competitors. If the beagle wins, it means it is a better beagle than the runner-up corgi is a corgi.

    When using ratios, you need the compare the same breed of nonprofit. Factors that determine breed similarity are size, age, mission, and funding. I use LUNA a lot which is Liquid Unrestricted Net Assets. A new nonprofit is not going to immediately accumulate net assets. A nonprofit largely funded by reimburseable government contracts will find it difficult to build sizeable net assets. Museums with a mission of preserving treasures need those net assets. Organizations dealing with am immediate crisis need to be spending now and not accumulating wealth.

    This is a link to a piece, I wrote fifteen years ago. My thinking has not changed.

    http://amazingnonprofits.com/pdf/Best_in_Breed.pdf

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