by Debbie DiVirgilio
There are many factors that make nonprofits and ministries challenging and one of them is that they have a triple bottom line. This idea of a triple bottom line is difficult for many in the external world to nonprofits to understand. In their minds, the financial bottom line is all that organizations need to consider to determine success and viability. However, in reality, what makes a nonprofit or ministry successful is so much more.
According to Peter Drucker, the “father” of nonprofit leadership studies, nonprofits must manage, or be the stewards of, a triple bottom line—financial, social and environmental.
They are expected to have a balanced financial bottom line despite having unpredictable revenue (donations and grants) and they don’t have access to traditional forms of capital. To measure financial success, nonprofits and ministries must ask, “what are we doing to become and remain economically sustainable?” And, secondarily, if sustainability is not part of the plan at the moment, “what steps must we take to move in the direction of sustainability?”
The social bottom line comes in the form of outcomes, how human lives are changed as a result of the work being done by the nonprofit. The question nonprofit leaders need to ask is “how are we making a difference in the lives of those we serve?” These challenges are compounded by the fact that nonprofits do not own the resources they are expected to manage. By virtue of their nonprofit status, nonprofits belong to the community at-large and are managers of resources used for the common good. Clearly, nonprofit organizations are stewards…constantly striving to balance mission drivers with money drivers.
And, according to Drucker, the environmental bottom line goes beyond being “green” and extends into being a social innovator and change-agent. To measure their effectiveness in this area, nonprofit leaders must ask, how is our organization making broader changes, not just in the lives of those we serve, but in our community? Note that here, community may be defined as broadly or as narrow as you would like.
Unfortunately, what I have realized through my years of service to nonprofits and ministries is that many are not being good stewards. They spend too much time limping along instead of equipping themselves for success by participating in coaching services, accessing the expertise of consultants and carefully analyzing what they are doing well and what is challenging the organization. Until the mindset is changed, organizations will never grow and become faithful stewards in each of these areas.
So, I ask you are you being a good steward of the resources in your nonprofit? How can we help you to become a better steward so that your financial, social and environmental bottom lines are strengthened?