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How to Make Decisions Using Time vs. Money Margins

by with One Comment CoachingFeatured BlogFinancial ManagementNonprofitSmall business

There are a million ways to make a decision in your business. 

Look at the profit margin. 

Make a pros and cons list.

Trust your gut instinct and what feels best.

Do what you’ve done before.

Do what you’ve never done before.

In different situations, you might use different methods to make a decision, or perhaps you use a combination of several.

I have another one for you that I love to use when making decisions: 

analyzing time margin vs. money margin.

Here’s an example of what I mean.

You want to create a new revenue stream. Maybe it’s a new course offering or maybe it’s an evergreen funnel for a program you’ve been live launching. 

You have two options:

  1. Pay someone to do this for you.
  2. Google it out and do it yourself.

Now, most of the advice we see from internet marketers and entrepreneur gurus are: HIRE! ALWAYS HIRE! Don’t do anything except a few special tasks yourself! That’s okay advice sometimes but not always. If your revenue streams are not strong or profit margins are too low, hiring out for every single thing is just going to drain your savings or put you in debt.

Before making the decision about how to go about creating this course or funnel, you need to ask yourself the question: Do I have more time or money right now? 

Maybe you’re in the early stages of your business, don’t have a ton of revenue, and are working on slowly growing. You have more time than money because your client load isn’t super full yet, so you’re probably best of doing this yourself. 

On the flip side, maybe business is booming. You’re being pulled in a ton of different directions within your business and are working a lot. Clients and customers keep signing on and buying your products or services left and right and your head is barely above water managing it all.

If this is you, do not try to create something new yourself! Hire someone! Assuming profit margins are strong, you have more money than time and should pay someone else to do this for you.


Do you ever use the time margin vs. money margin method to make decisions in your business?

Need help understanding if your profit margins are strong enough to hire someone? Grab our free Profit Plan to help figure it out! Click here>> 100degreesconsulting.com/plan

 

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Should you take out a business loan?

by with No Comment Featured BlogFinancial ManagementNonprofitSmall businessStrategic Planning

Hold onto your seats because I have a potentially controversial opinion to share with you today:

Debt is not inherently bad.

I get asked the question a lot: Is it ever okay to take on debt in my business? Should I get a loan or use a credit card in my business?

We are conditioned to believe that debt in our personal lives is bad, and in many cases consumer debt holds us back from true financial freedom. 

Spending more than you make is only a recipe for disaster and the same is true in our businesses. It can be very easy to invest in our businesses too soon, hire the wrong people, get more software and systems than we really need, and dump money into strategies that haven’t proven themselves to work yet. 

I’ve found that overspending often leads to taking on debt with a false hope that the cash influx will magically change habits and solve all of your problems.

I think we can all agree that that solution never works.

However! Using a business credit card or obtaining a loan or line of credit can work really well in certain situations and is totally acceptable in my book. Now before you run out and apply for the first loan you can find, I am going to share when it’s okay to take on debt in your business, when it’s not okay, and what you must absolutely do first!

Ready?

It can be okay to take on debt when…

    1. Timing is an issue. Many businesses have high months and low months. They know, based on historical numbers, that a particular month or quarter is slow in terms of revenue, but that the following quarter always picks back up again. They may need an influx of cash to cover operating or advertising expenses in advance of a big sales month and this is when it’s okay to take on debt. They know that sales are basically guaranteed, and are substantial enough to cover any debt they take on.
    2. You need capital expenses for production. Other businesses may need cash in order to produce a particular product or line in advance of sales, especially if there is not unrestricted or generating operating cash to fund manufacturing or production. This is another time when it’s okay to take on debt to produce products, provided there is a proven market to purchase the product at healthy margins.

On the flip side, it is not okay to take on debt when…

    • You don’t have a proven business model and/or a plan for revenue. I am only comfortable with a business taking on debt if they have already been successful with their current business model. People have already purchased your products or services and it isn’t a brand new, untested idea. The last thing you want is a boatload of inventory, no one to purchase it, AND a brand new debt payment you can’t make. So test that idea before taking on debt!
    • You haven’t tried other things to improve your cash flow first. If you find yourself short on cash, I do not recommend taking on debt before doing what you can to improve your situation first. Cut unnecessary and unused expenses, reduce those that aren’t generating a solid ROI, and increase revenue streams that ARE working. Debt is NOT the easy way out so work through your P&L before taking on significant debt.

Now that you’ve read the above and think your business still might be a candidate for a loan or line of credit, here’s what you must do first…

    • Create a 12-18 month forecast of revenue, expenses, and cash. Think through the future of your business and map out every revenue stream, every expense, and your cash flow for the next 12-18 months. This may seem like a long time, but you want to ensure that your business is growing in the right direction, profit is strong, and you will absolutely have the cash to repay the loan or credit card, when payments start to kick in. Need a template? Grab one here: 100degreesconsulting.com/plan
    • The forecast must include a realistic path to profit and debt repayment. The key word here is realistic: your forecast should assume the most realistic revenue, expense, and cash scenarios. Think about scale – maybe your product or service will sell a few the first month, more the following month, and be full-scale in month three. Think about timing – your launch may be projected to having amazing sales in November, but the cash might not land in your bank account until December.

So, to summarize my stance on business debt: I’m okay with temporary debt if you have a proven business model, revenue stream, and 12-18 month projections for repayment and strong margins. I’m not okay with debt if you’re using it to fund ongoing operating deficits.

Sometimes putting things on a credit card or taking out a loan is simply a matter of timing – if your business is cyclical, a quick cash infusion may help keep you in the black until revenue picks up and you’re easily able to pay it back. 

The key is knowing exactly what’s around the bend with a forecast.

What do you think? Are you anti business debt or do you believe it’s okay under certain circumstances?

Want help building your forecast to see around the bend? Schedule a chat with us!

 

Stephanie-42

Behind-the-scenes of our virtual team retreat

by with No Comment Business DevelopmentCoachingFeatured BlogGoal SettingMindsetNonprofitSmall business

It’s funny looking back on our 2020 goals because the world was so incredibly different just 11 short months ago.

Travel was a big priority for my family and me, I had at least half a dozen conferences in cities around the country planned, plus exciting trips to work in-person with clients. I also wanted to grow my team and bring them together at a beautiful AirBnb overlooking the ocean somewhere.

None of that happened in exactly the way I’d planned, but in some ways, it was better. I haven’t been on an airplane in over a year but our family discovered our new favorite road trip destination – coastal Maine. I presented at virtual conferences in front of thousands more people than would’ve been there in person. I grew my team beyond my wildest dreams and brought them together for a virtual retreat instead.

I shared the live updates on social media during our team retreat week but wanted to share more behind the scenes in a full blog post. So here’s how we planned our virtual team retreat. 

  • Determine goals. The very first thing that my Operations Director and I did was figure out what we actually wanted to get out of our time together. We’re all incredibly busy, so the top priority for me was to make our time worthwhile. My goals (incorporating ideas from the team) were:
  • Build relationships and establish norms for future collaboration
  • Begin putting together a 2021 plan for all facets of the business – client-facing and internal
  • Provide professional development for the whole team
  • Map out an agenda. Once we had our rough goals in place, we mapped them out on the calendar. Since we were virtual, I didn’t want everyone to get Zoom burnout, so we determined that five 2-hour sessions would comprise our entire retreat; three morning sessions and two afternoon sessions, from Wednesday through Friday. Here’s what our agenda looked like:
      1. Wednesday AM: Discuss 2020 wins and challenges, discuss 2021 goals
      2. Wednesday PM: Strengths Finder coaching session
      3. Thursday AM: Productivity expert presentation, mindset expert presentation
      4. Thursday PM: Team breakouts to plan 2021
      5. Friday AM: Team presentations and wrap-up with action items
  • Hire experts. One of our goals was to provide professional development for the whole team and since I’m not an expert on everything (shocker, I know!), we decided to bring in paid experts to teach our team. Here are the experts we decided on:
      1. I love personality tests and have recently been incredibly enlightened by Strengths Finder, so I paid for each team member to take the full assessment, then brought in an expert to analyze them and teach us how we can use that knowledge in our work and lives. 
      2. Productivity was one of the things our team expressed interest in, so our Operations Director did a great presentation with several dozen productivity hacks, from software tricks to ideas on setting boundaries. The team LOVED this session – we’re all busy women, so this was exciting.
      3. Self-care was another topic that our team expressed interest in (many of us are mamas, so self-care tends to be put aside often!), so I hired a mindset coach to help us examine how we can incorporate more self-care into our lives. It was incredibly enlightening!
  • Ask the team. Our team’s input both before and during the retreat was crucial. Our business is no longer The Stephanie Show, so it was important to me to make sure all voices were heard. We sent them a pre-retreat questionnaire, asking questions about both their wins and challenges, their personal and professional goals, and how we can grow and better support our clients. Our Operations Director compiled the results and this was the basis of our first session’s discussion. It gave us a great jumping off point for the week.
  • Make it special. My team knows I’m obsessed with curating and sending gifts and the retreat was the perfect opportunity to send each woman a little care package so our time together felt special and out of the ordinary. I put together gift boxes with cozy socks, an inspirational mug, a coaster from Nepal, a notebook, a handwritten note, and a Starbucks gift card so that everyone felt special and cozy!
  • Remove yourself. As the CEO of the organization, I wanted to give authority and ownership to the team and step out of their way, empowering them to brainstorm and come up with ideas without me. I’ve found that when the CEO is always in the room, people consciously and unconsciously tend to lean in their direction and I want to hear from others! So we had a breakout session where our CFO team and Marketing/Ops team brainstormed and began to build their 2021 plans, then they presented them to the whole team the next day. I loved seeing what they came up with!
  • Make it actionable. One of my pet peeves is walking away from a conference overwhelmed with information, but no clear action items. If we didn’t actually implement anything we learned, then what was the point?! So we spent our Friday session going around and sharing one thing we planned to incorporate into our daily lives and work now, and one goal we have for 2021. We are going to follow-up on these in future team meetings too.
  • Have fun! This was probably the toughest for me, as I’m not a dance party on Zoom kinda gal. But we kept it light, chatted before each session, and showed up to contribute and support. Here’s hoping an in-person experience, at a beautiful oceanfront home complete with dinners out and champagne toasts, is in our future!

 

What questions do you have? Have you ever hosted a virtual team retreat?

 

StephanieWeb-117

One small action can make an impact

by with No Comment Featured BlogMindsetNonprofitSmall business

One small action can make an impact.

Tomorrow is Election Day in the United States and millions of voters have already cast their ballots because of exactly that.

We know that our vote matters. Even though we are one in millions, our vote matters, this year more than ever before.

It got me thinking about how one small action I took, five years ago, has made an impact on my life and the lives of many, many others in a big way.

I took small, imperfect action, and sent emails to a carefully researched list of nonprofit leaders around the globe to see if they needed help with their financial management.

I’m pretty sure I had The Office on in the background and I’m definitely sure I asked my husband three hundred times Should I send it? Should I send it? Should I send it?

Spoiler alert: I took the small action. I sent the emails.

People responded.

I got one client, then four clients, and I had a business.

I’ll be the first to admit that if I could, I’d constantly be working on my business. I love the challenge of improving our client experience, the creativity of building and trying new things, and the freedom to do exactly what I want.

But sometimes it’s HARD. Launches have flopped. Clients have been unhappy. I’ve had to do things and have conversations that make me sick to my stomach. I’ve wanted to give up. I’ve wanted to turn and hibernate under a blanket and delete all of my emails.

Even though one small action can make an impact, it’s not always perfect. Here are my five biggest lessons from the past year:

  1. A flop is not a fail. Just because something doesn’t go the way you expected the first time, doesn’t mean it’s meant for the trash. Adjust and try again!
  2. Understand my strengths. Surprise – I’m not awesome at everything! Gallup’s Strengths Finder has been game-changing for our business and team to understand our work within our strengths.
  3. Simple to scale. You don’t need a business model with 15 different layers and revenue streams and goals. Simpler is always better.
  4. Hire people. Instead of trudging through work that’s outside of your Zone of Genius, hire amazing people to handle that work for you.
  5. Get nervous. If you don’t do things outside of your comfort zone, you will never experience the growth you want. I presented a new webinar this month that I was nervous about (but turned out so great!)

Thank you, for being a part of this amazing community of purpose-driven leaders. Your positive attitude, selflessness in service, and dedication of your life and work to helping other people is inspiring and humbling to me.

I’d love to know the biggest lesson you’ve learned as a leader this year! Comment below and let me know.

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Where did 100 Degrees come from?

by with No Comment Featured BlogMindsetNonprofitSmall business

 

Rewind almost exactly seven years and I was laying in the pitch dark, on a thin pad on the floor of a cement room in rural Senegal. I had a mosquito net over me, but no sheets or blankets because I was sweating.

I checked my phone to see the time, hoping and praying it was almost morning so I could get up, splash some lukewarm water on my face, and just end the sleepless night, but it was only midnight. At least five more hours to go.

As if to torture myself, I opened the weather app on my phone to see how hot it was, and when I saw 100 degrees on that screen in the darkness, I cursed everything.

Why was I making myself so uncomfortable? Why wasn’t I home enjoying the summer with my husband in our air-conditioned home?

The next morning, after a few hours of sleep, I woke with a clear head and realized: The discomfort of 100 degrees was a direct path to impact and change.

I couldn’t go into these villages in Senegal to support primary school construction projects without the discomfort. I needed to push through the discomfort in order to bring about positive change in those children’s lives and create impact in my own life too.

When I founded the business five years ago and brainstormed names for my new company, 100 Degrees was the first thing that came to mind.

Why?

Because we help leaders push through their own discomfort around numbers to create greater impact and change in their lives and communities.

So next time you’re sweating through your monthly finance review, frustrated, hot, angry, and wondering why in the world you put yourself through this journey of leadership or entrepreneurship, think about 100 Degrees.

Your journey, even though it may be 100 degrees with no a/c, is the only one to impact and growth.

What’s been a “100 degrees moment” in your journey? Comment and share with me!

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Are you guilty of saying this?

by with One Comment Business DevelopmentFeatured BlogMindsetNonprofitSmall business

“My business [or nonprofit] is my baby.”

Ever said that before? I have.

We love our work! We take pride in the change we’re making in the world and take things personally because we’ve poured so much heart and soul into what we do.

I also have a real life human baby. Noelle is 9 months old now and she is super amazing and fun. She’s starting to talk and when she says Mamamamama, my heart just explodes. She’s crawling everywhere, trying to stand by herself, and I’m constantly chasing after her. Her half gummy/half toothy grin could melt even the coldest of hearts.

But she’s still a baby.

As her mama, I meet her needs and am at her beck and call 24/7. I love her so much that helping her grow and supporting her brings me so much joy, and I wouldn’t trade that responsibility for the world.

Now, thinking back to my business…do I really want my BUSINESS to be my baby too?

Demanding. Needy. Full of responsibilities that ONLY I can fulfill.

That’s a hard NO.

So if our work isn’t our baby, what SHOULD it be?

How about a race car!

You learn how it works, what buttons to push, what features to add to make it go further and faster, and the right mechanics to make it all run smoothly. Then those people (your team) can operate the race car to help it cross the finish line.

It’s a team effort and you’re all in alignment towards the same goal, but you don’t do everything.

So, how do we shift our work from being a baby to a race car?

  1. Automate. Take stock of all of your software and make sure it talks to each other, and there are no redundancies or gaps. For example, are you invoicing clients or donors in Quickbooks AND Dubsado? Choose one and stick with it. Is your CRM like Salesforce talking to your project management system like Asana? Link those babies up!
  2. Hire the right people. Figure out what roles you need on your team and hire for the roles, not the people. Maybe you need financial analysis and strategy and are trying to force a square peg into a round hole by asking your bookkeeper to do that work. They’re different skill sets, so get the right people into the right seats.
  3. Create a routine. Surely there are tasks in your organization that need to happen weekly, monthly, quarterly, and annually. Take an hour and write it all down, then map it out on your calendar, spreadsheet, or project management system. Consistency is the only way to make progress on any of your goals, and getting it all in one place will help you stick to the routine.

What do you think? Is your business your (demanding, needy, yet lovable) baby? Or is it a well-oiled machine ready to cross the finish line to your world-changing goals?

PS – Did you see my Instagram post this week? Check it out and let me know what you think!

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I hate failing

by with No Comment Featured BlogFinancial ManagementNonprofitSmall business

I have a true confession for you, bright and early today.

I hate failing.

I know, I know. Failure is part of success. Fail forward. Blah blah blah.

I don’t care. I hate it to my core. (#enneagram3 much?!)

A lot of times when we think we are failing, it’s only because we are measuring ourselves against someone else’s success.

Here’s what I mean:

Feeling like a failure because your sales numbers are way lower than that person on Instagram who has a similar business model

Feeling like a failure for only raising $75k at your virtual gala when you saw that another organization raised $250k

Feeling like a failure because you only have 10 clients and your business bestie has 35

The problem is, other people’s metrics are irrelevant. Insignificant. Frankly worthless.

The most important measuring stick to use is your own.

I get asked ALL. THE. TIME: What’s a good profit margin? How much should I be spending on my team? How much income do I need to bring in every month?

The people on the other end of those Zoom calls probably hate me but the answer first is always: It depends!

That’s the truth though. It depends on your business model. If you’re a nonprofit or small business. What your revenue streams are. How long you’ve been in operation. How much revenue you’re bringing in. It goes on!

I’ll never leave you hanging though!

The best way to assess your own business is by reviewing your own historical numbers and watching the trends.

If you want to know if your profit margin is “good”, start by calculating your profit margin every month for the last 12 months, side by side. Is the number generally going up? Is it going down?

You’ll likely have highs and lows but when you look at the trend line, we want to see it going up (But not too much! That could be a sign you need to reinvest in the biz).

If you want to know how much income you should be bringing in, start by looking at your average monthly expenses for the last 12 months. You need at least that much per month (plus say 20% for savings/profit).

So, if you were ever wondering if your numbers are “good”, you now have my official answer!

Here’s a quick list of metrics you should be looking at in your business or nonprofit:

  1. Profit margin
  2. Cash on hand
  3. Revenue diversity
  4. Burn rate (average monthly expenses)

PS – You can always grab our Profit Playbook here here to help you calculate these metrics and more.

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Three simple steps to your monthly routine

by with One Comment Featured BlogNonprofitProductivitySmall business

I love the saying: Where your attention goes, energy flows.

We want to put our energy into the right things to get maximum results with minimum wasted time. No entrepreneurs (especially those with kiddos) can afford to be wasting a single second right now, ya know?!

Where are YOU spending the majority of your time and energy right now? Trying to keep your head above water while simultaneously running a household, growing a business, raising children, and not forgetting to feed yourself at least once a day?

Yup, me too! 

I don’t know about you, but I certainly didn’t expect to be mostly quarantined well into summer and it’s thrown a bit of a kink into my routine.

If you feel this way too, you can get back on track! Today I want to share with you three steps I’ve been following this summer to help you revamp your  routine and put your energy and attention back into your numbers:

Do your bookkeeping. This is as simple as coding all of your revenue and expenses accurately and comparing your bank statement to your accounting.

Review your financial statements. Check out your P&L compared to last month and see how you’re doing. Calculate your profit margin compared to last month (Profit Margin = Net Income / Revenue). See how much money is in the bank.

Update your forecast. You probably have a plan for the rest of the year and revenue and expenses mapped out monthly (If you don’t, reply to this email ASAP and I will hook you up with a template!). Come back to this plan, make any adjustments, and go forth and grow!

Simple, right?! Because what we focus on expands.

How are you going to get into your own monthly finance routine today? 

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How to create projections to achieve your goals

by with No Comment Featured BlogFinancial ManagementNonprofit

My daughter starts her second year of preschool this week. It’s hard to believe the summer has come and gone, and now it’s time to make sure I have adequate school snacks on hand at all times. I hope you had a glorious summer too. Even if you don’t have kids, there’s something in the air that changes when the calendar ticks over to September. Yes, it’s getting cooler but it also feels different, like the world is getting back to business.

Many leaders I know are gearing up for Q4. Our retail clients have their biggest sales months, our nonprofits are in the thick of fundraising, and everyone is putting in a 110% effort to meet their 2019 goals. Does this sound like you?

One thing that I’ve found super helpful as we enter this busy season is mapping out exactly how we’re going to achieve our goals, or forecasting.

You probably (hopefully?) created a budget in the beginning of this year that mapped out revenue and expenses from January through December, but that was a LONG time ago. Likely, you didn’t meet every single budget number for every single month, so forecasting is an opportunity to redo the upcoming months. You have a whole nine months and lots of information under your belt to make even better projections for Q4.

So here’s how to create Q4 projections. Open your budget template (Need one? Grab mine!), your financials for the year, and all your hopes and dreams, and let’s dive in!

How to create Q4 projections:

  1. Look back. Review your financials for the year so far. Compare revenue and expenses to your budget. How did you do? How far off were you and why?
  2. Look back even further. Check out your Q4 financials for last year. That’s often a decent place to start to help anticipate what this Q4 might look like.
  3. Build your projections! And I seriously mean build. Start from the bottom up and create your forecast with building blocks. For my service businesses: How many clients do/will you have? How much do you charge per client/project? How many new clients will you get? For my product businesses: How much did you sell last year? How much new product have you purchased and what are your prices? What’s your advertising budget? For my nonprofits: How much did you raise last year? What big grants or major gifts do you have in the pipeline?
  4. Don’t forget expenses. Often we’re just thinking about the finish line in terms of revenue, but net income or profit (revenue – expenses) is really what we should be aiming for. Build in any and all expenses that you’ll have in Q4 and check out your net income. (Quick reminder to nonprofits: you can have a positive net income even though you’re a nonprofit! That’s how you build a cash reserve and long-term sustainability!)

For my friends out there who hate numbers, this can seem like a useless exercise (But I already created a budget!) BUT it’s truly the only way to stay on top of your goals during what is often the last season of hustle for the year. AND, if you create this forecast now with a clear path of building blocks to achieving your goal, maybe it won’t feel like such a hustle after all.

Stephanie

PS – Feeling a little overwhelmed? I have a template, complete with a video walkthrough, here! Download it for free and get started.

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How Increasing Nonprofit Transparency Increases Donations

by with No Comment Featured BlogNonprofit

Guidestar, the neutral database of all nonprofit organizations in the US with revenue over $200k, recently published a study that demonstrated that organizations who provided better and more information to stakeholders raised substantially more money in subsequent years than organizations who didn’t share information with stakeholders.

More specifically, nonprofits who went from not transparent at all to fully transparent via their Guidestar profile raised 53% more in contributions in the following year. And nonprofits who just upgraded their Guidestar rating one unit by being just a little bit more transparent still raised 26% more the following year.

But only 16% of nonprofits in the Guidestar database of 14,000 organizations actually take the time to actively be more transparent.

If the data is proven, why in the world isn’t everyone doing this?

First of all, let’s break down the drivers of nonprofit transparency to understand why there’s such a gap. This study concluded that the following factors were strong determinants into the organization’s level of transparency:

  1. Strength of organization’s governance and board – If the nonprofit has a large, active board that meets all of the standard measures of good governance (check out the governance section of the 990 for more info!), they’re more likely to be transparent with their financials.
  2. Performance of the organization – If the organization has strong growth and positive financial metrics, they will be more likely to share this information. On the flip side, poor-performing organizations are more hesitant to enhance their Guidestar profile for fear of increased scrutiny.
  3. Professionalism of the staff – If the nonprofit has a paid, full-time, professional staff they are likely to have the capacity and expertise to be more transparent, compared to organizations with smaller, volunteer staff.
  4. Organization’s reliance on contributions – If an organization relies heavily on contributions from the general public (as opposed to program service fees or large government contracts), they are more likely to respond to donor requests for transparency.
  5. State regulation environment – If the nonprofit resides in a state that requires an audit or other forms of transparency and disclosure, the organization will be more transparent in order to comply.

Based on the information above, not all nonprofits are created equal. With different levels and types of funding, different board and staff structures and capacities, many nonprofits are less inclined to be transparent with their financials and program metrics.

Another factor I’ve seen firsthand in my work with nonprofits around the globe is that nonprofit leaders aren’t comfortable enough with the financials to be able to confidently share interesting, insightful information that will make an impact on their donors. So instead, they don’t share anything.

But even though this study shared that 78% of donors do not consult any third-party intermediary organizations before contributing (including Guidestar), they do provide more contributions to organizations with higher operating margins and efficiency ratios. Contributions increase when total assets, program ratio, and operating margin increases which is why it’s important to understand these metrics for your own organization.

You might think that communicating your financials is complicated, confusing, and time-consuming – and you may even question your ability as a leader if this doesn’t come easily to you. Let’s skip the drama and keep it simple and sustainable. Here are the metrics:

  1. Program ratio = program expenses / total expenses. The higher the better. (For reference, the Better Business Bureau Wise Giving Alliance requires organizations to spend at least 65% of total expenses on programs to be accredited.)
  2. Cost of fundraising = fundraising expenses / total contributions. The lower the better. (Again for reference, the BBB says no more than 35% of contributions should go towards fundraising expenses.)
  3. Operating margin = total revenue – total expenses / total revenue. The higher the better.
  4. Donor reliance = total contributions / total revenue

The great thing about all of this nonprofit transparency talk is that Guidestar makes it very easy to update their database with your newly transparent information, and thus increase your rating.

Here are a couple easy steps to increase your transparency and thus your Guidestar rating.

  1. Check out your organization’s rating on Guidestar. Are you not rated? Bronze? Silver? Gold? Platinum?
  2. Understand Guidestar’s rating system and what it takes to get to each level.
  3. Bronze is the lowest rating and requires only your contact information, mission statement and basic program info. This is a no-brainer!
  4. Silver requires everything of Bronze, plus audited financials uploaded to Guidestar or their basic financial statement filled in. Another easy-peasy!
  5. Gold requires everything of Silver, plus answering five questions (to which you probably already have the answers from a grant application or annual report!)
  6. Problem Overview – What is your organization aiming to accomplish?
  7. Goals – What are your organization’s goals?
  8. Strategies – What are your strategies for making this happen?
  9. Capabilities – What are your organization’s capabilities for doing this?
  10. Indicators – How will your organization know if you are making progress?
  11. Progress – What have you accomplished so far and what’s next?
  12. Platinum includes everything from Gold, plus selecting a handful of metrics from their list and updating with your organization’s numbers.
  13. Take 15 minutes to get your organization to Gold!

We are working with our clients to get them all to Gold this year. Transparency within and outside of your organization creates ownership and engagement, and I believe all nonprofit leaders would love more engagement from their stakeholders.

And remember, nonprofits who upgraded their Guidestar rating one unit by being just a little bit more transparent raised 26% more the following year!

Do you need help increasing your transparency outside of Guidestar’s framework? Grab our Transparency Tip Sheet here to learn how to share your financials the right way!