An organization is financially sustainable when it is able at all times:
- To pay its bills,
- To secure the income that is needed to work towards its organizational goals from reliable and diverse sources,
- To keep income and expenses in balance.
Factors determing financial sustainability
The NGO literature points out in this context the importance of
- Conducting regularly strategic, risk and financial planning
- Adequate financial systems
- Income diversification
- High-quality programs
- Good stakeholder relationships
- Unrestricted funding
- Financial reserves
-
Managing overhead costs
Guide to further reading (available online)
C.McNamara, How financial sustainability is so misunderstood, at, http://managementhelp.org/blogs/nonprofit-capacity-building/2010/05/27/how-financial-sustainability-is-so-misunderstood/
Mango, Financial Sustainability, at: http://www.mango.org.uk/Guide/FinancialSustainability
Mango, The secrets of financial sustainability, at: http://www.mango.org.uk/Guide/TT4FinSust
USAID, Four Pillars of Financial Sustainability, at: http://pdf.usaid.gov/pdf_docs/PNADF342.pdf
CIVICUS, Developing a Financial Strategy, at: http://www.civicus.org/new/media/Developing%20a%20Financing%20Strategy.pdf