Balancing the Mission Checkbook

Navigating our Mission-Money Matrix

A few months ago I wrote a blog post here about our work plan motto for the year, “Be our own client”. We decided that if we’re so convinced that our management tools help to build financially healthy and responsive nonprofits, maybe we should fully employ them ourselves. We made a list of some of the advice we often give to nonprofits and have been working through the processes that we’ve taught so many others. This is my follow up about some of our experience as our own client.

Any of you who attended the 2012 Finance and Sustainability Conference that we presented with Minnesota Council of Nonprofits were probably as excited as we were by the keynote address by Jeanne Bell, CEO of CompassPoint, about sustainability. The conference attendees buzzed all day about Jeanne’s description of the Matrix Map Analysis to understand the relationship between mission-focused impact and financial sustainability. The mapping approach is built on time-tested business practice and fully described in the book Nonprofit Sustainability. Co-author Steve Zimmerman of Spectrum Nonprofit Services has a nice overview here.

As our own client, we decided to complete a comprehensive Matrix Map Analysis, which we dubbed our Mission-Money Matrix. It took us several months to generate the information and complete the mechanics of the matrix and then another month to interpret and learn from the final version. It was powerful process that’s already led to some important questions and decisions – and a great breakout session for the upcoming 2013 Finance and Sustainability Conference.

A quick overview: To get the most out of the analysis we dove into each of our program areas to get to individual lines of business. As an example, instead of analyzing “training” we drilled down to nine different services that make up our training program. For the comprehensive review of everything we do at Nonprofits Assistance Fund we identified 27 different lines of business for analysis.

The matrix has two axes: profitability and impact. The profitability axis requires an understanding of the true cost and related income for each business line. We had that available from our accounting and staff time tracking system. Believe it or not, that’s the easy part. Numbers are numbers and once the expenses for staff, program, and operations have been allocated between different business lines and matched to income, the profitability axis falls into place. We found that the impact axis was the heart of the matrix. There isn’t a simple accounting system for “calculating” the impact of each business line. To complete this axis we selected four criteria to assess each activity based on a 1 to 4 rating. The criteria we used were Capacity, Demand, Results, and Excitement. There were differences of opinion and ranking in this step that led to some great discussions. When the ranking was complete we plotted all 27 activities on the matrix. Voila! We saw that we have 12 stars, 7 hearts, 2 money trees, and 6 question marks. We’ve already taken action on a few areas and have plans for further analysis or planning for others.

The matrix is a powerful tool because it’s so clear, consistent, and comprehensive. I’m such an advocate for the process that we developed a breakout session for the 2013 Finance and Sustainability Conference on February 22nd to review the purpose and process. We will also hear from two nonprofits about how they navigated the matrix analysis and used the results for strategic discussion and decisions. I can’t wait to hear more. I hope you can join us. Register now!

Kate Barr believes that every nonprofit financial question relates to strategy, structure and mission impact. She enjoys interpreting financial information to find stories numbers can tell. She loves writing, teaching, and talking with interesting people.