One question that’s been on the back burner for a while is how we might combine a series of key financial metrics into a rating system which summarises the financial resilience and risk of a non-profit.
The new and urgent set of financial stresses caused by COVID-19 on non-profit business models has been the impetus to address this question sooner rather than later.
Grant funders, social investors, sector support organisations, banks and policy makers are already looking at their portfolios and asking questions of where the greatest risks are. Questions are also being asked about what the state is of all the non-profits who are not already on the radar with grant funders and social investors?
There will be a need to establish priorities both for the provision of short term emergency bail outs and longer term funds to shore-up sectors and rebuild provision.
We need new data tools to assist in this process as our old methods of assessing whether organisations not only have the right teams, skills and networks to deliver services but whether their business models are strong enough to ensure that they survive over the medium term.
Our first algorithm is a step towards building the tools needed to undertake this sort of analysis. We have plans afoot for a more sophisticated second stage.
For the proposed rating system to work and be of use we’ll need to shape it with the sector. Collaboration and partnership ideas all welcome!
Download the full paper below.
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