- Founding year: 1979
- Revenue: $15 million (2018 fiscal year)
- Primary funding source(s): Program-restricted grants from foundations and corporations; government contracts; unrestricted major gifts
- Field: Economic development
- Website: prosperitynow.org/
- Description: Prosperity Now works to ensure that all people in the United States, especially people of color and low-income families, have a clear path to financial stability, wealth, and prosperity. Its network of 24,000 practitioners, advocates, and researchers spans across all 50 states and Washington, DC, who work to define problems, prioritize policy solutions, and put tools in the hands of advocates and policymakers.
- Population served: Low‑ and moderate-income people, especially people of color, living in the United States
The “tough times” they faced
Prosperity Now had been diligent about preparing scenario plans to deploy should “routine” financial stresses emerge, but that mattered little when the political climate changed. “Every model we created had to be thrown out the window after the 2016 election,” admits Adnan Bokhari, CFO and COO of Prosperity Now. Federal contract revenue declined from $3 million to $500,000 or 80 percent.
As a result of the loss of federal contracts, Prosperity Now faced a $1 million deficit going into the 2018 fiscal year. It covered the gap by tapping previously-restricted funds in its endowment, but its leadership knew they would again face a deficit in 2019 as federal contracts continued to decline. The organization needed to develop a new financial model that matched the economic realities of the times.
What they did
Prosperity Now created a four-pronged strategic approach to financial sustainability that consisted of raising more revenue, optimizing how it deployed resources, reducing costs, and, as a longer -term solution, generating earned income. The organization was very deliberate in developing principles to guide its decision making in these areas:
- Prioritize both mission and financial health
- Prioritize staff
- Exercise great care to ensure equity
- Consider both today and tomorrow
- Review costs and benefits
- Pursue cuts that make significant financial difference
Prosperity Now also created contingency plans with specific trip wires and next steps. The organization ended up testing their plan in real time as a major funder decided to not renew its support for the following year. The team cut costs to make up the difference and refrained from filling positions when people left the organization.
Prosperity Now also conducted an organization-wide risk assessment to identify the top five risks it now faced and would face in the future. Bokhari created a “growth monitor” system that the leadership team updated three times a year to determine if the organization is on track to meet its annual goals. “An enterprise risk framework was my initial ambition, but I realized the time commitment wasn’t feasible,” Bokhari explains. “The growth monitor is more of a quick ‘gut check.’ Leadership spends 30 minutes updating it once per quarter, and we were able to commit to doing that. With the right culture and leadership, this will help us home in on what we should be focusing on.”
Prosperity Now was able to address a $2.8 million budget shortfall by creating strategies to raise $1.2 million in additional revenue, generate $0.8 million by optimizing resource deployment, and reduce costs by $0.8 million.
Advice for other nonprofits
From Prosperity Now CFO/COO Adnan Bokhari:No one can do this alone.
"The entire leadership team came together to solve this. The next tier of senior management was also engaged in execution of the strategies. The results are our successes—not of any one individual."
Lead with the data and be persistent. The belt tightening needed to manage through tough times can be hard. Start with piloting new solutions to show that incremental changes are possible and potentially not as painful as initially believed.
“I felt that I had to make this a priority, and it was really difficult. It took a long time. I first had to prove that there was even a problem and did so by sharing the current and projected financial numbers openly and consistently.”
Recruit allies in leadership, especially on the board.
“Board involvement is key to making hard changes. It really helped to be able to say to the leadership team that either we do this or the board will do this for us. When we laid out those four strategies, one of the board members said that this is something we should be doing every year—and I agree!”
Proactively create systems and processes to identify emerging problems.
“Leading efforts to react to tough financial times is a difficult and draining place to be in. Rather than having one person shoulder that by being the mechanism through which this information is delivered, organizations can create systems and processes to alert them if there’s a problem.”
Systematically focus on diversity, equity, and inclusion.
“We review every spending cut, both individually and in the context of the larger set of cuts, to ensure that where reductions are made and who they affect is fair, free of bias, and balanced.”
Photo, top of page: Partners meet in St. Louis to talk about pilot findings for Prosperity Now's Savings Innovation Learning Cluster.