1- Dependence on External Funding Sources and Revenues:

Unlike for-profit organizations, non-profit organizations, for example, rely on diverse groups of funding sources and financial flows to maintain their operations, and most non-profit organizations receive funds from multiple sources such as the government, institutions, private donors, and revenues such as grants, contracts, membership fees, and subscriptions. Therefore, non-profit organizations need to diversify their income and revenue sources and reassess the projects they promote and their contribution amounts.

2- Significant Cuts in Government and Institutional Grants:

Non-profit organizations must create fundraising plans to support financial sustainability or reconsider them and think about innovative methods for fundraising. Among the promising ways that non-profit organizations can use to overcome their reliance on limited external funding sources is to think more creatively about money-raising strategies and consider the role played by non-traditional non-profit organizations or individuals.

This highlights the role that the circular economy plays in the financial capacity of non-profit institutions, especially those serving resource-poor communities, as this type often brings less tangible resources related to the institution, such as new volunteers, additional resources, new communications, reputation, and new donors.

Although the circular economy provides great opportunities for bringing many value-added benefits to the funding relationship, it can also bring additional challenges or complications aside from those usually posed by more traditional funders. For example, developing relationships may be more complex in nature and may require a high level of interaction with funding recipients.

3- Enhancing the Brand of Non-Profit Organizations:

Non-profit organizations, like for-profit organizations, depend on their marketing efforts for their brand to promote their services and maintain the continuity of their programs. However, reliance on competing predictions constitutes multiple sources of external funding, in addition to the motivation to address diverse social challenges within the community, often leads to achieving limited profits in a diverse social mission.

Thus, the importance of establishing a "brand" for a non-profit organization and promoting it in a way that clearly and consistently communicates the organization's mission and services, distinguishing it from alternative non-profit organizations or for-profit institutions, becomes evident. Among the prominent elements of establishing a brand for an organization is to define and develop the organization's mission and describe the mission in the third sector as social, and the brand embodies a set of characteristics that individuals outside the institution believe will be delivered consistently, and it can convey the status of the non-profit organization in the community as well as in the public market.

4- Identifying and Developing Organizational or Social Missions:

Identifying and addressing mission drift and developing transparent marketing plans helps to convey the social missions of non-profit organizations to funders and the community to which these organizations belong. A brand that communicates clearly and consistently with the social missions of non-profit organizations builds trust ties between the non-profit organization and its other components and may eventually isolate it from competition with other organizations.

5- External Expectations of Partnerships with Organizations:

Due to changes in the funding climate and the financial challenges faced by many non-profit organizations during turbulent economic times, these organizations have begun to consider formal collaboration as a way to respond to the changing nature of resources and reduce competition for funding sources. This is a new opportunity to explore potential partnerships among funders attempting to multiply their impact through limited resources. Existing sources indicate that the drive to establish formal collaboration typically comes from outside the organization. State directives from higher authorities (such as government bodies, legislation, industry, or professional regulatory bodies) may provide the necessary momentum for cooperative relationships that would not have otherwise arisen voluntarily.

In such cases, applicants from the government or foundation funds must demonstrate their commitment to sharing organizational resources or formal coordination of services with other service providers, and they are often required to submit joint grant applications. However, the potential cost of reduced operational autonomy and the risk of social missions can pose a challenge for profits trying to balance the needs and operations of cooperation against their social mission and financial needs.

The incentive to establish collaborations between non-profit organizations can vary greatly, and focusing efforts on establishing collaborative operations with significant impact—those collaborative operations that enable the organization to best achieve its mission—may compensate for the potential competition among collaborating partners.

Research on collaborative relationships in the third sector suggests that institutions are more likely to increase the formality of their collaborative activities when they are older, have a larger budget size, receive government funding but rely on fewer government funding sources, and have more connections between boards of directors and their non-profit peers, as well as not working in education and research or social services.

6- Considering the Value of the Organization and Accountability Systems to Funders:

Institutions and other donors want to increase access to the latest information about the organization's funding operations as a means to achieve their return on investments. Engaging in evaluation activities that identify financial and programmatic results as a result of funding support illustrates the value of non-profit organizations’ operations and helps determine the impact of their missions. Additionally, ongoing communication clearly illustrates the evaluation and accountability efforts to funders and investors.

Accountability can include a comprehensive report on activities as well as justifying the way resources are managed. Research in this area has established a clear link between the clarity of the institution's mission and its strategies and the success of any performance measurement program.

Establishing a system to track information about operations and conveying this information using simple and accurate reports can enhance the organization's ability to determine the profitability of programs, evaluate program results and their impact, and streamline budgeting efforts. Furthermore, building the capacity to track operations in this way and communicate them directly to funders is essential if non-profit organizations expect to establish financial support. However, accountability efforts place heavy demands on some non-profit organizations that need funding but lack staff time to develop comprehensive programs for measuring and maintaining results.

Among the high-impact accountability practices that clearly speak to organizational development or program improvement, which may help non-profits strategically focus efforts on demonstrating the value identified by researchers, is providing a framework for assessing sustainability in non-profit organizations using a "dual bottom line" that defines sustainability based on financial profitability and the impact of mission for currently offered programs and services, as profitability relies on direct program costs, a percentage of general or shared costs, and a percentage of administrative costs.

In contrast to profitability, "calculating" mission impact is less clear, and identifying programs that have a significant impact on the mission can be very difficult for many non-profit organizations that lack the capacity to support systematic program evaluation.

In most cases, programs implemented by non-profit organizations align with the mission in some way and often align with the funding priorities of institutions and government agencies. However, maintaining many programs or activities that do not align with each other may place a financial and organizational burden on failing to achieve profits and may threaten its long-term sustainability. Thus, the issue of identifying programs and services that demonstrate the greatest impact is key in assessing sustainability.

7- Enhancing Organizational Commitments to the Community and Leadership:

Non-profit organizations often operate within the communities they serve, creating a unique challenge of fostering ownership and cooperation among community members while maintaining program and mission integrity.

However, enhancing community member participation in third sector operations can help non-profit organizations better meet community needs, thereby enhancing financial sustainability, by leveraging the expertise of community members in facing the unique cultural and organizational challenges that organizations may encounter.

While there are multiple methods to enhance participation with non-profit organizations considering the organization's financial needs, community board leadership and voluntary participation are two strategies often used in the third sector.

The participation of local community board members provides a resource of diverse experiences and broader insight, and most importantly, it gives the local community serviced by the organization a sense of ownership. Similarly, local community volunteers help enhance community engagement and ownership while simultaneously assisting in addressing financial sustainability issues.

Despite the advantages, non-profit organizations must consider how the organizational mission aligns with the vision of the board and the motivation or interests of the volunteers to compensate for potential communication and retention challenges. Among the prominent practices aimed at addressing the challenges associated with enhancing community engagement and leadership is establishing a community leadership board and involving it in efforts to address operational challenges associated with developing missions, fundraising, and creating value for the community. Non-profits often establish a board of directors or advisory councils to provide guidance on the organizations' operations and programs.

Board members provide deep and significant information and advice concerning operations related to critical issues associated with the local community, with local community members, political leaders, and other key representatives of the local community, and individuals from cooperating organizations or others with a stake in the success of the organization's operations.

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