A financial surplus is crucial for planning for the future and addressing current challenges. Without a surplus in income, how can we respond to changes in our environment and the opportunities that arise before us?

And how can we take necessary precautions against risks and instability that may occur in the future, such as political or economic crises?

For this reason, we add a new component to our definition of financial sustainability.

In our view, the financial sustainability of a nonprofit organization revolves around its ability to generate income to meet demands, in order to maintain production operations at a constant or increasing rate to achieve results and obtain a surplus.

It should not be overlooked that financial sustainability can be achieved at the project or program or organizational level, and it means ensuring the longevity of the organization. In general, this financial sustainability should be defined in real terms by adjusting our accounting equation to reflect the desired outcome: total income minus total costs equals surplus.

For example: When The Nature Conservancy launched its institutional development program in 1988, there was a strong focus on diversifying income and generating internal revenue. However, over time, we have seen many prominent organizations succeed in achieving both goals but still face financial difficulties, and in the worst cases, they had to close their doors permanently.

Although it may seem obvious, we had to learn through experience that the state of fundraising, whether it went well or not, is not important or whether we created our own income or if we lack effective management and financial planning procedures in conjunction with strategic planning.

Therefore, we described these components as essential pillars of financial sustainability and organization similar to the pillar of financial management and strategy, and organizations often ask about how much income they need to generate, and in a high percentage of cases, the response is as much as they can and as quickly as possible.

Although we all want to achieve a steady income, it is essential to know the minimum threshold we must raise to achieve our proposed goals and missions and cover administrative costs.

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