This is a difficult post to write, yet the topic is so critical for the nonprofit sector and the issues we face today.

In December there was an interesting article printed in the Financial Times authored by Clara Miller, President and CEO of the Nonprofit Finance Fund. The a .pdf copy of the article "More from nonprofits now means less in future" can be found on the Nonprofit Finance Fund's web site.

The main theme of the article is one that bears repeating during this current economic environment. The question is how do we balance between stretching resources and setting limits on what an organization can do?

The nonprofit sector is full of people who feel a calling to help others. Often such people are the ones who have the tenacity to found new organizations and to keep them going. To such people, the choice is usually clear; you help everyone you can and don't turn anyone away.

But organizations that persist are usually those that have a balance. Nonprofits need heart, but experience tells us that organizations built solely on heart often burn out. Success comes from widening the circle to include people who care, but know that caring needs to be balanced with a broader view.

The current challenge for nonprofits is that so much will be asked at a time when resources are harder to find. And when all sources of support are affected, as in the current crisis, robbing Peter to pay Paul is not only tempting, it may become policy.

Cost shifting is tempting because it delays the impact of tough decisions. But in the long run it may come at a high price for both nonprofits and the communities they serve.

For example, facing a tight budget, government offices that contract with nonprofits are sure to push nonprofits to do more with less. Larger caseloads, lower reimbursements, and even longer lag times between when you provide a service and when the check comes in from your government contractor.

Clara Miller challenges nonprofit board members to look at the long term health of their nonprofits and the communities they serve when faced with such challenges. Hard as it may be, board members may have to draw the line. That is their role; looking at the bigger picture is their responsibility.

As Ms. Miller points out, "Non-profit contractors often accept these “underwater” prices because they cannot bear to turn away those in need." Often this practice results in an organization only getting paid $.90 for every dollar's worth of services it provides.

There's nothing wrong with that as long as the organization has the ability to raise a dime for every dollar of service it provides. In these tough times it is tempting to overlook that gap. The result can be that an organization works itself into a hole that it can never escape.

Most important is that organizations need to look at these questions now, before they start digging themselves into holes. Executive staff and boards should review the ins and outs of the annual budget to make sure everyone understands the pressure points. Far too often nonprofits get into trouble because no one really saw the implications of the organization's business model until it was too late.

Finally, this work has its own reward. When an organization fully understands its operations and the implications of serving more and more people, it is better able to articulate those needs to funders.