A Partnership in Charting a Sustainable Future

At a Glance: Exploring a More Sustainable Future

For nonprofits, charting the future is complex. The search for creative, strategic approaches to sustainability is continuous, and many organizations have struggled to achieve long term, mission-aligned profitability.

In its work with MENTOR: The National Mentoring Partnership, AAFCPAs evaluated the organization’s financial and operational position and helped illuminate avenues for growth.

Their work together led to an improved outlook, an expansion of the organization’s impact, and a new chapter sparked by positive momentum.

Background: A Mission Ready for Its Next Chapter

When MENTOR was founded in 1990, its mission was groundbreaking: the organization built a national movement to foster relationships between at-risk children and adults. MENTOR was a pioneer in the field, providing standards, training, advocacy, and public awareness through its national network of affiliates.

Their programs made a significant impact, but success brought new challenges. Mentoring as a discipline became more mainstream, new programs proliferated, and MENTOR’s mission and delivery model needed to keep pace in order to thrive.

MENTOR brought on new leadership, CEO David Shapiro, to seek solutions. The urgency was clear: to survive long term, the organization needed to recapture its original entrepreneurial spirit and rethink its relevance in this new environment.

Part of Mr. Shapiro’s process was to take a forensic approach to spending control, performing a deep analysis into which investments were productive, which posed unnecessary risks, and how they might develop more reliable revenue. He and MENTOR’s Chief Finance and Administrative Officer, Beth Tallarico, turned to AAFCPAs to help provide an objective, outside perspective.

The Challenge: Adapting for Long-Term Relevance

With MENTOR’s original model in question, the organization knew it needed a change in direction. There were a number of issues to contend with:

• MENTOR needed to re-assess the needs of the wider marketplace in the context of its mission. There is no doubt that the model was valuable when mentoring was a younger field, but the new climate required a different approach to stay relevant.
• There was internal skepticism about the organization’s ability to continue to successfully fundraise under the current model. How could MENTOR be successful as an organization that made its name serving as an intermediary, when plenty of self-sufficient programs had now emerged? They needed to go back out into the world to investigate how they could be most valuable to their constituents.
• Going one step further, MENTOR’s development efforts were falling into a common trap. They became overly reliant on financial commitments from a few dedicated Board members. This led to a concentration of fundraising that presented significant risk. As AAFCPAs noted, this trend could have led the organization to lose its nonprofit status, shifting closer to the definition of a private foundation.

The Solution: A Clearer Path to Sustainable Growth

AAFCPAs is fully committed to knowing its clients, including their finances, challenges, and vision for the future. With a global objective to add value, AAFCPAs went beyond the traditional core function of an auditor, getting the full picture of challenges, vision and the evolution of the organization both historically and in real time.

As Mr. Shapiro noted: “For the AAFCPAs team, it wasn’t just about the numbers. They wanted to hear about where the organization had been and where it wanted to go. They were willing to be on that journey with us as well as performing their core function.”

In addition to reviewing financial statements, AAFCPAs read MENTOR’s strategic plan and met with the senior leadership team to discuss their organizational goals.

Through their work together, AAFCPAs developed a comprehensive understanding of MENTOR’s business model and goals. Shapiro and his executive team encouraged AAFCPAs’ questioning of the status quo. This collaborative relationship led the team to raise difficult questions, look at potential pathways through different lenses, and explore the types of resources and reserves needed to sustain growth.

AAFCPAs provided “swing thoughts,” identifying just a few critical areas of focus for each year, including:

• Tying the working capital balance to the strategic plan – how much capital was required to execute on the vision?
• Understanding the importance of raising unrestricted revenue and building sustainable working capital. While the organization’s annual event provided a strong injection of capital, it was not a long-term solution.
• Drilling down on the purposes of restricted funds: which funds were spent/released for their intended purpose? How could they be clearly tracked and easily managed?
• Evaluating the risk carried by a network of affiliates with decentralized operations – What were some simple changes that would reduce that risk and pave the way to spinning off affiliates?

The team from AAFCPAs discussed its observations and recommendations with MENTOR’s leadership and then formalized and presented them to the Board, a practice that became an annual exercise as part of the ongoing relationship.

“Overall, it is the partnership with AAFCPAs that gives us clarity and direction,” said Shapiro. “It allows our internal team, our board, our auditors, and our supporters to understand exactly what’s going on and where we need to be heading.”

The Results: Greater Clarity, Stronger Direction

The partnership with AAFCPAs empowered MENTOR with the information and economic clarity needed to explore new avenues, remain attentive to risks, and gear its model for responsible growth.

MENTOR achieved a number of new goals based on AAFCPAs’ insights, including:

• Untangling financially embedded affiliates, which provided important strategic clarity about how to move forward;
• Managing a new, complex government grant involving multiple sub-contracting and its growth;
• Considering how to thrive with and without annual fundraising events.

Indeed, MENTOR took the search for unrestricted revenue to new heights with the development of a consulting practice designed for corporate sponsors and beyond. Mr. Shapiro realized that questions coming from their sponsors were not just about supporting the mission–they were about mentoring issues that the sponsors were experiencing themselves. MENTOR recognized an opportunity to diversify unrestricted revenue, launching its corporate program in 2016 with a new Senior Director of Corporate Engagement at the helm of the initiative.

“We find that smart leadership is often about listening to those around you,” said Carla McCall, Co-Managing Partner at AAFCPAs. “We saw how David listened to advisors, his management team, Board members, sponsors, and others to gather information and find a path to ongoing value. The solutions they put into play breathed new life into an incredible organization.”

AAFCPAs and MENTOR continue to be in contact year round with new questions and challenges to tackle as they arise. MENTOR’s mission is sound, its impact clear, and its model built for sustainability.