Victor Preston Foundation

Operating margin is a key financial metric. Operating margin is the difference between revenue and expenses, expressed as a percentage of total revenue. Operating margin is a measure of how well the nonprofit controls costs per dollar of revenue. To illustrate the operating margin calculation, consider a nonprofit with total revenue of $1,000,000 and total expenses of $900,000. The operating margin formula is: Operating Margin = ((Total Revenue−Total Expenses) / Total Revenue) × 100% Operating Margin = (($1,000,000 − $900,000) / $1,000,000) × 100% = 10% This means the nonprofit has a 10% operating margin, indicating that for every dollar in revenue, it retains $0.10 after covering expenses. A positive margin like this enables the nonprofit to reinvest in its mission, save for future needs, and ensure financial stability. Nonprofits should strive for an operating margin in the high single digits to low double digits. Too low of an operating margin risks poor reserves,...

Nonprofits, despite their name, should generate a profit. The term “nonprofit” is misleading because it suggests that these organizations must operate at a financial loss or break even. Nonprofits need revenue that exceeds expenses to reinvest in their mission, expand programs, and ensure sustainability. Without a surplus, nonprofits rely on unpredictable donations, grants, and investment income. A better way to describe nonprofits are as "tax-advantaged entities" rather than “nonprofits.” The primary difference between a nonprofit and a for-profit business is that a nonprofit reinvests its surplus into its mission rather than distributing it to shareholders. In line with this notion, nonprofit financial statements refer to “net income” (aka “profit”) as “change in net assets”. Many impactful nonprofits generate revenue through services, endowments, and strategic investments. Calling them tax-advantaged acknowledges their ability to operate like businesses while benefiti...

  To be a successful investor, emotional discipline is necessary. Benjamin Graham, in his book, The Intelligent Investor , notes fear and greed are powerful emotions that can drive investors to make poor decisions. When the market is booming, greed tempts investors to chase overvalued stocks. During market downturns, fear can cause panic selling of fairly valued stocks. Graham advises that the intelligent investor must remain emotionally detached and approach investing with a rational, long-term perspective. The investor must perform their own analysis of the value of the company’s stock rather than relying on the stock market to inform them of the stock’s value. To illustrate the emotional nature of the stock market, Graham introduces the reader to Mr. Market , a fictional character who offers to buy or sell stocks at constantly changing prices. Mr. Market operates at emotional extremes, offering to buy and sell stocks at a wide range of prices based on how he is feeling at that...

Should your startup be for-profit or a non-profit? Here are three important steps to consider: 1. C larify your primary objective:   If your main goal is to maximize earnings for stakeholders, a for-profit model is more appropriate. If your mission is to create social impact, a non-profit may be the better choice. A common misconception is that non-profits are prohibited from making a profit. This is untrue. Non-profits can, and should, be profitable in order to sustain themselves. However, significant portions of the profits should be reinvested in the mission. 2. A nalyze funding options:   For-profit businesses can attract venture capital, issue stock, and often have greater access to loans. For-profit revenue models may have more reasonable assumptions (e.g. a for-profit gym could reasonably charge a membership fee of 100 dollars per month). Non-profits rely on grants, donations, and tax-exempt fundraising. Nonprofit revenue models may be more difficult to develop (e....

Generative AI offers nonprofits powerful tools to enhance impact. 1. Generative AI can create newsletters and social media posts. This maintains awareness of the nonprofit’s mission and impact. Be sure to proofread everything created by generative AI. Think of generative AI as a research assistant requiring human supervision. 2. Generative AI can personalize donor engagement by crafting tailored messages. AI-generated visuals and videos can enhance storytelling efforts, helping organizations raise awareness and inspire action. Again, be sure to proofread everything. Also be sure to research copyright issues. 3. Generative AI fosters innovation in program delivery. The creative responses from generative AI programs can be used as a form of brainstorming. The randomness inherent to generative AI programs can result in novel ideas for your nonprofit. Remember, generative AI is best at creating ideas. Generative AI isn’t always factually accurate. Do your own research on important ass...

The Victor Preston Foundation is a 501(c)(3) nonprofit founded in 2022 by Sean Sassano-Higgins, M.D., M.B.A.  The mission of the Victor Preston Foundation is to improve the well-being of healthcare providers.  The foundation achieves its mission by providing education on financial and business literacy, as well as through support of nonprofits with similar missions.  Disclaimer for Educational Content The information provided on this website, through our blog, courses, webinars, or any other form of communication, is for educational purposes only and is not intended to be a substitute for professional advice. While we strive to provide accurate and up-to-date information, we make no guarantees regarding the accuracy, completeness, or effectiveness of the content. No Financial, Legal, or Investment Advice The content is not intended to provide financial, legal, or investment advice. Any strategies or information shared are meant for general education only and may not be ...