What Does the Election Mean for the Social Sector?

There is a lot to think about and chew on post-election as we wait for indications about the direction the new administration will take and what all of it means for the social sector.

To help us bide our time, some writers have given us very interesting things to consider.  First, David Brooks, conservative columnist for The New York Times, has written today in his column, “Change I Can Believe In,” about what he hopes the new administration will do.  Amid Brooks’ calls for bi-partisan politics, reformed healthcare, economic stimulus, curbed spending, is his hope that the Obama administration will take an entrepreneurial approach to social problems:

Walking into the Obama White House of my dreams will be like walking into the Gates Foundation. The people there will be ostentatiously pragmatic and data-driven. They’ll hunt good ideas like venture capitalists. They’ll have no faith in all-powerful bureaucrats issuing edicts from the center. Instead, they’ll use that language of decentralized networks, bottom-up reform and scalable innovation.

It’s a great dream.  Wouldn’t it be amazing to have an administration that thought and acted like a social venture capitalist, seeking out and helping to fund and scale solutions to the many problems that face our country?  A radical idea, but very exciting.

Then you have Paul Schmitz in the Nonprofit Quarterly, “In A Successful Campaign: Lessons for Nonprofits,” drawing lessons for the nonprofit sector from the campaign.  He argues that the nonprofit sector could learn a lot from a campaign that came from behind and completely changed the status quo of how campaigns are fought and won.  He delineates 5 best practices that nonprofits could employ:

1. Find and promote a powerful brand.  Obama’s was Change and Hope.
2. Create a clear, measurable strategy.  The campaign’s focus was always on getting to 2,025 delegates in the primary and 270 electoral votes in the general election.  No matter what happened, they stayed focused on their strategy to do this.
3. Use disciplined management.  The organization that Obama built rivaled that of some of the most successful corporations.  There was a clear chain of command, clear focus and disciplined strategy to get to the end goal.
4. Use both in-person and online organizing.  They coupled block walking,  canvassing, phone calls, and direct mail with very effective online fundraising and social networking efforts.  This dual approach was unprecedented and extremely effective at building support.
5. They tapped into the energy and drive of youth at all levels of the campaign.

I know that there will be much more dissection of the campaign and how they were able to overcome what at times seemed like insurmountable odds.  We should pay attention to the analysis of the campaign because I agree there are lessons for the social sector.  Nonprofits face insurmountable odds every single day. By analyzing and employing those elements that worked, there is the potential for greater reach and deeper impact.

Tags: election, management, nonprofit, Obama

What the Changing Government Means for Social Innovation

What does the historic election of Barack Obama yesterday mean for the social sector?  It may be too early to tell, but we can get a sense from his policy platforms and interviews.  Both McCain and Obama spoke about social entrepreneurship during the campaign and supported new ideas like a social innovation fund and national service.  It was exciting to see these new ideas taking hold in mainstream politics and the mainstream media.

So, on the day after such an historic election, let’s speculate on what this changing of the guard might mean for social innovation.

First, Obama is a big proponent of national service. He wants to get every citizen involved in serving their country and has said, “As President, I will ask for the active citizenship of Americans of all ages and walks of life.”  His ideas for expanding national service, include:

• Growth of current national service programs like AmeriCorps and the Peace Corps.
• $4,000 tax credits to college students in exchange for 100 hours of community service.
• Expanded programs for engaging retirees in community service.
• 50 hours of required community service from middle and high school students each year.
• Expansion of YouthBuild, which helps at-risk kids complete high school while building affordable housing in their communities.
• Allocation of 25% of college work study funds to community service projects.

He is also interested in creating incentives for social innovation.  As he said in Time Magazine , “We need to invest in grass-roots ideas, because the ‘next great innovation’ usually doesn’t come from government.”  He wants to:

• Create a Social Investment Fund Network to use federal seed money coupled with private investor capital to spur ideas that solve social problems.
• Create a new agency within the Corporation for National and Community Service to increase the capacity and effectiveness of the nonprofit sector.

Indeed, McCain and Obama were already working on some of these ideas when they co-sponsored the Serve America Act this past September.  The bill would create more AmeriCorps-like volunteer bodies to focus on the country’s most pressing problems (education, environment, etc.).  It would also create a commission to explore how government, nonprofits and the private sector can work more closely and effectively together.  And most interesting, it would create venture capital funds for the nonprofit sector to stimulate social innovation.  The bill is in committee right now and who knows where it will go from there, but since it mirrors much of Obama’s platform on service and the social sector, when he becomes president perhaps it will have a better chance of passing.

The service aspects of his platform are interesting and exciting, to be sure.  But what really excites me is the idea of a Social Innovation Fund that couples government and private money to seed solutions in the social sector.  I don’t know that we have ever lacked ideas for solving our social problems, but the real hurdle has been capital.  The social sector is sorely undercapitalized.  There are amazing programs out there nationally and here locally in Austin and the Southwest region.  But they are only able to grow incrementally because they lack the growth capital that is available in the for-profit side.  Any entrepreneur will tell you that it takes money to make money.  The same is true in the social sector:  it takes money to create real, lasting, sustainable change.  But nonprofits cannot create that change through incremental donations.  We need social venture funds with significant capital that can be smartly invested in programs that work.  Those investments ($100K+ over 3-5 years) will allow these programs to grow to scale, have broad and deep impact and really start to solve some of the toughest problems facing our country today.

Can you imagine the impact if an Austin nonprofit that is changing outcomes could scale their program?  Take a program like College Forward.  They could apply for and receive significant growth capital from such a fund.  They could take their program, which keeps students from dropping out of high school and moves them on to college, and expand it throughout Texas, throughout the country.  Instead of providing opportunities and futures to just 900 kids, as they do now, they could reach 9,000 or 90,000 kids.  They could transform a state, a region, a country, a generation.  That’s powerful.  And growth capital is how they would do it.

It will be interesting to see what a change at the top means and whether it will trickle down to the social sector nationally and here in the Southwest.  I’ll be watching closely.

Tags: Barack Obama, College Forward, Funding, innovation, John McCain, Nonprofits, Serve America Act

Ways to Raise Money in a Recession

It’s a topic that’s on every nonprofit Executive Director, board, and staff member’s mind these days.  How can we possibly raise money when the economy is in such turmoil?  Well, there are ways.  Here are 10 to get you started:

1. Harness Your Board.  Your board of directors ideally is a group of people who are committed to and invested in your organization.  They also, we hope, bring to the table relationships and connections that could help your organization.  Tap into that.  Educate them on what your organization needs and brainstorm with them about who they know and how they can help.  Ask those who have the capacity to give at greater levels to do so.  Now is not the time to be shy.  Be strategic about what your board can do to help and then ask them to do it.
2. Take Good Care of Your Donors. Make sure you keep, and even upgrade, the donors you already have.  Thank them for every gift they make in 24-48 hours with a thoughtful, results-focused letter demonstrating real appreciation and connecting them back to the mission and work of your organization.  Reconnect with those donors who made a gift 3-6 months ago thanking them again and asking them why they invested and what you can do to continue to invest them.  Begin renewing donors who gave 9-12 months ago.  Customize your renewal as much as possible.  Donors like to know that the organizations they give to know them, their interests and why they give.  Gather and use that knowledge to reinvest (and even upgrade) your donors.
3. Plan.  If your organization doesn’t have a strategic plan and a development plan, create them.  You raise money by being strategic, first about what your organization is and does, and second about how you are going to create sustainable revenue streams.  People give to organizations and causes that they care about, and they give even more money to organizations that are smart about what they are doing and how they are doing it.  A good strategic plan is an invaluable tool around which a fundraiser can build investment.  And a good development plan gives a fundraiser a step-by-step way to generate revenue.
4. Reallocate Resources.  As a nonprofit organization you have limited resources (money, staff, technology, time) with which to raise money.  You want to make sure that the effort you put into fundraising has the highest return on investment.  Are you sure that the event that just raised you $30,000 was the best use of your staff time and effort?  Calculate the direct and indirect costs of that event and determine the real net income you generated.  Are there better, more effective ways to raise more money for less cost and effort?  Take a hard look at how you are raising money and reallocate your limited resources to fundraising efforts that will net more money.
5. Use the Internet.  Move some of your communications with donors and prospects online.  You’ll save money and have a better chance of getting more and bigger gifts.  I’m not just talking about your direct mail letters, but also event invitations, surveys, newsletters, online communities, blogs, etc.  Send email invitations for your events.  Survey your donors about how best to communicate with them or what they think of your organization.  Launch a blog that gives donors and prospects a behind-the-scenes view of your organization and its work.  Harness online technology to more effectively personalize your communication with your donors for a much lower cost.  They will become more interested in your work and more invested in the organization.
6. Build Your Infrastructure.  Because you have limited resources it is important that you spend your money on the very best infrastructure you can afford.  Don’t skimp on your donor database or online email marketing software.  There are many options out there, do your research and make sure you are purchasing something that will decrease staff time while increasing productivity.  When you are hiring staff make sure you are getting the best and the brightest.  Spend the time crafting a thoughtful job description and position posting, create resume review criteria and interview questions that will uncover candidates skills, experience, working style, and past results.  A top notch Development Director can completely turn a fundraising operation around.  Take your time and find the best person for the job.
7. Keep Learning.  Don’t cut professional development and best practices research during these difficult times.  Now is the time to learn from others, get a fresh perspective, find a mentor for your fundraiser.  By getting out and hearing what others have done, how to improve skills, how to do things differently and more effectively they will continue to grow revenue and the sustainability of your organization.
8. Strengthen Your Case.  Money is raised around a case for support.  It can be tempting when times are tough and budgets are shrinking to fall back on a fundraising message based on need.  “We need to raise $50,000.”  But the best way to raise money is to clearly and articulately connect donors with what you are doing to impact the community.  Your case for support makes this connection.  If you don’t have a case for support write one.  If you have one, revisit it and make sure that it is compelling, clear, concise, inspiring.  Once it is, use it throughout all of your collateral and fundraising materials, letters, emails, etc.  You want to invest donors in the change you are creating.  Fundraise around that and you will see increased investment.
9. Clone Your Best Donors.  When you are struggling to find new donors, go back to the source.  Dig into your database to find out the characteristics (demographics and psychographics) of your best (most years of giving, biggest dollar, greatest upgrade) donors.  Then survey them (formally or informally) to find out why they give, what messages resonate with them, what they read, where they get their information and so on.  You want to understand how they tick so that you can find others like them.
10. Diversify Your Funds.  When one revenue stream (or several) are down, you want to be able to draw on other streams.  Are there other revenue streams you could launch or strengthen?  If you’ve never gotten foundation dollars, do some research on foundations that give to organizations in your program area.  What about corporate money, do you have a program or event that a corporation might like to sponsor because it hits their target audience?  Have you looked at earned income?  Do you have an asset that might be saleable?  How is your individual donor base?  Do you have on-going annual givers? If not, could you launch an annual fund program?  There are many ways to raise money and always potential for new avenues.  Explore whether some of these make sense for your organization.

These times are tough, but there are solutions.  It’s simply a matter of taking a step back and being strategic about finding new answers.

Tags: earned income, Fundraising, individual donors, nonprofit board of directors, Nonprofits, nonprofits and recession