Making a Vision for Change a Reality

One of the many things I love about my job is meeting social entrepreneurs (who often don’t even know that they are social entrepreneurs) who have amazing, game-changing ideas for solving social problems.  Their creativity, vision, passion and commitment are truly inspiring.

But the thing that strikes me about some of them, and the main reason I started Social Velocity, is that they don’t know how to make that idea, that solution, a reality.  We can’t expect that the same people who come up with great ideas or have a grand vision for change also have ALL of the skills required to build momentum around that idea and execute on it.  Often people approach me with a great idea, or a great organization, that has hit a roadblock.  They can’t figure out how to take the idea or organization to the next level, how to make their vision a reality.  Often I find that the roadblock exists because they are missing three key steps.

The first step is assembling an effective group of advisors, evangelists, supporters, workers, whatever you want to call them.  This doesn’t have to be an official board of directors or advisors.  But it does need to be a group of people who get the vision, are deeply committed to it and have resources to offer toward making the vision a reality.  These resources could be expertise in the particular solution, connections to influential people, funding, who knows.  But the idea is that a single actor cannot do it alone.  The same is true for people within organizations who want to take the organization in a new direction, toward a new solution.  Again, they need to find key supporters who can help them make their vision for change a reality.

The second key piece is a plan.  An idea for a new solution or an idea for a change in direction is great, but it is just an idea. It is difficult to build action around an idea.  To bring an idea to fruition you have to create a plan for how you will get from point A (where you are right now) to point B (where the vision is a reality).  What is it going to take to get there (infrastructure, funding, people) and how will you make it happen?  A clear, articulate, compelling plan demonstrates that you have done your homework, you know what you are doing, you have a clear vision, and you are going to get there.

Finally, you need to translate your plan into a pitch that will convince funders to jump on the train.  But how to successfully communicate with potential supporters is a key and often misunderstood skill.  You need to translate what you know to be truth (your vision for change) into something that will compel an outsider to become involved.

These three steps are key to making a vision for change a reality.  And this is what Social Velocity helps social entrepreneurs navigate. I think we are wrong to expect social entrepreneurs to do it all alone (assemble supporters, create a compelling plan, build the infrastructure, find funding).  They aren’t superheros; they are just leading the charge.

Tags: change, social entrepreneurs, Social Velocity

Calculating the Cost of Fundraising

It seems that almost every nonprofit I talk to either has or would like to have some sort of fundraising event.  There is a rampant misconception that a successful fundraising event can be the answer to a nonprofit’s money woes.  That is sadly not the case. Events do not make money for nonprofits.  Sure, they might generate some gross revenue, but when you look at the net revenue raised and the cost to raise a dollar, they break even if you are lucky and lose money if you are not.  And those two calculations, net revenue and cost to raise a dollar, if employed by more nonprofits, could transform how effective fundraising could be for the sector.

At the risk of boring you with the math, let me give you an example. Let’s pretend that a nonprofit organization with a $500,000 annual budget throws an annual gala with a band, nice catering, and an auction.  They have a staff member that spends half of their time getting the event together, and there is a board committee that helps sell tables and provides oversight for the event.  At the end of the event the organization grosses $100,000.  They are thrilled that they have made 20% of their annual budget in one night, right?  Wrong.

Let’s dig a little deeper.  They have grossed $100,000, but what did it cost them to raise that money?  The direct expenses for the event (the band, location, food, decorations, invitations, etc) cost them $50,000.

But they also need to factor in the indirect expenses.  Their event coordinator spent half a year preparing for this event. Their Executive Director came to some meetings, met with the event coordinator, made phone calls to invite people and other activities.  The Development Director also worked on the event.  And the board committee put in many hours on the event.  So if we calculate the hourly rate of those staff member’s time (salary and benefits) and multiplied it by the hours they each worked, we’d get the cost of their time.  We also need to do the same for board members.  We can use the standard value of volunteer hours ($20.25) multiplied by the number of board members who worked on the event and the average number of hours they spent.  If we add all of this up we get:

Event Coordinator: $15,000
Executive Director: $4,000
Development Director: $5,000
Board Members: $3,000

Total Indirect Expenses: $27,000

So the total of the direct expenses ($50,000) plus the indirect expenses ($27,000) is $77,000.

Now, here’s where it gets interesting.  First of all, you see that the net revenue on this event is only $23,000 ($100,000-$77,000 = $23,000).

But how much did it cost to raise that $23,000?  It cost $77,000 to raise $23,000, or if you boil it down it cost $3.35 to raise $1.00.  That’s insane, right? Although this organization actually made money, the cost of making that money is far larger than the money they made.  And how does the cost of making this money compare to their other fundraising activities?

These two simple calculations, net revenue and cost to raise a dollar, could transform nonprofit fundraising efforts.  If nonprofit organizations understood the net revenue and cost to raise a dollar of every fundraising activity they engaged in, they could determine the most effective use of fundraising resources and could focus their resources on those activities.  The bottomline revenue to the organization would increase dramatically, while fewer resources would be expended on low net revenue activities.  It could be transformative.

So let’s take another example. An organization hires a major gift officer at $65,000 per year plus benefits who raises $500,000 per year in major gifts.  If you include in major gift activities the costs for the Executive Director’s and board members’ time to go on fundraising visits and send thank you letters the total indirect and direct costs for major gift fundraising would be $100,000.  So the net revenue ($500,000-$100,000) would be $400,000.  And the cost to raise a dollar would be ($100,000/$400,000), $0.25, so it takes a quarter to make a dollar.

Then if the nonprofit compared that cost to raise a dollar to the $3.35 cost to raise a dollar with a gala, they could make a conscious and reasoned decision to forgo the fundraising event and focus more efforts on major gifts.  They could take the $77,000 they spent on the fundraising event and hire another major gift officer.

I’m not suggesting that nonprofit events go away completely.  I think they absolutely have a place as friend-raising, stewardship, and cultivation activities.  An event can be a great way to celebrate the impact an organization is having and get more people to learn about them, or to thank donors who have been instrumental in the results an organization has achieved.  But in terms of pure revenue-raising abilities, fundraising events are very inefficient.

And a sure path to greater efficiency begins with analyzing the effectiveness of your current activities.  I’d love to see more nonprofits running the numbers on all of their fundraising activities and then making some hard choices about the best use of resources.  The end result could be more money at less cost.

Tags: cost to raise a dollar, events, Fundraising, gala, net revenue, nonprofit

Discussing the Future

So this is kind of interesting, and I’m not sure yet what to make of it.  Independent Sector, a coalition of 600 charities, foundations, and corporate giving programs working to strengthen the nonprofit sector, has launched an online forum, called FutureLab to answer the question: “What can we do right now, as a nonprofit community, to create a better, more vibrant 2020?”  They are attempting to spur a “national conversation to explore the challenges and possibilities that will affect the nonprofit and foundation community for years to come and to develop groundbreaking strategies that will shape our future.”  Those are massive questions and a massive undertaking.  But didn’t I just say that the nonprofit sector needs to be more bold?  Perhaps this is a step in the right direction.

FutureLab has broken this broad conversation into nine discussion areas which are:

• Diversity
• Global Engagement
• Integration with Religious Groups
• Leadership
• Responsibilities of Government and Nonprofits
• Technology
• Civic Engagement
• 21st Century Economy
• Impact

And they also have a “coffeehouse” area where people can contribute ideas that don’t fit into those categories.

Through social media and other channels they are encouraging anyone connected to the nonprofit sector (volunteers, staff, board members, consultants, etc.) to contribute their ideas for what could make the sector better.  You can comment on existing ideas, submit your own ideas, or vote on contributed ideas.

It doesn’t look like many people are contributing yet, and you have to wonder what the end goal is and what will be done with the volume of ideas and information they are hoping to gather.  Will anything come of it?  Will anything change? Independent Sector’s goals for the project are a bit tenuous:

Members of the nonprofit and philanthropic community are encouraged not only to review the content posted during this discussion, but to draw on relevant insights to inform their own planning and decision making. Independent Sector…will produce a summary of highlights that will be made available to nonprofits and foundations. Independent Sector may also identify ideas from the conversation to pursue as part of its ongoing work.

But there are some heavy hitters involved.  The funding for the project comes from major foundations like Gates, Annie E. Casey, Skoll, Kellogg Foundation, Rockefeller Foundation, Sea Change Capital.  So something interesting has to come out of it, right?  Anyway, it will be interesting to watch.  If you’re interested, join the discussion.

Tags: Annie E. Casey, FutureLab, Gates, Independent Sector, Kellogg Foundation, Rockefeller Foundation, Sea Change Capital, Skoll Foundation

The Long View of Change

There is a tendency in the social entrepreneurship movement to think that everything related to social entrepreneurs and social innovation is new.  But  much can be gained by occasionally looking to other sources, examples, people and models to inform how change, in a broader context, happens and is eventually made a new norm.

One of these older models that could prove helpful to social entrepreneurs is the concept of Real Change Leaders–agents of change within successful companies–which was introduced by Jon Katzenbach’s 1995 book of the same name.  By “real change leaders” he meant mid-level, corporate employees who were working to encourage innovation within the company, which in a marketplace that increasingly demands innovation as a competitive advantage were critical to the company’s success.  These Real Change Leaders were not the CEOs or big-name leaders, rather they were the otherwise average, mid-level employees who were moving companies forward in remarkable, yet unrecognized, ways. Through extensive study and interviews, Katzenbach determined that these “real change leaders” share seven characteristics, which interestingly echo how many people describe social entrepreneurs:

• Commitment to a Better Way. They have an inexhaustible and visible commitment to the need for change and an ability to execute successfully on that change. Their change target is exciting, worthwhile and essential to future success.




• Courage to Challenge Existing Power Bases and Norms. They have the personal courage required to sustain their commitment in the face of opposition, failure, uncertainty and personal risk.  They do not welcome failure, but they also do not fear it. They demonstrate the ability to rise again and again.




• Personal Initiative to Go Beyond Defined Boundaries. They consistently take the initiative to work with others to solve unexpected problems, break bottlenecks, challenge the status quo, and think outside the box. Setbacks to not discourage them, and they do not wait around for directives to move.




• Motivation of Themselves and Others. They are highly motivated themselves, but more importantly, they have the ability to motivate and inspire others around them. They create excitement, momentum and opportunities for people around them to follow their example and take personal responsibility for change.




• Caring About How People Are Treated and Enabled to Perform. They really care about others and are intent on enabling the performance of others as well as their own.  They don’t knowingly manipulate or take advantage of others.




• Desire to Stay Undercover. They attribute part of their effectiveness to keeping a low profile. Grandstanding, strident crusading and self-promotion are viewed as sure ways to undermine their credibility and acceptance as change leaders.




• Sense of Humor About Themselves and Their Situation. Their sense of humor gets them through when others around them start losing heart. It also enables them to help others stay the course in the face of confusion, discouragement and the inevitable failures that change produces.

So these Real Change Leaders that Katzenbach chronicled 15 years ago share interesting parallels with those leading change in the social sector today.  Although the ultimate goal of his RCLs was change for the sake of greater profitability, as opposed to social entrepreneurs’ ultimate goal of change for the sake of the greater good, the comparisons are interesting and enlightening.  The book and the stories of RCL’s upon which it is based could hold some interesting insights for those who are working towards change in the much broader context of our communities, our institutions, and our world.

Tags: change, Jon Katzenbach, Real Change Leadership, social entrepreneurs

If We Could Be So Bold

Inherent in our current time of constraint (struggling economy, crumbling institutions, unhealthy planet) is the opportunity of possibility.  As Margaret Drabble said, “When nothing is sure, everything is possible.”

But it is only possible if we seize the opportunity.  Nowhere is this more true than in the nonprofit sector.  Let’s admit it, the nonprofit sector tends to be risk averse.  And you could argue that the many constraints that they endure incent them to  be risk averse.  But what if nonprofit organizations seized the opportunity that this restructuring offers and became bold.  I mean really BOLD.

What if nonprofit organizations adopted massive, crazy, BOLD goals? The BHAGs (Big Hairy Audacious Goals) that Jim Collins in Good to Great describes:

A BHAG is a huge and daunting goal — like a big mountain to climb. It is clear, compelling, and people “get it” right away. A BHAG serves as a unifying focal point of effort, galvanizing people and creating team spirit as people strive toward a finish line. Like the 1960s NASA moon mission, a BHAG captures the imagination and grabs people in the gut.

It is a massive, energizing, crazy goal that can bring people together, give them something to work for, make them part of a team that is doing something inventive, game-changing.

To Nathaniel Whittemore of the Change.org blog we are obligated to move the solutions we seek to a loftier realm.  Those working to solve social problems must be bigger, bolder, crazier, more disruptive in their goals:

Where I think it leaves us is with an obligation to push even harder. At the cusp of that last gasp of crazy, the forces that wish to uphold the status quo kick and fight even harder. The former gatekeepers will not leave without a fight. We need to be even more bold, because at the end of the day, I don’t want 20% better nonprofits with a fundraising strategy better optimized for online giving. I want disruptive change that rights wrongs and realigns incentives for a more sustainable, just future.

And Dan Pallotta agrees.  He challenges nonprofits to take a cue from the moon program as well and create massive goals:

Nonprofit organizations have to join forces and begin committing themselves to impossible goals that address the massive social problems we confront, and they must define those goals in time and space — a cure for MS in 10 years; the end of homelessness in Boston in 10 years, and so on. Think of President Kennedy’s challenge: “I believe this nation should commit itself to achieving the goal, before this decade is out, of landing a man on the moon and returning him safely to the earth.” No wiggle room there…

But bold goals are not just for the sake of goals.  Those massive, crazy goals propel an organization forward.  They galvanize staff, board, volunteers, funders to get up from their chairs, to step away from mindless, boring meetings, to enlist their friends, family, colleagues, to invest time and resources until it hurts. Bold goals are the rallying cry that moves us toward solutions, compels us to fix broken systems, to break out of our inertia:

If a courageous group of nonprofits would call for the end of child hunger in D.C. within seven years, we’d have to start talking seriously about…all of the…structural problems like admin:program ratios, inadequate investment in infrastructure…and those discussions would actually be exciting. There would be a reason to reframe the present structure. To try to reframe that structure in the absence of a compelling context…[is] like trying to develop a lunar module in the absence of any goal to get to the moon. You wouldn’t know anything about the booster that would carry it, the rendezvous strategy, weight limits, etc. Everything you did would be ineffective…Daring goals, set in time and space are the only way to get there. Any less courageous path lands us exactly in the chaotic and ineffectual place we stand today. And that’s a long way from the moon.

I’ve seen with my clients how massive goals can transform organizations and galvanize them toward solutions.  When they have decided to take on exponential growth instead of incremental growth.  When they have moved from working to grow their services by 50% each year to working toward addressing 50% of the need.  The former can address the needs of 100 new clients a year, the latter can move towards actually eradicating the problem all together. This change in perspective, in goals, can revolutionize an organization.  No longer are the board, staff and funders content to add a few sites each year with no end goal in sight.  Rather, they understand and rally around their long-term goal, which is to solve a problem.  And they see every effort they make, every meeting they come to, every investment they secure as getting them that much closer to that solution.  It can transform an organization, and ultimately transform a problem.  And isn’t that really what we are all here to do?

Tags: BHAGs, Change.org, Dan Pallotta, Jim Collins, Nathaniel Whittemore, nonprofit