Financing not Fundraising

As we approach the end of a pretty difficult year for nonprofit fundraisers, and look towards the start of what could be an equally difficult one, I’d like to outline a new vision for how the nonprofit sector gets funded.  Fundraising in its current form just doesn’t work anymore.  Indeed, traditional fundraising is holding the sector back by keeping nonprofits in the starvation cycle of trying to do more and more with less and less.

Really, what the sector needs is a financing strategy, not a fundraising strategy.  By that I mean that nonprofits have to break out of the narrow view that traditional FUNDRAISING (individual donor appeals, events, foundation grants) will completely fund all of their activities.  Instead, nonprofits must work to create a broader approach to securing the overall FINANCING necessary to create social change.

What does this new approach to financing the nonprofit sector look like?  It looks like this:

1. Nonprofits understand that funding programs and general operating expenses is not enough to survive and thrive.  All activities that bring money in the door (individual donors, foundation grants, earned income, government contracts, loans etc) are integrated and part of a larger financing strategy that supports the short AND long term goals, as well as the programs AND infrastructure of the organization.




2. Nonprofits no longer segregate fundraising from their other activities (programming, administration).  All elements of a nonprofit’s operations, including the money-making ones, are fully integrated and moving forward together.




3. Individuals, who make up 80%+ of the private money entering the sector, become a greater focus of fundraising efforts, rather than corporate or foundation philanthropy (which make up 5% and 12%, respectively, of the private money entering the sector).




4. Fundraising messaging moves from an emphasis on the tin-cup mentality and donor benefit, to an emphasis on the social impact a  nonprofit is creating.




5. Money is raised to support not only the direct services that a nonprofit provides, but also the infrastructure (staff, technology, systems, evaluation, training) of the organization.  Nonprofits understand that they will only get better at delivering impact if they have an effective organization behind their work.




6. Other types of capital vehicles (like loans, equity) are added into a nonprofit’s financing mix.




7. Earned-income opportunities are evaluated and, if appropriate, launched.  Earned income is not right for every nonprofit, but it is worth exploring and analyzing opportunities as they come and understanding and being open to the revenue-generation possibilities.




8. The net revenue of every money-making activity a nonprofit engages in (events, individual fundraising appeals, corporate sponsorships, earned income, etc.) is calculated and evaluated.  Low net revenue activities are replaced with higher net endeavors.




9. Nonprofits move away from “push” fundraising and marketing efforts that force their message on innocent bystanders (like direct mail appeals) and towards “pull” fundraising and marketing efforts that bring interested donors/prospects to the organization (like blogs, Twitter, Facebook, friend-raising events, etc.)

There really is a better way.  Nonprofits don’t have to wear out their fundraisers, their donors, their staff and their message.  By working towards financing their efforts as opposed to fundraising for them, they can get a lot closer to social impact.

Tags: direct mail, Financing, Fundraising, nonprofit, Philanthropy, social change

Texas Social Innovation Initiative Virtual Press Conference

I mentioned in an earlier post that Social Velocity will be one of the consultant teams working on OneStar Foundation’s Texas Social Innovation Initiative (TSI).  The TSI is a partnership between OneStar, Root Cause, and Dallas Social Venture Partners, which gives each of seven innovative Dallas/Fort Worth nonprofit organizations, who competed among 60 nonprofits, more than $25,000 in cash and strategy assistance to support their growth and impact.

The seven nonprofit winners will be announced this Wednesday at the Governor’s Nonprofit Leadership Conference in Dallas.  As part of that announcement there will be a virtual press conference at 10:30 a.m. CST featuring a discussion by leaders in the nonprofit sector about how to stimulate social innovation in Texas. Participants are Elizabeth Darling, president/CEO of OneStar Foundation; Stacy Caldwell, executive director of Dallas Social Venture Partners; and Andrew Wolk, CEO of Root Cause. To participate in the conversation you can watch the stream on the Social Velocity blog below, and you can also follow the conversation on Twitter via the hashtag #TXSI.

UPDATE: The virtual press conference happened on Wednesday, December 9th, but you can still watch the taped virtual press conference here.

Tags: Andrew Wolk, Dallas Social Venture Partners, Elizabeth Darling, OneStar Foundation, root cause, Stacy Caldwell, Texas Social Innovation Initiative

What is Social Innovation?

It’s a big buzz word right now, but what does it mean? Is it just a bunch of hype?

Social innovation is a whole group of big, ambitious, new ideas and models for solving social problems. Social innovation is about changing institutions, organizations, approaches, systems in fundamental ways so that we can fix the many problems facing us. It includes things like:

• Creating new financial vehicles where nonprofit and for profit organizations that are working to solve social problems can have ready access to all kinds of funding (seed funding, growth capital, debt, etc.)
• Removing the hurdles placed in front of organizations working to solve social problems (accounting standards, IRS regulations, etc.)
• Restructuring philanthropy to be more effective at supporting real change
• Revamping government so that it can support, rather than thwart, change leaders
• Reforming nonprofit organizations to break out of the starvation cycle and become more effective at creating social impact

And that’s just the beginning.

Social innovation is big.  It’s bold. It is a movement of people and organizations from all three sectors (public, private, nonprofit) who are taking a completely different approach, who are turning the status quo on its head, who are building new systems, who are asking hard questions, who are creating a new way forward.

If you are going to be in Dallas, Texas next week, consider joining me at the Governor’s Nonprofit Leadership Conference where I am leading two sessions on the social innovation movement and what it means for the nonprofit sector.  I hope to see you there!

Social Innovation for Nonprofits

2009 Governor’s Nonprofit Leadership Conference
Wednesday, December 9, 2009 1:30-3:00pm, or
Thursday, December 10, 2009 10:15-11:45am
Sheraton Dallas Hotel
Dallas, Texas

In this seminar, attendees will learn how to employ new models in the social and philanthropic sectors (including social entrepreneurship, growth capital, strategic fundraising) so they can more effectively address the social issues in their communities. If nonprofit organizations are strategic with the resources at their disposal, they will be better able to confront social challenges. Particularly in the midst of the economic downturn, nonprofits need new ideas and models for doing what they do more effectively and sustainably.

Click Here to Register for the GNLC

Tags: GNLC, Governor's Nonprofit Leadership Conference, reforming nonprofits, restructuring philanthropy, social innovation, Texas

Building a Stronger Organization

We all know the nonprofit sector is really struggling.  Particularly in the midst of a deep recession it can be difficult to figure out how to get out of a vicious cycle of increasing demand for services, relentless fundraising, diminishing capacity and so on.

But there is hope.  In order to break free of the starvation cycle of trying to do more and more with less and less, nonprofits need to make big change.  And in order to do that they need to figure out what is holding their organization back.

Most consultants offer nonprofits what they call an Organizational Assessment.  But I hate the term, and I don’t hold much stock in the results. The solutions they offer to what’s holding a nonprofit back tend to be rooted in what the nonprofit sector has been doing wrong for too long.  Most Organizational Assessments are not bold enough, they don’t push nonprofits to understand and articulate their own theory of change, look at entirely new revenue streams, get rid of non-performing board members, completely revamp their mission, focus their marketing efforts, create a real strategic plan, and so on.

What nonprofits need is an Organization Building Plan. It can transform a nonprofit, give them an understanding of where they stand currently and what it will take to really strengthen the organization and their ability to make social change.  An Organization Building Plan gives a nonprofit a clear, executable road map for making their organization work better, smarter, more effectively, more sustainably.  It demonstrates how to integrate better all aspects of the organization (program, funding, marketing, operations, board, etc), make the organization more sustainable, expand the net of supporters (funders, volunteers, board members, friends), deliver programs in a way that increases social impact, and increase the strengths of the organization, while addressing the weaknesses.

If a nonprofit can strengthen their organization, they can deliver more social impact. Indeed, I would love to see every nonprofit organization with a well executed Organization Building Plan.  So what does a good one look like?

An outsider (it must be an outsider, because, as we all know, someone close to the organization won’t have the heart or the vision to see what is really wrong and how to fix it) interviews board, staff and funders, reviews organization processes, policies, procedures, documents. They then analyze and create detailed recommendations for improvement in the eight key areas of a nonprofit organization:

1. Mission and Vision: How these basic pillars of the nonprofit galvanize internal and external people to create change.
2. Strategy: How the organization comes up with and executes on a plan for the work of the organization.
3. Program delivery and impact: How the organization delivers social change.
4. Governance and leadership: How the board and key staff drives the organization forward.
5. Finances and revenue generation: How financially strong and sustainable the organization is.
6. External relationships: How strong and effective important collaborations and partnerships are in the work of the organization.
7. Marketing and communications: How well the organization gets in front of the right audiences in a compelling way that drives action.
8. Operations, systems and infrastructure: How well the organization makes use of resources.

Doing Organization Building Plans is one of my favorite services we offer at Social Velocity.  When I deliver the results to a client’s board and staff it is thrilling to look around the room and see the mix of shock, awe, relief, excitement, energy, innovation.  Finally someone has taken a hard look inside the organization and come up with a new direction that opens a whole new world to the organization.  Ideas start flying around the room “We could do this…”, “What if we did that…”  It serves as a rallying cry to begin to build the organization.

At Social Velocity we are all about big, not incremental, change.  An Organizational Assessment can make a nonprofit incrementally better.  An Organization Building Plan can transform how an organization works, dramatically increasing productivity, sustainability, and ultimately, social impact.

Tags: Fundraising, mission, nonprofit starvation cycle, organizational assessment, vision