7 Things Board Members Can Do To Raise More Money

I am often asked by exhausted board members and executive directors what the board can do to raise more money. My answer, let me tell you right away, is NEVER to launch a new event.  Don’t get me started on my anti-events rant, that’s another post.

But there are other things that board members can do to raise significantly more money for their organization, in a much more effective way.  Here are 7 to get you started:

1. Invest. Make a significant financial investment in the organization.  This is so obvious, yet rarely does a nonprofit organization enjoy 100% giving from their board.  And those that do, often have several board members who are only making “token” gifts.  If the nonprofit on whose board you serve isn’t on the list of your top 3 nonprofits and you aren’t allocating your philanthropic dollars accordingly, then get off the board.

 

2. Open Doors. Open up your network to the organization. We all have friends, colleagues, co-workers, family members, neighbors.  They may not all be $10,000+ level givers, but you would be surprised at the capacity that probably does exist there.  If you really believe in the organization, then spread the word about your involvement to your network and encourage them to become involved.  If you’re uncomfortable doing this then perhaps you need to rethink how committed you are to the organization.

 

3. Get Strategic. Demand that your nonprofit create a strategic plan. Without an articulated direction and a strategy for getting there how are you going to get donors to invest? So many nonprofit organizations operate without a plan, and that’s probably why they struggle to raise funds. People donate to a cause, but they invest in a executable strategy for impact.  The former results in small gifts, the latter brings big dollars.

 

4. Expand the Revenue Model. Often nonprofit organizations take a narrow approach to thinking about bringing money in the door.  They may have a direct mail campaign, get some government and foundation grants and call it a day. Instead, take a bigger picture view of the business that you are in and the various ways you could finance, not fundraise for, the end goal. Executive and development directors are often so caught up in the day-to-day of funding operations that they don’t have the luxury of taking this big picture view, but that’s where the board can step in.

 

5. Fund Revenue-Generating Capacity. Make sure the organization invests in sufficient development capacity. Budget for and find a top-notch development director. Secure outside expertise to create a solid, executable development plan. Train the board on their role in fundraising. Don’t ask the organization to cut corners on development expenses, because you will just pay the price later.

 

6. Articulate Why Someone Should Give. It’s so obvious to you why you are involved in your nonprofit. But can you articulate that to others in a compelling way? Can you demonstrate how a significant community problem is being solved by your organization? Can you do it in 2 minutes? Can the other board members and the staff do it? If not, then you need to create a case for support.

 

7. Get the Board on Board. Once you’ve done all of these things, get your fellow board members on the boat. The nonprofit sector is structured to be led by consensus. So it isn’t enough for you as a sole board member to “see the light.”  You have a responsibility to convince your fellow board members that they can’t think small anymore. They have to invest, get strategic, open doors, and so on.  Once you are all on the same page, you will be a force to be reckoned with.

If you are interested in learning more about how to get your board raising money for your nonprofit, check out our Getting Your Board to Fundraise recorded webinar.

I promise you, there is an answer. It doesn’t have to be so hard. Board members can help their struggling nonprofits to find a path toward financial sustainability.

Tags: Board of Directors, case for support, development director, nonprofit, nonprofit events, raise more money

The Perils of Nice

I have a new post up on the Change.org Social Entrepreneurship blog called “The Perils of Nice.” Here is an excerpt:

The nonprofit sector often suffers from a propensity toward niceness. Indeed, according to a recent study by researchers at Stanford and two other business schools, nonprofits are perceived as “warm, generous and caring organizations, but lacking the competence to produce high-quality goods or services and run financially sound businesses.” In other words, we think they are nice — but not competent. But this perception stems from a reality that is often imposed on the sector. Nonprofits are encouraged to collaborate instead of compete, hold onto under-performing staff, accept martyr-like salaries, smile and nod when funders push them in tangential directions and keep quiet when government programs want the same services at a lower price…But in order to innovate and work toward real solutions, in order to get out from under consensus-based mediocrity, nonprofits need to break free from the niceness trap. They need to get meaner, uglier, messier…

Tags: Change.org Social Entrepreneurship blog, Stanford

Can Slow Money Launch an Austin Social Capital Market?

As I have written before, despite being the 3rd largest venture capital city in the country, Austin is slow to climb on the emerging social capital market bandwagon. Tremendous wealth and entrepreneurial expertise exist here, but there isn’t a lot of energy around creating a continuum of capital for social entrepreneurs. Perhaps that is about to change.

Slow Money is a national movement aimed at increasing the availability of risk capital to sustainable food-related social entrepreneurs. Austin recently established an affiliate of the movement here, Slow Money Austin, and their kick-off event is next month. Scott Collier, who has written on this blog before about mission-related investing and has been active in Austin’s venture capital community for years, is helping to lead this effort. I interviewed him about Slow Money Austin and what they hope to accomplish. Even if you don’t live in Austin, I think it is interesting to watch how one of America’s top 50 cities is responding to the increasing demand for a capital market for social entrepreneurs.

Nell: What is Slow Money Austin?

Scott: Slow Money Austin is a Central Texas affiliate of the national Slow Money Alliance focused on increasing the availability of risk capital to support the growth of sustainable food enterprises.

Nell: Why do you think Slow Money is a fit for Austin at this particular point in time?

Scott: Austin is one of several locations around the country where there is significant and growing interest in local food sources, organic farming that is better for people and planet, and sustainable food businesses that can provide much needed jobs and natural food alternatives. Slow Money is important to these businesses as they cannot grow to serve the increasing demand unless they have access to capital, especially patient risk capital that invests in partnership with food system entrepreneurs.

Nell: As part of a national movement, how will Slow Money Austin differ from other Slow Money organizations around the country?

Scott: Oh, I imagine we will find ways to make our Slow Money activities weirder than others. But seriously, Austin has such a national reputation for a healthy, entrepreneurial and well-educated population that I think it is obvious we should be national leaders in this process. Maybe it is because we are home to Whole Foods, the best entrepreneurial success story in the health food industry, or maybe it is because Austinites value community, health and a connection to nature like few other places in the country, but whatever the reason, this could be the start of a major new investment and entrepreneurship sector for Austin.

Nell: Your kick-off is in April, what do you hope to get out of this event?

Scott: The main objective is to get the Austin investment and entrepreneurial communities talking about the local and sustainable food sector in a serious way. The food industry, at over $600 billion, is a big part of the U.S. economy and it has a huge impact on hot-button issues like healthcare costs, carbon footprint and environmental health. With Slow Money, we want to awaken entrepreneurs and their funding sources to the great opportunity we have to use the power of free enterprise to tackle these major issues of our time.

Nell: What happens after the event? Where does Slow Money Austin go from there?

Scott: Great question. We are hoping to awaken some regional leaders to the opportunity with this event and after the event we would like to see ongoing events and investment activities proliferate that continue to build sustainable food enterprises. I like to draw a parallel to the efforts 20 years ago to bring attention to the opportunities for Austin entrepreneurs and investors to build technology businesses. As Texas struggled to come out of a dismal recession, thought leaders in this region launched the Austin Technology Incubator, The Capital Network, the Austin Technology Council and held events and venture conferences, all of which allowed Austin to claim a solid portion of the growth in the then-emerging tech sector. Cities all over the U.S. are still coming to Austin asking how we managed to pull that off. Well, hopefully this event will trigger some similar thinking as regional leaders see opportunity to create sustainable economic welfare in a large and growing sector: the sustainable foods market where margins and growth rates are high, but market penetration, at only about 3 percent, leaves tremendous room for further growth.

Nell: I’m fascinated by the funding piece of this. Is one of your goals to create a fund for sustainable food-related entrepreneurs in Austin? And if so, how does that fund work, how big is it, how are investments made, what do the investments look like?

Scott: I would again point to the example of 20 years ago and say it is not about creating a single fund to answer the opportunity. Instead, it is about creating a continuum of angel and fund investors and a support network of legal and other services that can support ventures ranging from dozens of small farms that want to bootstrap healthy lifestyle businesses all the way to scalable production, processing or distribution companies that can produce strong returns and substantial social benefits. What the funding for these business should look like varies from simple equity or unsecured debt investments of tens of thousands of dollars to larger amounts coming from investment firms managing tens of millions. Considering the scale of the opportunity across the country, it is not hard to see dozens of funds emerge managing amount of $10 million to hundreds of millions. This is pretty much what has happened in the Cleantech sector, which 10 years ago was hardly a sector at all and now accounts for about a fourth of the $20 billion in venture capital that is invested in a year’s time. Of course I think there is room in Austin for a couple of funds especially focused on Texas, and I would hope that some of the existing venture and private equity firms would allocate some attention to the sector.

Nell: How do you think such a fund or funds will fit into Austin’s current “emerging” social capital market?

Scott: That raises a very important distinction that will be made in Slow Money activities. The book that Woody Tasch wrote, called Inquiries into the Nature of Slow Money, addresses this in a more comprehensive way, but in a nutshell, Slow Money investors will mostly be investors that are seeking a financial return as well as a social impact. This raises the potential for the sustainable food sector to be a major target for philanthropists and private foundations as they launch Program Related or Mission Related Investment practices deploying funds to generate not only a financial return but also a positive impact to human health, environmental and animal well-being, and employment opportunities. A dramatic example of such fresh investment thinking is the Gates Foundation’s recent move to deploy $400 million into such impact investments. While this represents just 1% of Gates Foundation corpus, imagine the impact that could result if the other $500 billion or so of foundation capital in America invested with similar expectations. We would see the deployment of $5 billion of investment capital seeking positive social impact and a financial return of capital, thus creating a sustainable, perpetual virtuous cycle.

Nell: Besides you, who is behind bringing Slow Money to Austin?

Scott: We have great underwriting sponsors in Whole Foods Market, a global leader in the healthy and sustainable food sector, and Barr Mansion, one of the country’s first USDA Certified Organic events facilities, where we will be holding an investor-focused local food dinner April 22nd. And of course we have great partners in the Sustainable Food Center and the City of Austin, who will host the Showcase event on the 21st in our own LEED Gold-certified City Hall. We have great support from Austin Ventures, The RGK Center for Philanthropy and Community Service, Greenling, Dai Due Austin, and too many others to name here. And of course we will have Woody Tasch representing the national Slow Money Alliance in attendance to kick things off. It should be an interesting discussion, and an amazing dinner! Sign up at www.slowmoneyaustin.org.

Tags: Austin, Austin Technology Council, Austin Technology Incubator, Austin Ventures, Dai Due Austin, Gates Foundation, Greenling, RGK Center for Philanthropy, Slow Money, social capital market, Texas, The Capital Network, Whole Foods, Woody Tasch

A Boot Camp for Young Social Entrepreneurs

Tomorrow, Saturday, March 13th Do Something, an organization that gets teenagers involved in social change, is holding an interactive webcast boot camp for young budding social entrepreneurs and you can watch it here.

The Social Action Boot Camps bring together young community leaders, activists and social entrepreneurs for a day of networking and training dedicated to giving each attendee the tools to grow and sustain their community action ideas, projects and organizations.

Here is the Streaming Schedule:

Do Something Boot Camp Interactive Webcast
From New Orleans
Saturday, March 13th from 9am- 5:30pm

9:00-9:30: Keynote from Do Something Award Winner Divine Bradley
9:40-10:35: Corporate Sponsors: How to pitch your project and manage donor relationships
10:45-11:40: Building a Website
12:50-1:20: Do Something Youth Panel
1:30-2:25: Partnerships
2:35-3:30: Public Speaking
3:40-4:30: Interviews with young social leaders

You can come back here tomorrow to watch the webcast and ask questions of guests and speakers via Twitter (Tweet your remarks to @justgOOdtv with #dsbootcamp) or Facebook chat.

To find out more go to the Do Something Training site.

Tags: Do Something, Social Action Boot Camp, social entrepreneurs

The Change.org Social Entrepreneurship Blog

I am delighted to announce that I’ve been asked by the Change.org Social Entrepreneurship blog to become a regular contributor.  It’s a real honor to be part of this phenomenal blog, so I hope that you will check it out and join the conversation.

I will still write for the Social Velocity blog as often as I have been, but if you’re interested in my additional posts, check them out there.  My first post “The Danger of Abandoning the Nonprofit Sector” is up today, and here’s an excerpt:

With all the excitement and energy around social entrepreneurship, there’s a tendency to dismiss the sector that was working on social impact long before it was cool: the nonprofit world.  These days, nonprofits get far less airtime in the social innovation movement than their for-profit, social entrepreneur counterparts…Again and again, I’ve heard that innovation will never become part of the nonprofit system — that nonprofits are too set in their ways. Or that the sector is too broken to emerge anew. That attitude, though, is unacceptable. There’s great danger in dismissing the sector. Sure, it’s inefficient, dysfunctional and broken. Yet it has tremendous potential for innovation. Indeed, without innovation in the nonprofit sector, the broader movement to solve social problems is doomed…

Tags: Change.org Social Entrepreneurship blog, nonprofit, Social Entrepreneurship

A Watershed for the Social Capital Market?

One of the sessions of the RISE Social Entrepreneurship track was a panel of investors who fund social entrepreneurs (both nonprofit and for-profit).  One of the panelists was Scott Collier, Managing Director of Triton Ventures.  Scott has been a venture capital investor since 1991, serves on the board of the Entrepreneurs Foundation of Central Texas, and is working to engage Austin’s funding community in social innovation.  In the RISE panel Scott was on, a conversation began around mission-related investing, the missed opportunity currently facing foundations, and how a new move by the Gates Foundation may be opening up a whole new pool of funds to social entrepreneurs.  I asked him to write a post on this. It follows here.

I was recently fortunate to be on a RISE panel with a great mix of entrepreneurs and venture investors turned philanthropists, private foundation founders and social investors, all talking about investment in social enterprises.  The discussion emphasized the grant-making functions of the foundations represented on the panel and the exciting ventures that these grants were supporting. However, as often happens, there was no discussion about the potential for social impact investing by the investment functions of these organizations if they were to allocate a portion of their investment capital to activities that could produce both a financial return and a social impact.

I mentioned that this seemed to be a missed opportunity since the investment function of U.S. foundations manages about $550 billion whereas the grant-making function manages a much smaller amount: about $45 billion a year.  This would seem to imply that small program-related or mission-related investment allocations out of the $550 billion under management could represent much greater impact investing potential than would similar allocations of grant funds.  I also mentioned a cautionary tale as revealed in an LA Times article in 2007, where it was pointed out that the Gates Foundation, the world’s largest private foundation, was investing for a financial return in companies whose business practices were causing harm to individuals that were at the same time receiving benefits from NGOs supported by Gates Foundation grant funding.  Given that investment dollars comprise such a much larger sum, such returns-only investment practices could be undermining the value of grants, resulting in questionable net positive impact if viewed holistically.

What I failed to add to this conundrum is that the Gates Foundation has now recognized the opportunity to be a thought leader in making social enterprise investments out of their investment capital.  Below is an excerpt from the Gates Foundation website explaining features of their pilot $400 million PRI initiative.

Q. What is the [Gates] foundation’s new approach to Program-Related Investments?
A. We are working with a range of partners to use Program-Related Investments (PRIs) to deepen the impact of our work. We believe that investments are the right instruments to use in situations in which our program strategies are best served by partnering with revenue-generating enterprises, such as NGOs, financial institutions or companies. These entities may not be able to access investment capital from the private markets because the markets or entities that serve the poor may be perceived as too risky or costly to serve, or investors don’t have good information to assess the opportunities. By providing investment capital directly or by reducing risk to investors, we can help our partners access the capital they need to grow and demonstrate to the market that financially viable opportunities exist that serve the needs of poor or otherwise disadvantaged persons.  We know we can’t solve all problems with these types of investments – grant-making remains critical for those sectors that can never generate revenues or be addressed by market forces.

We have established a pilot program with an envelope of $400 million to invest in a range of investment opportunities. The capital for PRI investments or guarantees will be provided by this special $400M pool which will be managed by the CFO’s office of the foundation. Out of this pool, we will invest in PRIs that directly and meaningfully contribute to the achievement of the foundation’s charitable purposes.

Q. What types of investments will the foundation do?
A. We will evaluate a full range of investment opportunities that could include:

• Debt investments such as loans to NGOs, financial institutions or companies;
• Equity investments such as investments in venture capital funds or (less commonly) purchases of shares in companies;
• Guaranty investments such as bond back-stops, credit guarantees, or insurance.
• Any PRI opportunity must closely align with our program strategies, from increasing financing for agricultural smallholders in Africa, to supporting charter school facilities expansion, to increasing investment in global health technologies.

I spoke with a colleague who is close to Gates Foundation CFO Alex Friedman, who launched this PRI program, and he told me that a key part of the pilot launch was to organize a new group whose financial returns would not impact the performance objectives of the office of the CIO.  This was intended to free the new PRI group to focus more on social return than on financial return.

It is certainly exciting news that this $400 million, representing roughly 1% of the Gates Foundation’s capital under management, is now available for both financial and social return when invested in partnership with social entrepreneurs.  However, what may be even more exciting is that the intention of the move is to encourage other private foundations to do likewise and for Gates to thus be a catalyst for multiples of the $400 million to show up in the market as risk capital for social enterprises.  Could this be the beginning of large pools of capital available for direct impact investing, social venture funds and private equity funds, and the creation of a true continuum of capital availability in what is today a very nascent social capital market?

Tags: Entrepreneurs Foundation of Central Texas, Gates Foundation, Mission-Related Investing, PRIs, RISE, Scott Collier, social entrepreneurs, Triton Ventures

Climb on Board, Austin

Today wraps up the Social Entrepreneur track of RISE, Austin’s SXSW-style conference for entrepreneurs.  It was a lot of fun putting together the track with Jessica Shortall, with lots of help from Annie Frierson, Suzi Sosa, Andy White and the many amazing, inspiring social entrepreneurs in our area.  I’m so impressed with the speakers and panelists that made up the track.  From design-thinking for social entrepreneurs, to domestic microfinance, to technology for social impact, to social investing, to balancing mission and profit, and much, much more.  It was so great to see those working in the gray area between social impact and entrepreneurship together sharing insights, ideas, knowledge, discussion, debate.

I couldn’t get to all of the sessions in the track, and so I’d love recordings of those I missed.  But because RISE is a free conference there is little budget for “extras” like recording equipment and staff.  However, I heard a rumor that some of the sessions were unofficial taped.  If you know of any taped sessions, let me know, and I’ll post them to this blog.  And I will definitely make the case to the organizers of RISE that next year we find a way to tape sessions.  Because this content is just too rich to be shared by only the 25-40 people in the room.

So I wanted to share my takeaways from the RISE Social Entrepreneurship track and thoughts about where we go from here.

First, the takeaways:

• There is tremendous interest and energy around social entrepreneurship in Central Texas
• However, there is little infrastructure or eco-system to effectively support those entrepreneurs
• More social entrepreneurs in the track and attending sessions were women  (that could entirely be based on the fact that the leaders of the track are women, but I think there’s more to it than that)
• There is a debate about whether social entrepreneurs need to bootstrap as long or as hard as traditional entrepreneurs since the same end reward (financial profit) does not really exist for SEs
• Funders of social entrepreneurs are not present in nearly as many numbers as social entrepreneurs
• An “investment banker” or “broker” vetting and connecting social entrepreneurs to potential investors is a key part of the needed ecosystem

And that’s just a beginning list.  There were far too many conversations, insights, war stories, and needs to catalog here.

Which brings me to where we go from here. There is a disconnect for Austin in the realm of social innovation.  When I talk with people in the social innovation space outside of Texas they are always interested to hear that I am from Austin and are sure that Austin is well along the path of launching and growing social entrepreneurs.  Because of Austin’s reputation for progressive ideas, its wealth, its technology background and its rank as the third largest venture capital city in the country, people assume that social entrepreneurship, which often follows from these things, is burgeoning here.  When I tell them that isn’t the case, they are shocked. What is holding Austin back?

We heard some provocative conversations this week and saw some inspiring examples of social entrepreneurs who are making it and funders who are helping them along.  But that’s not enough, not even close.

Social entrepreneurs need access to significant funding at every step of the game from seed to growth, whether their  model is nonprofit, for-profit or a hybrid.  We need to give social entrepreneurs the skills to create solid business strategy around a great idea, language for creating a compelling pitch, infrastructure to grow results.  We need to create communities for social entrepreneurs and social investors to interact, network, learn from each other, forge partnerships.  But most of all we need to collectively say, it’s not enough.  One week a year is not enough.  A handful of social entrepreneurs and social investors in a city of 1.7 million is not enough.  Social innovation is a growing industry, one that Austin should and must climb on board.  I’m not satisfied.  I want to see more.  A lot more.

Tags: Austin, Central Texas, design-thinking, microfinance, RISE, social entrepreneurs, social innovation, Social Investing