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How Nonprofits Can Thrive While Awaiting Economic Recovery

By Nell Edgington



After 3+ years of a difficult recession it looks like the economy might be starting to turn around. That’s great news. But for the nonprofit sector, which is always the first hit by and last to rebound from a recession, it might still be awhile until they enjoy the looming economic recovery. But it does no good for nonprofit leaders to throw up their hands and curse the economy. Instead, nonprofits should seize this opportunity to rethink how their organization brings money in the door.

There are some key things nonprofit leaders can do to create a sustainable financial model in the midst of lingering economic uncertainty:

  • Take a Step Back. Stop putting your organization in the “fundraising” box and take a big step back. Figure out an overall financial model for your organization that connects with your mission and your organization’s core competencies. Don’t just go through the regular fundraising motions (direct mail, events, grants). Rather, analyze how to create a long-term financial model for your organization.

  • Harness Your Board. Your board of directors ideally is a group of people who bring connections and expertise that could help your organization. Tap into that. Educate them on what your organization needs and brainstorm how they can help. Now is not the time to be shy. Be strategic about what your board can do and get them to do it.

  • Create a Plan. If your organization doesn’t have a strategic plan and a revenue 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 causes that they care about, and they give even more money to organizations that are strategic about what they do and how. A good strategic plan is an invaluable tool around which you can build investment. And a good revenue plan gives you a step-by-step way to generate money.

  • 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 in has the highest return on investment. Calculate the direct and indirect costs of every revenue-generating activity and determine the real net income you generated. Are there better, more effective ways to raise more money for less cost and effort?

  • Use Technology. Move your communications with donors and prospects online. You’ll save money and have a better chance of getting more and bigger gifts. Send email newsletters, campaigns, event invites. Survey your donors. Create an online community through social media where people can get to know your organization and become involved. People will become more interested in your work and more invested in the organization.

  • Learn from the Best. Now is the time to learn from others, get a fresh perspective, find a mentor or coach for your Development Director. Use social media to find interesting and innovative people and ideas. Talk with your fellow social change leaders locally, nationally and internationally. Attend online conferences and webinars. By getting out and hearing what others have done and how they have innovated you will find new ways to grow revenue.

  • Strengthen Your Case. Money is raised around a case for support. It can be tempting when times are tough to fall back on a message of need. “We need to raise $50,000.” But the better way is to clearly connect donors with the change you are creating in the community. 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. Invest donors in the change you are creating.

  • Clone Your Best Donors. When you are struggling to find new donors, go back to the source. Dig into your database to determine 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. You want to understand how they tick so that you can find others like them.

  • 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? Have you explored earned income? Could you grow your individual donor base? There are many ways to raise money and always potential for new avenues. Explore whether some of these make sense for your organization.

Things may be looking up, but it’s going to be awhile for the nonprofit sector. Instead of waiting around for a better economy, make some significant changes now to how you raise money. In so doing you’ll be turning this challenge into a tremendous opportunity for your organization.

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About the Author: Nell Edgington is President of Social Velocity (www.socialvelocity.net), a management consulting firm leading nonprofits to greater social impact and financial sustainability. Social Velocity helps nonprofits grow their programs, bring more money in the door, and use resources more effectively. For more information, check out Social Velocity consulting services and clients.


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7 Comments to How Nonprofits Can Thrive While Awaiting Economic Recovery

Desi Cabrera
February 23, 2012

You have provided some excellent recommendations! As you have indicated it’s a slow rebound for nonprofits, despite improved economic conditions, as evidenced by the latest results of the Blackbaud Index, which we reviewed. You are welcome to drop by and have a read: http://www.miratelinc.com/blog/latest-blackbaud-nonprofit-fundraising-report-reflects-slight-growth/

Nell Edgington
February 23, 2012

Desi, thanks so much for the reference!

Natasha
February 23, 2012

Nell, Great post as always. I passed in on and shared it with a few Linkedin groups. I’d love to learn more about Social Velocity and how I can help promote your message.

Natasha

Nell Edgington
February 24, 2012

Thanks Natasha! I appreciate it!

Ron Yellon
February 24, 2012

A great list. I would like to add engagement with cost management. Making sure you don’t waste money spending more than you need on the essential costs of business. It’d not only co listen with trustee duties but can vs the quickest way to release resources for the frontline mission. Certain investors need evidence that this is nailed down. Of course I have an interest … I want charities to focus resources on achieving good outcomes . I measure my success as a for profit cost management service provider by such external performance measures. Using a specialist with our business model means the efforts are self funding. No risk or upfront cost, who wants to add to charity’s overheads? Not me. I like to help people who understand the importance of managing cost, want to do so at every opportunity, and are attracted by no risk and reduction of workload.

[…] How Nonprofits Can Thrive While Awaiting Economic Recovery […]

Larry Wenger
March 27, 2012

Non-profits lose a lot of money because their workforce, like that of many, many other organizations, is not fully engaged. National numbers are that only 25-30% of American workers are engaged and motivated. Also, more attention must be given to the day to day leadership done by front line supervisors and middle managers. The day to day leaders are not the folks earning $100k. It’s the people earning $30-$40k who have the most influence over day to day operations and client outcomes. Many could really benefit from a lot more training and support.

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