Board of Directors
If you want to get your nonprofit out of the (all too common) starvation cycle of never having enough money to achieve your goals, you must raise capacity capital. Capacity capital is not the day-to-day revenue you need to keep your doors open. Rather, capacity capital is a one-time infusion of significant money that can help you grow or strengthen your nonprofit. It is money for things like: technology, revenue-generating staff, systems, a program evaluation.
This Slideshare helps you understand capacity capital and how to raise it. And if you want some additional guidance for launching your own capacity capital campaign, download the Launch a Capacity Capital Campaign Step-by-Step Guide.
You can see the growing library of Social Velocity Slideshare presentations here.
A couple of fascinating debates – one about the role of philanthropy in democracy, and one about the value of nonprofit evaluation – were fascinating reads. And I always love a good controversy, so July gladly provided at least two. The much heralded “sharing economy” came under fire and the hype around social impact bonds was called out.
Below are my 10 favorite reads from last month. If you want to see a longer list of great reads, follow me on Twitter, Facebook, LinkedIn or Google+. And you can see past months’ 10 Great Reads lists here.
- There was a really interesting debate on the Markets for Good blog (always a place for thoughtful conversation) between Andrew Means and Patrick Germain about the value of program evaluation and performance measurement in the nonprofit world. Andrew Means kicked it off here and here and Patrick responded here.
- I absolutely love it when someone makes you think about something that you took for granted in a whole new way. Conventional wisdom is that the sharing economy is a democratizing development. But Max Holleran, writing on the OpenDemocracy blog, argues that perhaps it is the complete opposite. As he says, “Our concept of what sharing means has gone from The Gift to the paid-for lift…How we assess public goods has also changed dramatically: urban commons have been ceded to private-public management initiatives.”
- The Hewlett foundation announced a new $50 million initiative to “strengthen representative democracy in the U.S.” And that announcement inspired a thought-provoking back and forth about the role of philanthropy in democracy among Daniel Stid and Larry Kramer (both from Hewlett) and Maribel Morey (assistant professor of history at Clemson University), via a Stanford Social Innovation Review blog post and the subsequent comments to the post. No matter your politics or your views on philanthropy, it is refreshing to see such an open discussion about a foundation’s efforts.
- On a somewhat related note, Amy Schiller argues that we cannot allow philanthropy to be a “workaround” to the “friction of democracy, ” which is necessary for truly solving social problems.
- To get more funders to invest in nonprofit organization building we need more data and case studies on the return on investment. Building the case for funder investment in nonprofit technology capacities, Berta Colón, Cynthia Gibson, Michele Lord, and Geraldine Mannion examine recent data on building nonprofits’ digital reach, and the Knight Foundation provides a case study on how National Public Radio (NPR) built their digital skills.
- I love New York Times food columnist Mark Bittman for his fabulous recipes and views on food, but recently he’s become somewhat of a food activist, and his article on the the true (social) costs of a burger is eye-opening.
- Is there hope for the famously dysfunctional nonprofit board? A new report from Urban Institute suggests we need to raise our expectations of nonprofit boards. Let’s hope!
- I know I’ve been including Steven Pressfield in my round ups lately, but this man really knows how to inspire people to fight the demons that face them in order to create whatever they were put on this earth to create. His recent blog series entitled “Why” does just that. I think social changemakers, more than anyone, need this kind of inspiration.
- Curt Klotz from the Nonprofits Assistance Fund argues that nonprofits must price their services according to value because “there is no virtue in self-imposed austerity that leads to mediocrity in our programs, and constant turmoil in our finances.” Amen to that!
- Writing on the PhilanTopic blog, Laura Callanan pulls back the curtain on some of the hype around social impact bonds and social innovation in general. Instead of falling victim to shiny object syndrom she asks that “we all bring our critical minds – as well as our open hearts – to the job of social change. Let’s celebrate the potential in the new approaches but also integrate them with prior experience and test them with our constituents…Let’s remember that a tool is just a tool.”
What thought-provoking or controversy-inspiring read caught your eye last month?
Photo Credit: Josue Goge
One of the things I love most about what I do is the opportunity to speak around the country to nonprofit and philanthropic leaders about new approaches. The nonprofit sector and the philanthropy that funds it are changing dramatically, which can be unsettling, but can also be an incredible opportunity for nonprofit leaders to find a better way to reach their goals.
This Fall I’m particularly excited about some great speaking opportunities I have coming up. If you will be at any of these events, please let me know, I’d love to connect there.
And if you’d like to learn more about having me come speak at your event, or to your board, staff or donors, check out the Social Velocity Speaking page.
Here are my upcoming engagements:
August 1st, Portland, Oregon
I’m delighted to have such a groundbreaking nonprofit, Ecotrust (which inspires more resilient communities, economies, and ecosystems around the world) hosting me at a lunch event for Portland nonprofit leaders. I’ll be speaking to the group about new ways to finance their work. I’ll describe how clarifying the work their nonprofit does and connecting that to a robust financial model can transform their organizations’ financial sustainability and ability to create social change.
October 10th, Seattle
I’ll be kicking off the symposium with a talk on “Moving From Fundraising to Financing,” where I’ll show nonprofit leaders a new, more effective way to fund their work. As donors shift from a “charity” mindset to an impact and investment view, nonprofit leaders must articulate the social change they seek, develop a robust and sustainable financial model for their mission, and make their donors partners in the work. We’ll discuss how to uncover the most important building blocks of creating an integrated approach to engaging people in the mission.
November 5th-7th, Phoenix
At this year’s annual conference of grantmakers, I’ll be serving on a panel titled “The Power of Investing in Nonprofit Capacity.” Ellen Solowey, Program Officer at the Virginia G. Piper Charitable Trust; Darryl Tocker, Executive Director of the Tocker Foundation; and I will discuss foundations that make capacity investments in nonprofits. We will explore how funders can collectively address nonprofit capacity constraints such as financial instability, disengaged boards, lack of funding for professional development, and the need for long-term planning.
January 22, 2015, Hailey, Idaho
At this gathering of nonprofit leaders I’ll be leading a session titled “Messaging Impact.” More and more donors are interested in funding organizations that can demonstrate impact, or change to a social problem, as opposed to organizations that only talk about their needs. If a nonprofit leader can create a message of impact, she will be able to raise more money over a longer period of time. I’ll explain how to create a message of impact to encourage more donors to invest in the long-term work of a nonprofit.
It’s going to be a great Fall. I hope to see you at one of these events!
Photo Credit: Social Velocity
Ever since last year’s release of the Letter to the Donors of America it seems there is an increasing drumbeat against the “Overhead Myth,” the idea that nonprofits must keep their overhead and administrative costs as low as possible. The fact that we are now openly talking about overhead as a myth is very encouraging.
But I think it will take a good deal of time before donors actually embrace the idea that nonprofits should stop starving their organizations of the resources they need to create and execute effective programs.
To move donors along, nonprofit leaders must lead this conversation with their own donors. Those nonprofit leaders who need more money to build a stronger, more effective and sustainable organization behind their work should educate themselves, their board members, and their donors about capacity capital.
“Capacity capital” is a one-time infusion of significant money that can be used to strengthen or grow a nonprofit organization. Capacity capital is NOT the day-to-day operating money nonprofits are used to raising and employing. Rather, capacity capital is money to build a stronger, more sustainable organization.
A nonprofit could use capacity capital in many ways, for example to:
- Plan and execute a program evaluation
- Plan and launch an earned income stream
- Create a strategic financing plan
- Hire a seasoned Development Director, or other revenue-generating staff
- Purchase a new donor database
- Improve program service delivery
- Upgrade website, email marketing, and/or social media efforts
- Launch a major gifts campaign
But raising capacity capital is not like traditional fundraising. It involves determining how much capacity capital you need, creating a compelling pitch, deciding which prospective funders to approach, and educating those prospects about the power of capacity capital. In so doing, you are not only raising the money you so desperately need, but you are also leading your part of the nonprofit sector away from the overhead myth.
The Launch a Capacity Capital Campaign Guide can show you how to raise capacity capital for your nonprofit.
Here is an excerpt from the guide…
Section 1: Create a Capacity Building Plan
You cannot raise money without a plan for how you will spend it. Funders need to be convinced that you did your homework and have a clear, actionable, measurable plan for how you will invest capacity capital dollars to result in a stronger organization that can deliver more impact.
To get there, start by answering these questions:
- What is holding our nonprofit back from doing more and being more effective?
- What could we purchase to overcome these hurdle(s)?
- If we were able to purchase these items how would we use them and over what time frame?
- What can we reasonably expect to be the changes in our effectiveness and/or impact because of these things we purchased and implemented?
With your answers to these questions, put together a plan.
Start by creating 1-3 goals around the hurdles you identified in #1 above. For example, you may have identified in #1 that you don’t have adequate staff to raise enough money to achieve your mission.
So your capacity plan goals might be:
- Create an overall money strategy to raise $450,000 per year.
- Hire a Development Director to implement the plan.
- Secure the technology and materials necessary to raise this money (database, website, etc.)
Or, if you are a much smaller nonprofit, your goals might be more modest:
- Create an overall money strategy to raise $100,000 per year.
- Train the board on their role in fundraising.
- Upgrade our website to attract online donations.
Once you’ve developed your goals, make a laundry list of activities and purchases necessary to make each goal a reality. In some cases you may need outside help to determine how to get there. For example, you may not know how to put together an overall money strategy to raise $450,000, so you may have to hire a fundraising consultant to help you create that strategy. Also note roughly how long each activity will take.
So, your list of activities with a timeline for each might look something like this:
Goal 2: Train the board on their role in fundraising
- Discuss and get buy-in from board on a fundraising training (October)
- Find a date/location (October)
- Research fundraising trainers (November-December)
- Hire a trainer (January)
- Hold training (February)
- Follow up with each individual board member on the next steps resulting from the training (March-April)
Once you have listed all of the activities to achieve each goal of your capacity plan, highlight activities that would require new purchases. Research a ballpark figure for what each one would cost and then attach that figure to those highlighted items, like this…
Photo Credit: Franklin D. Roosevelt Presidential Library and Museum
As I mentioned earlier, I am building a video library of topics that can spur discussion among your board and donors. So, to add to that library, today I’m talking about why we need to get over overhead.
Traditional wisdom is that nonprofits should keep “overhead” (administrative, fundraising, systems, technology, staffing) costs as low as possible. This is a really destructive idea, and we need to move beyond it. But we will only get there if nonprofit leaders across the country start having that conversation with their board members and donors. Because if we can move beyond overhead, we will have a much stronger, more effective nonprofit sector.
The transcript of the video is also below. And you can view all of the Social Velocity videos on the Social Velocity YouTube channel.
To learn more about getting over overhead and raising capacity building dollars for your nonprofit, download the Launch a Capacity Capital Campaign Guide.
Hi I’m Nell Edgington from Social Velocity. Today I want to talk about why nonprofit board members and donors need to get over overhead.
So overhead is the idea that nonprofit organizations can separate what they spend on programs and services, the mission work of the organization, versus what they spend on infrasturucture, staffing, systems, fundraising function, administrative costs. All of those things in the second bucket are typically considered “overhead.”
Now overhead, I think, is a very meaningless distinction in the nonprofit sector, and we need to move beyond it.
It’s meaningless because you can’t have exceptional programs and services if you don’t have solid staff behind them, if you don’t have evaluation systems to figure out if you are making a difference, if you don’t have a fundraising function to bring the revenue in the door to make those programs and services operate, if you don’t have the infrastructure, the technology, all of the things that you need to make those programs and services run well.
We also need to get over overhead because if you think in terms of overhead as a nonprofit organization you will not seek, nor will you attract, the funding to invest in infrastructure, the funding that so many nonprofit organizations desperately need, the funding for capacity building, for strong staff, for great technology and systems, for evaluation programs, etc. If you think in terms of overhead you are going to keep those costs as low as possible and you won’t try to bring the money in the door to support your capacity as an organization.
Finally, we need to get over overhead because if as a nonprofit organization we are measuring our work in terms of how much we spend on overhead and keeping that as low as possible, we are not measuring our work based on whether we are actually making a difference, whether we are actually creating social change. And we need to move to a place where we are evaluating nonprofit organizations based on their results, based on the social change and the outcomes that they are achieving, not how they spend their dollars.
So those are the reasons I think overhead is very destructive in the nonprofit sector, and I hope that you will talk with your board and donors about how we need to get over overhead. Good luck!
My focus this month at Social Velocity is nonprofit leadership. As I mentioned earlier, May’s webinar is Reinventing the Nonprofit Leader. And I’m delighted to release today, as promised, the companion book, Reinventing the Nonprofit Leader.
Here is an excerpt from the new book:
The new millennium has been a difficult one. A crippled global economy, threatening climate change, crumbling education and healthcare systems, and a widening income gap comprise a few of the social problems we face.
And as our social challenges mount, the burden increasingly falls to the nonprofit sector to deal with the fall out.
So it is time for a new kind of nonprofit leader, one who has the confidence, ability, foresight, energy, and strength of will to lead the nonprofit sector, and our communities, forward. Indeed it is up to the leaders of our great nonprofit sector, to face, rather than shrink from, these many challenges.
It is time we move from a nonprofit leader who is worn out, worn down, out of money and faced with insurmountable odds, to a reinvented nonprofit leader who confidently gathers and leads the army of people and resources necessary to create real social change.
So in the hopes of inspiring nonprofit leaders to claim their rightful place as true heralds of social change, I have written this book. It is based on my many years of coaching nonprofit leaders to success. This book lays out the elements that those nonprofit leaders have learned in order to embrace their role as reinvented nonprofit leaders.
The reinvented nonprofit leader:
- Unlocks the Charity Shackles and demands to be treated as an equal and critical part of the economy, the community, the solution.
- Refuses to Play Nice and gets real with funders, board members, partners, and staff who are standing in the way of progress.
- Embraces Strategy that moves beyond just “doing good work” and gets real results.
- Uses Money as a Tool because big plans will not come to fruition without a sustainable financial engine behind them.
- Demands Real Help and the tools necessary to achieve the mission because the best leaders recognize weakness and solicit help to address it.
- Breaks Down the Walls of the organization and lets the world in as fully engaged partners, advocates, and supporters.
- Remembers the Dream that got them here in the first place because often it is the big idea that propels great leaders forward.
It is a tall order, but true leadership is.
We no longer have the luxury of mediocre leaders. These times demand confident, capable, engaging leaders who are a beacon to a society whose mounting problems are overwhelming at best.
While it may seem like an impossible transition to become a new kind of nonprofit leader – one who is more entrepreneurial, innovative, confident and strategic – let us remember that nonprofit leaders have always been entrepreneurs. They have recognized some sort of disequilibrium in our society and have created, out of nothing, an organization, a solution and an assembly of staff and volunteers to fix it. In essence, I am simply encouraging you, the nonprofit leader, to claim your rightful place.
The reinvented nonprofit leader is confident, engaged, and savvy. She will, I have no doubt, lead this great nonprofit sector, and all of us who benefit from it, to new heights.
So how do you become a reinvented nonprofit leader? Let’s take these one by one…
If you want to read more, download the Reinventing the Nonprofit Leader book now.
And if you register for the webinar before May 21st the companion book is free. You can register for the Reinventing the Nonprofit Leader webinar here.
I am really in to Slideshare lately. I uploaded my first Slideshare presentation, Calculating the Cost of Fundraising, last month and people seemed to really like it. So I plan to create regular Slideshare presentations and share them on the Social Velocity Slideshare site.
Today’s Slideshare is 7 Ways to Kiss Fundraising Goodbye. Traditional nonprofit fundraising is broken. It lock nonprofits in an endless cycle of chasing low return activities. A much better approach is to create a sustainable financial model that aligns well with your mission and core competencies. Nonprofits must move from Fundraising to Financing.
If you want to move your nonprofit from a Fundraising to a Financing approach, download the Build a Nonprofit Financing Plan Step-by-Step Guide.
Nonprofit leaders have been given a seemingly endless list of tasks: develop and execute effective programs, manage a diverse and underpaid staff, chart a bold strategic direction, create a sustainable financial model, wrangle a group of board members with often competing interests, and recruit and appease a disparate funder base.
All with little support along the way.
I think its time for us to reinvent the nonprofit leader. In order to better lead her staff, board, and donors to greater social change, the reinvented nonprofit leader must:
- Unlock the charity shackles that keep nonprofits beholden to dysfunctional expectations
- Refuse to play nice with staff members, board members, or funders who stand in the way of the mission
- Embrace strategy that gets results
- Wield the money sword
- Break down the walls of her nonprofit to let in more supporters, advocates, and partners
- Demand real help and the tools necessary to do the work well
- Remember the dream for change that inspires the work
So in the hope of inspiring nonprofit leaders to claim their rightful place as true heralds of social change, I am offering a new Social Velocity webinar, Reinventing The Nonprofit Leader.
Informed by years of experience coaching nonprofit leaders, the Reinventing The Nonprofit Leader webinar will help nonprofit leaders like you to:
- Adapt to a rapidly changing world
- Find the confidence, energy and will to lead more effectively
- Better engage your staff, board, and donors in the work
- Stop apologizing for what you really need
- Use money as a tool
- Embrace new technologies and approaches to build momentum
- Become inspired for the work ahead
Reinventing Nonprofit Leader
A Social Velocity Webinar
Wednesday, May 21, 2014 at 1:00pm Eastern (or On Demand)
Don’t worry if you can’t make the time of the live webinar. All of our webinars are recorded and available On Demand, so simply sign up now, and you’ll be sent a link to watch the recording of the webinar after it airs. You can see the entire Social Velocity On Demand Webinar Library here.
I hope to see you there!
Photo Credit: Library of Congress
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- Reinventing the Nonprofit Leader
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