How Nonprofits Can Thrive While Awaiting Economic Recovery

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.

Tags: case for support, cost of fundraising, fundraiser, nonprofit board of directors, nonprofit donors, nonprofit earned income, nonprofit fundraising, nonprofit fundraising events, nonprofit social media, nonprofit strategic plan

A Contest to Help Your Nonprofit Manage to Outcomes

I’m excited to announce something a little different on the Social Velocity blog: a contest! Mario Morino, author of one of my favorite new books, Leap of Reason: Managing to Outcomes in an Era of Scarcity, has generously offered to give away a Leap of Reason board package to three lucky nonprofit readers of the Social Velocity blog. You can read my past review of the book and why I like it so much here and my past interview with Mario here.

The Leap of Reason board package will include a copy of the book for each board member and other supplemental materials to get the board discussing how to manage toward outcomes. If you would like to be entered into the contest, simply respond in the comments with a brief (1-3 sentence) description of why you think your nonprofit is ready to start managing toward outcomes.

In Leap of Reason, Morino, co-founder of Venture Philanthropy Partners, argues that every nonprofit MUST, if it wants to survive in this new environment of “brutal austerity,” create a culture of performance. Many nonprofit organizations simply exist to “do good work.” But that is just not enough anymore. It’s not enough for those that fund the work, and it’s not enough for those who receive the services. Nonprofits must determine what they exist to change and whether they are actually creating those changes. Mario is ever-mindful, however, that large scale evaluation projects are simply unrealistic for the vast majority of nonprofits. They don’t have the money or time to devote to such projects. He and other experts in the book provide key initial steps and case studies to encourage nonprofits to develop their own ways to manage to outcomes.

So, if you think your nonprofit is ready to start managing to outcomes, and you’d like the Leap of Reason board package to help you along, respond in the comments with a short (1-3 sentence) explanation of why you think your nonprofit is ready.

I will then pick three winners. Each nonprofit winner will receive:

• A Leap of Reason book for each board member
• A Leap of Reason User Guide for each board member
• A Leap of Reason Supplemental Reading Packet for each board member
• A Leap of Reason Board Package Overview (a how-to guide for the executive director or board chair leading this process)

Good luck!

Update on February 21, 2012: The response to this contest was so great that Mario Morino graciously agreed to increase the number of winners to 20. Those 20 nonprofit winners have all been notified with the specifics about how to claim their Leap of Reason board packets. Thank you so much to everyone who participated! And I look forward to future Social Velocity blog contests!

Tags: Board of Directors, Leap of Reason, Mario Morino, nonprofit board of directors, nonprofit evaluation, nonprofit outcomes, nonprofit performance measurement

How Founder’s Syndrome Hurt the Komen Foundation

Last week’s stunning PR nightmare at the Susan G. Komen Foundation is a textbook example of how not to run a nonprofit. Komen decided early last week to pull all funding from Planned Parenthood and then went radio silent in response to an increasingly angered social media network. Finally they flipped their original decision while firing the anti-Planned Parenthood vice president for public policy, Karen Handel.

Komen’s PR response was woefully inadequate, their social media efforts were non-existent compared to Planned Parenthood’s, and their board decision-making process was flawed. And all of this follows their brand-busting decision last year to partner with KFC.

Obviously, the organization is not making good decisions.

But few people are placing the blame for these missteps where it should probably go, at the top. Karen Handel herself argued that she wasn’t the only decision maker, “I clearly acknowledge [my role] in the process, but to suggest I had sole authority is just absurd. The policy was vetted at all appropriate levels.”

I wonder if Komen isn’t suffering from classic founder’s syndrome. Founder’s syndrome is when the original founder of a nonprofit (or a leader who has been there for a very long time) creates a culture where:

• Power and influence all reside within the single founder
• The brand of the organization is inextricably linked to the personality of the founder
• Staff are powerless to speak up and be heard when they disagree with certain decisions
• The board of directors merely rubber stamps founder decisions and have no real authority over and provide no strategic direction to the organization
• Decisions are rarely tested or debated

Komen was founded by Nancy Brinker when her sister, Susan G. Komen, died of breast cancer in 1982. For such a massive organization (a 2010 budget of $400+ million), the Komen Foundation only has 9 board members, most of whom are friends or family of the founder . The organization’s structure and behavior have all the signs of classic founder’s syndrome.

In a healthy nonprofit environment, staff are allowed (even encouraged) to push back, ask hard questions, have their dissenting opinions heard.  And the board of directors has the ultimate strategic and fiscal authority for the organization. As a group, they debate and grapple with big strategic decisions. And, as a group, board and staff together are charged with achieving the mission.

When founder’s syndrome is present it can spell trouble for a nonprofit. Far beyond the PR nightmare we have witnessed the past week with Komen, founder’s syndrome can fundamentally weaken an organization. It can make the organization’s funding and brand name overly reliant on one person. It can cause a lack of critical and innovative thinking. Ultimately, it can mean that the organization becomes less about social impact and more about the personality of the founder.

What has played out with the Komen Foundation over the past few months should be a cautionary tale for other nonprofits. To be strong, effective, innovative and sustainable, a nonprofit must encourage a culture of group ownership. It remains to be seen if Komen learns from their mistakes, but at the very least perhaps other nonprofits can.

Photo Credit: Jeffrey

Tags: Karen Handel, Komen Foundation, Nancy Brinker, nonprofit board of directors, nonprofit founder's syndrome, nonprofit strategy, Susan G. Komen Foundation

How to Find Individual Donors

When I speak to groups of nonprofit boards and staff, they are often shocked when I reveal how money flows to the nonprofit sector. Thinking that foundation grants are the holy grail of funding, many nonprofits hire a grant writer and spend countless hours and resources chasing highly competitive grants. But the fact is that barely 2% of the money flowing to the nonprofit sector comes from foundations. A much larger portion, over 11%, comes from individuals:

But many nonprofits don’t know how to raise money from individuals. For them, it seems somehow easier to research foundation guidelines, put together a proposal that answers each question, and hope for the best. But individual donor fundraising can help diversify a nonprofit’s funding picture, and major donor fundraising in particular, which requires a one-on-one relationship building mode,l can be a great way to systematically expand a nonprofit’s network and funding. It is also the highest and best use of a board member’s fundraising time.

To help nonprofits understand individual donor fundraising and how to get moving in that direction, the next webinar in our ongoing Financing Not Fundraising webinar series focuses on how to bring individual donors in the door.

The Finding Individual Donors webinar will give you tools and strategies to:

• Understand the differences between smaller donor fundraising and major donor fundraising
• Define a major gift for your organization
• Use social media to connect with individual supporters
• Create events that resonate with individual donors
• Identify prospects
• Engage your board in individual donor fundraising
• Create a system for engaging individual donors
• Launch a major donor campaign
• Break an individual donor dollar goal into pieces to make the goal achievable

And much more.

If you want to attract individual contributors to your nonprofit, but don’t know how to get started, or if you would like to expand the individual donors you already have, this webinar will show you how.

Webinar Details:
Financing Not Fundraising: Finding Individual Donors
Wednesday, February 22, 2012
12 noon-1:00pm Eastern
Price: $40

I hope to see you there!

Tags: financing not fundraising, finding individual donors, fundraising from individuals, individual donor fundraising, nonprofit webinars, raising money from individuals

9 Ways Board Members Can Raise Money Without Fundraising

I’ll admit it, I’ve been on a board fundraising kick lately in the blog (here and here). I just think that if your nonprofit is going to become more strategic and financially sustainable, you have to start from the beginning (or the top, as it were). In my last blog post I discussed how to overcome excuses for why a board member can’t bring money in the door. But the fact remains that a majority of people don’t like to (or simply won’t) ask for money.

The good news is that there are lots of other things board members can do to bring money in the door. And remember, if you are financing not fundraising your organization, your definition of “bringing money in the door” should be very broad.

Here are 9 things you could ask your fundraising-shy board members to do:

1. Help create or evaluate a business plan for an earned income venture. If you have business leaders or entrepreneurs on your board this would be a great use of their time and add tremendous value to your organization. If they can help you create a more profitable business, they are directly contributing to your organization’s bottom-line.




2. Advocate for government money. You may have a board member that can’t stand the idea of asking their friends for money, but they are well connected in city, county, state or federal government and could open doors to you for government contracts, grants, fee-for-service or other government monies.




3. Provide intelligence on prospects. If you have a board member that seems to know everyone in town, but for whatever reason refuses to ask any of them for money, they can still be incredibly useful. You may be getting ready to ask a prospective donor for $1,000, and this board member can tell you what that person has already given to, at what level, who else might know them and so on. When you make an ask, the more information you have going into it, the more successful you will be.




4. Set up a meeting with a prospective customer. If your nonprofit is engaged in an earned income venture, you probably always need help with new sales. If you have a board member who is part of, or connected to, the target customer(s) of your business, they could open doors to new customers. Or at the very least, they could help you think through your sales and marketing strategies and make them  more effective so that you can attract more customers.




5. Email, call or visit a donor just to say thanks. The stewardship of a gift is an often forgotten, but incredibly critical, part of the fundraising process. According to Penelope Burk’s annual donor survey, 84% of donors would give again if they were thanked in a timely way. And being thanked by a board member is a bonus. A donor who renews their gift to a nonprofit is providing more money for the organization.




6. Explain to a prospect why you serve. A board of directors is a group of volunteers who care so much about the mission of the organization that they are willing to donate their time (a precious resource) to the cause. As a donor, it is affirming to see that a volunteer is contributing time, but it is even more motivating to hear, in the board member’s own words, why they feel compelled to serve this organization. That story can be enough to convince someone to give.




7. Host a small gathering at your home. Over the course of a year, most people invite a gathering of friends and/or family into their home at least once. A board member could take a few minutes at their next dinner party, birthday celebration or Super Bowl feast to talk about something that is near and dear to their heart: the nonprofit on whose board they serve. They don’t have to ask people for money, but they could simply say, “If you’re interested in learning more, let me know.” And then the nonprofit’s staff could take it from there with those who are interested.




8. Recruit an in-kind service. If a board member could remove an expense line item from a nonprofit’s budget that would directly contribute to a stronger bottom-line. For example, if a board member works at an ad agency, could they convince their company to provide some pro-bono marketing services to their nonprofit? But keep in mind, these in-kind donations must be of value to the nonprofit and provide an offset to a direct cost that the nonprofit would otherwise have to bear.




9. Negotiate a lower price from a vendor. Do you have a board member with great negotiating skills (think of all of those lawyers on your board). Could they negotiate with your insurance providers, office space rental company, or printers, for a lower price? If so, that’s more money in the bank.

If you think of a board member’s “get” responsibilities in these much broader terms, then I find it difficult to imagine a board member who cannot bring money in the door. You just have to get strategic about how each individual board member can best contribute to the organization’s bottom-line.

If you want a roadmap for making your board more effective, download the “10 Traits of a Groundbreaking Board” e-book.

Photo Credit: DeeganMarie

Tags: Board of Directors, earned income, financing not fundraising, nonprofit board of directors, nonprofit fundraising

Overcoming Board Fundraising Excuses

It’s a point of debate in the nonprofit sector whether all board members of a nonprofit should be required to help raise money. Bill Ryan (co-author of the book Governance as Leadership) argued that the fundraising requirement of many nonprofit boards is “a giant, fast-growing myth that ends up choking good governance to death.” And I often hear from nonprofit leaders and board members that requiring every single board member to participate in money-generating activities just isn’t realistic. I strongly disagree. I’m a firm believer in a give/get requirement for every board.

But, that doesn’t mean that every board member must ask donors for money. Rather, a nonprofit must take a strategic approach to employing at least some of every board member’s time toward bringing money in the door. And there are many things board members can do, beyond making an ask, to raise money (which is the subject of an upcoming post). But first, nonprofits have to move beyond their many excuses for why every board member can’t help raise money.

Here are the some of the most common excuses and why they don’t fly:

• “We want client representation on our board, but our clients don’t have money.”
  Even though a client may not have access to large pools of money, they can still absolutely help bring money in the door. Because they have been helped by the organization, they can provide an amazing testimonial to potential donors about the impact of the organization. Why not take that client board member on some meetings with prospects? Their presence and their story might be enough to turn a prospect into a donor.




• “We need a specific skill set (legal, marketing, policy expertise) and those board members may not have a network that can give.”
  A board member who doesn’t count potential major donors among their friends still has networks to draw from. Everyone has co-workers, clients, vendors, neighbors, family, and/or social media followers. When you start to ask your board to systematically think through who they know, you would be surprised about how vast your organization’s potential network is. Just because a board member doesn’t know the list of 50 donors every other nonprofit in town is going after, doesn’t mean they don’t know people.




• “Some board members aren’t good at fundraising.”
  Actually the vast majority of people aren’t good at fundraising because it isn’t widely understood. But so what? Provide your board some fundraising training and have them practice on each other. Then pair greener board members with more seasoned ones to help them learn. Or ask another friendly nonprofit to have some of their effective board members come talk about their experiences raising money.




• “Some board members are uncomfortable with asking for money.”
  Yep. Actually most people are uncomfortable asking for money. Money is a taboo subject in our society. But instead of viewing money as a dirty thing, start viewing it as a critical component of the work your nonprofit does. Reframe money as a great, necessary opportunity to help your organization do more and better. Bring everyone’s discomfort with money out into the open and turn it something positive. Get the board excited about raising more money so that more can be accomplished.




• “We want board members with program expertise to focus on mission, not money.”
  I suppose in an ideal world it would be great if you could have mission without money, but that is just not the reality. Your organization does not have endless resources. Money is limited and therefore your programs and activities must be limited by an understanding of that resource. A board member cannot adequately discuss or plan for programs without intimate knowledge of and experience with the money that makes those programs run. You simply cannot separate the two. And the sooner you get those “program experts” contributing to the financial bottomline of the organization, the sooner you will have stronger, more sustainable programs.

Money is what makes a nonprofit and it’s work viable. It makes no sense to say that some board members should help bring it in and others should be excused. We have got to stop separating money, and the activities associated with it, from other aspects of a nonprofit organization. It makes no sense.

If you want help making your board more effective, download the “10 Traits of a Groundbreaking Board” e-book.

Tags: board fundraising, Board of Directors, fundraising training, getting a board to raise money, nonprofit board fundraising, nonprofit fundraising

Financing Not Fundraising: Jump Start Your Board

In part 12 of our on-going Financing Not Fundraising blog series we’re talking about activating an often under-used nonprofit financing resource: the board of directors. The words “fundraising” and “board” can sometimes seem so incongruous that it results in  a lot of eye-rolling on the part of an executive director. As a general (and probably optimistic) rule, nonprofit boards of directors are not very helpful at bringing money in the door. It is often a chicken or the egg scenario that leaves many nonprofits at an impasse. But I believe it is up to the executive director to get tough and strategic about getting her board to take action.

If you are new to our Financing Not Fundraising blog series, the series is about how nonprofits must break out of the narrow view that traditional FUNDRAISING (individual donor appeals, events, foundation grants) will completely fund all of their activities.  Instead, they must create a broader, more strategic approach to securing the overall FINANCING necessary to create social change. You can read the entire series here.

If you want to learn more about how to apply the concepts of Financing Not Fundraising to your nonprofit, check out our Financing Not Fundraising Webinar Series.

Here are some ways to get your board to bring more money in the door:

• Make Them Strategic. Involve them in strategic planning. No one wants,  or is able, to raise money without a bigger plan. If you don’t currently have a strategic plan, put one together, but make sure to get the board involved in the whole process. It must be their strategic plan if they are going to help finance it. If you already have a strategic plan, make sure that you are updating the board, and more importantly, asking for their help on implementing it at every board meeting. It’s not enough to create a strategic plan, you must keep the board engaged in making it come to fruition.




• Force Them to Give. Once your board is excited about the strategic plan and the future direction of the organization, get them to invest. It is unconscionable to me that there are still nonprofit board members who don’t make a financial contribution to their organization. Make it abundantly clear that a contribution (at a level significant to them) is a requirement of service. No one can convincingly ask someone else for money if they aren’t giving themselves. End of story.




• Focus Their Fundraising. The highest and best fundraising use of a board member is major donor recruitment. Stop asking board members to be involved in any and all aspects of fundraising (event planning, direct mail letter creation, grant writing). Instead have them focus on tapping into their networks to bring people to the organization. And no matter how “connected” you may or may not think your board members are, believe me, their networks are vast. They include their friends, family, neighbors, co-workers, social media fans/followers, church congregants, fellow alumni and on and on. Ask each board member to come up with 5 people in their network that they think have the capacity to give at your major donor level. Then have the board member spend the year focusing on getting those people in the door.




• Integrate Money into Every Conversation. A lot of boards don’t like to talk about money: either raising it, or how it is spent. Boards often have limited financial management conversations, skimpy or non-existent finance committees, and a general preference for discussing mission over money. But you can’t let them get away with that. It is absolutely critical that money be fully integrated into any conversation the board has. They must understand what the financial model of the organization is and be continually monitoring the ability of that model to deliver on mission.




• Don’t Sugar Coat Anything. The tendency in the sector is to treat a board as the organization’s most important donors and from which you hide the truths about your organization. But you need to move beyond that and start helping the board to understand the harsh realities of your work. The next time your board asks you to raise more money without additional staff, or add programs without new funding, or go down a rabbit hole for no reason, tell them “No.” Give them your honest appraisal of what the organization should or shouldn’t do. And make sure they listen.

Boards need to step up. There is no doubt. But it is up to the executive director to make sure that they do. By getting your board to be strategic, focused, invested, integrated and aware they can start helping to finance your work.

If you want help jump starting your board, download the “10 Traits of a Groundbreaking Board” e-book.

Photo Credit: Intercontinental Hong Kong

Tags: board fundraising, board role in fundraising, executive director, financing not fundraising, major donor fundraising, nonprofit board of directors

10 Most Popular Posts of 2011

As 2011 comes to a close, I wanted to provide a list of the ten most popular Social Velocity blog posts this year. Then I’m taking a break from the blog until January.

I hope you all find time over the holidays to relax, unwind and spend time with friends and family. Thank you all for reading and contributing to the Social Velocity blog this year. I really appreciate all of my readers and look forward to talking with you in the new year. Happy Holidays!

The 10 most popular Social Velocity blog posts of 2011 were:

1. 5 Lies to Stop Telling Donors
2. The Financing Not Fundraising Blog Series
3. 10 Great Social Innovation Reads: November
4. The Problem with Strategic Planning
5. 5 Nonprofit Trends to Watch in 2011
6. 4 Things Every Nonprofit Needs
7. What is Social Innovation?
8. A Step-by-Step Guide to Creating a Nonprofit Revenue Plan
9. 7 Things Board Members Can Do to Raise More Money
10. Why Nonprofit Overhead is Destructive

Photo Credit: Charline Tetiyevsky

Tags: financing not fundraising, nonprofit board fundraising, nonprofit donors, nonprofit overhead, nonprofit revenue, nonprofit strategic planning, social innovation