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capacity capital

A Summer To Do List for Nonprofit Leaders

nonprofit summerMemorial Day is almost here, and in my mind that means so is the beginning of summer. While work surely carries on over the summer months, for many of us there tends to be more space to reflect, recharge, and reconnect with your core.

But you have to make time for it.

Sometimes nonprofit leaders will tell me that they love the slower pace of summer because it means they can catch up on their to do list, move paperwork off their desk, make progress on their filing, get more organized.

Ugh!

Let me tell you right now that your to do list will never be complete, so instead, make better use of the space summer provides by taking a big step back and getting inspired for the work ahead.

Here are some tasks I suggest you put at the top of your to do list this summer:

Get Quiet
Before you can do anything else, you need to step out of the rat race for a bit and listen to the silence. There you can reconnect with your core, ponder some bigger questions, figure out what you are meant to do. Maybe you need to take a trip away from your normal routine and the many demands on your time. Maybe you need to find a space to just be. Maybe you need to find activities that are outside of your job, because remember that you are so much more than the leader of a nonprofit organization. However and wherever you do it, you have to make some time to journey inside.

Find Inspiration Again
I know as a nonprofit leader you are (or at least once were) inspired by the work you do. Passion and commitment to mission are often what define a social change leader. But that source of inspiration is not endless. And the day-to-day drudgery of trying to move mountains can wear you down and make that light grow dim. When that happens you have to seek inspiration elsewhere. The world we live in is endlessly inspiring, so when you are feeling that your vision is impossibly narrow, get outside your walls. We must give ourselves permission to reconnect with what makes us human, not machine. But if you simply cannot figure out what will inspire you, go back to the first item and get quiet enough, long enough to figure it out.

Ask Some Big Questions
Once you have found quiet and inspiration you will then have the capacity to figure out what’s next. Nonprofit leaders are so busy with the day-to-day that they often find themselves disconnected from the big picture. Why are you doing this work? What are your ultimate goals? Who is your target audience? Take advantage of the mental space summer provides to ask yourself and your board some of the big questions that can help you recommit to the work and more easily attract the other people and resources necessary for the next chapter.

Figure Out What’s In Your Way
If you are like most nonprofit leaders, you are so accustomed to scraping by without the necessary tools, staff, systems to do your job that you rarely take a big step back and ask, “What do we really need to accomplish our goals?” Take some time to figure out the things that drive you and your staff crazy. What are the hurdles standing in your way of doing more? An ineffective board? A lack of strategy? Not enough money? The wrong technology? Not enough staff? Create a list of what you really need to do the work, put it in front of your board and ask them to help put together a capacity building plan.

Forgive Yourself
Man, are social change leaders hard on themselves. Apparently it’s not enough to work on saving the world, but you have to continually berate yourself for not doing it quickly enough, or well enough. So get over it. You are doing the best you can with what you have. Give yourself a break and you will find that without a bully constantly breathing down your neck you can accomplish much more. Take that knowledge with you into the fall, and you may just be transformed.

This summer, step outside the routine and commit to a real break that allows you the physical, mental and spiritual space that you as a social change leader so desperately need. Happy Summer!

Photo Credit: Unsplash 

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Performance Management for Every Nonprofit: An Interview With Isaac Castillo

Castillo_IsaacIn today’s Social Velocity interview, I’m talking with Isaac Castillo, Director of Outcomes, Assessment, and Learning at Venture Philanthropy Partners, where he leads VPP’s approach to data collection, data reporting, and outcome measurement.

Prior to coming to VPP, Isaac served as the Deputy Director for the DC Promise Neighborhood Initiative (DCPNI).  At DCPNI, Isaac led efforts to improve outcomes in the Kenilworth-Parkside community in Ward 7 of the District of Columbia through the strategic coordination of programmatic solutions and research-based strategies. Prior to his time at DCPNI, Isaac served as a Senior Research Scientist at Child Trends where he worked with nonprofits throughout the United States on the development and modification of performance management systems and evaluation designs. In addition, Isaac was also the Director of Learning and Evaluation for the Latin American Youth Center (LAYC) where he led the organization’s evaluation and performance management work.

You can read interviews with other social change leaders here.

Nell: You have spent your career using data to improve the performance of the nonprofits for which you worked. Why do you think performance management is so important for nonprofits? Do you think all nonprofits should pursue performance management? When does it make sense and when doesn’t it?

Isaac: I believe that every nonprofit should pursue some form of performance management because they owe it to the clients they serve. Most nonprofits will assume that they are making a positive difference in people’s lives, but in the vast majority of cases they are just guessing. Using some form of performance management will allow every nonprofit organization to confirm this thinking and to identify areas that can and should be improved so that the next cohort of participants can get better services than the last.

Unfortunately, one of the greatest challenges preventing a nonprofit from implementing some form of performance management isn’t a lack of resources, expertise, or time. It is fear. The fear that they will find out that their work isn’t having a positive effect. This fear is what nonprofit leaders need to overcome, not for the benefit of themselves or their organization, but because they owe it to the clients they serve today and the clients they will serve in the future. I believe that every nonprofit should strive to serve tomorrow’s clients better than today’s clients, and one of the only ways to ensure that this happens is the sustained use of performance management.

The type of performance management that each nonprofit should pursue should vary by the size and scope of their work. At a minimum, small nonprofits should be tracking basic demographic and attendance information on their participants, and hopefully at least one meaningful output or outcome. Whether this occurs in a computerized system or in a spiral paper notebook is up to the nonprofit. But it doesn’t have to be costly, and it doesn’t take expertise. It only takes the will and desire to improve as a nonprofit.

Nell: In the nonprofits in which you’ve worked how have you been able to secure resources to fund performance management? What is the case you and your colleagues have made to funders and what do you think it will take to get more funders investing in performance management?

Isaac: Raising funding for performance management work usually takes a mix of several different strategies and approaches for potential and existing funders.

First, I strongly encourage nonprofits to include some percentage (1 to 5 percent – possibly more) of funding in each grant submission or proposal dedicated to supporting performance management and outcome measurement work. By placing this small percentage into each proposal, a nonprofit can begin to raise funds for internal evaluation and performance management activities. It may not seem like a lot, but it can add up, and eventually generate enough funds for a half-time or full-time position to support in-house performance management work.

Second, I also strongly encourage nonprofits to engage in regular ‘funder education’ – where a nonprofit proactively meets with their funders to have ongoing conversations about outcome measurement and evaluation. This allows both the funder and the nonprofit to come to agreement on measurement expectations and to ensure that both groups are focused on the same concepts. I often suggest that the first of these types of meetings focuses on each group’s definitions of three commonly misunderstood terms: outputs, outcomes, and impact.

Finally, I would recommend that the nonprofit and funder have an honest discussion regarding expectations of results and the funding necessary to support the related evaluation work. If a funder is expecting an random control trial (RCT) to be completed to determine ‘impact,’ then the nonprofit should be willing to push the funder to support a large investment to pay for a high quality evaluation. If the funder is only willing to support a small amount for outcome measurement, then the nonprofit should clearly articulate what is possible.

Nell: Ken Berger and Caroline Fiennes recently argued that we may have gone too far by asking nonprofits to produce research about their own outcomes. What’s your response to that argument?

Isaac: I fully support Ken and Caroline in their argument that most nonprofits should stay away from trying to produce impact research. The desire for ‘impact’ is something that has been (and continues to be) pushed unfairly (and without financial support) by the funding community.

I honestly think a lot of confusion in this space comes from inconsistent use and understanding of the term ‘impact’. The term ‘impact’ has a precise definition among researchers but is often used in a much broader context among funders, nonprofits, and the general public. In the research and evaluation world, impact is used to describe the effectiveness of a program while eliminating as many potential confounding factors as possible. That is why the use of random control trials (RCTs) is usually the cornerstone of impact research – RCTs are the easiest way to control for and eliminate confounding factors.

When most non-researchers use the term ‘impact’ however, they are usually just asking if the program or organization works and if it is making a difference for its intended service population. That is a much lower bar to set, and yet it is a critical distinction in this discussion. If you are thinking about ‘impact’ as a researcher, you will need a large amount of resources and expertise to determine ‘impact,’ which usually means completing one or more formal evaluations. If you are thinking about ‘impact’ in the more general sense and less strict way, then pursuing some form of performance management system will allow a nonprofit to determine if their efforts have been successful.

I do think every nonprofit should pursue some form of performance management to ensure that their work is having a positive effect as a complement to existing research that others have done. Relying only on the use of others’ research does not guarantee that a nonprofit will provide effective services and achieve positive outcomes. This type of research is a like a recipe – it shows what has worked in the past and provides a guide for the nonprofit – but a recipe can still be ruined with poor implementation or planning.

Every nonprofit has an obligation to the people they serve (and not to their funders) to ensure that their programming is having a positive effect (or at the very least not causing harm). Without some form of performance management system in place (even one that just uses paper and pencil), a nonprofit will never know if they have strayed too far from the recipe provided by previous research.

I also think there are a growing number of very sophisticated nonprofits that should be using AND producing research on effective programs. Every year, I see more and more nonprofits that hire talented and unbiased researchers dedicated to internal evaluation and outcome measurement work. These individuals are just as talented and unbiased as their colleagues working in traditional research and evaluation organizations. They can, and should, produce original research that can help inform the nonprofit field. The real challenge comes in nonprofit organizations finding the resources to support the hiring and retention of these individuals. Not every nonprofit will have the resources or capacity to hire one or more of these individuals – but those that do should absolutely be trying to produce original outcome and impact research to provide ‘recipes’ for effective programming that nonprofits with fewer resources can use in the future.

Nell: Your former organization, DC Promise Neighborhoods, is part of the national Promise Neighborhoods Initiative launched by the US Department of Education in 2010 and modeled after the famous Harlem Children’s Zone. How successful has this national replication of a successful local model been? Have you been able to replicate outcomes? And what hurdles, if any, have you and other replication sites found?

Isaac: I think that there has been some initial success among the Promise Neighborhoods. Part of the challenge that all the Promise Neighborhoods face is that the Harlem Children’s Zone did not achieve their success overnight. They have been working in Harlem for decades, so it would be unrealistic to believe that the Promise Neighborhoods would be able to create large scale change in a matter of a few years.

However, there are signs of progress across all of the Promise Neighborhoods. Each of the Promise Neighborhoods started to address a few outcomes with the initial round of funding, and these outcomes varied. Some focused on math and reading proficiency for students, some focused on obtaining medical homes for young children, and others sought to increase the amount of healthy food consumed by residents. In DC, we focused on improving school attendance.

I do think that most of the 12 Promise Neighborhood Implementation grantees were able to make progress on the outcomes they identified as initial focus areas. However, the very nature of the work (creating community level change) doesn’t lend itself to the rapid accomplishment of multiple outcomes in a short period of time. Each of the Promise Neighborhoods had to prioritize certain outcomes for their respective communities, and only several years later are they able to claim success and begin to identify the next set of outcomes to be addressed. So while certain outcomes haven’t necessarily been replicated across all the Promise Neighborhoods, that is due to the differences in priorities and community conditions rather than any problem with the model itself.

Photo Credit: Venture Philanthropy Partners

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What Will Be Philanthropy’s Next Chapter?

antique-typewriter-keysI am often asked by nonprofit leaders, “Where are the funders who understand what nonprofits really need?” Well, they were at the Grantmakers for Effective Organizations conference (#2016GEO) last week in Minneapolis.

After attending the conference and curating a great group of bloggers who recapped each day (you can read Phil Buchanan’s Day 1 post here, Trista Harris’ Day 2 post here, and Mae Hong’s Day 3 post here), I have lots of my own thoughts percolating and wanted to share my takeaways from a great conference.

GEO is made up of 500+ member foundations that strive to be better philanthropists. They are a thoughtful bunch who seek to invest better in the nonprofits leading social change. As Linda Baker from the David and Lucile Packard Foundation said in her session on Real Costs for Real Outcomes, “We want to have authentic, trusting relationships with our grantees. We want them to have the impact they want to have in the world because that’s the only way we will have impact. It’s critical to our success.”

And that, in essence, is what GEO and its member foundations are all about. They view themselves and their money in service to those nonprofits creating social change. It is a different model than the traditional philanthropic model of nonprofits in supplication to those who hold the purse strings.

And because GEO is on the cutting edge of where philanthropy is and should be going, the conference this week encouraged philanthropists to push their work in some exciting new directions.

Here is what I saw emerging at the conference:

 

GEO panelPhilanthropy Must Embrace the National Call for Equity
From the #BlackLivesMatter movement, to student protests on college campuses, there is a growing demand across the country for equity — a level playing field — for all. And philanthropy has to get better at responding to this in the moment. As Alicia Garza founder of the #BlackLivesMatter movement said in her session, “Philanthropy is missing the opportunity to support the very change they are set up to resource.”

And the plenary panelists Peggy Flanagan, Michael McAfee, Doug Stamm and Starsky Wilson would perhaps agree and take it even further, encouraging philanthropist to re-examine the institutional racism inherent in the system. As Michael McAfee said, “I am deeply frustrated at our leadership. At the moment where consciousness about equity is elevated, we shift our priorities, our initiative, we do something to avoid the real work for this moment. We could do something if we could be more courageous.” In this moment where our country is grappling with issues of equity, philanthropy must step up and invest in the hard work of change.

 

grantmaking

Philanthropy Must Invest in Stronger Organizations

GEO members have always been on the forefront of understanding that it takes strong organizations to create real outcomes, but this conference took that to another level. From a session on unrestricted operating support, to one on supporting fundraising capacity, to one on funding nonprofits’ real costs, GEO was pushing its members, and philanthropy as a whole, to recognize that real change will only come when we support organizations, not just programs.

As one attendee put it, “The project funding paradigm ignores the health of the nonprofit organization in which the project lives.” Yes, absolutely. GEO members are recognizing–and perhaps leading the rest of philanthropy to begin recognizing–that you cannot have effective programs, strong outcomes, and ultimately social change without strong, effective organizations behind them.

And that means that philanthropy can and should lead the way in funding the full costs, including program AND operating costs, along with working capital, fixed assets, reserves, and debt. And at the same time, philanthropy must be a partner with nonprofits in figuring out how to overcome their capacity constraints, like lack of fundraising expertise, lack of management knowledge, and lack of adequate systems and infrastructure.

 

Vu Lee

Philanthropy Must Humble Itself 

There is no doubt that GEO members are a humble bunch; they view their role as supportive to the real work of social change, which is different than traditional philanthropy that viewed itself as all knowing. But, perhaps there is still work to be done.

Vu Lee, blogger from Nonprofit With Balls and Executive Director of Rainier Valley Corps, spoke eloquently of philanthropy’s “trickle down” approach to working with communities of color and encouraged philanthropists to take a better approach: “We have to start changing philanthropy’s perception of what communities of color are. Instead of infantalizing communities of color, recognize that communities have the solution, they are the solution, they are the light.”

And Deepak Bhargava from Center for Community Change spoke of the typical grantor/grantee relationship being similar to a feudal relationship, where the philanthropist is the Lord and the nonprofit is the serf. Instead, he encouraged the social sector to move to a place of “public friendship” between grantor/grantee where both sides are:

  • United by a vision of big change
  • Accountable to each other
  • Thinking of themselves as custodians of organizations leading to a better place
  • Engaging in creative, generative conflict

He spoke of this ideal as something that we must “persuade a new generation of philanthropists is possible.”

And perhaps this new philanthropy is possible. GEO certainly seems to think so. So let’s hope that this new vision for philanthropy is embraced by the growing GEO membership and that that membership in turn leads philanthropy as a whole to a more effective way of investing in social change.

As Alicia Garza put it, “Effective grantmaking is moving resources to change agents AS change is happening and getting out of the way.” Amen!

Photo Credits: publicdomainpictures.net, #2016GEO

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10 Great Social Innovation Reads: March 2016

spring readingMarch was a whirlwind in the world of social change. From successful nonprofit advocacy efforts, to new ways to measure fundraising effectiveness, to finding inspiration in small American cities, to a disconnect between civic engagement funders and activists, to new technology to serve the homeless, and a lot more in between, there was much to read.

Below are the top 10 things that caught my eye in the world of social change in March. If you want to see the longer list, follow me on Twitter @nedgington. And if you want to see past months’ 10 Great Reads go here.

  1. SeaChange Capital Partners put out a stunning report about the depressing state of financial risk management in health and human services nonprofits in New York, but their insights could really be applied sector-wide. As the report cautions: “Trustees must strive to maximize the good that their organization does while managing its risks. Balancing these can be challenging because of the passion they feel for the organization and its mission. Nonprofits lack the indicators of organizational health that reach the directors of for-profit businesses, such as stock prices or credit spreads…In this context, nonprofit trustees in leadership positions must ensure that well thought through risk management processes are in place. In a challenging operating environment, the status quo is no longer acceptable.”

  2. Perhaps help is on the way. A fascinating conversation happened between the head of the Nonprofit Finance Fund, Antony Bugg-Levine and Fred Ali, head of the Weingart Foundation and champion of the movement to cover full costs and give nonprofits unrestricted flexible funding. Ali is a huge proponent of investing in nonprofit capacity, as he describes: “The incessant [funder] focus on restricted programmatic grants has come at a huge cost to our sector. When we were considering a shift to unrestricted grants, we took a look back and found that many times the organizations we were supporting were not producing the outcomes we were looking for because they didn’t have the ability to invest in the kind of infrastructure that is necessary to produce those outcomes. So when I hear foundations object to our approach, I have to ask, ‘What are you trying to accomplish? Does your grantmaking approach help or hinder the development of capacity and sustainability?’ It is pretty clear that we have a lot of nonprofit organizations that are doing incredible work, being asked to do even more work, and they are not getting the kinds of support they need to that work effectively.” Yep.

  3. Pew Research is really knocking it out of the park lately. Every day they come out with fascinating data slices that are relevant and topical. Like their infographic on the 10 demographic trends that are shaping the U.S. and the world, which blew my mind. And if you want to dig into data just on the nonprofit sector, check out this in-depth report from The Bureau of Labor Statistics, which The Nonprofit Quarterly calls “required reading for leaders and board members of nonprofits and philanthropy.”

  4. On Monday, the governors of both California and New York signed legislation raising the minimum wage in their states to $15 per hour. Apparently we have the advocacy efforts of nonprofits to thank for this social change.

  5. But economics professor Mark Hendrickson doesn’t see a lot of value in the nonprofit sector. If you feel like getting justifiably incensed, take a look at his eye-popping read in Forbes where he is responding to what he calls the “turf war” between philanthropy and capitalism. Hendrickson provides many stunning quotes about the nonprofit sector, including this whopper: “Many non-profits do good work (albeit without the efficiencies imposed by the profit-loss calculus). However, they have no moral standing to criticize or condemn those who create the wealth that the non-profits spend. Non-profits essentially are professional mendicants trying to do good with other people’s money. It’s time for the non-profits to abandon their petty turf war and to muster enough grace at least to keep silent if they can’t bring themselves to express gratitude for the dominant, indispensable role of the profit-makers in advancing human welfare.” Wow.

  6. So now that you’re mad, let writer James Fallows inspire you. He and his wife Deb have been on a three-year journey across the country visiting small cities to understand what contributes to their cultural and economic resilience. What they found is that despite political dysfunction at the national level, there is some very inspiring progress happening at the local level: from urban renewal, to bipartisan compromise, to educational reform, to state-of-the-art job training and much more. As Phillip Zelikow, a professor at the University of Virginia and quoted in Fallows piece put it: “In scores of ways, Americans are figuring out how to take advantage of the opportunities of this era, often through bypassing or ignoring the dismal national conversation. There are a lot of more positive narratives out there—but they’re lonely, and disconnected. It would make a difference to join them together, as a chorus that has a melody.”

  7. And speaking of innovation, some nonprofits have developed apps to better serve the homeless, to varying degrees of success.

  8. Writing about civic engagement in The Nonprofit Quarterly Austin Belali bemoans the disconnect between those who are leading a new surge in civic movements (like Black Lives Matter) and the philanthropists funding civic engagement efforts, noting: “While the leaders of what could be described as a twenty-first-century movement for inclusive democracy are largely women and people of color, civic engagement philanthropy and the organizational leadership it supports is stubbornly the opposite.” And looking at a specific kind of civic engagement (voter turnout among young people), Abby Kiesa and Peter Levine might agree when they argue in the Stanford Social Innovation Review: “We must ask whether society supports youth engagement, and, if it does, how that support can be made equal for all youth, regardless of education, race, and income. We believe that encouraging youth to engage and to contribute their skills and values can help improve the political culture, but major institutions—educational, governmental, political, and civic—must actually want that to happen.”

  9. Adding to what has been a scarce (but hopefully growing) body of research on fundraising effectiveness, The Bridgespan Group released a new study about calculating the fundraising effectiveness of each affiliate within a national nonprofit network (like Big Brothers Big Sisters or the YMCA). They created a calculation they call “share of wallet,” which they define as “current fundraising performance compared to fundraising potential as gauged by the pool of donor dollars you draw from.” This fairly simple calculation of how much each site raises vs. what is possible to be raised can help a national nonprofit uncover which sites are more successful and why, and then hopefully help lower performing sites raise more.

  10. And finally, social media maven Beth Kanter urges us all to take a digital detox day. Sounds fantastic…how about a week instead?

Photo Credit: David McSpadden

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10 Great Social Innovation Reads: Feb 2016

social change readsFebruary focused (at least in my mind) on innovations in philanthropy. A new growth capital fund for nonprofits, radical philanthropists, trends in charitable giving, and philanthropy’s role in creating the future. Add to that a bold move by a nonprofit to wrest a lucrative city recycling contract from a for-profit company, research on Millennials’ hopes for the future, and a call for presidential candidates to take a lesson from history. It was a great month.

Below are my picks of the 10 best reads in the world of nonprofits, philanthropy and social change for the month of February. And if you want a longer list of what catches my eye, follow me on Twitter @nedgington.

You can also see past months’ lists of 10 Great reads here.

  1. There was a really exciting development in philanthropic support of nonprofit capacity in February. Ten donors led by the Edna McConnell Clark Foundation joined together to form Blue Meridian Partners, which will award $1 billion worth of unrestricted, performance-based grants, via 5 to 10-year investments of up to $200 million per nonprofit. According to Edna McConnell Clark Foundation president Nancy Roob, this venture is a new way to invest in high-performing nonprofits, because as she puts it: “Without large, long-term investments of growth capital for organizations with proven results, we’ll continue to salve but not solve our big social challenges.” Yep.

  2. And speaking of innovations in philanthropy, Inside Philanthropy provides a really interesting profile of philanthropist Farhad Ebrahimi and his Chorus Foundation, which although a relatively small foundation is taking an unusual approach to environmental giving by using a spend-down plan, providing long-term general support grants, and practicing mission investing.

  3. In analyzing Blackbaud’s 2015 Charitable Giving Report and comparing it to other available data both in the US and Canada, Amy Butcher of The Nonprofit Quarterly finds some interesting insights about how philanthropy is evolving.

  4. But perhaps it isn’t evolving quickly enough. Minnesota Council on Foundations President Trista Harris recently attended the Abundance 360 Summit about the technology of the future and was disappointed at the lack of a philanthropy presence. As she puts it, “Change in the world and our communities is happening at a breathtaking rate, driven by access to infinite information and exponential increases in computer processing speeds. This accelerating rate of change makes the challenging work of doing good even more difficult. Foundations are trying to make the world a better place, but we are often using yesterday’s information to do so. What if we could predict the future and prepare for the realities that will soon impact our communities? I believe it is our responsibility, as philanthropic leaders, to learn the skills necessary to understand and create the future.”

  5. Pew Research does an excellent job of unearthing data that relates to the issues of the day. In February I was especially interested in their report that while Millennials are less confident than Gen X or Baby Boomers about America’s future, so were their parents and grandparents when they were young.

  6. And while we are on the topic of history…Every once in awhile New York Times columnist David Brooks really strikes a chord. In February he used his column to pen a letter to several of the remaining presidential candidates encouraging them to use a “Roosevelt Approach,” as Brooks describes: “Many Americans feel like they are the victims of a slow-moving natural disaster…it’s a natural disaster caused by structural forces — globalization, technological change, the dissolution of the family, racism. A great nation doesn’t divide in times of natural disaster. It doesn’t choose leaders who angrily tear it apart. Instead, it chooses leaders like Franklin Roosevelt and Dwight Eisenhower…they were…able to set an emotional tone that brought people together and changed the nature of Americans’ relationships with one another. During their presidencies, the bonds of solidarity grew stronger and the country more formidable. They were able to cultivate a deep sense of unity, responsibility and sacrifice.”

  7. Writing in the Stanford Social Innovation Review, Daniela Papi-Thornton, deputy director of the Skoll Centre for Social Entrepreneurship, is quite critical of what she calls, “Heropreneurship,” when social entrepreneurs who have little experience or training are generously funded to solve complex social problems. According to her: “Unfortunately, all too often, the people who get the funding to try their hand at solving global challenges haven’t lived those problems themselves….We’re wasting limited resources on shallow solutions to complex problems, and telling our students it’s OK to go out and use someone else’s time and backyard as a learning ground, without first requiring that they earn the right to take leadership on solving a problem they don’t yet understand.”

  8. Nonprofit Tech for Good offers a nice list of 36 apps and online tools for nonprofits.

  9. In an interesting decision, the Minneapolis city council voted to award the city’s 5-year recycling contract to a nonprofit, instead of the for-profit that manages recycling for most of the country. Writing in The Nonprofit Quarterly, James Araci sees an exciting trend: “It’s a smart move for nonprofits to shift perceptions of America’s waste from a commodity to be sold to countries like China to an engine of local job creation and environmental benefits.”

  10. And finally, head of the Nonprofits Assistance Fund, Kate Barr takes aim at the nonprofit overhead myth by encouraging nonprofit leaders to change their own language and thinking: “If we in the nonprofit sector want to bust the overhead myth and bring attention to the things that really matter, then it’s our responsibility to take the lead by communicating differently and better. In order to take that lead, don’t wait for the question to come in and then argue why the [overhead] ratio isn’t important or meaningful. We have to replace it.” Sing it, Kate!

Photo Credit: jwyg, cropped version of “Work with schools : after a book talk, showing boys gathered…” from New York Public Library

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A Nonprofit “Culture of Philanthropy” Is Not Enough

Beyond FundraisingThe Evelyn and Walter Haas, Jr. Fund, a foundation on the forefront of investing in nonprofit capacity and one of the few foundations funding nonprofit leadership development, released a new report this week Beyond Fundraising: What Does It Mean to Build a Culture of Philanthropy?.

While I applaud the Haas Fund for taking a pioneering interest in, as they put it, “understanding how to break out of the nonprofit sector’s chronic fundraising challenges,” unfortunately I don’t think that this report will move the needle on the sector’s money woes.

Their landmark 2013 report published with CompassPoint, UnderDeveloped: A National Study of Challenges Facing Nonprofit Fundraising (of which the Beyond Fundraising report is a follow up) uncovered a real crisis in fundraising staffing in the nonprofit sector. And last year Haas announced a multi-year effort to “to identify gaps that may need to be filled when it comes to helping nonprofits break out of chronic fundraising challenges.”

A sector-wide conversation about money is so incredibly needed that I really appreciate the Haas Fund’s efforts to start it, especially when philanthropists are loathe to talk about the sector’s money challenges, let alone invest in solving them.

But in the hope that debate spurs greater change, and because of Haas’ expressed desire to open a conversation so that they can “learn out loud,” I offer my concerns about the Beyond Fundraising report.

As Linda Wood, Senior Director of Leadership Initiatives at the Haas Fund (and past interviewee on this blog), describes in the beginning of the Beyond Fundraising report, there must be a fundamental change in how nonprofits approach fundraising. As she writes: “Without a deeper shift in how organizations hold the work of fund development, simply adopting new tools and techniques may not be enough.”

The Beyond Fundraising report, authored by philanthropy consultant Cynthia Gibson (also a past interviewee on this blog), starts from where the 2013 UnderDeveloped report left off: that the lack of a culture of philanthropy is the most important issue holding nonprofits back from fundraising success:

By framing the issue as a talent pool problem alone, we neglect to focus more critically upon entrenched organizational factors that contribute to the inability to establish development as a shared function and nurture an organizational culture to sustain it. The right development director hire alone will never break the cycle, but the right person inside an organization that has a culture of philanthropy, can.

The Beyond Fundraising report is an attempt to understand what a culture of philanthropy is and how to encourage its growth. The report defines a “culture of philanthropy” as a situation in a nonprofit where:

Most people in the organization (across positions) act as ambassadors and engage in relationship-building. Everyone
promotes philanthropy and can articulate a case for giving. Fund development is viewed and valued as a missionaligned program of the organization. Organizational systems are established to support donors. The executive director is committed and personally involved in fundraising.

The report delineates four necessary components to a culture of philanthropy:

  1. Shared responsibility for development
  2. Integration and alignment with mission
  3. A focus on fundraising as engagement
  4. Strong donor relationships

It then provides a list of indicators for nonprofit leaders to use to assess whether or not they possess a culture of philanthropy, a list of “guiding questions” nonprofit leadership can ask in order to build a culture of philanthropy, and a list of roles that development staff and funders can play in bringing a culture of philanthropy to fruition.

While I don’t disagree with any of the indicators, questions, or roles the report describes, I don’t think that any of them, or even their sum total, will solve the lack of financial sustainability at a particular nonprofit, let alone in the nonprofit sector overall.

And this is because I think that only looking at fundraising — the pursuit of philanthropic dollars, which only make up 13% of all the money flowing to the nonprofit sector — is a fundamentally flawed approach to understanding money in the sector. My bias has always been to move the sector from a broken fundraising approach to a more strategic and holistic financing approach.

And while I agree that individual nonprofit leaders are part of the problem, they are just one part. Often their troubled approach to money is simply a reaction to a dysfunctional system. Certainly we need to move away from some ineffective money practices that nonprofit leaders embrace (being reactive rather than strategic about money, not calculating the return on investment of fundraising activities, not aligning money and mission, allowing a board to dismiss their money-raising responsibilities…).

But I worry that by scapegoating the problem to the shortcomings of individual nonprofits we are ignoring the larger financial dysfunctions of the sector. Rather than pull back the curtain on the systemic hurdles causing the nonprofit sector’s money woes, I fear that this report lays much of the blame for financial dysfunction at the feet of individual nonprofit leaders.

Because in my mind, the real problem is not the approach of individual nonprofit leaders, although that is important. I think the financial problems of the nonprofit sector run much deeper. If we truly want to address those problems we must have bigger conversations, and ask harder questions, like:

  • Why is there a lack of financial acumen (how to effectively attract and employ money) throughout the sector (present among both nonprofits and their funders), and how do we solve that?
  • Why is long-term organizational and financial planning not encouraged and supported throughout the sector?
  • Why is there not enough investment in the financial function of nonprofit organizations (the staffing, systems, technology, planning, and marketing necessary to build sustainable financial models)?
  • Why aren’t there many, many more funders like The Haas Fund discussing and investing in solutions to the sector’s money problems?
  • Why are we still focusing on philanthropic dollars alone when we need to understand and integrate money as a whole into social change efforts?

And that’s just a start.

My fear is that if we place the full weight of nonprofit financial dysfunction on the shoulders of an individual nonprofit’s culture, or if we look only at fundraising, we shirk our duty to dig deeper and remedy larger, structural dysfunctions in the sector.

I applaud the Haas Fund for their determination and courage to create a space, through their capacity investments and on-going research, for the incredibly important conversation about money in the nonprofit sector. But I would love to see this effort grow to become a bigger conversation about how we solve the endemic financial challenges nonprofits face.

Photo Credit: The Evelyn & Walter Haas, Jr. Fund

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5 Fundraising Mistakes Nonprofits Make

nonprofit mistakesFundraising is such a misunderstood enterprise. And it’s not just misunderstood by nonprofit leaders in the trenches.

I was talking to a normally very savvy foundation program officer the other day who wondered if one of his struggling grantees should think about launching a new gala event to raise some additional money. I swallowed my first inclination to scream “NOOOOOO!” in the middle of a crowded restaurant and instead calmly explained why events are a bad money fix, and why any short-term money generating strategy is probably a really bad idea.

But this well-meaning program officer is far from alone in his understanding of financial sustainability in the nonprofit sector. If I had my way, nonprofit leaders would stop making these 5 big fundraising mistakes:

  1. Taking a Short-Term Approach
    If you don’t have enough money today, a single fundraising activity isn’t going to solve the problem in the long-term. If you want to solve your ongoing money woes, you have to create a long-term plan. The single best way to bring more and larger dollars in the door is to create a smart, long-term strategy for your nonprofit. And that long-term strategy must include a corresponding long-term financial strategy. With a compelling Theory of Change (an articulation of the value your nonprofit creates), what you are hoping to accomplish, and how you will get there, you will be better able to convince funders (no matter what your financial model) to come aboard. People invest in a compelling and believable vision for the future. If you are just raising money for the day-to-day, you will always struggle.

  2. Looking Under the Same Rocks
    Often when there is a money shortfall, nonprofit leaders think they simply need to ask the same people to give again or more. If only it were that easy. To attract more people and organizations you have to have a wider net. But not just on your Facebook page or in your mailing list. A wider net means that your board’s networks need to grow, your distribution channels need to grow, your friend-raising activities, your strategic alliances need to grow — the overall network of your nonprofit needs to grow. You need to think holistically about how to grow the reach of your organization and get everyone involved in making that happen.

  3. Chasing A Magic Bullet
    Seriously, listen when I say this: There Is No Magic Bullet to Fundraising. Fundraising, like so many things, often falls victim to shiny object syndrome. From the Ice Bucket Challenge, to crowdfunding, to social media, it seems there is always something new that nonprofit leaders, philanthropists, or board members think will finally solve a nonprofit’s money woes. But the reality is that finding enough and the right kind of money for the results you want to achieve as an organization is hard work. There is no easy fix. Instead you have to get strategic and create, and then systematically execute on, a financial plan for your nonprofit. It may sound boring, but believe me, once you attach strategy to money, the transformation — to your staff and board, to your funders, to your financial model, to your overall results, to your effectiveness and sustainability as an organization — can be incredible.

  4. Giving People a Free Pass 
    When you tell certain board members or certain staff members that they don’t have to worry about money, you are essentially giving them a free pass and placing a larger burden on the rest of the organization. While money must be led by your Chief Money Officer (whatever their title — Executive Director, Development Director, CDO), it must be a team effort. Your money person’s job is to develop an overall money strategy and then mobilize all her resources (staff, board, other volunteers, technology, systems) to bring that money strategy to fruition. She CANNOT do it alone or with only half a board. Money has to be part of the conversation for everyone in the organization.

  5. Not Fundraising for The Fundraising Function 
    If you want to get better at raising money, you must invest in the right strategy, staff, and systems — your fundraising function –to raise that money. You need to pay market rate for a fundraising person who is a smart, strategic leader. You need to put time and effort into an overall financial strategy, and you need to create the infrastructure (technology, systems) to make that financial strategy a reality. To make these investments, you might have to raise capacity capital from your donors, a one-time infusion of significant money that helps strengthen your organization. A capacity capital investment in your fundraising function can more than pay for itself in a few years when your transformed financial engine is running at a much more profitable rate. But failing to invest in your fundraising function means you will continue to struggle financially.

Oh nonprofit leaders, please stop hitting your heads against the fundraising wall. I promise you, a more sustainable financial engine awaits if you simply invest the time and energy into a smart strategy, a broader network, effective staff and systems and a real team effort.

If you want to find out more about the Financial Model Assessment I conduct for nonprofits, download the one sheet.

Photo Credit: hobvias sudoneighm

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5 Nonprofits Trends to Watch in 2016

Poster_of_Alexander_Crystal_SeerThis is my favorite time of year. Despite the darkness of the last few months, December is often about reflecting on the year that is drawing to a close and hopes for the new one coming.

And as is my tradition on this blog, I like to look ahead at the trends that may affect the nonprofit sector in the coming year. I have never claimed to be a clairvoyant, but I am an admitted optimist, so my predictions are less about telling the future and more about wishful thinking. This year, more than ever, I want to see opportunity amid the uncertainty and the challenges we face.

So here are 5 things I’m really hopeful about for the nonprofit sector as we head into 2016.

You can also read past Nonprofit Trends to Watch lists for 2011, 2012, 2013, 2014 and 2015.

  1. New Opportunities for the Nonprofit Sector to Lead
    A growing recognition of the value of the nonprofit sector paired with a rising confidence among nonprofit leaders will create opportunities for nonprofits to step up and create opportunity out of the seemingly mounting pile of challenges (like terrorism, natural disasters, political gridlock). The nonprofit sector’s natural place — its core competency — is in righting imbalances and it often coalesces in times of trouble. We are already seeing really exciting collaborations and innovations aimed at increasing civic engagement and winning equal rights, to name a few. Call me an optimist, but I think the challenges we face are merely a precursor to the emergence of a stronger social sector ready to find new solutions.

  2. Increased Use of Protests 
    And as evidence of social movements emerging from challenges, we are seeing an uptick in social protests. This year we’ve seen some impressive organized demands for social change. From Black Lives Matter, to student protests on college campuses, to Chicago protests demanding the mayor’s resignation, people are rising up to demand change. While their methods somewhat mirror the protests of the 1960s and 1970s, their access to and use of technology is quite new. It will be interesting to see how these movements evolve and how much change they will be able to accomplish.

  3. Greater Emphasis on Networks 
    And these protests, like any social change effort, will be more successful if they embrace the use of networks. I think there will be a growing recognition that nonprofits must build networks in their social change efforts. They must understand the points of leverage for attacking a problem on a much larger scale than a single organization can and then figure out who the influencers are in their space and how to connect their work with those others. Because the network approach requires that nonprofit leaders move away from the resource-constrained, scarcity approach that keeps them from forging alliances with other entities that might be competing for the same limited pool of funding, I think (hope) we’ll see more nonprofit leaders move to an abundance mentality that leaves fears behind in favor of a bigger, bolder, more networked path.

  4. More State-by-State Strategies 
    The stunning victory this year legalizing same-sex marriage demonstrated the tremendous success that a state-by-state (as opposed to a national) approach to social and political change can have. Indeed, because of political gridlock at the federal level, other social change efforts (like Represent.us and the legalization of marijuana) have found success at the state level where changing minds and changing policy is sometimes easier and more efficient. But this isn’t a new idea. In fact according to research compiled by Bloomberg Business, social and political change in America follows a pattern: “A few pioneer states get out front before the others, and then a key event—often a court decision or a grassroots campaign reaching maturity—triggers a rush of state activity that ultimately leads to a change in federal law.” Though the idea isn’t a new one, I think it may gain traction as more social movements find a state-by-state approach increasingly attractive.

  5. Smarter Funding
    But to pursue more successful models, like the use of networks and state-by-state strategies, nonprofits must have the necessary funding runway to get there.  So I’m hopeful that funders will increasingly recognize that nonprofits need more flexible and effective funding (like unrestricted dollars and capacity capital). There are already encouraging signs. The Ford Foundation has moved to provide more unrestricted support (and encouraged other funders to build the capacity of nonprofits) and the federal government released new guidelines this year providing more indirect funding to nonprofits. So let’s hope we see more foundation, individual and government funders providing nonprofits more of the kind of money they really need to create solutions.

Photo Credit: Library of Congress

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