There was a really interesting interview last week in the Nonprofit Quarterly with Bill Ryan, author of Governance as Leadership, who recently led a study on coaching in the nonprofit sector. Coaching is a form of management consulting where a leader is given one-on-one strategic guidance.
An executive director can be coached to grow an organization, to build a stronger board, to revamp their financial model. Or as Ryan puts it, coaching answers the question: “If my organization wants to get to Point X, what do I, as a leader, need to do to build on my strengths and manage my weaknesses to help it get there?”
The concept of coaching is fascinating to me because, as Ryan points out, in corporate America coaching is much more commonplace than in the nonprofit world. If a CEO needs management counsel, they are encouraged to find a coach, whereas coaching for nonprofit leaders is often deemed a luxury. But, I think coaching is even more necessary in the nonprofit world. Nonprofit leaders, unlike their for-profit counterparts, often lack a management background having made their way to the top through program expertise.
The reality is that coaching for a nonprofit executive director can be absolutely transformative. It can make the difference between a program that is just getting by and a program that becomes financially sustainable and grows dramatically, with an engaged, committed board behind it.
Such is the case with ACE: A Community for Education, a nonprofit early childhood tutoring program. I have coached ACE Executive Director, Mary Ellen Isaacs for over a year since we completed an ambitious strategic planning process. They are now working to triple the number of students they serve and diversify and grow their financial model.
Here’s what Mary Ellen has to say about the coaching experience (or if you are reading this in an email click here to watch):
I believe coaching can be hugely transformative for nonprofit organizations, helping their leaders build the skills they need to grow their solutions far and wide. If you’d like to learn more about how I coach nonprofit leaders, check out the Coaching page of the website.
Photo Credit: wikimedia
There is something pretty interesting going on in Illinois around nonprofit overhead costs. I have written many times (here and here for example) about how the distinction between “overhead” and “program” costs in the nonprofit sector is meaningless at best, and destructive at worst.
I’m really excited to see that the Donors Forum in Illinois is starting to host real conversations between nonprofits and philanthropists about the Real Costs (including administrative costs) necessary to create effective social change.
With the help of the Bridgespan Group, in March the Donors Forum brought nonprofits and philanthropists together for a one-day discussion about real costs in the nonprofit sector. They want funders to understand that it is not enough to fund only nonprofit programs. In order to create effective social change, nonprofits must also be able to fund the infrastructure, staffing, space, tools, and research costs of their work.
The image above is a graphic facilitation of the March session. The Donors Forum has also developed a great website with resources for nonprofits and philanthropists about real costs, including Ann Goggins Gregory and Don Howard’s seminal article in the 2009 Stanford Social Innovation Review “The Nonprofit Starvation Cycle,” reports and resources about nonprofit fiscal fitness, Grantmakers for Effective Organization’s study on how philanthropy is changing, and much more.
As part of their efforts, the Donors Forum has also put together this video that helps to explain, in very clear terms, the critical importance of funding ALL of a nonprofit’s costs:
I’m excited to see where this conversation goes and whether more nonprofits and philanthropists start having open, honest conversations about what it really takes to create lasting social change. I’m hoping to interview Valerie Lies, President and CEO of the Donors Forum, later this year about this initiative and where they hope to go from here. So stay tuned.
The majority of nonprofits struggle to bring money in the door. And they often don’t know why. When you are on the inside of an organization that is used to doing things a certain way it can be nearly impossible to see new opportunities, to understand what you could do differently. There can be many reasons why a nonprofit doesn’t bring enough money in the door.
But here are the top 5 reasons a nonprofit struggles financially:
- Too Many Programs Drain Money From Your Organization. It sounds like a truism — you struggle with money because your programs cost money. But the reality is that few nonprofits analyze their programs to determine each one’s individual impact on the bottom line. Often they will add a new program because it has an impact on the mission (or because a single funder wants the program), without understanding how the new program fits into the organization’s overall financial picture. The end result is an organization that is stretched to the breaking point. Nonprofits must analyze all of their programs to understand their impact not just on mission, but also on finances, then they can make decisions about where to more sustainably focus resources.
- You’re Leaving Money Up to One Person. The financial engine of a nonprofit must be a team effort. Yes, it is important, if you are large enough, to have a staff member whose sole job is to think about money, but you cannot leave it all up to her. The entire organization, from the front line program staff all the way up to the chair of the board must understand the critical importance of money and what role they individually play in securing it. Although program staff won’t actively solicit donors, they can still share client stories with donors, write blog or newsletter articles, participate in program tours with donors, and even suggest new ideas for tying money to their programs. And there are countless ways for board members to bring money in the door, but you have to make sure they are aware of and doing their part.
- You’re Not Effectively Telling Your Story. It is so common for nonprofit staff and board members, who believe so passionately in their cause, to think that it’s obvious to outsiders why they should get involved. But it isn’t. And in an increasingly crowded social change marketplace it is more important than ever that nonprofits be able to articulate, in a compelling way, what value they are providing a community.
- You’re Doing What Everyone Else Does. It drives me crazy when a nonprofit that is struggling financially witnesses another nonprofit’s fundraising activity and tries to replicate that perceived success, without analyzing if it makes sense. Just because it looks like a recent gala or a new thrift store rakes in the money doesn’t mean a) that it did actually make a profit for the nonprofit and b) that it would make a similar profit for your nonprofit. The key is to make the best use of your specific assets as an organization. Think about what value you have to offer and who might be interested in paying for that value. For example, a homeless shelter could financially partner with local businesses to move people away from storefronts and into more stable and life-changing accommodations. You have to analyze what you have to offer and who specifically would be willing to pay for that value.
- You’re Not Investing In Your Money Raising Function. If you don’t have enough or the right kind of staff in place to raise money it is little wonder that you struggle. And if you’re not giving them effective tools they will be at a loss. Think about your financial engine and the various revenue streams you employ. Do you have the technology, staffing, systems, materials, space you need to raise money well in those ways? For example, if you want to raise money from individuals you need an effective database system that tracks contact information, interactions, history, interests. Whatever ways you bring money in the door, you need to ensure you have enough and the right kind of tools to do it well.
If you’d like help to both assess why your nonprofit isn’t raising enough money and create a plan to raise more, join us for the Financing Not Fundraising E-Course. I’ll analyze how your organization brings money in the door, give you ideas for increasing your financial engine, and help you put together a new financing plan. You’ll also get to hear from and work with other nonprofit leaders in your shoes. Find out more about the Financing Not Fundraising E-Course here.
Photo Credit: tuppaware_001
I’ve been talking lately about nonprofits needing to make more investments in their organization, in their sustainability, and in their future. Well, I have the perfect opportunity for you to do just that. I’m excited to announce the newest Social Velocity tool — the Financing Not Fundraising E-Course. Over the course of two months I will be leading a group of 15 nonprofit Executive and Development Directors to determine what’s holding them back from raising more money and create a comprehensive financing plan for their organizations.
This e-course will take you from Fundraising to Financing. We’ll start with a fundraising assessment of where your organization currently is in your efforts to bring money in the door, and we’ll end with a comprehensive, actionable financing plan to move your organization forward.
Here’s how it will work:
- We’ll kick off with a webinar to help everyone understand what a fundraising assessment looks like and what it includes.
- Everyone will be sent away to complete the detailed fundraising assessment I will provide them.
- I will then analyze each individual fundraising assessment.
- The 15 participants will be split into two groups. I will lead a 90-minute coaching session with each group to go individual-by-individual to explain what their fundraising assessment revealed and where they should focus their change efforts.
- After the coaching sessions I’ll host an informal Google Hangout where participants can discuss questions, hurdles they are encountering, where they need help.
- Then I’ll lead a second webinar to explain how to create a financing plan.
- I’ll give everyone a Financing Plan template and detailed instructions on how to create their own financing plan.
- Then I’ll analyze everyone’s completed financing plan.
- We’ll do a second round of coaching sessions where I will go individual-by-individual to explain where their financing plans can be improved.
- We’ll end with a final Google Hangout where everyone can discuss, ask questions, get support and move forward.
- And throughout the process you can always reach out to me via phone and email with additional questions or for guidance.
The registration fee for the e-course is $499.
Of course I’m biased, but to me this investment just makes sense. With this e-course you can set your nonprofit on a path to a much larger, more sustainable financial engine. This is about making an investment now in order to enjoy a much larger payoff down the road.
If you’d like to join us, register soon. The e-course is limited to 15 people, and it’s already filling fast.
I hope to see you there!
I wrote last month about the crippling nonprofit fear of investment. Related to that, nonprofits need to understand and embrace the concept of Return on Investment. Nonprofit leaders often exist in such a world of scarcity that they don’t recognize that an investment today can have a huge payoff down the road. And not recognizing the value of a return on investment, particularly when it comes to a nonprofit’s fundraising function, can keep nonprofits in starvation mode.
One of the ways I consult with nonprofits is coaching a development director or executive director to increase money flowing to the organization. We work on getting board members to bring money in the door, identifying new donors, crafting a compelling message, launching new revenue streams, developing an overall financing plan.
This work could have a huge future payout:
- Board members no longer sit on their hands but actively recruit new donors to the organization.
- New donors are acquired through a thoughtful, strategic major donor campaign.
- A compelling case for investment convinces foundations and major donors to invest at higher levels and for longer periods.
- A new earned income stream brings in unrestricted revenue.
- An effective financing plan puts scarce resources to their highest and best use.
If you think of this in terms of return on investment it’s a no-brainer. You have two options:
- Continue to struggle day-to-day for the foreseeable future, or
- Make an investment today in order to dramatically increase funding and sustainability tomorrow
Let’s do the math. If a nonprofit with a budget of $1 million were to spend, say $5,000 on hands-on coaching to develop a financing plan, create a compelling case for investment, get their board engaged in fundraising, and launch a major donor campaign those elements could translate into well over $100,000 of new money annually for the nonprofit.
- A financing plan clarifies and marshals resources so staff and board know exactly where the money flows and who will do what to make it happen. The very act of creating and monitoring a financing plan could increase funding by 5%, or $50,000.
- A case for investment, when done well, becomes the backbone of any and all money-raising efforts. It can be integrated into your website, your social media efforts, your donor letters, your presentations. Telling a concise, compelling story makes donors sit up and take notice and adds perhaps another 2% increase, or $20,000.
- If your entire board starts (in their own unique ways) bringing money in the door that could increase your bottomline as well. If each member of a 15-person board starts to increase their own giving and/or the giving of those in their network by $1,000 each, that’s another $15,000.
- A major donor campaign charts a logical, strategic way for you to identify and acquire new donors. Getting strategic about how you find and recruit those donors will ensure much greater success, perhaps a 5% increase, or $50,000.
So with very conservative estimates the original $5,000 investment in coaching translates to $135,000 in new money every year thereafter.
My favorite example of this is when I helped KLRU, Austin’s PBS station use $350,000 in capacity capital to do many of the above things. After 3 years of implementing a new financing plan, using a new case for investment, and more, they were raising $1.6 million in NEW REVENUE each year. That’s a huge return on investment.
If you make a smart investment in improving the money engine of your nonprofit, that investment will pay off many times over, creating a more secure financial future for your organization.
Photo Credit: MeckiMac
It happens all too often. A nonprofit executive director called me the other day because they have just completed a beautiful strategic plan with some exciting goals and a new direction for the organization, but they don’t know how to bring the money in the door to make the plan a reality. They don’t have a financing plan for their nonprofit, so they are just hoping for the best.
A financing plan galvanizes board and staff to bring enough of the right kinds of money in the door to make the organization’s goals a reality. It creates a sustainable financial model for the nonprofit so that it can survive and thrive. Instead of rolling the dice and hoping for the best, a financing plan puts your nonprofit’s financial destiny squarely in your control.
But very few nonprofits have a financing plan. Which is why I’m excited to be offering one of my most popular webinars again this month. In the April 24th Creating a Financing Plan webinar I will take you step-by-step through what a financing plan looks like and how to create one for your nonprofit. If you truly want to break free from the exhausting hamster wheel of fundraising and start bringing enough money in the door to achieve your goals, you need a financing plan.
The Creating a Financing webinar will help you create an overall financing plan for your nonprofit, which includes:
- All revenue streams flowing to the organization
- A strategy for funding programs and operations
- Opportunities to raise money for infrastructure
- Tactical steps with activities, deliverables, people responsible
- Ways to divide tasks by staff and board members
- A process for monitoring the plan going forward
Here’s what some past Creating a Financing Plan webinar participants have said:
“This session was one of the best on this topic I have seen…presented in an excellent and logical manner.”
“I loved the reframing of financing for desired results instead of funding for operations… your message to wed money to the mission was a big AHA moment and I am now figuring out how to bring this to life for staff and Board.”
And remember, as with all of our webinars, if you can’t make this day and time, don’t worry. When you register for the webinar you will gain access to the slides and recording of the webinar which you can watch whenever you want.
I hope to see you there!
Photo Credit: jDevaun
The other day I met with a nonprofit leader (let’s call her June) who has a great idea for an earned income venture that fits directly with her mission, but she doesn’t have the start-up capital to launch. When she explained this to me, she threw up her hands as if to say, “I’m powerless to move forward.”
But from my vantage point she has all the pieces necessary to raise the start-up capital and launch, she just isn’t putting them together. It’s a common refrain — nonprofit leaders complain about being in a catch-22 of not having enough money to raise enough money. But the answer is often right in front of you. To break free from the starvation cycle, assemble the assets you already have in order to raise capacity capital, which is the topic of today’s post in the ongoing Financing Not Fundraising blog series.
The nonprofit starvation cycle is one nonprofit leaders know only to well. Nonprofit organizations rarely have the technology, staff, and systems to function effectively. So they scrape by trying to wring one more drop out of a completely dry rock. But instead of waiting for funders to fix the situation, it is up to nonprofit leaders themselves to break free. And you break free by raising capacity capital.
Capacity capital is a one-time investment of significant money that can help build or strengthen a nonprofit organization so that it can create more social change. Capacity capital funds things like technology, systems, a program evaluation, revenue-generating staff, start-up costs for an earned income business. It is money that strengthens the organization so that it can do more.
But often nonprofit leaders, like June above, don’t recognize that everything they need to raise capacity capital and break free from the starvation cycle is in right in front of them. Here are the necessary pieces:
A Plan. You know what you need in order to do more, so put together a change plan and figure out what elements you need (technology, systems, staffing) and what they will cost. Do your homework so you can speak intelligently about what it will take to get you from point A to point B. June has a great business plan for her venture and knows exactly how much she needs in start-up costs.
Donors Who Love You. When raising capacity capital you want to go after donors who already love what you are doing and want to see more. You must convince them that a one-time investment of capacity capital will enable you to do even more of what they already love. June has a great network of long-time donors, which she could convince to become capacity capital donors.
A Connection Between Capital and More Impact. Make a convincing argument to those donors that capacity capital will create more of what they already love. For example, having a great Development Director in place can bring hundreds of thousands of new dollars each year which means many more people will be touched by your organization. Or explain how an evaluation of your program will allow you to focus your resources on highest impact activities. June could describe how a profitable earned income venture could increase financial sustainability while delivering more impact.
June has all of these pieces. She has a great plan for an earned income business that could significantly contribute to a more sustainable financial engine and thus allow her nonprofit to reach more people, a clear articulation of how much capital she needs and for what, and a committed group of donors who love the organization. For her, and for most nonprofits, it is simply a question of connecting the dots.
If you want to learn more about the power of capacity capital, download the Enormous Opportunity of Capacity Capital e-book, the Creating a Capacity Capital step-by-step guide or the Raising Capacity Capital webinar.
Photo Credit: PublicDomainPictures
I’m excited to announce that I will be participating in a Chronicle of Philanthropy Live Chat on Tuesday, March 26th at 12 noon Eastern. Karina Mangu-Ward, from EmcArts will be joining me to answer questions from the audience about connecting mission and money. You may remember Karina from a past interview I did with her. She’s really amazing and is the Director of Activating Innovation at EmcArts, a social enterprise for innovation and adaptive change across the arts sector. She leads the strategy and development of ArtsFwd.org, an interactive online platform where arts leaders can learn from each other about the power of adaptive change and the practice of innovation.
Karina and I will be live chatting and answering questions from the audience, so I hope you can join us. It promises to be a fast-paced, interactive hour.
Here’s an excerpt from the Chronicle of Philanthropy description:
In the mad dash for donor dollars, nonprofits often take money for projects that distract them from their missions. Some donors pitch new programs but provide too little money to pay for a big enough staff to run it, so the charity ends up skimping on efforts that its clients really need. Other nonprofits might think holding a fancy gala will raise tons of money but don’t consider how the time spent planning the event will affect the group’s critical services. Join us on Tuesday, March 26, at noon U.S. Eastern time for a live online discussion about how to take a more strategic approach to fundraising. You’ll learn how to focus your fundraising efforts on your organization’s mission—and why saying no to some opportunities might actually help your nonprofit raise more money.
If you’re interested in participating, it’s easy. Just go to the Chronicle Live Chat page here at 12 Eastern on Tuesday, March 26th. You don’t need to RSVP or login, just show up.
I hope to see you there!
Photo Credit: wikimedia
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