April was all data, all the time. From big data, to performance data, to how donors use data to improve programs, to whether donors even care about data. It’s enough to make your head spin. But many people were cautioning to keep the end goal in mind. Data is only data, its ultimate use is to create social change.
Below are my 10 favorite social innovation reads in April. But let me know in the comments what I missed. And if you want to see my expanded list, follow me on Twitter, Facebook, LinkedIn, or my newest addition, Google+.
You can see the 10 Great Reads lists from past months here.
- Writing on the Full Contact Philanthropy blog, David Henderson argues that we must understand the limitations of data, as he says “Decisions we make should be informed by data, but data does not make decisions for us.”
- Daryn McKeever from the Gates Foundation seems to agree arguing that we need to move from Big Data to Big Wisdom, using data to make better decisions. And David Brooks writing in the New York Times seems to fall into the same camp.
- The Stanford Social Innovation Review is celebrating their 10 year anniversary and as part of the festivities are running a series of essays about how social innovation has evolved and where it’s going. Part of that series is Tim Ogden’s controversial (I think) post claiming that contrary to growing belief donors don’t care about impact any more than they ever did.
- As a counterpoint, the recent NextGen study from the Johnson Center on Philanthropy found some pretty significant changes in how the newest donors, Millennials, do philanthropy. Michael Moody and Sharna Goldseker, authors of the report, break down how they think donors are changing.
- And adding to the conversation about whether donors care about outcomes, a debate raged between William Schambra from the Hudson Institute and Ken Berger from Charity Navigator. William argues that moving the nonprofit sector to outcomes measurement would lose other, more important and less tangible benefits (civic engagement, social bonds) that the sector promotes. But Ken argues that measuring outcomes is absolutely critical to helping the nonprofit sector create more change.
- During April’s annual Skoll World Forum a new Social Progress Index launched, a measure for comparing different countries abilities’ to “provide for the social and environmental needs of their citizens.” The hope is that the index will help guide social investment decisions. It will be interesting to watch how it evolves.
- For a really interesting case study on use of data, The National Center for Arts Research interviews Kate Levin, Commissioner of the New York City Department of Cultural Affairs about how they use data to make the case for investments in culture.
- I have been fascinated to watch New Orleans’ renaissance via social innovation in the years following Katrina. Two recent articles (here and here) highlight exactly how the city is coming back and the role social innovation is playing in that comeback.
- Albert Ruesga, Chair of Grantmakers for Effective Organizations and editor of the White Courtesy Telephone blog, writes a fairly scathing (but in a nice way) post about how philanthropists need to start having more difficult, honest conversations in order to move the sector forward. His post was in response to Caroline Preston’s February Chronicle of Philanthropy article in a similar vein and the impetus for a panel discussion in DC along the same lines. They promise to keep this conversation going. Let’s hope, because we need more cruelty, or at least honesty, in the sector.
- As I said last month, crowdfunding is apparently the next new shiny thing. And April continued the drumbeat with many more articles, the most interesting of which was Dowser’s list of 10 New Platforms for Crowdfunding.
Photo Credit: o5com
Perhaps it had something to do with the SXSW Interactive conference last month, but March was all about using technology in interesting ways to further social change. From crowdfunding, to a new giving graph, to credit card donations to the homeless, to engaging people in the arts and beyond, people are experimenting with technology for social change in really exciting ways.
Below are my 10 favorite social innovation reads in March. But let me know in the comments what I missed. And if you want to see my expanded list, follow me on Twitter, Facebook, LinkedIn, Pinterest or ScoopIt.
You can see the 10 Great Reads lists from past months here.
- Crowdfunding is quickly becoming the hot new thing in the social change world. It remains to be seen if it is a game changer, but in the meantime take a look at some examples of how its being used here, here, and here. And while we’re talking about innovative use of technology to fundraise, Lucy Bernholz dissects some new efforts to donate to the homeless via a credit card.
- Writing on the ArtsFwd blog, Anna Prushinskaya describes how some innovative arts organizations have used social media to effectively engage audiences in new ways.
- I’m really excited about a new technology the Case Foundation is developing that will map your online search preferences to giving suggestions just like Google, Facebook and others currently use your search preferences to suggest products and services. (I’ll be interviewing the mastermind behind this, Will Grana, on the blog this summer).
- I love to see nonprofits using new media (like video and infographics) to tell their story. Beth Kanter offers some easy tips for creating infographics. And speaking of cool infographics, check out this one on why slacktivists are more active than you think.
- It seems “scale,” the social innovation buzzword of a few years back, is being redefined. Kathleen Enright, CEO of Grantmakers for Effective Organizations, describes a new report that expands the idea of scale and offers ways grantmakers can support it. And Ben Mangan, CEO of nonprofit EARN, spurs nonprofits and funders to move past “stifling incrementalism” and start working towards real scale.
- Dan Pallotta ruffled some feathers, as is his way, with his TED Talk this month The Way We Think About Charity is Dead Wrong, and there were several responses. But I thought the most thought-provoking was from a group of professors from Boston who suggest that Pallotta’s argument that nonprofit salaries are too low only reinforces the wealth inequality of the American economy.
- And on a related note, Dione Alexander, writing on the Mission and Money blog, explains increasing wealth inequality as a kind of bullying, noting “The social contract through which we assume shared responsibility for the community is broken.”
- And since we are on the topic, this video about wealth inequality in America blew my mind. If you want a quick and dirty view of where America’s money goes, take a look.
- As part of the ten year anniversary of the Stanford Social Innovation Review, Matthew Forti looks back at the past ten years of measuring nonprofit outcomes, the good, bad and the ugly.
- Writing in the Duke Chronicle, Trinity senior Elena Botella argues that deciding when a public service should be privatized should be based on evidence, as she says “Humans respond to a profit motive, but we also respond to altruism, community values, prestige and pride in our work.”
Photo Credit: mendhak
The Nonprofit Finance Fund (NFF) today released the results of their fifth annual State of the Nonprofit Sector survey. This year almost 6,000 nonprofits responded and the results point to a nonprofit sector that is shifting fundamentally, where traditional funding sources (like government dollars) are shrinking, while demand for services is increasing. Nonprofit leaders must adapt their business models in order to keep up.
As NFF CEO Antony Bugg-Levine put it:
Nonprofits are changing the way they do business because they have to: government funding is not returning to pre-recession levels, philanthropic dollars are limited, and demand for critical services has climbed dramatically. At the same time, 56 percent of nonprofits plan to increase the number of people served. That goal requires systemic change and innovation– both within the sector, and more broadly as a society that values justice, progress and economic opportunity.
With demand increasing and traditional resources drying up, something has got to give. Nonprofits are finding that they must get more strategic about using money and determining the impact of their work.
Some of the most interesting findings from the 2013 survey are:
- 42% of survey respondents report that they do not have the right mix of financial resources to thrive and be effective in the next 3 years.
- Over the next twelve months, 39% plan to change the main ways they raise and spend money.
- 23% will seek funding other than grants or contracts, such as loans or investments.
- For the first time in the five years of the survey, more than half (52%) of respondents were unable to meet demand for their services last year (up from 44% in 2009), and 54% say they won’t be able to meet demand this current year.
As one survey respondent put it, it is time to move from the reactive to the strategic:
Our greatest challenge is financial stability and sustainability. We must be more effective to raise 50% more money than we did two years ago—with the same number of staff members, but using all the skills and talents each staff member brings to the table to maximize our efforts. Our budget is to the bone, and our staff is overstretched….We…must learn how to work proactively and strategically… and stop playing catch up, as we have for most of our existence.
Because NFF has been doing this survey for the past 5 years they can start to look at trends over time. They’ve developed a pretty cool Survey Analyzer Tool that lets you slice and dice the data by geography, sector, budget, and more.
I encourage you to dig in and take a look at the data. You can find all of the survey reports and tools at the Nonprofit Finance Fund website here.
Photo Credit: Nonprofit Finance Fund
But it’s time to move beyond that. I’m starting a new series today about the many different forms of Nonprofit Fear and how to move the sector beyond them.
Because there are many:
- Fear of making an investment
- Fear of change
- Fear of losing a donor
- Fear of being honest
- Fear of money
- Fear of competition
…and the list goes on. Because these fears are so crippling and have the potential to really hold nonprofits back, I want to unpack each one in order to start a conversation about how we move past them.
So today, let’s discuss one of the most crippling, which is the fear of making an investment.
Most nonprofits live hand-to-mouth. They exist in a hamster wheel of raising just enough money to keep going. But if they took a step back, marshaled their resources and made an investment in real transformation they could break free from that hamster wheel.
Nonprofits come to me with a long list of woes: we don’t have enough money, our board isn’t doing anything, our funders are worn out, we can’t meet client needs, we are just getting by, we are worn out. They desperately want to break out of this endless cycle of not having enough and not being able to do enough. I explain that in order to make a significant change, in order to break free from this beast, in order to really transform business as usual, they must make an investment.
Not just an investment in help, but an investment of time, energy, and mind share. They need to rally their board, staff, funders, and advocates around a transformation plan. They need to be willing to take a risk and make an investment in a new way.
Some nonprofits decide that the risk is too great. That instead of overcoming their fear of investment they would rather pull back and continue on as usual. They may still cobble together a strategic plan, or write up a new board recruitment policy, or put together a fundraising plan, but nothing has really changed. They are still thinking and operating in the way they always have.
But the nonprofits that I do work with decide to take that first step. They decide to put a stake in the ground and chart a new direction for their organization. They release the status quo and instead make an investment in their future, a better future for their organization and the community change they seek. They are willing to ask hard questions, to make hard decisions, to take risks, to try a new approach.
Instead of shrinking from the opportunity, they stand up and say “enough is enough.” They decide that in order to achieve the vision that sparked their organization’s beginning long ago, they must make an investment in their future.
Photo Credit: briandeadly
I was in Atlanta last week speaking at NeighborWorks America’s National Fundraising Symposium. I really love speaking to nonprofit staff and board members who are in the trenches trying to raise money for their organizations. The same thing that happened in Atlanta always happens. The group started out tired, uninspired, worn out with fundraising. But then I started to describe Financing and the light bulb went on. And for the rest of the day when I talked with attendees, or heard them talking to each other, they would try out this new word, this new concept, “Financing.”
But it’s not just semantics. Financing is a fundamentally different approach to every aspect of a nonprofit organization. For the group in Atlanta, I laid out the five main elements of it:
- Create A Financing Plan
Nonprofits must create a comprehensive strategy for bringing enough, and the right kind of, money in the door to achieve their strategic goals. This includes revenue and capital, programs and infrastructure dollars, and all funding sources. Money must be understood and used as a tool, instead of feared and sequestered.
- Connect Mission & Money
The financial woes of many nonprofit organizations often stem from a misalignment of mission and money. A nonprofit leader who creates a financial engine for her organization that is fully connected to and supportive of its mission (instead of detracting or isolated from it) will enjoy financial sustainability.
- Diversify Funding
Relying on only one or two funding sources, particularly foundation grants which make up less than 2% of all the money flowing to the nonprofit sector, is a dangerous strategy in the nonprofit sector. It is far better to create a robust and diverse money mix that fits well with your nonprofit’s mission and competencies.
- Invest Supporters
As mounting research demonstrates, donors are increasingly looking to become engaged in the nonprofits they support. And they are looking for impact, not just a place to write a check. In order to attract these donors, nonprofits must articulate their value and convince supporters to become a partner in creating social change.
- Find Money to Build
The time for scraping by and never having enough money for the right technology, staff, and systems is over. Instead nonprofits must become savvy about capacity capital and start raising the money they need to build the organization their mission requires.
It is so inspiring to see people who are on the front lines of creating stronger schools, neighborhoods, communities in this country suddenly realize that it doesn’t have to be so hard. You can stop beating your head against the fundraising wall.
Photo Credit: billaday
A reader of my blog post earlier this month, From Nonprofit Scarcity to Social Change Abundance, took issue with my argument that nonprofit leaders need to be more bold. He believes that I, and others, should stop telling nonprofit leaders to chart bolder goals because nonprofit leaders simply don’t have the time or resources. I think his comments and our subsequent exchange (you can read the whole comment string here) illustrate the self-imposed limitations that hold some nonprofits back.
In his comment on my blog post, Dan Owens argues that nonprofits are not at fault for limiting their goals. Nonprofits’ very lack of resources holds them back, and it is unreasonable to try to push nonprofits to be more bold:
Nonprofits everywhere are working incredibly hard to solve some of the toughest challenges our society has to offer. Even truly great nonprofits…are stretched to capacity, and even those who embrace all the latest trends and business models cannot solve all the problems they seek to address. The money doesn’t exist, and without sustained and increased federal funding for nonprofits and those they serve, we will not be able to solve the problems we hope to achieve, including childhood hunger…Nonprofits need more resources. You’re right in saying that nonprofit leaders often design plans based upon last year’s fundraising figures. But they have very good reasons to be afraid, and to worry for the future and the clients they serve. They don’t have the freedom and money to make those “pie in the sky plans”…most nonprofit have to fight and scrap for every dollar they have, contributed, earned or applied for. And then they have to do it all again the next year. Is it any wonder they operate as they do?
But my point with the blog post, and really my point with the entire blog and Social Velocity in general, is that nonprofits have to break out of the starvation cycle of never having enough to do more. Instead of embracing the fact that the nonprofit sector is incredibly under-resourced, nonprofits must see past that and envision a future where they have everything they need to accomplish bold social change. It is the very act of turning scarcity on its head that creates abundance, as I point out to Dan:
You have clearly delineated many of the funding problems inherent in the nonprofit sector. There is no doubt that nonprofits need more resources. But the only way that will happen is if nonprofits become more bold, not just with “pie in the sky plans” (which I, by the way, think are absolutely critical) but also by being more bold with funders, government regulators…board members. My whole point with the Financing Not Fundraising series, and really this blog overall, is that nonprofits must break out of the cycle of “fighting and scrapping for every dollar they have.” That is an unsustainable scenario. Instead of accepting the shortcomings of the current funding for the nonprofit sector, let’s get bold about asking for more. But that request must be made in the name of bold goals for social change.
Still seeing the current hurdles standing in the way of bold goals in the nonprofit sector, Dan wonders if the solution might lie in separating nonprofit leaders from the day-to-day work of their organizations so that they have the time and space for envisioning true social change:
I believe one of our greatest challenges is to get those in the nonprofit sector with the real knowledge (usually EDs working on the ground) to have the time and space to work up the bold (and yes, fearless) ideas. Everywhere I have worked I have had the all-too-rare conversation with the ED or program director who can articulate the overall bold vision but cannot see how that can be achieved within the current framework and particularly without harming those they currently serve- because the disruptive innovation necessary would take resources away from current programs…I heard a great speaker recently who [had a great idea for change] but she never really had the chance to build the idea out until she took a few weeks off from her job and was able to really focus on specifics and practical considerations. Perhaps that is what we need more of — sabbaticals, and then planning to implement the bold ideas.
Again, I believe this is the wrong approach. Bold action must be part of the day-to-day work of the organization. We can no longer separate big picture strategy from the day-to-day work of the nonprofit sector. Every effort, every resource, every staff member must be engaged in the larger vision of social change. It must become part of the everyday culture of the nonprofit sector, not just the purview of the elite few at the top, or an exercise conducted a few times per year.
If we are going to truly break free of the hamster wheel and make social change a reality, we must make bold vision part of every day life in the sector.
What do you think? Do the resource constraints of the nonprofit sector stand in the way of big, bold goals?
Photo Credit: cdrussorusso
There was a really interesting article in the Chronicle of Philanthropy recently about a Los Angeles nonprofit for aging Hollywood actors that was in danger of closing its doors but is now raising hundreds of millions of dollars. It’s a rags to riches story that demonstrates how nonprofit leaders who embrace change when change is necessary can completely transform an organization.
Arguably the Motion Picture & Television Fund (MPTF) is not your average nonprofit organization. Set up in the 1920s by Charlie Chaplin, Douglas Fairbanks Sr., and Mary Pickford it asked actors to donate spare change to help fellow actors down on their luck. MPTF later expanded to become a $100 million organization that serves 150,000 needy actors with healthcare, housing, and retirement services. And although MPTF enjoys a budget with a few more zeros than the average nonprofit, their approach to change can serve as a model for other nonprofits.
In the early 2000s MPTF lost its way. Financial hardship forced the organization to consider closing one of its retirement centers which drew the ire of celebrities like George Clooney. But unlike other nonprofits that lose their way and have to eventually close, Hull House being the most recent and troubling example, MPTF turned things around.
Here’s what the MPTF story teaches nonprofits about embracing the challenge of change:
- Remove What Stands In Your Way
In order to survive it’s critical that nonprofits do something not easy for the sector: recognize and address the obstacle. Whether it’s an unmovable executive director, a deficient board, a broken financial model, or a distracting funder, a nonprofit must face the challenge head on. MPTF realized that they needed new leadership and replaced the fund’s president in 2010. Hull House’s board, however, refused to address changing the organization’s financial model despite seeing glaring financial issues for several years.
- Force Honest Conversations
When George Clooney voiced his dismay at MPTF’s decisions, new MPTF president Bob Beitcher approached Clooney and listened to his concerns. Beitcher explained that they were facing closure of the center because of financial dire straits. Over time he turned Clooney’s concerns into passion for the organization and eventually convinced him to c0-chair MPTF’s capital campaign. Hull House board and staff, on the other hand, kept conversation light. The staff sugar-coated financial reports and the board failed to ask hard questions. It is essential that nonprofits tackle difficult conversations in order to emerge stronger.
- Create a Financial Runway
MPTF had a practice of keeping several months of operating reserves on hand. Hull House, by contrast, lived on the edge — to the point of holding negative $2.3 million in net assets in June of 2007, long before the recession really hit. So when it did, they were in big trouble. Nonprofits (and funders!) must get over the taboo against operating reserves. You simply cannot survive, let alone create social change, if you don’t have the financial runway to do so.
- Connect Mission to Money
MPTF now enjoys a large donor base, but that wasn’t always the case. In order to get there they articulated to specific potential donors why their work was so critical and why they should get involved. They are currently raising millions of dollars because they have connected the dots for a specific target audience between their need for investment and the impact they are creating. Nonprofits need to articulate what they are trying to change and then find donors for whom that change is attractive.
The closure of such a stalwart and venerated nonprofit institution like Hull House should have been a wake up call for the nonprofit sector. If it could happen to Hull House, it could happen to any organization. But it doesn’t have to. Instead of blaming the recession, the board, fundraising, or anything else, nonprofits need to embrace the challenge of change.
If you need help addressing a challenge facing your nonprofit, let me know.
Photo Credit: Mary Pickford, 1924 from fotopedia
A new report from the Dorothy A. Johnson Center for Philanthropy and 21/64 gives us the first real glimpse into the minds of the next generation of philanthropists, and it’s fascinating. These are not your father’s philanthropists. Millennial and GenX donors (wealthy individuals, or individuals who will inherit wealth, born between 1964-2000) will control more philanthropic dollars than any previous generation. And more importantly, they think about giving in very different ways than their parents or grandparents did. Which means nonprofits need to pay attention.
This next generation of philanthropists is so critical because it’s estimated that $41 trillion will transfer from the Baby Boom to these next generations in the next 40 years. And since much of this wealth could become philanthropic, some have predicted “a new golden age of philanthropy.”
But it’s not just the unprecedented wealth that makes this new generation of philanthropists so important, it’s the fact that they want to fundamentally change philanthropy. According to the report: “They want to make philanthropy more impactful, more hands on, more networked.”
The key findings from the report are that these NextGen donors are:
- Focused on Impact. “They see previous generations as more motivated by a desire for recognition or social requirements, while they see themselves as focused on impact, first and foremost.”
- Giving Based on Values. “They fund many of the same causes that their families support and even give locally, so long as that philanthropy fits with their personal values.”
- Looking to Be Engaged. “Giving without significant, hands-on engagement feels to them like a hollow investment with little assurance of impact.”
- Paving Their Own Way. “While they respect their families’ legacies and continue to give to similar causes and in similar ways as their families, they are also eager to revolutionize philanthropy.”
This report is further proof of the major trends changing the nonprofit and philanthropic sectors. Given where the sector is heading, there are three things nonprofit leaders should understand and embrace:
- Outcomes are here to stay. In order to compete for funding you must be able to prove the results of what you are doing, what change you are creating. NextGen donors are doing their homework and want to understand what impact their dollars will have. To stay relevant, you need to start by creating a theory of change and then figure out how you can being managing to outcomes.
- Giving has gone social. NextGen donors rely heavily on their social networks to make decisions, including their giving. And they offer their knowledge of worthy causes to their friends as well. So if you aren’t part of the social network you will be left behind. Start to open your organization to become a networked nonprofit and watch your support and influence grow.
- Donors are more than a checkbook. This next generation of donors doesn’t want to just write a check, have their name on a wall and be done with it. They want to really get to know the causes in which they invest. And the word “invest” is an apt one. These donors want to give money, time, mind-share, networks to things they believe in. And if you can employ that passion and investment effectively you will get so much more than just dollars. So figure out how to engage donors in much deeper, more meaningful ways.
This is a really exciting time for philanthropy and ultimately for the nonprofit sector it funds. But it’s up to nonprofit leaders to understand these fundamental shifts and adapt accordingly.
Photo Credit: www.nextgendonors.org
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