I started a new blog series in March about overcoming the many fears that cripple the nonprofit sector, the first one being the fear of investment. Today I want to talk about the nonprofit fear of money. Because the nonprofit sector is focused on mission, as opposed to profit, money is often ignored at best, or feared at worst. Many nonprofit boards and staff find money distasteful, burdensome, and avoidable.
But money can be used as a powerful tool to create more social change. In order to overcome the fear of money and start using it effectively, nonprofit boards and staffs must:
Embrace Its Power
Without money, your compelling, inspiring, world-changing mission is only a sentence on paper. As much as we might like to deny it, nonprofits very much exist in a market economy. So instead of trumping all, mission is merely one of the things nonprofit leaders need to be thinking about as they are working toward social change. Because without a smart strategy for how you will secure and use money you are sunk.
Really, Really Understand It
Of course money is scary if you don’t understand it, and most nonprofit leaders don’t have a finance background. So learn all you can about money. Find an accountant who speaks English and can explain how money flows in and out of your organization. Make sure you are receiving and sharing with your board monthly financial statements that are understandable. Ensure board and key staff all have basic nonprofit financial management training so everyone speaks the same language and understands the key ratios they should be analyzing. This common understanding should serve to generate substantive conversations about the best use of money to further the work of the organization.
Involve Everyone in Raising It
I know I sound like a broken record, but EVERYONE at a nonprofit should be involved in bringing money in the door in a way that fits well with their skills and experience. Every board member should have a money responsibility. Be strategic about putting each individual to their highest and best money-raising use. And every staff member, even program staff, can be enlisted to explain the program to potential donors, gather client stories, or provide data about the program so that you can garner more support. No one at the organization should be allowed to say “I don’t do the money thing.” Money is everyone’s job, because with no money there is no mission, remember?
Budget for Having Too Much of It
It is unseemly for a nonprofit to operate a surplus. Funders don’t like to see an organization too far into the black, and board members become uncomfortable when “too much” money sits idle. But money sitting in a bank account means the organization no longer lives hand to mouth, continually putting out fires, and focusing only on keeping the doors open. Operating reserves allow an organization to think strategically, take some risks, streamline the business model, innovate the solution, and weather economic uncertainty all in the name of delivering bigger, better social impact. So overcome the taboo and budget for a surplus that creates operating reserves.
Talk About It. All. The. Time.
Because money is so central to mission you cannot make decisions about the organization, about programs, about staffing, really about anything without understanding the financial implications of those decisions. Therefore, you must be talking about money all the time. Not just when the finance committee of the board meets, or when you are reviewing the monthly financial statements, or when your latest fundraising event falls flat. Money must be a constant conversation. It must be fully integrated into everything you do.
The key to financial sustainability, and ultimately significant social change, is being smart about managing money. But you cannot be smart with money if you are afraid of it. Money can be a beautiful, powerful tool for creating social change. Embrace it.
Photo Credit: orudorumagi11
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.
But it doesn’t have to be that way.
If you can recruit the right people, get very specific about the skills they bring, and work with them to put their assets to use for your nonprofit, you can get even the most fundraising-shy board member to start bringing money in the door.
And this month’s Social Velocity webinar will show you how.
The Getting Your Board to Raise Money webinar will help you:
- Excite and engage the board in bringing money in the door
- Put every single board member to their highest and best use
- Set up a structure for effective board involvement in raising money
- Give you creative jobs for fundraising-shy board members
- Set up systems for tracking and rewarding board involvement
- Overcome board fear and inertia
This is one of our most popular webinars, and each time I’ve offered it, it sells out. Here’s what some past participants in this webinar had to say:
“This was one of the best and most helpful and informative webinars I’ve been on. It was exactly what I was looking for in terms of beginning to get our board energized and on track and I will use the slides
to help me prepare for our upcoming board retreat.”
“The webinar was very concrete and actionable – gave specific suggestions regarding
engaging board members. This was very useful. Well done.”
“This really opened my eyes to new possibilities – thank you so much!”
Financing Not Fundraising: Getting Your Board to Raise Money
Wednesday, May 22, 2013
The registration fee will get you:
- Access to the live, interactive webinar
- A link to a recording of the webinar, which you can watch as many times as you like
- The PowerPoint slides from the webinar
- The ability to ask additional follow-up questions after the webinar
Register Now – $49
Photo Credit: buddawiggi
One of the biggest woes of a nonprofit leader, aside from the endless fundraising circuit, is an ineffective board, particularly when it comes to fundraising. But you cannot just recruit a bunch of warm bodies to your board and then assume that they will magically bring money in the door. If you want your board to effectively contribute to the financial engine, you have to start from the beginning. And that is to recruit a money raising board, which is the topic of today’s installment in the ongoing Financing Not Fundraising blog series.
In order to assemble an army of volunteer money raisers, advocates, ambassadors for your nonprofit you have to get strategic. You must move away from scarcity-based board recruitment where you beg people to fill vacant holes on your board, and instead create a recruitment strategy that identifies the right people with the right skills, experience and networks who will become your partners in bringing more money in the door.
And that strategy looks like this:
- Connect Your Strategic Plan to Your Board
Start by taking a look at your long-term strategic plan and ask the simple question, “What skills, experience or networks do we need on our board to make each goal of our strategic plan a reality?” And don’t think in broad terms like “fundraising,” or “marketing.” Rather think very specifically about target audiences you want to access, new networks of people you want to find, specific skills that your strategic plan requires. A childhood literacy nonprofit probably needs board members who have key connections to local school districts, possess education-related expertise, or can talk intelligently about smart program design.
- Recruit for Specific Needs
Once you’ve identified what skills, experience, and networks your board must possess, test that list against what your current board has in order to find holes. Those holes become the very specific types of people you want to recruit. If a strategic goal is to expand your program beyond your current region, but no one on your board lives or has connections outside your region, that’s a hole. Start brainstorming who might fill that hole and how to gain access to them (for some help check out LinkedIn’s cool tool).
- Find Each Member a Job
You don’t get people to help bring money in the door by asking them to just bring money in the door. You first must get them excited about what the organization is doing (the overall strategy) and then highlight their unique contribution to making that happen. Be very clear with each individual board member about what they bring to the table and how you would like to tap into those specific skills, experience, and networks to drive your strategy forward. People become invested in something when they believe they are making a real and specific difference. Help each board member figure out exactly how to do that.
- Tie Everything to Your Financial Engine
Once you’ve figured out each individual board member’s job, brainstorm how that ties to money. To create a sustainable financial engine for your nonprofit, money has to be part of every conversation. If, for example, you’ve determined that a particular board member’s legal expertise is critical to your nonprofit’s ability to launch a new program in the coming year then also work with them to figure out how that new program will become financially sustainable. Perhaps there is an earned income component to the new program that they could help you to develop. There are many ways board members can contribute to the financial bottom line, so think outside the fundraising box and get strategic about how each individual board member can contribute, not only strategically, but financially (here are 9 ideas to get you started).
- Inspire Momentum
If you assemble a group of people who contribute very specific skills, experience and networks to the organization’s overall strategy, and if you effectively work with them one-on-one to nurture the assets they bring, you will soon see momentum build. Each board member understands their unique role, is excited about how it fits into the bigger picture, and have connected that role to the financial engine of the organization. Once you start to see successes with individual board members, share that with the whole board. Let them see what individual members are doing and how it moves the organization forward. They will be inspired to embrace their own unique role.
Many nonprofit leaders start from the wrong place of cajoling, demanding, begging (or simply giving up on the idea of) board members and fundraising. If instead you start from the position of getting each individual board member to find their unique role to play, the money will follow.
If you want to learn more about getting your board to bring more money in the door, register for this month’s “Getting Your Board to Raise Money” webinar.
Photo Credit: State Library of Queensland
As I mentioned in an earlier post, I am leading a Financing Not Fundraising E-Course for nonprofit leaders who are ready to create a more sustainable financial engine for their nonprofit. I would like to give one nonprofit that can’t afford the registration fee the opportunity to participate in the class for free.
But because this E-Course requires not only a financial investment, but more importantly an investment of time and mind-share, I want to select a nonprofit leader who has a compelling case for why they are ready to move their nonprofit from fundraising to financing. So I am introducing this contest.
To recap, the Financing Not Fundraising E-Course will take a small group of nonprofit leaders who are ready to chart a more sustainable financial future for their nonprofit from fundraising to financing.
Over the course of two months under my guidance you will:
• Undertake a comprehensive fundraising assessment of your nonprofit
• Gain new money-raising ideas
• Create a detailed financing plan
• Hear from other nonprofit leaders in your shoes, and
• Learn how to move your organization forward
To watch a video that describes the Financing Not Fundraising E-Course in more detail go here.
If you’d like to enter to win a free registration to the Financing Not Fundraising E-Course, fill out the form below. The nonprofit leader who makes the most compelling case for why they are ready to take their organization to the next level will be selected this Wednesday, May 1st. So submit your entry soon.
Update: A contest winner was selected so the contest is now closed. However, registration for the September-October 2013 E-Course is new open. You can register here.
Photo Credit: Library of Congress
I’ve had a lot of great questions about the upcoming Financing Not Fundraising E-Course for nonprofit leaders. So I created a video that breaks the e-course down and explains exactly how it will work.
The Financing Not Fundraising E-Course is an excellent opportunity for nonprofits stuck in the starvation cycle to figure out what they can do to more effectively raise money and then create a plan for a more sustainable financial engine. The registration fee is per organization, so if you would like your executive director, development director and a board member, for example, to participate, they all can for one fee. You will just simply appoint one person as representative of the organization to participate in the coaching calls, and the others are free to “listen in” and help you with each step along the way.
The total time commitment over the course of two months is approximately 10-15 hours, which includes the webinars, coaching calls, Google Hangouts and homework assignments.
This E-Course is truly an investment in the future of your organization. By making the investment of the time and cost you will transform the money engine of your organization and recoup that investment many, many times over.
I hope you can join us!
A big topic of conversation lately has been whether donors really care about impact, or whether they simply just give based on less scientific things like their emotions, or their friends recommendations. Which is why I’m excited to announce that I’ll be participating in a Google Hangout April 30th about using data to attract donors.
Writing in the Stanford Social Innovation Review, Tim Ogden claims that donors have never really been interested in impact. And Ken Berger from Charity Navigator and William Schambra of the Hudson Institute debate (here and here) whether moving the nonprofit sector toward performance management helps or hurts social change efforts.
To add to this conversation, David Henderson and I are hosting a Google Hangout, “How to Use Real Performance Data to Raise More Money,” on Tuesday, April 30th at 2pm Eastern. David is a super smart guy who runs Idealistics, a consultancy that helps nonprofits learn from their outcomes data, increase impact, and demonstrate results to funders and stakeholders. David’s professional focus is on improving the way social sector organizations use information to implement higher impact poverty interventions. He has been quoted in the Chronicle of Philanthropy and has written for Change.org and the Huffington Post. You can read my interview with him from a year and a half ago here.
David and I thought it would be interesting to host a conversation with nonprofit leaders about how nonprofits can use real performance data to raise more money. We’ll kick off the hour-long conversation with a couple of points and a case study or two of nonprofits that are using data to raise more money, but then we’ll open it up to you for questions. You can send us your questions ahead of time (via email to firstname.lastname@example.org or email@example.com) or simply post them to the Google Hangout here as you watch.
I hope you’ll join us!
How to Use Real Performance Data to Raise More Money
A Google Hangout with David Henderson and Nell Edgington
Tuesday, April 30th, 2013
Can nonprofits that use real performance data to raise more money? Are donor increasingly interested in impact data? How can nonprofits communicate their program data to donors? And how should nonprofits respond to questionable performance claims by other organizations? Join David Henderson from Idealistics and Nell Edgington from Social Velocity in a Google Hangout on Tuesday, April 30th at 2pm Eastern to discuss these and many more questions about how nonprofits can use real data to raise more money. We’d love to have you participate in the discussion, so send your questions ahead of time to Nell or David, or leave a comment at the Google Hangout here.
Photo Credit: 401(K) 2013
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
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