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Innovators

The Social Innovation Fund Six Years On

social innovation fundThere is an interesting report out today on the effectiveness of the Social Innovation Fund (SIF). Authored by the Social Innovation Research Center (SIRC), a nonpartisan nonprofit research organization, the new report details what has worked and what hasn’t in the six year history of the SIF.

Launched by the Obama administration in 2009, the SIF — a program within the Corporation for National and Community Service — provides significant funding to foundations that follow a venture philanthropy model by regranting that growth capital, along with technical assistance, to evidence-based nonprofits in “youth development, economic opportunity, and healthy futures” areas. In 2014, SIF expanded its efforts to include a portfolio of Pay for Success (social impact bond) grantees.

Now, 6 years on it is interesting to take a look back to understand what, if any, effect SIF has had on the nonprofit sector. The effect of the SIF is also critical given that, as of right now, the House and Senate have both defunded SIF in their respective funding bills.

To date, the SIF portfolio is made up of $241 million of federal investments and $516 million in private matching funds, which was invested in 35 intermediary grantees and 189 subgrantee nonprofits working in 37 states and D.C.

The SIRC report focuses on the current progress of SIF grants made during the first three years of the program (2010-2012). The report finds two clear positive results for the SIF so far. The SIF has:

  1. Added to the nonprofit sector’s evidence base about which programs work, and
  2. Built the capacity of nonprofit subgrantees, especially in the areas of “performance management systems, evaluations, financial management, regulatory compliance systems, and experience with replicating evidence-based models.”

On the negative side, however, the report finds that the SIF put real burdens on funders and nonprofits with its fundraising match requirements and the federal regulatory requirements. The report also finds that the SIF has had little effect on the sector as a whole because the SIF has not very broadly communicated their learnings so far.

To me, of course, most interesting are the report’s finding about capacity building at nonprofit subgrantees. There is such a need for nonprofit capacity building in the sector, and this was a clear goal of the SIF.

The SIF is one of few funders that do more than pay lip service to performance management by actually investing in building the capacity of nonprofits to do it. However, the SIF has been criticized for mostly selecting nonprofits that already had strong capacity. And indeed, the SIRC report finds that the SIF was most successful among those nonprofits that already had high capacity (in performance management, fundraising function, etc.) prior to SIF funding. Indeed, the report found that “poorly-resourced intermediaries working with less well-resourced community based organizations have been at a disadvantage.”

One SIF grantee in particular, The Foundation for a Healthy Kentucky, really struggled to build the capacity of their subgrantees whose starting capacity was so low. As they put it:

During the course of participation, it became clear that…[SIF] was really better suited for replicating existing programs or, at a minimum, investing in well-established programs that had some level of sophistication around organization systems and evaluation.

This mirrors earlier criticism of the SIF that it was set up to grow only those nonprofits that were already doing well, while those nonprofits that struggled with basic capacity issues were left out. The SIF has struggled to determine whether it is funding innovation (new solutions with limited capacity), or proven solutions (with a long track record and the corresponding capacity). It seems the two are mutually exclusive.

What the SIF is trying to do is such tricky business. To identify, fund and and scale solutions that work is really the holy grail in the social change sector. Certainly there are hurdles and missteps, but I think it’s exciting when government gets in the social change game in a big way. Six years is really too soon to tell. So I hope that this brief SIF experiment is allowed to continue, and we can see what a social change public/private partnership of this scale can really do.

To read the full SIRC report go here.

Photo Credit: Obama signs the Serve America Act in 2009, Corporation for National and Community Service

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Nonprofit Leaders, Take a Breath

nonprofit leaderEarlier this month, after much effort, I finally convinced a worn out nonprofit leader to take some time off to rejuvenate. But it was a battle.

Because they are often incredibly driven by ambitious social change visions, tremendous empathy for the plight of their clients, and an overly developed gratitude to their board and donors, nonprofit leaders push themselves extremely hard.

In fact, nonprofit leaders are really quite excellent at self-denial. I see this all the time in my coaching practice.

But nonprofit leaders you must give yourselves permission to breathe. And I don’t mean an afternoon off, or a weekend without checking email.

I mean a real break. A break where you start to find yourself again.

Not yourself as a nonprofit leader, but yourself as a human being with interests, connections, and passions outside of your organization. Someone who explores the world around you. Someone who realizes that you are on this earth for a very short time and while your role in social change is absolutely necessary, it is not your only contribution, nor is it the only place you can (or should) find meaning.

Because let’s be honest, the only way a pace like yours ends is in complete social change burnout. By existing only on the unending treadmill of work, work, work and ignoring your very human need to reconnect with your passions, your spirit, your family and friends you are setting yourself up for eventual breakdown. And make no mistake, without you as leader at the helm, your nonprofit’s work will grind to a halt.

So during these summer months when things are perhaps a bit slower, give yourself permission to take an extended period of time away.

And I mean really away.

Turn off your phone and your email. Step back from social media (believe me it will still be there when you get back).

Without the constant deluge of information and demands on your time assailing you, you are free to hike the mountains, get a massage, take in an art exhibit, watch your children or your grandchildren play (and join them!), explore your hobbies, read an amazing book. It really doesn’t matter what you do, just that you do something different and meaningful. Embrace the parts of yourself outside of your social change job, those things that make you fully human.

You may even consider taking it further, as philanthropic thought leader Lucy Bernholz did recently with a “digital sabbatical” where she went offline (no email or social media) for six weeks. She found the experience incredibly rejuvenating: “Without the addictive stimulation and distractions of digital life it feels like my brain grew three sizes.”

As the daily glut of information continues to increase, it becomes more important than ever to take a breather, to embrace the quiet. There is tremendous value in reconnecting with what makes us human, not machine.

And let me assure you that I am giving myself this same advice. I know how hard it is to step away from the email and social media beasts. I’m as concerned as you are with letting people down or not making enough progress.

But I am slowly coming to realize that sometimes progress is found in the quiet. And sometimes it is enough — more than enough — to just be. To sit and watch the world in all its beauty float by and have absolutely no effect on it other than to appreciate it.

If you need help finding the space to do this, check out the Coaching I offer nonprofit leaders.

Photo Credit: pixabay

 

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Disciplined, People-Focused Nonprofit Management: Pillar 2

nonprofit managmentThis spring I have been trumpeting the Performance Imperative, a detailed definition of a high-performing nonprofit released by the Leap Ambassador community in March. Today I continue the ongoing blog series describing each of the 7 Pillars of the Performance Imperative with Pillar #2: Disciplined, People-Focused Management.

You can read about Pillar 1: Courageous, Adaptive Leadership here, and you can read my interview with Lowell Weiss, one of the chief architects of the Performance Imperative here.

With this second Pillar, the Performance Imperative obviously makes a distinction between “leaders” in Pillar 1, and “managers” in Pillar 2. There is a note in the Performance Imperative that “leaders” and “managers” are typically two separate people in nonprofits with budgets over $1 million. So this distinction, and perhaps this Pillar, applies only to larger nonprofits.

But I think there is actually application to any nonprofit. In any nonprofit there are leadership tasks (creating the vision, being the cheerleader, marshaling resources) and there are management tasks (making sure the trains run on time, putting each resource to its highest and best use). In smaller organizations both sets of tasks fall to the same person, yet they both still need to be performed well. So I think it behooves any size nonprofit to analyze whether they are BOTH leading and managing well.

Effective managers put organization resources to their highest and best use. They recruit, train and retain the right talent, they use data to make good decisions, they manage to performance, and they are accountable.

You can read a larger description of Pillar 2 in the Performance Imperative, but here are some of the characteristics of a nonprofit that exhibits Disciplined, People-Focused Management:

  • Managers translate leaders’ drive for excellence into clear workplans and incentives to carry out the work effectively and efficiently.
  • Managers…recruit, develop, engage, and retain the talent necessary to deliver on the mission.
  • Managers provide opportunities for staff to see…how each person’s work contributes to the desired results.
  • Managers establish accountability systems that provide clarity at each level of the organization about the standards for success and yet provide room for staff to be creative about how they achieve these standards.
  • Managers acknowledge when staff members are not doing their work well…managers are not afraid to make tough personnel decisions so that the organization can live up to the promises it makes.

The Center for Employment Opportunities (CEO) is an example of how strong management is necessary to create a culture of high-performance. CEO employs people entering parole in New York State in transitional jobs at government facilities while helping them access better paying, unsubsidized employment. CEO Chief Operating Officer, Brad Dudding described to me how CEO management created, over the past 10 years, a culture and system of high performance.

Here is his story:

In the early years, CEO focused program performance on meeting individual contract milestones, not a set of unified organizational outcomes. They were proficient in collecting data and reporting it to funders, but did not use data to track participant progress, to make course corrections, and to manage to short-term outcomes.

In 2004 the Edna McConnell Clark Foundation provided CEO with a multi-year capital investment to:

  • Create a theory of change as a blueprint for program intervention and outcomes measurement.
  • Develop a performance measurement system to track progress toward those outcomes.
  • Nurture a performance culture that uses data to understand program progress, build knowledge and correct performance gaps.

First, CEO management had to agree on a theory of change and the specific outcomes for which the organization would hold itself accountable. Next, management shared the theory of change with staff and demonstrated how each staff member contributed to its achievement through an all staff event, follow-up trainings and consistent messaging that the organization was entering an exciting period of change. CEO then adopted a new performance measurement system to reinforce the theory of change.

But reorienting the organization was not easy. Not everyone was ready to embrace a new culture of performance accountability and data tracking. CEO management was initially surprised by staff resistance and responded impatiently with compliance measures. Looking back, not enough time was invested in staff training and promoting the value proposition of new changes. At times it was an enormous effort to get front line staff to track and use data everyday to ensure participant goals were being met.

But the tipping point came when CEO promoted early adopters of the data system to management positions. These new managers were comfortable operating in a data-driven environment and holding others accountable to use data to track program participants’ progress. Once there was a group of strong managers in place, CEO’s performance culture started to take hold and program outcomes improved.

By 2010, CEO was managing to annual performance targets and short-term outcomes through staff’s real-time documentation and data analysis.

In 2012, the results of a three-year randomized control trial showed that CEO’s program resulted in a reduction in recidivism of 16-22%. But the evaluation also uncovered a need to improve CEO’s strategies for advancing long-term employment and for connecting individuals to the full-time labor market. In response, CEO created a job retention unit and developed innovative job retention strategies, including training programs and financial incentives for participants.

In 2013, CEO entered the New York State Social Impact Bond, the first state-sponsored transaction, through which CEO will serve 2,000 high-risk parolees in New York City and Rochester between 2014 and 2018. If CEO hits benchmarks and reduces the use of prison and jail beds by program participants, investors will be repaid their principal and will receive a return of up to 12.5% by the U.S. Department of Labor and New York state.

The tenets of a performance based culture — supportive leadership, disciplined managers, goal setting, data collection and analysis to track and improve outcomes — are now fully accepted by CEO staff and reinforced by management. CEO now has a highly developed system of tactical performance management, which allows the organization to know on a daily basis if it is delivering on its promise to its participants.

Photo Credit: Australian Paralympic Committee

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A Nonprofit Culture of Measurement: An Interview with Mary Winkler

Mary WinklerIn today’s Social Velocity interview I’m talking with Mary Kopczynski Winkler, senior research associate with the Center on Nonprofits and Philanthropy at the Urban Institute. Mary is a nationally recognized expert in the field of performance measurement and management.   She is a founding member of the Leap of Reason Ambassadors Community, a private community of nonprofit thought leaders and practitioners committed to increasing the expectation and adoption of high performance in the social sector and who released the Performance Imperative earlier this year.

You can read past interviews in the Social Velocity interview series here.

Nell: PerformWell is an effort among Urban Institute, Child Trends and Social Solutions to offer tools and strategies for human services nonprofits to measure their work. How successful has this effort been and what are your plans for continuing to grow the capacity of nonprofits to measure their work?

Mary: PerformWell is a free, interactive, web-based resource designed to help human services nonprofits gain knowledge about performance management, access tools and resources they need to better service clients and meet outcomes, and obtain strategies for effective, efficient service delivery. Launched in March 2012, the demand for PerformWell has exceeded our expectations with more than 400,000 visitors (from all 50 states and more than 200 countries); 25,000 individuals have registered for our webinars; and more than 140,000 assessment tools have been downloaded from our site. Webinar survey results are routinely high, but we are working to put additional systems in place to track how nonprofits are using various aspects of PerformWell and to what end.

In 2013, the PeformWell partners engaged in a business planning process with Root Cause. Market research confirmed our views about a large unmet need for performance measurement knowledge and high interest in the resources offered through PerformWell, but that additional products and services are also desired, such as webinar training series, regional user conferences, and customized engagements with nonprofits. Users wanted a more interactive web-experience.

Our short- to medium-term goals include substantial updates to the website to improve the user experience (we also plan to solicit user feedback during and after these changes are implemented); development of additional products and services better aligned with the feedback obtained from the market research undertaken by Root Cause; and exploration of partnerships and sponsorships with nonprofits, consultants and funders to generate additional revenue and resources to expand the content, reach and use of PerformWell to improve the adoption and application of performance measurement and management practice across the nonprofit sector.

Nell: Some believe that measurement is perhaps more straightforward for human services nonprofits — you can measure change to an individual’s behavior or life circumstances — but measurement is more difficult for arts organizations or advocacy groups. What are your thoughts on that?

Mary: Sometimes I think this argument serves as a convenient excuse for organizations to avoid putting even the most basic systems in place to track progress or otherwise hold themselves accountable to their constituents. In 2007, with support from the Hewlett Foundation, the Urban Institute and the Center for What Works, we published a series of simple frameworks, as part of our Outcome Indicators Project, to help nonprofits in 14 program areas engage in performance measurement. Two of these areas are advocacy and performing arts. The Urban Institute also provided research support to the Performing Arts Research Coalition (PARC) to develop standardized surveys to help performing arts organizations across the country obtain more routine and better data from audience members, subscribers, and the community.

Establishing a causal link between advocacy or arts interventions and impact is, in my view, more challenging than for human service organizations. In the case of advocacy organizations, it can be very difficult to isolate the contributions of a particular campaign or even organization to a policy or legislative outcome.

It is, however, possible to devise strategies for capturing information on earlier stage outcomes, such as increased awareness.

I recently participated on a panel at the annual OPERA America conference – on “internal metrics for civic impact.” As much as measurement activities have evolved from the days of the PARC coalition, I observed that most of the metrics and data points were still very internally focused on measures of participation and attendance and fall well-short of anything approximating community or civic impact. I encouraged those present to consider stepping away from a focus on the impact of an individual opera company’s contribution to civic impact, and recommended instead more of a collective impact approach in collaboration with other arts, civic, and education organizations in a community.

In this case, I even hesitated to use the word “impact,” and suggested the group consider distinguishing between collective contribution toward a modest set of civic outcomes (e.g., performing arts promote understanding of other cultures or are a source of pride for those in the community) and the more traditional causal attribution usually reserved for the term “impact.”

Nell: Caroline Fiennes, among others, has argued that individual nonprofits should actually do less evaluation and rather rely on larger research studies to prove their theories of change. What do you make of that argument and the difference between evaluation and measurement? 

Mary: I agree with some of what Caroline puts forth here – particularly her observations about “withholding (unflattering research) and publication bias” – an issue that University of Wisconsin-Madison professor Donald Moynihan has termed “performance perversity.” I also agree both with her suggestion that evaluations be done by a third-party to reduce any tendencies toward subjective reporting or bias and her endorsement of a greater consideration of shared metrics.

I am troubled, however, by the fact that only 7% of UK social-purpose organizations are interested in improving services, and her somewhat cavalier suggestion that monitoring and evaluation “wastes time and money.” Although she is not alone in this second argument (see for example Bill Shambra’s “take-down” of Charity Navigator’s efforts to encourage greater use of performance metrics in “Charity Navigator 3.0: The Empirical Empire’s Death Star?”), such sweeping generalizations undermine the legitimate and courageous attempts of many nonprofits to use data for program improvement efforts.

I agree with Phil Buchanan in that there is a “moral imperative” to make an honest attempt to understand if resources are being used effectively and certainly to guard against the possibility that programs could be doing more harm than good as organizations like Latin American Youth Center and Harlem Children’s Zone have discovered and since corrected.

I see measurement as a necessary practice for every nonprofit. But measurement is different from evaluation. Nonprofits need to start by developing a measurement infrastructure that makes sense for their organization – one that supports their mission and commitment to serve and improve the lives of their clients or constituents – not one that is reactionary and responsive to funders. It is precisely this kind of infrastructure that can lay the groundwork for a more rigorous evaluation, at a time that is right and appropriate for the organization’s stage in development.

I see measurement and evaluation along a continuum of inquiry that should be designed to support the learning objectives of an organization. Measurement helps organizations to take the day-to-day or month-to-month pulse of various activities and program results – these snapshots in time or scorecards help managers and service providers understand trends and provide an opportunity to correct, modify or otherwise adapt operations.

Evaluation is, by definition, more rigorous, more expensive, and takes considerably more time to see results. Evaluation serves a very important role as organizations make decisions about whether to continue, grow, scale or otherwise expand services, but it needs to occur at the right time – and certainly not as an organization is just getting off the ground.

Nell: It is difficult for most nonprofits to find funding for measurement work. For example, in the most recent Nonprofit Finance Fund State of the Sector survey, 69% of nonprofit respondents said their funders rarely or never cover the costs of measurement. How do we change that, or can we?

Mary: Although I am sympathetic to this argument and argue frequently that foundations have a unique and critical role to play in helping to build the capacity of nonprofits to better engage in measurement and evaluation, I think we need to change the conversation to one that focuses on the shared responsibility between nonprofits and funders for making the necessary investments in measurement and evaluation.

If nonprofits are truly ready to embrace a culture of measurement and high performance, then they need to reorganize operations in ways that embed measurement practice at every level of the organization, and change expectations from front-line workers all the way to the board of directors.

This means things like: defining expectations about data collection in job descriptions; setting aside a small percentage of funding for evaluation as a line-item in every grant request; and using data in meaningful ways in everyday discourse. Likewise, funders need to work more collaboratively with grantees to understand the data needs and capacity of nonprofits, consider funding longer-term grants that build in support for measurement and evaluation, and stop asking for data or reports that aren’t part of the conversation about continuous improvement and learning. Funders, too, can support field-building efforts to develop additional tools and resources in support of the measurement work nonprofits seek to accomplish.

There are a number of exemplary efforts already underway including Edna McConnell Clark Foundation’s Propel Next and the World Bank Group’s support of Measure4Change and the East of the River Initiative. Each of these efforts feature: targeted grants to build measurement and evaluation capacity of participating nonprofits; access to technical assistance resources; and a community of practice to help grantees learn from each other, share successes or failures, and reduce what is all too often a sense of isolation among measurement and evaluation practitioners.

Photo Credit: Urban Institute

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10 Great Social Innovation Reads: May 2015

social change readingMay was another busy month in the world of social change. For a start there was: a behavioral economics approach to social change, continued focus on civic tech, a tool for calculating a nonprofit’s true costs, new definitions of membership in the digital age, the evolving public library, digital sabbaticals, and much more.

Below are my 10 favorite reads in the world of social change in May, but feel free to add to the list in the comments. And if you want a longer list, follow me on Twitter, LinkedIn, Google+, or Facebook.

You can also read 10 Great Reads lists from past months here.

  1. Perhaps some solutions to social problems lie in behavioral economics. Writing in The New York Times, economists Erez Yoeli and Syon Bhanot and psychologists Gordon Kraft-Todd and David Rand argue that the opinion of others, in this case regarding the preservation of natural resources, is a strong social change motivator.

  2. Civic tech, (the use of new technology to better engage citizens in democracy) has become quite the buzzword lately. But how do we know which civic tech solutions are actually creating change? Anne Whatley from Network Impact offers some tools for assessment in that arena.

  3. And another nonprofit tool comes from Kate Barr of the Nonprofits Assistance Fund. She provides a great tool to help nonprofits calculate and then articulate to funders the full costs of their work.

  4. Daniel Stid from the Hewlett Foundation writes a thoughtful piece on what separates good strategic planning from bad, because as he puts it “The real benefit of planning is not the final document but rather the discipline the process imposes, the new information it generates, the working relationships it fosters, and the conversations, insights, and commitments it sparks.” Amen to that!

  5. In this age of social media and technological connectedness, how do we create more formal structures for belonging to institutions? Melody Kramer, formerly of National Public Radio, is a Knight Visiting Nieman Fellow working on that very question, and she offers some beginning thoughts on the project, including, “Imagine if public radio stations functioned as Main Streets…or in the same way that local public libraries do? It would transform the way people could interact — and participate — in the local news process, and would enhance the stories stations put out on air.” Fascinating.

  6. Speaking of libraries, NPR writer Linton Weeks provides a history of the public library and how it continues to (and must) evolve in the digital age.

  7. Great philanthropic futurist Lucy Bernholz has been offline for a bit, and it turns out she took a digital sabbatical. She reports that “without the addictive stimulation and distractions of digital life it feels like my brain grew three sizes.” What a great (and necessary) idea!

  8. Writing on the UnSectored blog, Marie Mainil describes the importance of building and supporting social movements to create global social change. As she puts it “Collecting data on the dynamics of local, regional, national, and international social change campaigns is the next frontier of organizing for social change. With a visual multi-level collection of ladders of engagement from across the world, social change actors would be able to better plan and coordinate tactics and actions at scale, thereby increasing their chances of success.”

  9. In May the Center for Effective Philanthropy held their biennial conference. Ethan McCoy provides great roundups of day one and day two. I almost feel like I was there!

  10. Never one to put things lightly, William Schambra cautions against what he sees as the hubris of tech philanthropists and his fear that they desire to “fundamentally…reshape the social sector in their own image, based on their supreme faith in advanced technology.”

Photo Credit: Erin Kelly

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What’s Your Nonprofit’s Theory of Change?

Theory of Change GuideOver the past few years I’ve developed a Social Velocity library of books, step-by-step guides, and webinars. My hope is that these tools can make the concepts I use with my consulting clients accessible to smaller and start up nonprofits who aren’t ready for or interested in a customized approach.

The tools follow the methods I develop in my consulting practice (like creating a financing plan, growing the board of directors, designing a theory of change) so when my consulting approach changes over time, the tools must change as well.

Which brings me to the Design a Theory of Change Guide. I created this guide a couple of years ago, but I recently changed the Theory of Change framework I use with my clients. I used to follow a more traditional logic model approach, but over time I’ve come to realize that there are really five specific and complex questions that make up a Theory of Change.

And those are:

  1. What is the target population or populations you are seeking to benefit or influence?
  2. What relevant trends in or changes to the external environment are occurring?
  3. How and where are your core competencies employed?
  4. What changed conditions do you believe will result from your activities?
  5. What evidence do you have that this theory will actually result in change?

The completely revised Design a Theory of Change Guide walks you step-by-step through answering these questions and creating your nonprofit’s own Theory of Change.

A Theory of Change is a fundamental building block to everything that your nonprofit does. Because without a Theory of Change, you won’t know what you are trying to accomplish, how you will get there, or whether you are moving towards it, and you certainly won’t attract the funding necessary to get there.

A Theory of Change can strengthen your nonprofit in many ways:

  • Guides your strategic planning process. If you understand your nonprofit’s overall Theory of Change and what you exist to do, it is much easier to chart a future course.

  • Helps revise the vision and mission of your organization, making them stronger and more compelling.

  • Gives a framework to prove whether you are actually achieving results and creating real social change.

  • Provides a filter for new opportunities as they arise. Do new opportunities fit within your Theory of Change?

  • Engages board members and other volunteers, friends and supporters in your work. If people understand the bigger picture, they will be more inclined to give more time, energy, and other resources to the work.

  • Allows staff to understand how their individual roles and responsibilities fit into the larger vision of the organization. This can increase staff morale, productivity, communication and overall commitment to the organization.

  • Provides the basic argument for a case for investment or other fundraising messaging. With a Theory of Change, you can articulate what you are working to achieve, in a compelling way.

A Theory of Change is so fundamental because you cannot chart a strategic direction if you don’t know what you are trying to change. And you can’t prove that you’ve changed something unless you have articulated what it is that you want to change in the first place. And you certainly can’t convince funders, volunteers, and key decision makers to support you if you can’t tell them what you are trying to change and whether you are actually doing it.

So to truly create long-term social change you must start with a Theory of Change, which is why I encourage every nonprofit engaged in social change to create one.

You can learn more about the Design a Theory of Change Guide and download a copy of it. If you downloaded the previous Theory of Change Guide and would like the newly revised version free of charge, let me know, and we’ll send it to you.

As always, you can see all of the Social Velocity books, guides and webinars available for download on the Social Velocity Tools page.

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Building a Sustainable Nonprofit: A Case Study

nonprofit strategyI consider myself incredibly lucky because I get to work one-on-one with some amazing social change leaders.

One of the clients I’m working with right now is the Muslim Public Affairs Council (MPAC). This is a group of incredibly smart and passionate people who are committed to improving public understanding and policies that impact American Muslims by engaging the government, media, and communities.

The challenges they face as a nonprofit organization are not unique. So I’d like to share their story as a case study.

I met MPAC in 2013. While they had been around for 25 years and aspired to be a truly national organization, MPAC struggled to build a diversified financial model and a donor base beyond southern California. At the same time the organization lacked a coherent strategy for their future work. They wanted to expand their national presence, grow their networks and influence, strengthen and diversify their funding sources, and ultimately increase their impact on a vibrant American Muslim community, but they didn’t know how to get there.

MPAC hired Social Velocity to conduct a Financial Model Assessment to determine what was holding the organization back from growing their revenue and diversifying their funding sources. I interviewed board and staff members and some external constituents to uncover what was holding MPAC back. I also analyzed MPAC’s past financial history, board and staff structure, marketing materials, fundraising activities and more to understand what was working and what was not. I delivered to board and staff a 30+ page assessment that described how MPAC could strengthen their financial sustainability.

One of the biggest things holding MPAC back financially was the lack of a future organizational strategy around which they could rally donors. Upon hearing my findings, the board voted unanimously to undertake a strategic planning process to chart a focused future direction. We then worked over the next 6+ months to develop a 3-year strategic plan to increase MPAC’s impact and financial sustainability.

Because of the new strategic plan we created, MPAC has focused their efforts and resources and are now working to implement the strategic plan and financial model recommendations. They are working to identify outside investors to help fund a growth campaign, expand the board, hire a Development Director, and streamline operations. Board and staff are excited about the new direction and are actively working to bring it to fruition. And to help MPAC in this critical change and growth phase I am coaching staff and board on how to implement the plan and set the organization up for success.

Outside guidance is sometimes critical to moving an organization forward. As Salam Al-Marayati, MPAC’s President and CEO put it:

Nell’s assessment illustrated how we were wasting resources and not connecting prospective donors with a clear message. After the board and staff read the report, we all decided to proceed with a strategic planning process. That exercise, which spanned over 6 months, opened everyone’s eyes. We now have buy-in from our most important stakeholders in the organization – the board – for change. We realized that in order to achieve growth, we have to change internally. Nell helped us to navigate the road to becoming a national organization by changing how we operate internally. Nell’s experience in nonprofit management and fundraising proved to be invaluable in our planning process. We are now beginning to implement the strategic plan are excited about this new era for the organization.

It doesn’t have to be so hard. The mission your board and staff are so passionate about can be achieved in a sustainable way.

You can learn more about how I work with nonprofits on my Consulting page, and you can read more case studies on the Clients page. If you’d like to discuss how I might work with your nonprofit, let me know.

Photo Credit: Evelyn Simak

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5 Fundraising Delusions Nonprofits Suffer

fundraisingFundraising is, for the most part, a fundamentally misunderstood activity. There are a lot of misconceptions, among nonprofit leaders, board members — even donors — about effective ways to bring money in the door.

Here are are a few of the worst delusions about fundraising that persist in the sector:

  1. Events Are Fundraisers
    Very few nonprofit events generate a net income after you factor in the direct (food, venue, invitations, entertainment) and indirect (board and staff time) costs that go into them. They simply are not profit-generating activities. If you are looking to your events to bring in a profit, calculate the cost to raise a dollar to see if they actually are. Some nonprofit leaders argue that events generate value beyond profit, vague terms like “awareness” or “goodwill.” That may be, but unless you follow-up with individual event attendees to turn that increased “awareness” or “goodwill” into money, there is little financial value to events. Turn your energies instead to low-cost, mission-focused cultivation and stewardship events for your major donors and major donor prospects, then you might have something.

  2. Crowdfunding Creates Revenue
    Nope, it doesn’t. Revenue is the on-going money you need to keep your doors open and your operations running. A crowdfunding campaign, by definition, is a one-time deal. It is organized around a specific need or timeframe. Therefore the money it generates is not easily or regularly repeated. Crowdfunding could make sense for a nonprofit hoping to raise startup, growth or capacity capital (all one-time infusions of money). But that Kickstarter campaign is not going to keep the lights on, so look elsewhere (like a financing plan) for sustainable revenue.

  3. Major Donors Can Be Recruited En Masse
    Major donors are secured through a long-term, systematic, one-on-one process. There is no quick way to bring large donors on board. My issue with mass major donor fundraising programs (like the Benevon model) is that when you ask people as a group to pull out their checkbooks, you are leaving money on the table. The check someone feels compelled to write after watching a 20-minute presentation with their friends pales in comparison to the one they will write after you’ve built a one-on-one relationship with them over time. Put together a strategic major donor campaign, along with the infrastructure and systems to execute on it, and you will create a long-term major donor base (and its corresponding revenue stream) for years to come.

  4. Skimping on Fundraising Staff and Systems Saves Money
    While you may save a few thousand dollars in salary by hiring a novice fundraiser (instead of an experienced one), you will cost the organization hundreds of thousands of dollars in missed revenue. The same is true with cheap fundraising systems like an ineffective donor database, an unresponsive website, a cumbersome email marketing system, or a poor (or non-existent) marketing strategy. Figure out what it will really cost to build the fundraising team and systems you need and then raise the capacity capital to get there.

  5. Endowments Solve Money Woes
    Let’s face it, an endowment makes sense for very few nonprofits. Even if you were able to convince donors to let their money just sit in a bank account (which is a big “if”), that money won’t really impact your bottomline. Even if you raise an endowment of $1 million, it will only generate $50,000 (assuming a 5% return) of operating revenue each year. Instead raise a much smaller amount of capacity capital which you could use to strengthen your fundraising infrastructure (more staff, better technology). Those improvements could increase your annual revenue by many times more than $50,000.

It’s time to face the facts. There are smart ways to raise money and there are delusional ways to (not) do it. Embrace the power of money and use it as a tool to create a more effective, sustainable organization.

Photo Credit: TaxCredits

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