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Innovators

What is the Value of a Nonprofit Leader’s Time?

clockIt never ceases to amaze me how often nonprofit leaders give away their expertise and their time – for free.

Here’s just the most recent example I’ve encountered.

A leader of an education nonprofit, let’s call her “Amy,” was approached by a group of funders who wanted to start a similar program in a different city. They had already identified a potential leader of the effort, but this leader, let’s call him “Mark,” was pretty inexperienced in working with school districts and in managing a large scale nonprofit effort.

So the group of funders asked if Amy would be willing to help Mark. This would involve Amy sitting in on some community meetings and providing one-on-one coaching on a regular basis to Mark.

Because Amy’s nonprofit also received funding from some of these funders, she felt obligated to comply. And let me be clear, Amy was offered absolutely no compensation for her time, effort and expertise.

There are several things wrong with this situation.

First, although this group of funders found tremendous value in Amy’s expertise, they did not assign any financial value to that expertise. They sought her out, and indeed already determined that their effort would be hampered without Amy’s guidance. However, they also assumed (perhaps subconsciously) that this nonprofit leader was so passionate about the education space, that she would be more than willing to donate her time.

Second, Amy herself did not assign a financial value to her time. She was complicit in the funders’ assumption that, while her time has huge social change value, it has no financial value. But the two must correlate. Amy’s time is a limited resource. And thus she must calculate the financial value of that resource.

But, third, nonprofit leaders don’t necessarily have the tools to calculate the value of their time.

In the hopes that other nonprofit leaders don’t get caught in Amy’s predicament, here’s a quick three-step process for calculating the financial value of your time as a social change expert, based on the financial value your organization assigns to your time.

  1. Determine Your Annual Cost: Take your annual salary and add the monetary value of your annual benefits (healthcare contribution, social security contribution, etc.). Typically benefits are calculated at an additional 25% of your salary. So, if your annual salary is $85,000 you would multiply that by 1.25 to get the total of your salary plus your annual benefits: $85,000 x 1.25 = $106,250.

  2. Determine Your Hourly Cost: Then, divide that salary + benefits number by the average number of working hours in a full-time position (so 52 weeks a year at 40 hours per week is 2,080 hours per year). I know you probably work more than 2,080 hours in a year, but this is just a general full-time number of hours. So, in this example, your hourly rate would be $106,250 / 2,080 = $51.08. Or $51 per hour, just to make it easy.

  3. Determine Your Hourly Value: If you are feeling bold, you can add a profit margin to this number, just as anyone who is paid to offer their expertise (lawyer, consultant, doctor) does. The idea here is that if someone pays you $51 for an hour of your expertise, you are only breaking even. But if you actually want to make a bit of profit that you can plow back into your organization, you could add in a little margin. So perhaps you round up to $65 per hour.

Now, you have a number you can use.

If Amy had been armed with such a calculation, when the group of funders came to her, she could have estimated the number of hours required (including community meetings, coaching, etc.) and then presented it to the funders. Perhaps the hours totaled 50 over the course of a 12-month period. This would have a financial value then of 50 x $65 per hour = $3,250, which I would argue is still a very conservative valuation.

So that group of funders would need to make a payment to Amy’s nonprofit (above their normal contributions) of $3,250 in order for her to agree to their request.

(And now that you have a way to calculate the hourly value of your time, you can also use it to determine the value of your time spent on other things — for example, fundraising activities like this.)

I can hear nonprofit leaders and funders gasping, “How dare you suggest that a nonprofit leader ‘charge’ a funder for her time.” And others might worry that funders would be offended by the request and end their other contributions to Amy’s nonprofit.

But shouldn’t nonprofit leaders be aware of (and transparent about) the costs embedded in how they are spending (and being asked to spend) their time? Nonprofit leaders and funders could then have a more illuminating conversation. Perhaps Amy’s group of funders won’t want to invest $3,250 in starting up Mark’s new nonprofit. If that is the case, then they probably weren’t very committed to the new effort in the first place. Far better to know that up front rather than after Amy sunk 50 hours into something that has nothing to do with her organization.

It’s time for nonprofit leaders (and their funders) to recognize the financial value of the social change expertise those leaders possess and invest accordingly.

Photo Credit: David Lofink

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Making Philanthropy More Equitable: An Interview with Aaron Dorfman

Aaron DorfmanIn today’s Social Velocity interview, I’m talking with Aaron Dorfman, President and CEO of the National Committee for Responsive Philanthropy (NCRP), a research and advocacy organization that works to ensure America’s grantmakers are responsive to the needs of those with the least wealth, opportunity and power. Before joining NCRP in 2007, Dorfman served for 15 years as a community organizer with two national organizing networks, spearheading grassroots campaigns on a variety of issues. He also serves on the board of The Center for Popular Democracy.

You can read other interviews in the Social Velocity Interview Series here.

Nell: What is your take on recent concerns about donor advised funds locking too much philanthropic money away from directly reaching nonprofits? Is the recent growth of DAFs a good thing or a bad thing, or is it more complicated?

Aaron: It’s definitely complicated.

On the one hand, I’m sympathetic to how much easier DAFs have made things for donors. I do some of my own charitable giving through a small DAF, and I love the convenience of it. I have no doubt that other donors also find DAFs to be a very helpful development in philanthropy.

However, many of the concerns raised by critics are also valid.

There is little or no evidence that DAFs have contributed to an increase in overall charitable giving, for example, and there certainly isn’t any evidence that the funds have boosted giving to historically marginalized communities. So, if there has been no increase in overall giving, then what DAFs have done is to delay the giving.

Another concern is that DAFs provide donors with significant tax advantages over private foundations – but at the cost of transparency. Most DAFs don’t accept unsolicited proposals, and reporting by sponsoring institutions doesn’t identify grants with individual funds. Practically speaking, that means that most of these funds are inaccessible to most nonprofits. They’re traditionally housed at community foundations, but they’re not directly open to receiving proposals from community-based nonprofits, though proposals may be steered there by foundation staff acting as gatekeepers.

We found this to be true in a recent in-depth assessment we conducted of the Oregon Community Foundation. This was especially the experience of nonprofits serving and/or led by communities of color, who already have the hardest time accessing mainstream philanthropic support.

The lack of access by community nonprofits is even more troubling when you consider the fastest growing of the DAFs: the funds located at the giant financial industry warehouses like Schwab, Fidelity and Vanguard. There, no one is putting nonprofit proposals in front of donors who might be interested.

The lack of adequate reporting reinforces this problem of access: since the IRS does not require DAF sponsors to report which funds made which grants, grant seekers cannot take advantage of reports to identify potentially like-minded donors. (DAF sponsors have begun making greater amounts of information available about their grants, but what they provide is of limited help to grantseeking nonprofits because they don’t identify which funds made which grants.) This is further compounded by the fact that at present the major foundation database (Foundation Center) doesn’t systematically track giving by the likes of Vanguard, Schwab and Fidelity, most of whose funding simply doesn’t appear in the database.

Nell: Some people have argued that since philanthropy itself is built upon an inequitable market economy it can serve to reinforce that inequality. Is there a disconnect, or can we expect philanthropy to appreciably contribute to greater equity? What do you make of the debates about philanthropy that redistributes wealth and philanthropy that simply reinforces power and economic imbalances?  

Aaron: There is no question that philanthropy can and has done both of these things.

When the Ford Foundation provides support for grassroots community organizing, or for litigation to protect and expand civil rights, that’s an example of philanthropy clearly contributing to greater equity.

When Atlantic Philanthropies, The California Endowment and other funders supported advocacy that contributed to the passage of the Affordable Care Act (Obamacare), that, too, was a case of philanthropy appreciably contributing to a more equitable society.

These are just a couple of examples of funders who understand their goals and their vision for society to be disruptive to the status quo; funders who understand the role unjust economic systems have played in the issues they would like their dollars to help overcome. The “disconnect” between market economics and progressive philanthropy is not impossible to overcome, and many of the more than 200 grantmakers that have signed on to NCRP’s Philanthropy’s Promise initiative are leading the way in showing other funders how to do just that.

However, when certain foundations support elite universities, when they invest only in white-led cultural organizations that emphasize European-American culture, or when they invest in advocacy to privatize public education at the expense of low-income communities – then you have some clear examples of how philanthropy reinforces inequality.

There was a great series of articles published recently in The Nation that explores these ideas, and what the future of philanthropy might be for those of us who hope to see a greater philanthropic contribution to fairness, equity and justice.

Nell: You have written before about philanthropy’s historical role in funding social movements. What do you make of philanthropy in the Black Lives Matter movement? How involved has philanthropy been, and how involved do you think philanthropy should be?

Aaron: There is a paradox here. Philanthropy has always under-funded social movements. However, philanthropic funding has also been essential to the success of social movements. We documented this in a 2014 paper Freedom Funders: Philanthropy and the Civil Rights Movement, 1955-1965.

The Black Lives Matter movement has thus far received very little support from institutional philanthropy. A group of foundation staff members have formed Funders for Justice as a way to learn together and to accelerate the flow of funding to the movement. They’re making headway, but the movement is still receiving very little support. Some individual donors, mostly younger and working through the Solidaire Network, have been able to move money more quickly to the movement.

The Hill-Snowdon Foundation, a small family foundation based in D.C., has been a real leader on this. They dipped into their corpus and have devoted new resources to creating the Making Black Lives Matter initiative and are attempting to organize their peers in philanthropy to invest in black-led organizing and in the Movement for Black Lives. The foundation is a past winner of the NCRP Impact Awards, which recognizes smart philanthropy that empowers underserved communities and achieves real results.

Also, Black professionals in philanthropy have been organizing through the Association of Black Foundation Executives and its Philanthropic Action for Racial Justice initiative.

I should add, too, that movement leaders have rejected some philanthropic support that was offered to them because it came with too many strings attached. In some respects, it’s been a good thing that the movement has not been dependent on philanthropy, since foundation support so often serves to rein in radical social movements.

Nell: The nonprofit sector has historically stayed away from advocacy work, but that seems to be changing. What role do you think nonprofits can and should play in advocacy, and will there be more of a push for that in the future?

Aaron: Advocacy and community organizing are among the best ways for foundations and nonprofits to leverage their limited dollars in pursuit of their missions. By changing public policies and/or the regulatory framework, we can transform society and build the kind of nation we all want to inhabit. Any nonprofit or foundation that is serious about achieving its mission must understand how advocacy fits into their overall strategy.

NCRP has challenged grantmakers to devote at least 25% of grant dollars to funding nonprofit advocacy and organizing, but fewer than 100 of the largest 1,000 foundations in the country meet that benchmark. The number of serious advocacy funders is increasing, but slowly.

Nonprofit advocates bring the voices of people and communities to policy makers. They are a greatly needed counter balance to the growing influence of corporate lobbyists, who often advocate only the narrowest self-interests of their industry. I think many, many people in our sector understand this and that we will see an expansion of nonprofit advocacy in the coming years, and that an increasing number for foundations and high net worth donors will provide ever-increasing resources for that advocacy work.

Photo Credit: NCRP

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The Future of the Nonprofit Sector [Slideshare]

I’m excited to be heading to Pennsylvania next month to speak at the 2016 Nonprofit Day Conference. My keynote address for the conference will be “The Future of the Nonprofit Sector.” I wanted to share an abbreviated version of the speech with you here via the Social Velocity Slideshare library.

In my mind, there are some fundamental shifts happening in the sector that will be important to watch. They include:

  • Increasing competition in the space
  • A greater demand for results and social change
  • An increased use of advocacy to achieve that change
  • A move to more “networked” approaches
  • Less “starving” nonprofits of their operational needs
  • And (of course) a move from fundraising to financing

These are interesting times, and they hold tremendous opportunity, I think, for the social change sector.

If you want to see other Social Velocity Slideshares go here. And if you want to learn more about inviting me to come speak to your group or event, check out my Speaking page.

The Future of the Nonprofit Sector from Nell Edgington

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What Unique Value Can a Foundation Create?

philanthropyI’ve started working in a new area of the social change space that I’m really excited about. Recently I’ve been helping some foundations figure out what market they are (and should be) in. Because if a foundation can be smarter and more strategic about figuring out where they should focus their efforts within a particular social problem, they will see a higher social return on their investment.

As I’ve said countless times, you cannot develop or execute on a strategy without really understanding the market in which you work. Although we might like to deny it, nonprofits (and foundations) exist in a market economy, which means that they (like everything else) must compete amid the other actors and entities in the space. So it is absolutely critical that leaders understand what unique value their work brings to the space. This can be done through a Marketplace Map, which is one of the first exercises (along with a Theory of Change) that I help nonprofit leaders create during a strategic planning process.

An organization is best positioned to create social change in a sustainable way when their core competencies (what the organization does better than anyone else) intersects with a set of social problems apart from potential competitors or collaborators. This is not at all to say that you shouldn’t collaborate. But when you do, you must clearly understand what you bring to the table that is distinct from and additive to what your competitors bring to the table. In mapping their marketplace, an organization can much more clearly understand and articulate their value proposition and can direct their resources more effectively to the realization of that value proposition.

And the same is true for foundations. I am ever optimistic that just as nonprofit leaders are getting smarter and more strategic about the work they do, foundation leaders are as well. I would love to see more foundations taking a step back and really analyzing the social change marketplace in which they operate and determining how they can bring unique value to that marketplace.

Let’s say for example a funder is really passionate about addressing climate change. But there are many moving parts in the marketplace of that social problem. There are scientists and researchers and other experts who have views on the problem and the efficacy of potential solutions. There are many nonprofits in many different categories working on various aspects of the larger problem. There are policies and policymakers who are addressing the issue in various ways. There are other foundations and philanthropists who are investing in different solutions. It can be overwhelming for any particular funder to know where they specifically can have an impact on a very complex climate change marketplace.

So I help the foundation analyze these various elements, where and how effectively each is operating, where trends effecting the social problem are moving, and where the particular funder can add unique value.

While I spend a good deal of time on this blog giving voice to the challenges of the nonprofit sector, there is no doubt that the philanthropy that funds the sector has room to grow as well. And in my mind, part of that growth involves foundations getting more strategic about exactly where they can create the most value with their dollars. Because if both nonprofits and the philanthropists that fund them can be smarter about the marketplace of social problems, we just might get closer to solving them.

Photo Credit: ribosomis

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10 Great Social Innovation Reads: July & Aug 2016

social changeSince I was on vacation in late July and early August, I’m combining the last two months of great reads into one. The summer of 2016 certainly was a dark one. From continuing police violence against black men, to the shootings of police officers in Dallas and Baton Rouge, it seemed we were becoming a nation truly divided. And tremendous flooding and devastation in Louisiana that was largely ignored by the media was heartbreaking to watch.

But, there were also moments of hope. From new research showing that donors are increasingly interested in investing in what works; to philanthropic leaders calling for better partnerships among the public, private and nonprofit sectors; to a way to move the conversation away from “overhead,” the summer months made for some very interesting reads.

Below are my picks of the 10 best reads in the world of social change in July and August. But let me know in the comments what else I missed while I was out.

If you want a longer list of reads, follow me on Twitter @nedgington. And you can read previous months’ 10 Great Reads lists here.

  1. More police violence against black men and the shootings of police officers in Dallas and Baton Rouge arguably broke the country’s heart in July. Ira David Socol traced Americans’ growing fear of “the other” over the past few decades and how it has contributed to where we are today. And Pew Research offered some data about how Americans see the Black Lives Matter movement. While Heinz Endowment President Grant Oliphant called for an end to the violence, in an incredibly moving series of blog posts where he wrote:  “We are called — by everything our diverse faiths teach us, by everything we believe about ourselves and our country — to come together as one people, whether we bravely wear the blue or have come to fear those who do. We are called by all that is good in our hearts to see ourselves in all the fallen, all the lives lost, all the families grieving, all the communities struggling to make sense of their brokenness. We are better than this violence. Deep down in our souls we know this. We are so, so much better than this.” And President Obama gave an incredibly moving speech at the funerals for the Dallas police officers, where he encouraged us all to, “With an open heart…worry less about which side has been wronged, and worry more about joining sides to do right.”

  2. But the Black Lives Matter Movement is not just aimed at addressing police violence, the Movement recently released a K-12 education platform designed to fix “a U.S. public-school system…so broken that college is never an option for many young people of color.”

  3. Amid these deepening divides and a growing wealth inequality, Andy Carroll from Exponent Philanthropy argues that philanthropy can no longer be expected to solve everything. Rather, we need partnerships among the public, business and nonprofit sectors to address our growing challenges.

  4. And then there was the tremendous flooding and devastation in Louisiana. Despite the fact that it was the largest natural disaster since Hurricane Sandy in 2012, the media and philanthropy largely ignored the disaster.

  5. Curtis Klotz from the Nonprofits Assistance Fund offers a phenomenal graphic to use in changing the conversation from “nonprofit overhead” to “core mission support” at your nonprofit.

  6. And speaking of how nonprofits use money, FASB (the Financial Accounting Standards Board) just released some significant updates to their standards for nonprofit accounting. The changes impact net asset classes, investment returns, expenses, liquidity and availability of resources, and presentation of operating cash flows. Every nonprofit leader should understand these important changes.

  7. Founder of Family Independence Initiative, Mauricio Lim Miller argues that just as businesses constantly use technology to understand consumer behavior, nonprofits should tap into technology to “let the people they serve dictate what works best.” And Melissa Chadburn might agree with Mauricio’s premise that fighting poverty requires a better understanding of the causes of that poverty given her scathing piece, “How Well-Meaning Nonprofits Perpetuate Poverty.”

  8. Penelope Burk’s annual fundraising study revealed that more donors are interested in results than ever before. Five years ago, only 16% of donors surveyed gave based on a nonprofit’s results vs. a whopping 41% this year.  And research from MobileCause shows that Millennials and GenXers are now the vast majority of the U.S. workforce so if you want to reach them as donors you better be online and mobile.

  9. Ever the trailblazers in foundations interested in building nonprofit capacity, the David and Lucile Packard Foundation unveiled a fabulous new online Knowledge Center with tons of resources for improving nonprofit organizational effectiveness.

  10. Jim Schaffer questions how “philanthropic” the digital giants Amazon, Facebook and Google actually are. And Lucy Bernholz warns nonprofits of the dangers of trusting Facebook’s new fundraising offerings.

Photo Credit: radness.com.au

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How Open to Change Is Your Nonprofit, Really?

nonprofit changeBecause I talk about change in the nonprofit sector a lot, I sometimes get inquiries from nonprofit leaders who think they want change at their organization, but actually don’t.

A nonprofit leader might be excited by the idea of dramatically improved fundraising results, or a board who is engaged and invested in the work, or funders who want to step up, but she isn’t willing to do the hard work to realize that change.

I recently talked with a nonprofit leader who was interested in a Financial Model Assessment because he was intrigued by the idea of potential revenue increases. But when I explained that realizing those changes might necessitate other changes — like how he structures his staff, how involved in decision-making he allows the board to be, even how he crafted their long-term strategy — he began to balk.

But the fact is that you simply cannot expect a different result if you continue to operate in the exact same ways.

When I work with a nonprofit organization, my role is to lead a change process so that when I leave, the organization is more sustainable, more engaged and engaging, more strategic and integrated, and ultimately more effective at creating social change.

But significant change is not easy. And for it to truly come to fruition it requires that the nonprofit leader must fully commit — and get her board and staff to fully commit — to creating real, lasting change.

The nonprofit sector is sometimes criticized for being too stuck in its ways. And indeed it can be hard to create change amid a sector that is so consensus-based. Sometimes even the smallest decisions must involve discussion among staff, the board, even funders and other stakeholders.

So if you really want the reality that your nonprofit faces to be different, if you want to find greater financial sustainability, if you want to achieve more program results, if you want to attract more and bigger funders, if you want a stronger, more effective board, you have to commit to real change. And then you have to get others at your organization to commit to real change as well.

I can often tell the difference between a nonprofit leader who is just playing at change, and one who is actually committed to doing the hard work. Ask these questions to determine if your nonprofit is truly ready for meaningful change:

  • Are we willing (at every level of the organization) to take a hard look at how we operate and make changes where behaviors or systems no longer make sense?
  • Are we willing to have difficult conversations, perhaps on formerly taboo topics, in order to find a better way forward?
  • Are we excited enough by the potential rewards of change to work hard to convince skeptics (on the board and/or staff) to come along?
  • Are we as an organization willing to invest the time (and patience) in a change process that could take months or years to fully realize?
  • Are we willing to open everything we do as an organization to discussion and analysis?

If you can find a critical mass of board and staff members who can answer yes to these questions, then your nonprofit is a candidate for true change and a more effective and sustainable path forward.

Because change is really hard. But with effective, meaningful change can come great reward.

To learn more about the Financial Model Assessment I use with clients, download the Financial Model Assessment benefit sheet.

Photo Credit: Pat Ronan

 

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The Importance of Taking Time Off

hammockThere was a very disturbing report last week. An NPR poll found that half of Americans who work 50-plus hours a week don’t take all or most of the vacation they’ve earned. And among those who do take vacations, 30% say they do “a significant amount” of work while on vacation.

Ugh!

I cannot stress enough how important it is to the critical social change work we are all doing to take a break every once in awhile. And I mean really take a break and reconnect with those things that make us human, not machine. I don’t care what your job is and how critically important the work you do is, you will do it more effectively if you are a whole person. And you become and stay a whole person when you take time away from that job.

And because I believe in practicing what I preach, I’m about to take my own advice and disconnect from the world of social change (and social media) for the next few weeks. Instead I will be relaxing, playing with my kids, reading, hiking, and just being.

But in case you’ve already taken your time off (good for you!) and you want some things to read while I’m out, here are a few things to explore:

I’ll be back to writing the blog in mid-August. In the meantime, I hope you all find some space to breathe, to think, and to reconnect with what you are meant to do. Because believe me, we need you back in the Fall inspired and ready for the hard work ahead.

Photo Credit: Five Furlongs

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Nonprofit Financial Health and Sustainability: Pillar 4

FLYToday I am continuing my on-going blog series on the 7 Pillars of the Performance Imperative. The Performance Imperative was released last year as a north star for the nonprofit sector by the Leap Ambassadors, of which I am a member. Pillar 4, about sustainable financing, is obviously my favorite since I am arguably obsessed with nonprofit financial sustainability.

You can also read about Pillar 1: Courageous, Adaptive Leadership, and Pillar 2: Disciplined, People-Focused Nonprofit Management, and Pillar 3: Well-Designed and Implemented Programs.

I believe it is absolutely critical that a high-performing nonprofit organization have a smart strategy for attracting and employing money effectively. Because without a sustainable financial model there is nothing else — no mission, no performance, no social change.

You can download the detailed Performance Imperative here, but here are the highlights of Pillar 4: Financial Health and Sustainability. In a nonprofit that exhibits financial health and sustainability, the board and staff:

  • Take charge of their organization’s financial destiny. They articulate the value they deliver and develop overall financing strategies, tightly aligned with their mission, to support and sustain it.
  • Establish strong systems for financial stewardship and accountability throughout their organization.
  • Build and participate in budget processes that are oriented toward achieving results.
  • Share their financial results transparently with key stakeholders regularly.
  • Treat fund development as a strategic function that requires focus, management, capital, and specialized skill sets.
  • Operate with margins that allow them to build their balance sheet.
  • Understand their organization’s cost structure.
  • Use financial models to make clear and transparent the organization’s financial condition and predict how it will end the year.

In other words, high performing nonprofit leaders understand, embrace and use money as a tool to achieve social change. They create a robust financial model that articulates true costs and creates a strategy to attract enough and the right kinds of money, engage board and staff in making that model a reality, is transparent with outsiders about the model, and above all uses money strategically. In short, a high-performing nonprofit finances, instead of fundraises for, the social change they want to create.

I want to be very clear, however, that financial sustainability does not mean, as some people sometimes confuse it, that a nonprofit moves away from philanthropy and toward earned income, which is somehow more sustainable. This is a fallacy in thinking that nonprofits can somehow be market-driven. Because nonprofits exist to remedy a disequilibrium in the market economy they will always have to be at least somewhat subsidized, by government, philanthropy, or both. Therefore, financial sustainability in the nonprofit world means creating and executing on an overall financial strategy that allows a nonprofit to effectively deliver on outcomes.

FLY (Fresh Lifelines for Youth), a nonprofit that works with teens in the juvenile justice system to break the cycle of violence, crime, and incarceration, is an example of Pillar 4.

Here is their story, as Christa Gannon, FLY’s Chief Executive Officer & Founder explained it to me:

 

Three years ago we were extremely fortunate to be a grantee of Edna McConnell Clark Foundation’s PropelNext initiative to help organizations prepare for growth and scale. At the same time as a grantee of our local and sophisticated foundation funder Tipping Point we participated in a comprehensive training on ensuring that our financial and development practices were aligned and consistent with best practices.

Through these two initiatives we had the privilege of learning a great deal and working with outstanding consultants who created the space for us to step back and productively ask ourselves what was working and what could work better for us as we grew. We brought these findings to our board, worked with the consultants to update and refine our practices, created new dashboards, and brought consultants to board meetings and committee meetings to help us elevate our line of sight and institute new ways of being.

We began these efforts with the help of a long-time employee who helped lead our financial efforts for over 7 years (now going on 10 years!). We elevated his role (creating a position for a Director of Finance and Operations), had our consultants provide some coaching and guidance and invested in his capacity to learn, grow, and lead. Additionally, during this time we brought on a new COO with a great deal of financial acumen who helped this process a great deal. It allowed me to take a critical step back from finance to allow new approaches to take hold and grow.

We revamped our monthly financials, our CEO dashboard, and our dashboard for the board. Additionally we created a new budget-building process which includes a multi-year budget (expense and revenue) forecast and straw budgets. We also changed our internal practices for how we managed temporarily restricted net assets. In previous years when we received grants/gifts off fiscal year cycle (and many are) we would hold those funds and spend them down in the latter half of their cycle, which often meant the grants spanned two fiscal years. This created a great deal of extra work and challenges for our team. We modified this process, which has resulted in an increase in net unrestricted assets available to us as we grow and scale.

One challenge we’ve realized in this process is that we have been so extremely cost conscious and frugal that we have unintentionally built a financial model that relies on staffing structures that cannot be maintained as we grow and scale while ensuring the highest quality services that our clients and community deserve.

As these challenges became apparent to us, we have taken critical steps such as reducing case-load ratios for line staff, adding critical positions to support talent recruitment and development, finance, fundraising, evaluation and learning, etc.. To support this capacity building we are investing in our fundraising ability, engaging our board even more in their role to help garner financial resources, and allocating more of my time to strategy, fundraising, and board development.

We have always felt incredibly grateful for the opportunity to help steward the generosity and strategic thinking of our investors, foundation and corporate supporters, and government partners into the world. As our systems for how we tackle financial management have changed and improved that attitude of gratitude has remained.

What has changed for us, however, is a desire and intention to simplify how we think about and manage our funds such that our processes are clear, straight forward, and understandable by all involved without undue explanation or re-education in meeting after meeting (both board and staff). Our efforts to be cost-conscious, thoughtful, and prudent inadvertently led to systems and processes that made our work more complicated and time consuming than it needed to be. In part this reflected my mindset and efforts as founder. It required me to let go and not white-knuckle our financial approach; trust the team, systems, and consultants; and realize that the approach that got us to this point in the organization’s history would not be the best approach to get us to the next milestone.

We are very mindful that the work we do and the population of young people we serve is not a top priority for many philanthropists. As a result, we take every investment very seriously and are very clear that it means a kid gets a chance to become so much more than their past mistakes.

For us, financial investments are life changing for our clients. We may be the only chance they get, so we want to ensure we deploy each resource to its highest and best use.

Photo Credit: FLY

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