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Leadership

Is Your Nonprofit Board Avoiding Their Money Role?

nonprofit boardI was speaking to a group of nonprofit leaders in Pittsburgh last month about how to Move From Fundraising to Financing and there were some parts of the presentation that raised eyebrows and (sometimes) controversy. And it usually happened around the topic of the nonprofit board.

I strongly believe that the board of directors is a nonprofit’s most critical financial asset. A board that is actively engaged and has the specific skills, experience, and networks required to deliver on the organization’s strategy can make the difference between a nonprofit that is just getting by and a nonprofit that is truly creating social change. And money is an inextricable part of that. Therefore, a nonprofit’s board cannot avoid its money role, or the organization and its mission will suffer.

Is your board avoiding their money role? Here’s what it looks like when they are:

The Board Isn’t Raising 10% of the Budget
I know it’s heresy, but I believe that a board should be charged with raising at least 10% of a nonprofit’s annual budget. But that doesn’t mean they all have to write personal checks (or get their friends to write them). Rather, there is an endless list (here and here) of ways board members, who are fundraising shy, can bring money in the door. Because why should the entire financial burden be left on the shoulders of the staff? That’s just not sustainable. And if you can’t get your board to step up to the financial plate, how will you have any hope of getting others to do so? There are really so many reasons why your board should take on more money responsibilities.

The Board Doesn’t Enforce a Give/Get
So to reinforce the idea of complete board involvement in the financial engine, you need to make it a practice. And that’s where the give/get comes in. A give/get requirement is a minimum dollar amount at which each individual board member must either “give” themselves, and/or “get” from somewhere else. Every single member of the board must understand and contribute to how money flows to the organization. They cannot argue that money is the purview only of the staff or a subset of board members. Money has to be part of the ENTIRE board’s job. Until you force the board to really participate in creating and maintaining an effective financial engine, you won’t be able to have substantive conversations about or get real engagement in raising or spending money.

New Program Decisions Ignore Money
It is not enough for a board to approve new programs or program expansion by only analyzing the potential impact on the mission. The board must also understand how a new program will or will not contribute to the long-term financial sustainability of the organization. The board needs to analyze all of the costs (including set up, opportunity costs, and ongoing operating costs) of the program and whether the program can attract enough money to at least cover those costs. And if not, whether the new program can be subsidized by other activities already in the mix. But the board cannot blind themselves to the financial downfalls of a sexy new program.

Real Conversations About Money Happen Only in Crisis 
Most board meetings include an update on a nonprofit’s budget, which is the extent of any money conversation. If there is a problem (expenses are too high, or revenue is not flowing as budgeted) a long conversation will ensue about the crisis. But bigger, regular discussions about the overall financial strategy of the organization are scarce. If the board is to be the financial steward of the organization, they have to spend time analyzing and developing their nonprofit’s financial model — where revenue should flow and how money should be employed to meet the mission. Money is a tool. But to effectively wield that tool, the board needs to think, talk, and act strategically about it.

For a nonprofit to be truly effective and sustainable, its board — the entire board — must embrace its money role. Because their is no mission without money. And no successful board turns a blind eye to the financial engine of their organization.

If you want to find out more about developing a sustainable financial model for your nonprofit, download the Develop a Financial Model Bundle. And if you want to learn how to create a more effective board, download the Build an Engaged Board Bundle.

Photo Credit: Luis Miguel Bugallo Sánchez

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10 Great Social Innovation Reads: Dec 2015

social changeDespite being the run up to the holiday season, December was a busy month in the world of social change. From arguing about new philanthropy, to looking back at 2015, to exploring America’s history of philanthropy, to analyzing the leadership of the Pope and the Red Cross’ Gail McGovern, to inspiration in grim times, there was lots to read.

Below are my picks of the 10 best reads in the world of social change in December. But please add to the list in the comments. And if you want to see a longer list of what catches my eye, follow me on Twitter @nedgington.

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

  1. Arguably the biggest news in December was Mark Zuckerberg (founder of Facebook) and his wife Priscilla Chan creating a limited liability corporation (not a foundation or nonprofit) focused on social solutions. Many, many, many people had something to say about it. Some liked it, others despised it, others found serious implications for the future of philanthropy, others were terrified by it. Amid all the hubub, the Zuckerberg/Chan’s chief of staff further clarified their plans. Perhaps we should just wait a bit and see what the actual effect is.

  2. And beyond the Zuckerberg/Chan investment, there was debate about new forms of philanthropy in general. Michael Edwards thinks the idea of blending social and profit motives has jumped the shark. And Andrew Means of Data Analysts for Social Good thinks Effective Altruism, the idea that you can use data to determine where to most effectively invest in social change, is flawed because it doesn’t account for different philanthropists having different preferences.

  3. Since December is the last month of the year, there was the traditional glut of posts looking back at 2015. My favorite among them were: The National Council of Nonprofit’s “5 Firsts” for the Nonprofit Sector in 2015,” Inside Philanthropy’s “Hot Topics and Trends for Women and Philanthropy, 2015,” The Nonprofit Quarterly’s “9 Important Nonprofit Stories of 2015 (And What They Can Teach Us),”  Pew Research’s “15 Striking Findings From 2015,” Mashable’s “26 Incredible Innovations that Improved the World in 2015, and Lucy’ Bernholz’s “Philanthropy’s 2015 Buzzwords.” Whew!

  4. The Smithsonian’s National Museum of American History previewed an upcoming permanent exhibit on American philanthropic history. Fascinating.

  5. David Callahan provided some really interesting theories for why the percent of charitable giving in America has yet to climb beyond 2% of GDP. His proposed causes include: liberals, corporations, and even Ronald Reagan.

  6. Emmett Carson, head of the Silicon Valley Community Foundation, put forth an interesting idea for two of the most influential organizations advocating for the nonprofit sector: Independent Sector and The Council on Foundations. He thinks they should merge, as he explained: “The new entity could harness our entire sector to meet old and new social and economic challenges. Such a new organization could meet our sector’s higher collective purpose — to influence how this country meets its obligations to our most marginalized citizens, whether they are poor, sick, homeless, immigrants, disabled, or victims of systemic discrimination.”

  7. Writing in Forbes, Mike Perlis, argued that The Pope is an illustrative example of how leadership should operate in the 21st century.

  8. ProPublica’s ongoing series investigating the American Red Cross continued with an article about CEO Gail McGovern’s leadership and where she may have gone wrong. And Ruth McCambridge from The Nonprofit Quarterly found the problems at the Red Cross to be reminiscent of other nonprofits that have fallen victim to troubled leadership, like the founder’s syndrome that plagued the Susan G. Komen Foundation.

  9. Nonprofit blogger Vu Le argued that if we want nonprofits to act more like businesses, nonprofits should enjoy more of the benefits that businesses do: “Society needs to provide nonprofits with the same level of funding, speed of investment, flexibility, autonomy, and acceptance of risk and failure, or else stop trying to get us nonprofits to be more like for-profits. You can’t have your nonprofit cake and yet withhold your for-profit icing.” Amen to that.

  10. And finally, to restore your faith in humanity, new Canadian president Justin Trudeau created a tremendous welcome for incoming Syrian refugees. And Barbara Bush and Jessica Mack from Global Health Corps would probably consider Trudeau just the kind of leader we need right now, for as they wrote in the Stanford Social Innovation Review: “At times like these, when the news is an endless litany of upsetting events, it is far too easy to let rage slide into violence, or allow fear to shut us down to the humanity of others. We have examples of that all around us. But leadership doesn’t entail taking the easy option. Instead, the most courageous stand we can take is against fear itself, by resisting the instinct to close up and push others away…It is within each of our abilities to decide how to parlay these grave moments into opportunities for resilience, inspiration, and hope.” Yes!

Photo Credit: hobvias sudoneighm

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10 Most Popular Posts of 2015

10 most popular postsIt’s that time of year again — to put work away, enjoy friends and family, and give yourself a chance to take a breath. I will be taking the next two weeks off from writing the blog. But before I go, as is my tradition, I wanted to leave you with a list of the 10 most popular blog posts from this past year, in case you missed any of them.

And if you are feeling ambitious, you can also see the 10 most popular posts from 2011, 2012, 2013, and 2014.

I hope that you all will find some space over the next couple of weeks to relax, to get away, to regroup, and to ready yourselves for the next chapter. We need you social changemakers now more than ever, so please find some time to take care of yourself before you get back to taking care of the rest of the world.

Thank you for being part of the Social Velocity community and for all of your hard work making the world a better place. I wish you all a very happy New Year. I’ll see you in 2016!

  1. The Problem with Nonprofit Events
  2. How Scarcity Thinking Holds Nonprofits Back
  3. 7 Questions to Guide Your Nonprofit Strategy
  4. 5 Myths the Nonprofit Sector Must Overcome
  5. How to Build a Stellar Nonprofit Staff
  6. How to Create a Compelling Fundraising Ask
  7. 3 Signs of a Bad Nonprofit Strategic Plan
  8. 5 Fundraising Delusions Nonprofits Suffer
  9. What Do Your Programs Really Cost?
  10. The Network Approach to Social Change

Photo Credit: Ethan R

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Strategic and Sustainable Nonprofit Growth: A Case Study

AppleMark

I talk a lot about the many challenges of leading a nonprofit. But sometimes even success itself can be a challenge for a nonprofit. This was particularly true for one of my clients, Breakthrough Austin.

Breakthrough is a very successful nonprofit that identifies cohorts of 6th grade students who want to be the first in their families to graduate from college. The nonprofit then supports those students over the next 12 years so that they reach that goal. Over their 10+ year history, Breakthrough has achieved impressive student outcomes and the support of a deep donor base.

In fact, Breakthrough has been so successful that other schools and school districts have asked to add the Breakthrough program. But that’s not always a good thing, especially when a nonprofit doesn’t know where they can grow most sustainably and with the greatest results.

In the Spring of 2015, Breakthrough board and staff wanted to grow to reach more students, but they didn’t know how to determine when and where. They needed a strategic plan that could help them chart a growth trajectory to reach more students in a sustainable way. And baked into that strategic plan they needed strategic growth filters that helped them assess how to know if new locations were a good fit with their model and their long-term plans.

Breakthrough hired Social Velocity to lead their strategic planning effort. With my guidance, Breakthrough created an advisory committee of board, staff and key external stakeholders. I led the group to analyze the external environment in which Breakthrough operates, develop Breakthrough’s theory of change, refine their vision and mission statements, and articulate the goals and objectives and corresponding financial projections of the next 3 years for the organization.

Together we created the various elements of their strategic plan:

  • A Marketplace Map, to understand how their core competencies fit with a set of community needs, apart from their competitors and collaborators
  • A Theory of Change, to articulate the value they hope to create
  • Strategic Growth Filters, to analyze where they should grow
  • Revised Vision and Mission Statements
  • 3-Year Strategic Plan and Budget
  • Year 1 Operational Plan, to execute on the strategic plan
  • System for Monitoring the Plan, to make sure it is coming to fruition

Over the course of the 6-month planning period, Breakthrough board and staff became increasingly excited about their new strategic plan and the clarity it gives them about how and when to grow. They are already putting the pieces in place for expansion and are beginning to build the additional capacity necessary to get there.

Creating a strategic plan helped Breakthrough become crystal clear about how to grow strategically and sustainably, as Michael Griffith, Breakthrough Executive Director put it:

“Nell helped us chart a course for the future that meets the needs of our current students and allows us to expand to serve even more. She was skilled at developing a framework that allowed us to grapple with the tough questions of strategy and sustainability. We are thrilled we made this investment and look forward to the coming years with a plan firmly in place!”

If you want to learn more about the strategic planning process I take clients through, check out the Strategic Planning page, or if you want to read more client case studies, check out the Clients page.

Photo Credit: Breakthrough Austin

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5 Nonprofits Trends to Watch in 2016

Poster_of_Alexander_Crystal_SeerThis is my favorite time of year. Despite the darkness of the last few months, December is often about reflecting on the year that is drawing to a close and hopes for the new one coming.

And as is my tradition on this blog, I like to look ahead at the trends that may affect the nonprofit sector in the coming year. I have never claimed to be a clairvoyant, but I am an admitted optimist, so my predictions are less about telling the future and more about wishful thinking. This year, more than ever, I want to see opportunity amid the uncertainty and the challenges we face.

So here are 5 things I’m really hopeful about for the nonprofit sector as we head into 2016.

You can also read past Nonprofit Trends to Watch lists for 2011, 2012, 2013, 2014 and 2015.

  1. New Opportunities for the Nonprofit Sector to Lead
    A growing recognition of the value of the nonprofit sector paired with a rising confidence among nonprofit leaders will create opportunities for nonprofits to step up and create opportunity out of the seemingly mounting pile of challenges (like terrorism, natural disasters, political gridlock). The nonprofit sector’s natural place — its core competency — is in righting imbalances and it often coalesces in times of trouble. We are already seeing really exciting collaborations and innovations aimed at increasing civic engagement and winning equal rights, to name a few. Call me an optimist, but I think the challenges we face are merely a precursor to the emergence of a stronger social sector ready to find new solutions.

  2. Increased Use of Protests 
    And as evidence of social movements emerging from challenges, we are seeing an uptick in social protests. This year we’ve seen some impressive organized demands for social change. From Black Lives Matter, to student protests on college campuses, to Chicago protests demanding the mayor’s resignation, people are rising up to demand change. While their methods somewhat mirror the protests of the 1960s and 1970s, their access to and use of technology is quite new. It will be interesting to see how these movements evolve and how much change they will be able to accomplish.

  3. Greater Emphasis on Networks 
    And these protests, like any social change effort, will be more successful if they embrace the use of networks. I think there will be a growing recognition that nonprofits must build networks in their social change efforts. They must understand the points of leverage for attacking a problem on a much larger scale than a single organization can and then figure out who the influencers are in their space and how to connect their work with those others. Because the network approach requires that nonprofit leaders move away from the resource-constrained, scarcity approach that keeps them from forging alliances with other entities that might be competing for the same limited pool of funding, I think (hope) we’ll see more nonprofit leaders move to an abundance mentality that leaves fears behind in favor of a bigger, bolder, more networked path.

  4. More State-by-State Strategies 
    The stunning victory this year legalizing same-sex marriage demonstrated the tremendous success that a state-by-state (as opposed to a national) approach to social and political change can have. Indeed, because of political gridlock at the federal level, other social change efforts (like Represent.us and the legalization of marijuana) have found success at the state level where changing minds and changing policy is sometimes easier and more efficient. But this isn’t a new idea. In fact according to research compiled by Bloomberg Business, social and political change in America follows a pattern: “A few pioneer states get out front before the others, and then a key event—often a court decision or a grassroots campaign reaching maturity—triggers a rush of state activity that ultimately leads to a change in federal law.” Though the idea isn’t a new one, I think it may gain traction as more social movements find a state-by-state approach increasingly attractive.

  5. Smarter Funding
    But to pursue more successful models, like the use of networks and state-by-state strategies, nonprofits must have the necessary funding runway to get there.  So I’m hopeful that funders will increasingly recognize that nonprofits need more flexible and effective funding (like unrestricted dollars and capacity capital). There are already encouraging signs. The Ford Foundation has moved to provide more unrestricted support (and encouraged other funders to build the capacity of nonprofits) and the federal government released new guidelines this year providing more indirect funding to nonprofits. So let’s hope we see more foundation, individual and government funders providing nonprofits more of the kind of money they really need to create solutions.

Photo Credit: Library of Congress

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Nonprofits, Lead Us Toward Hope

HopeI have been down lately. As I mentioned earlier this week, November was really rough. The recent (and increasingly frequent) terrorist attacks coupled with a shocking American response to the Syrian refugee crisis has made it feel as though the world is a very dark place.

But we must fight that darkness. And the nonprofit sector must lead us there.

Life is a constant interplay between dark and light. As actor Patton Oswalt wrote after the Boston Marathon bombing in 2013:

“You watch the videos of the carnage and there are people running TOWARDS the destruction to help out…Every once in awhile, the wiring of a tiny sliver of the species gets snarled and they’re pointed towards darkness. But the vast majority stands against that darkness and, like white blood cells attacking a virus, they dilute and weaken and eventually wash away the evil doers and, more importantly, the damage they wreak…So when you spot violence, or bigotry, or intolerance or fear or just garden-variety misogyny, hatred or ignorance, just look it in the eye and think, ‘The good outnumber you, and we always will.'”

Or as Mr. Rogers said, when there are horrific acts, don’t focus on the fear and the violence, but instead “look for the helpers.” Focus on those who are working to make the world a better place.

And those working to make the world a better place are the nonprofits. Indeed, one way the good outnumbers the evil is through the leadership of the nonprofit sector — the social movements that champion right over wrong.

And they must. As Rick Cohen so eloquently wrote in his last piece, it is up to the nonprofit sector to rise up in the face of fear and injustice. Indeed, this is playing out right now in my state of Texas where the head of the Texas Health and Human Services Commission is threatening to sue the nonprofit International Rescue Committee headquartered in Dallas because they continue to work with Syrian refugees despite the state’s refusal to take Syrian refugees in the wake of the Paris attacks. This nonprofit is fighting the fear and ignorance.

And isn’t that — at its essence — the critical role of the nonprofit sector, to, as Susan Ragusa put it, bring light to the darkness: “Every nonprofit, large and small, [has] a strategic role in bringing greater balance to a world that feels upended by horrific acts and the continued threat of more.”

One nonprofit, the Muslim Public Affairs Council (a client of mine) is doing exactly this. They work to improve public understanding and policies affecting American Muslims. They have been incredibly busy lately trying to convince Americans that ISIS does not represent Muslims. MPAC’s critical role is to be the voice of reason and understanding amid the terror and the backlash rhetoric. They are working tirelessly to show American policymakers how to turn away from the dark and embrace our better nature. As MPAC staff wrote recently:

“It is easy for us to pay lip service to America as the beacon of freedom. To be such an example to the rest of the world, yet not allow the world’s tired and poor to reach that freedom, makes our values mere slogans as opposed to truth. The home of the brave must not be scared to hold on to its principles, most especially during the times it is easiest to let them go.”

And that is the antidote — isn’t it — to the fear, the hopelessness, and the violence? We must pick ourselves up, gather our courage, and seek the light. We must strive, always strive, to find and embrace the better angels of our nature.

And nonprofits must lead us there.

Photo Credit: “S S Hope” by Herman Hiller, Library of Congress

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10 Great Social Innovation Reads: November 2015

Reading on the StairsLet’s be honest. November was a really tough month. The terrorist attacks in Paris (and other attacks in Mali, Beirut and elsewhere) put the world on edge. And the anti-refugee rhetoric that followed was incredibly disheartening. Finally, the loss of tenacious nonprofit investigative journalist Rick Cohen made for a difficult November, a month that is typically focused on gratitude and giving back.

But there is always hope. Some foundations are taking an innovative approach to failing cities and to supporting networks, students are rising up for equality, and the Overhead Myth was dealt another blow.

Below are my selections of the top 10 reads in the world of social change in November, but please add to the list in the comments. And if you want a longer list of great reads, follow me on Twitter, Facebook, LinkedIn or Google+.

And you can see past months’ 10 Great Reads here.

  1. The horrific terrorist attacks in Paris created an ugly backlash in America against Syrian refugees. There were worries about the attacks causing a slowdown in fundraising for Syrian refugees and parallels drawn to the exclusion of Jewish refugees in World War II. But rising above all of this Rick Cohen urged nonprofits to take their rightful place as defenders of the downtrodden and speak up against anti-refugee policies. As he put it: “If the U.S. slams the door on desperate Syrian refugees, the nonprofit sector that claims to represent openness, inclusion, and democracy will find its credibility seriously damaged should it fail to do whatever it can to confront the politicians using fear and hatred as a tool for political advancement.” Amen!

  2. Adding insult to injury, that beautiful piece was Rick Cohen’s last published article because he died in November, creating an enormous loss for the sector. The Nonprofit Quarterly created a lovely tribute to their colleague by culling his best pieces, and they have big plans for carrying on Rick’s legacy.

  3. There is hope amid the fear and turmoil of our times. Susan Ragusa from Inside Philanthropy looks to the nonprofit sector to “lead with optimism and champion hope.” Yes.

  4. Perhaps heeding that call, some foundations have stepped up in innovative ways to help struggling American cities. Rockefeller Foundation President Judith Rodin described ways resilient cities can mitigate climate change.

  5. The whip smart David Henderson has created a new tool (currently in beta) for individual donors to track and analyze their favorite nonprofits.

  6. We are far from completely overcoming the Nonprofit Overhead Myth, but there was a big step forward in November when the Los Angeles County Board of Supervisors passed a motion to pay the full costs for nonprofit services. As Tim Delaney, president of the National Council of Nonprofits explained: “Los Angeles County has now raised the bar for collaboration between governments and nonprofits by stating its firm stance that its nonprofit partners must be paid the full cost to deliver services that the County contracts with them to provide. We urge states, counties, and localities across the country to follow its lead.” Amen!

  7. Student protests against racial inequality on college campuses across the country reached a fever pitch in November with some wins at the University of Missouri. It will be interesting to see how student demands and this movement evolve.

  8. Steve MacLaughlin from Blackbaud put together an interesting Slideshare on 50 Fascinating Nonprofit Stats that became so popular that Blackbaud created a whole website around it.

  9. Many nonprofits made preparations for today’s Giving Tuesday campaign (perhaps using the nifty interactive data dashboard that allows you to slice and dice online giving data, or some new Facebook giving tools). But some nonprofits, feeling that it’s just a gimmick, opted out of participating in Giving Tuesday at all.

  10. The Ford Foundation announced that a big part of their new direction will include further investing in networks and institutions. As Darren Walker described: “Networks are fulcrums for creativity and dissent, beacons of stability, scaffolding for aspiring change makers, and connectors for social innovators.” And to help create more effective social change networks, network entrepreneur theorists, David Ehrlichman, David Sawyer, and Jane Wei-Skillern  offered 5 Steps to Building an Effective Impact Network.

Photo Credit: Jens Schott Knudsen

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How an Assessment Propels a Nonprofit Forward

nonprofitSometimes I work with nonprofits that are really stuck.

They have been spinning their wheels for months (maybe years) and can’t seem to get out of a vicious cycle that might include insufficient funding, a disengaged board of directors, struggling programs, or an inability to articulate their value to outsiders. They continue to have the same conversations month after month, wanting to do more and be more, but unable to figure out what’s holding them back.

When that is the case, a Financial Model Assessment can be really instrumental in moving the nonprofit forward.

Last week, I led the culminating meeting of a Financial Model Assessment for one of my clients. In this meeting I bring board and staff together to discuss my findings after a 3-4 month assessment of how every aspect of their nonprofit (strategy, vision and mission, board and staff structure, marketing, etc.) contributes to (or detracts from) their ability to bring sustainable money in the door.

This meeting is always my favorite part of the process because it starts to move a nonprofit forward in several ways:

Taboo Topics Are Uncovered and Discussed
Let me be clear, this is a challenging meeting. Through the course of the Assessment, I often uncover one or two things that are happening at a nonprofit that everyone knows about (and may even be discussing privately) but no one is willing or able to address as an organization. Perhaps the nonprofit is running a program that drags the organization down, or the board is not pulling their weight, or the staff is not structured effectively. In this meeting, nothing is sacred. Anything that holds the nonprofit back is fair game. It can be incredibly helpful to have someone finally put everything out in the open for the organization as a whole to discuss. Because if you don’t articulate and analyze the problems, you have no hope of overcoming them.

Board and Staff Are Energized
Once those problems are out in the open, there is often a palpable energy that begins sparking around the room as individual board and staff members begin to realize that there is a better way. It may not be easy, and it may push them and the organization in new, challenging ways, but it is exciting and hopeful and energizing. Every single time I have led one of these Assessment meetings a noticeable energy beings to build. It’s the acknowledgement among board and staff that they don’t have to be stuck anymore.

A Clear Path Emerges
And the reason they don’t have to be stuck anymore is because the Assessment lays out a path forward that frees the nonprofit from the spinning wheels. Suddenly board and staff have a set of steps and a strategy that they can discuss, analyze, and execute. They may not agree with or integrate every recommendation I make, but they at least have a future path around which they can mobilize.

Change Begins
This meeting, and the Financial Model Assessment that instigates it, can often be the first step in a new direction. It can be the inflection point at which board and staff finally recognize together, as a critical mass, that the status quo just won’t work anymore, and they must come together to chart a smarter, more strategic future course. It is the place where everyone acknowledges that change — true change — is necessary and possible.

If you want to learn more about the Financial Model Assessment I conduct for nonprofits, check out the Financial Model Assessment page here, or download the benefit sheet here.

Photo Credit: Till Krech

 

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