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Planning

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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The State of the Nonprofit Sector in 2015

nonprofit sector surveyEarlier this week the Nonprofit Finance Fund released the results of their 7th annual State of the Sector survey about the financial health of the American nonprofit sector. This on-going survey, now in its 7th year, has become a fascinating marker to gauge how the nonprofit sector is evolving amid a changing economic climate.

The Nonprofit Finance Fund launched the survey in 2008, when the economic crisis was just beginning. This year results from 5,451 respondents show some positive signs of adaptation and growth, but also recurring challenges that continue to face the sector.

You can see the full results of the survey here and slice and dice the data yourself with their Survey Analyzer Tool here. But here are some of the key findings of this year’s survey.

Nonprofits are unable to meet a growing demand for their services:

  • 76% of nonprofits reported an increase in demand for services – the 7th year that a majority have reported increases.
  • 52% couldn’t meet demand, the third year in a row that more than half of nonprofits couldn’t meet demand.
  • Of those who reported that they could not meet demand, 71% said that client needs go unmet when they can’t provide services.

Nonprofits still (not surprisingly) struggle to make ends meet. While some nonprofits are achieving financial sustainability (47% ended 2014 with a surplus, the highest in the history of the survey), many still face real challenges:

  • 53% report three months or less of cash-on-hand.
  • 32% find achieving long-term sustainability a top challenge.
  • 25% struggle to be able to offer competitive pay and/or retain staff.
  • 19% can’t raise funding to cover their full costs.

And these financial challenges are due in large part to the catch-22 funders place nonprofits in by routinely covering only a portion of the full costs of the programs they intend to support:

  • 70% of survey respondents receiving Federal funding report that the government never or rarely pays for the full costs of delivering services.
  • 68% of respondents who receive state funding say the state government never or rarely pays for the full costs of delivering services.
  • 47% of respondents who secure foundation funding report that foundations never or rarely cover their full costs.
  • While 89% of nonprofits are asked to collect data to capture the effectiveness of programming, 68% of funders rarely or never cover the costs associated with measuring program outputs or outcomes.

So we still have a long way to go.

But those nonprofits who are faring well in this environment are those being strategic. As one human services nonprofit leader put it:

“Sustainable funding continues to be our greatest challenge. Our actions to address this challenge include developing and adhering to a strong and dynamic strategic plan; diversifying our program funding streams as much as possible; developing and communicating a strong community impact statement for our programs; and focusing on increased donor engagement in order to increase fundraising dollars.”

You can dig further into the data from this and past years’ surveys here.

Photo Credit: Nonprofit Finance Fund

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The Strategy of Social Change [Podcast]

nonprofit podcastI’ve gotten a few requests lately to participate in social change podcast series (see my podcast with Panvisio). I love discussing the many issues in social change work, so I’ve really enjoyed being part of these discussions.

This month Greg Cherry of The Philanthropy Hour asked me to participate in a podcast conversation with him as part of his ongoing podcast series with social change leaders.

In the podcast, among many topics, we discuss:

  • How leadership is the best ingredient for social change effectiveness.
  • What true leadership means.
  • What a Theory of Change is and why it’s crucial to any social change organization.
  • How to develop a Message of Impact and create a Case For Investment.
  • The importance of moving from fundraising to financing and what that shift looks like.
  • Debunking the “overhead myth.”
  • And much more…

Below is the podcast, or you can click here to listen to it.

 

Photo Credit: Ilmicrofono Oggiono

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Courageous, Adaptive Nonprofit Leadership: Pillar 1

leadershipAs I mentioned last month, the Leap Ambassadors (of which I am a member) recently released the Performance Imperative, a detailed definition of a high-performing nonprofit. Because I think the Performance Imperative is so important and every nonprofit leader should understand it and begin to use it, today I am kicking off a series to describe, one-by-one, each of the seven pillars of the Performance Imperative.

I think the Performance Imperative is so exciting because it can serve as a north star to the nonprofit sector, helping organizations analyze their own performance and create a clear roadmap for improvement.

As Lowell Weiss, one of the leading architects of the Performance Imperative, explained in my interview with him last month:

High performance is all too rare in our sector today. In fact, we don’t even have a commonly accepted definition of the term “high performance.” The Performance Imperative is our attempt to create that common definition and then start the process of creating guideposts to help nonprofits who are motivated to improve their performance for the clients and causes they serve.

So, first up in this series on the Performance Imperative is Pillar #1: Courageous, Adaptive Executive and Board Leadership.

Without true leadership, at both the board and staff level, you will achieve little as a nonprofit. This pillar is about asking hard questions, pushing the organization toward excellence, continuously improving and taking nothing for granted.

You can read the full description of Pillar #1 in the Performance Imperative, but here are a few key elements present in nonprofits that exhibit this pillar:

  • Boards “ask probing questions about whether the organization is living up to its promises and acknowledge when course correction is needed.”
  • Executives and boards “know that great talent is a huge differentiator between organizations that are high performing and those that aren’t.”
  • Executives and boards “know that they haven’t figured it all out and acknowledge that they still have a lot of work to do.”
  • Executives and boards “are constantly assessing not only what the organization should be doing but also what it should stop doing…redirecting scarce resources to the highest opportunity areas.”

In other words, nonprofit leaders who embody Pillar 1 of the Performance Imperative, ask hard questionsbuild a stellar staff, seek continuous improvement, and put resources to their highest and best use.

There is no doubt that there are many examples of this courageous, adaptive leadership in the nonprofit sector. One of those, I believe, is Molly Baldwin, founder and CEO of Roca.

Molly founded Roca in 1988, and by 2004 it was a multi-million dollar teenage pregnancy and violence prevention program.  But that year, Molly began asking some hard questions about the results Roca was achieving. She forced board and staff to take a huge step back and examine what they were doing and the ultimate effect that work had.  She led her board and staff through a rigorous refocusing and pruning effort to limit their target populations and use data to drive their interventions. Instead of continuing a laundry list of services to many different populations that had limited effect, she helped her organization refocus resources on where they could create real change — transforming the lives of young men in the criminal justice system.

It was a challenging transition to lead, but the results are impressive. An internal study overseen by Harvard’s Kennedy School of Government in 2013 found that Roca reduced recidivism 65% and increased employment by 100% for the men in the program. And Roca was chosen as the lead provider in Masschusetts’ first pay for success effort.

Ten years ago Molly could have continued on Roca’s then current path, continuing to do “good work,” but failing to ask hard questions about whether that work was really resulting in change. But instead, Molly brought everything to a halt and forced board and staff to grapple with some fundamental and incredibly risky questions. In the end Molly’s leadership transformed Roca into an organization that is truly delivering solutions.

That’s the kind of social change leadership we need.

If you want to learn more, download the Performance Imperative and read additional case studies here.

Photo Credit: William B. T. Trego painting depicting George Washington’s army at Valley Forge.

 

 

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The Nonprofit Sector’s Crisis of Confidence

rosieI sometimes wonder how many of the nonprofit sector’s challenges stem from a fundamental lack of confidence. Don’t get me wrong, there are deep structural dysfunctions at play in the nonprofit sector. The sector is held back by a lack of adequate financial resources and an on-going grantor/grantee power imbalance, to name just two.

But how much is a lack of nonprofit leader confidence also to blame? How much further could we go in the sector if more nonprofit leaders confidently stood up for what they believe, what they need, and the value of the work they do.

I am a huge believer in confidence. In fact, I think that those who exude confidence, even when they don’t necessarily feel it, are far more likely than those who don’t to be taken seriously and get what they want.

But often in the nonprofit sector that confidence is absent.

I think this lack of confidence stems from a fundamental feeling of inadequacy that pervades the sector. Nonprofit leaders are subjected to a recurring litany of false beliefs that include, nonprofits: “live beside the economy“, “aren’t as capable as business“, only “do good work,” and “should be grateful” for whatever they get.

But nonprofit leaders must free themselves from those crippling shackles. You must stand up and demand (nicely if you’d like) what you truly need. And you start by articulating the value your organization provides.

Let me give you an example.

A nonprofit leader whose organization had long provided critical services for a school district was fed up with not being paid for those services (they had to privately fundraise for the costs of the program). The nonprofit leader did her research on how much money her organization was saving the district (in increased student attendance, additional staff and instruction time, etc.) and how much the district was investing in other inferior solutions.

She put together a confident, thoughtful and decisive presentation, secured a meeting with the superintendent, and made her case for increased investment. The end result was a superintendent blown away by the evidence and the nonprofit leader’s presentation. For the first time ever the superintendent included significant, multi-year support for the program in the district budget.

This nonprofit leader could have simply swallowed the fact that the school district didn’t value the services her organization provided. But instead she pointed out the disconnect between value provided and money invested and stood up for her organization.

I would guess that most nonprofit leaders lack that kind of confidence. And in fact, for many years even the nonprofit leader above didn’t have it.

But there is so much to be gained from a confident approach. Aside from the potential of securing more resources, when you become a confident player you start to identify strategic partners (like the school superintendent above) who can be your equal in the work of social change.

Because partnerships are infinitely more successful when they are forged by two equal entities coming together to create value. This is true for partnerships between your organization and your vendors (like the school district) but also your funders, board members, advocates, policymakers — anyone that you need on board in order to get the work done.

Confidence isn’t just about getting more of what your nonprofit needs. It’s ultimately about effectively creating social change. And you can’t create social change with your head down and your voice low.

So stop living in the shadows. Arm yourself with data, a compelling argument, an army of advocates and, most importantly, confidence to forge what you need in order to create change.

Photo Credit: Library of Congress

 

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Nonprofit Leaders, Stop Wasting Your Time

nonprofit managementAs a general rule, nonprofit leaders are a self-less lot. You are so driven by your passion for social change that you are willing to perform any and all tasks required to get the job done. But there is a critical calculation that so many nonprofit leaders neglect. And that is to understand the value of their time and allocate that most precious resource effectively.

Yes, you read that correctly.

As the leader of your nonprofit your time is your organization’s most precious resource. Sure, board members, other staff members, and donors are absolutely critical to the work. But without you, there would be nothing. You are the visionary, the cheerleader, the linchpin around which everything (and everyone) revolves.

There are only so many productive hours in the day, so any hour you spend on one task is an hour you don’t spend on another task. You must put each hour of your working day to its highest and best use. As the most important connector for your nonprofit, you should be outside the organization as much as possible meeting with allies, funders, prospects, decision-makers, advocates who can help move your mission forward.

If you are stuck inside your organization updating a database, cutting checks, filing, or putting out fires, you are missing a huge opportunity.

So you need to use your time more effectively. Here’s how to start:

Create a Strategy
When a nonprofit creates and then manages to an overall strategy there is less time spent putting out fires and more time achieving outcomes and goals. So convince your board and staff to create a strategic plan and then manage to that plan. Move your organization’s culture from the reactive to the strategic and watch how you (and your staff and board) get more accomplished in the same amount of time.

Manage To Goals, Not Tasks
Once you have a strategy in place, you can manage your staff to goals, instead of discrete tasks. Whenever possible, delegate whole projects instead of specific pieces. Give a staff person the end goal you have in mind and the tools they need to get there and then empower them to do it their way. Check in on a regular basis to see how they are doing, but resist the temptation to micromanage. In so doing you get more off your plate while giving your staff license for creativity and initiative.

Regularly Meet One-on-One With Staff
I know I’ve said it before, but I’m a HUGE fan of the management power of weekly one-on-one meetings with each member of your staff. There are so many benefits. Your staff interrupts you less frequently because they know they have your undivided attention once a week, you are more willing to delegate because you know you have regular check-in points, staff learn how to problem solve on their own, and (most importantly) you have more time to GET OUTSIDE.

Find Administrative Help
As head of your nonprofit you must free yourself, as much as possible, from paper pushing tasks like filing, database maintenance, accounting. If you have the budget, hire an administrative assistant. If you don’t have the budget, recruit a volunteer to provide office support until you can grow your financial model to support administrative help. And while you are at it, outsource your accounting to a freelance bookkeeper or virtual CFO. Don’t put your administrative support at the end of the list of things your nonprofit needs. The sooner you free up your time, the better off your entire organization will be.

Nonprofit leaders, stop selling yourself and your organization short. Your time has tremendous value. So think clearly about how you allocate that limited resource and find solutions that put your time to its highest and best use. Free yourself to be the connector, fundraiser, and leader your nonprofit so desperately needs.

If you want to learn more about nonprofit leadership, download the Reinventing the Nonprofit Leader Book or Webinar.

Photo Credit: National Archives

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