What I love best about my job is opening nonprofit leaders to new and bigger possibilities. Last week was a busy one. I was in Phoenix for part of the week speaking at the Planned Giving Roundtable Conference and then I flew to New York to lead a board retreat at the National Guild for Community Arts Education.
When I am speaking to or leading a group, I love the moment when they move from discouraged, exhausted or burned-out, to energized by new ways of thinking.
At the Planned Giving Roundtable I delivered a keynote address about the power of a theory of change. A theory of change is such an incredible tool for helping a nonprofit articulate what value they provide the community. And once you have articulated that value, a theory of change is a jumping off point to:
- Chart a strategic direction, which guides the action of the organization and focuses limited resources
- Prove the results the organization is achieving, which allows the nonprofit to,
- Attract more support, leading to the holy grail in the nonprofit sector,
- Sustainable Community Change
So the theory of change serves as the fundamental building block in making that process happen, like this:
Because the theory of change is so instrumental, I believe that every nonprofit organization that is working toward social change should have one. Without a theory of change, you don’t know what you are trying to accomplish, how you will get there, or whether you have accomplished it, and you certainly won’t attract the funding necessary to get there.
So once I (hopefully) convinced the group in Phoenix about the importance of a theory of change, I flew to New York City to help the board and staff of the National Guild for Community Arts Education actually develop their own theory of change.
It was so exciting to see the group work together to articulate how their organization puts community resources to work towards community change. It’s not easy to come to agreement about exactly what change an organization is working towards, which is why I think it is important to have an outsider leading that process.
At the end of the day, board and staff were energized and excited about their evolving theory of change and how it could help them chart a new strategic direction, focus resources, and attract more support and momentum.
That is the moment I love. When people who are so passionate and working so hard for community change, can take a step back and articulate how and why they do the work that they do. Because it is in taking that big step back that you can begin to develop a strategy for bringing hoped for change to fruition.
Photo Credit: Dean Morley
It’s no secret that nonprofits struggle with money. In fact, the Nonprofit Finance Fund’s most recent State of the Nonprofit Sector Survey found that 41% of nonprofit respondents ran a deficit in 2012. If we really want to rewrite this rule for the nonprofit sector, we need to make some pretty big changes.
So here’s a radical idea.
What if every nonprofit board were responsible for bringing in 10% of their nonprofit’s annual operating budget?
That means that if your nonprofit’s budget is $1 million, your board would be responsible for raising $100,000 each year. They could do that through a combination of give/get activities, meaning they could all write personal checks (at whatever level makes sense for them individually) and then use their unique skills, experience and networks to raise the remaining amount.
That’s a crazy idea, right?
I don’t think so. Here’s why.
The Board Must Really Understand the Money Engine
A board of directors simply cannot separate themselves from the financial engine of their nonprofit. The entire board must fully understand and contribute to how money flows to the organization. They cannot argue that money is the purview of the staff; money HAS to be part of the board’s job. Until we make the board really participate in making the financial engine run, they won’t be able to have substantive conversations about how to raise or spend that money.
The Board Must Share the Burden
I’m so tired of silly, small board fundraising goals. Does a 15 member board that brings in only $15,000 out of a $1 million budget really make a difference? Absolutely not. That’s pennies. If they are truly going to lead the nonprofit that they serve, they must share the financial burden. Ten percent of the operating budget starts to make a significant dent, so let’s start there.
The Board Must Tap Into Their Unique Assets
I am not suggesting that we force every board member to ask individuals for money. Far from it. Rather, I’m arguing that nonprofits start getting really strategic about tapping into each individual board member’s strengths and assets in order to make a bold fundraising goal a reality.
But you can’t just turn to the board and tell them to bring 10% in the door. Some things are going to have to dramatically change in order to make 10% a reality.
Here’s what you have to do:
- Work one-on-one with each individual board member to create an annual plan for how they will meet their part of the goal.
- Give the board lots of different ideas for how they can meet their goal.
- Provide the training, materials, and education they need to execute on that individual plan.
- Hold each individual board member accountable for their individual plans and goals, check in with them every month to see how they are progressing.
- Have the board report at every meeting about their progress on the 10% goal.
If we really want to see a shift in how the nonprofit sector is funded, we need to make some pretty radical changes to business as usual. So start to entertain the idea. What would it look like if your board brought in 10% of your annual budget?
If you want help transforming your board, check out the Board Engagement consulting services I provide.
Photo Credit: Richard Matthews
There is a new nonprofit that nicely demonstrates the challenge of identifying a social problem and then developing the right strategy for solving that problem. Code.org’s sole aim is to solve the impending shortage of computer programmers. Because we have grown increasingly dependent on technology in our everyday lives, while our schools have not adequately prepared our children to keep up, we are facing an enormous shortage of people who can create the technology we desperately need.
Projections estimate that by 2020 we will need 1.4 million computer programmers, but will only have 400,000 computer science graduates, creating a 1 million person gap. And 9 out of 10 schools aren’t currently teaching computer programming. This is a huge problem.
Enter code.org. The nonprofit was founded earlier this year with two stated goals:
- Spread the word that there is a worldwide shortage of computer programmers, and that it’s much easier to learn to program than you think.
- Build an authoritative database of all programming schools, whether they are online courses, brick+mortar schools or summer camps.
They have an impressive team and list of supporters, many of the darlings of the technology startup world. And they’ve already attracted the attention of the national media and have a very savvy media presentation including some pretty cool videos.
Code.org is fascinating to me, not just because I agree that connecting how we educate our children with the skills they will need in the future is a huge issue, but also because code.org demonstrates the strategic struggle facing every social change agent. The struggle lies in identifying a social problem and then creating the right solution to the problem you’ve identified.
There are many ways you could attack the problem of a shortage of future computer programmers. You could decide to:
- Advocate for changes to the public education system
- Create new training sites around the country
- Develop coding games for kids
- Create a marketing campaign that encourages more kids to try coding
- Develop a database of available training programs
So far code.org has decided to focus on the last two. But it begs the question, why those two?
In identifying a social problem and then choosing a possible way to attack it, social change leaders must ask the following questions:
- What is the most effective entry point for changing this problem? For code.org they think the entry point is kids themselves, getting them to demand coding training, as opposed to changing education policy or increasing the supply of coding locations.
- How do we use our unique assets to address that entry point? Code.org’s biggest asset is their long list of technology celebrity supporters, so they are tapping into those people (Bill Gates, Mark Zuckerberg) to show kids how cool coding is. If, instead, code.org had a unique ability to move education policy forward, or proprietary coding software that more quickly delivered results they could have decided to go those routes.
- How do we structure our organization to deliver the solution? Right now code.org is a website with a series of videos and a growing database of training locations. So they don’t need a lot of staff or structure. If, however, they had decided to set up new training sites around the country or advocate for public education changes in every state, they would have needed a much larger operation with more locations and staffing.
- How will we measure if our solution is working? Code.org has clearly delineated where they need to be. By 2020 they want to see 1 million more computer programmers. So they have to figure out how many more college students they need in computer sciences, how many more high school students they need who can code, how many more middle school students who are dabbling in code and so on. I’m hoping they have metrics all along the way and the ability to see if the numbers are actually growing.
Code.org has very clearly defined a critical social problem and they have marshaled an impressive army of supporters to work toward change. It remains to be seen, however, whether they have asked the right questions and selected the right path for making that change a reality.
Board members sometimes stand in the way of a what their nonprofit needs most. I’ve talked before about the meaningless at best and destructive at worst distinction between “overhead” and “program” dollars. And board members often are as bad as donors at forcing nonprofits to ignore the very real costs of the work they do and their very real need for organization building dollars.
But board members could break this pattern by helping their nonprofit uncover, plan for and fund the staffing, technology, expertise and systems required to make the organization more effective at creating change.
Board members need to put their weight behind organization building. And they can start by giving their nonprofit these five priceless gifts:
- Permission to Talk About Real Costs. Stop asking your nonprofit staff to get by with less and less. Stop telling your Executive Director to lower the salary they can offer a talented Development Director, not to spend money on technology, or to use volunteers when they need experts. Instead, start asking what the real costs of the work are and how much you truly need to raise to accomplish your ambitious organizational goals.
- The Support of the Board. Once you start talking about real costs, you need to marshal the rest of the board to support organization building. Boards are often led by a vocal few who convince the rest to go along with their plans. If you can be that vocal member who articulates the need for organization building, how it will result in greater results over time, and how the board must be the champion of and seed investor in organization building, you can create a stronger, healthier nonprofit.
- A Capacity Plan. With the board in support of organization building, it’s time to put an organization-building plan in place. Ask the head of your nonprofit to spend some time coming up with a capacity building plan that will take the organization to the next level. Then present that plan at the next board meeting for a substantive conversation about what is truly holding the organization back and what it would take to move forward.
- An Organization Building Investment. Instead of asking that your annual donation go to your favorite program, be the lead investor in this new capacity building plan. Organization building dollars are very difficult to find. So those closest to the organization should be the first to step up and invest in capacity. And don’t just give the required amount. Make an investment that is significant to you. If you truly believe in this organization, take out your checkbook and make it hurt.
- Access to More Building Dollars. But don’t just stop there. Think strategically about who you could convince to join you in strengthening the capacity of the organization. Then make the case for why a Development Director, or a strategic plan, or an evaluation study, or new technology will grow the results your nonprofit is achieving. If board members start making a compelling case to their friends and colleagues about the importance of capacity building dollars, the sector could be transformed.
Board members can be an instrumental driver of stronger, healthier, more effective nonprofit organizations. But in order to get there, board members have to understand and embrace their leadership role in making organization building a reality.
If you want a roadmap for making your board more effective, register for our How to Build a Groundbreaking Board webinar.
Photo credit: asenat29
The constantly evolving world of social media can be absolutely exhausting. You want to keep up, but how can you when the number of sites grows every day? And each site competes with the others on look, functionality, audience size. I’ve finally decided to take the advice of many and focus my time on a select few sites. These are:
At first I was hesitant about Google+. Even though Google+ can’t boast anywhere close to the number of people that LinkedIn and Facebook do, it is still very much on my list. Google increasingly controls how people find content on the web, and it is more than likely that the search engine will increasingly reward those who use it (your content will rank higher in searches if you are using Google+).
But in addition to that, I’m pretty excited about Google Hangouts, Google’s answer to online meetings. I participated in my first Google Hangout in April with David Henderson (How to Use Real Performance Data to Raise More Money), and now I’m using Google Hangouts with small groups of nonprofit leaders in the Financing Not Fundraising E-Course. I also have client meetings via Google Hangout. But I think there is huge potential for even more with Google Hangouts.
To host all of this new activity I’ve launched a Social Velocity Google+ page. I plan to host some informal social innovation chats and perhaps move some of my monthly social innovator interviews from written exchanges to live or recorded Google Hangouts. So, on the Social Velocity Google+ page in addition to updates, articles and other happenings in the world of social innovation you can participate in upcoming Hangouts and interact with leaders in the social innovation space. I hope you will join me at Google+. You can follow the Social Velocity Google+ page here.
What are your thoughts on Google+? How effective a social media channel is it for you?
There was a really interesting interview last week in the Nonprofit Quarterly with Bill Ryan, author of Governance as Leadership, who recently led a study on coaching in the nonprofit sector. Coaching is a form of management consulting where a leader is given one-on-one strategic guidance.
An executive director can be coached to grow an organization, to build a stronger board, to revamp their financial model. Or as Ryan puts it, coaching answers the question: “If my organization wants to get to Point X, what do I, as a leader, need to do to build on my strengths and manage my weaknesses to help it get there?”
The concept of coaching is fascinating to me because, as Ryan points out, in corporate America coaching is much more commonplace than in the nonprofit world. If a CEO needs management counsel, they are encouraged to find a coach, whereas coaching for nonprofit leaders is often deemed a luxury. But, I think coaching is even more necessary in the nonprofit world. Nonprofit leaders, unlike their for-profit counterparts, often lack a management background having made their way to the top through program expertise.
The reality is that coaching for a nonprofit executive director can be absolutely transformative. It can make the difference between a program that is just getting by and a program that becomes financially sustainable and grows dramatically, with an engaged, committed board behind it.
Such is the case with ACE: A Community for Education, a nonprofit early childhood tutoring program. I have coached ACE Executive Director, Mary Ellen Isaacs for over a year since we completed an ambitious strategic planning process. They are now working to triple the number of students they serve and diversify and grow their financial model.
Here’s what Mary Ellen has to say about the coaching experience (or if you are reading this in an email click here to watch):
I believe coaching can be hugely transformative for nonprofit organizations, helping their leaders build the skills they need to grow their solutions far and wide. If you’d like to learn more about how I coach nonprofit leaders, check out the Coaching page of the website.
Photo Credit: wikimedia
I started a new blog series in March about overcoming the many fears that cripple the nonprofit sector, the first one being the fear of investment. Today I want to talk about the nonprofit fear of money. Because the nonprofit sector is focused on mission, as opposed to profit, money is often ignored at best, or feared at worst. Many nonprofit boards and staff find money distasteful, burdensome, and avoidable.
But money can be used as a powerful tool to create more social change. In order to overcome the fear of money and start using it effectively, nonprofit boards and staffs must:
Embrace Its Power
Without money, your compelling, inspiring, world-changing mission is only a sentence on paper. As much as we might like to deny it, nonprofits very much exist in a market economy. So instead of trumping all, mission is merely one of the things nonprofit leaders need to be thinking about as they are working toward social change. Because without a smart strategy for how you will secure and use money you are sunk.
Really, Really Understand It
Of course money is scary if you don’t understand it, and most nonprofit leaders don’t have a finance background. So learn all you can about money. Find an accountant who speaks English and can explain how money flows in and out of your organization. Make sure you are receiving and sharing with your board monthly financial statements that are understandable. Ensure board and key staff all have basic nonprofit financial management training so everyone speaks the same language and understands the key ratios they should be analyzing. This common understanding should serve to generate substantive conversations about the best use of money to further the work of the organization.
Involve Everyone in Raising It
I know I sound like a broken record, but EVERYONE at a nonprofit should be involved in bringing money in the door in a way that fits well with their skills and experience. Every board member should have a money responsibility. Be strategic about putting each individual to their highest and best money-raising use. And every staff member, even program staff, can be enlisted to explain the program to potential donors, gather client stories, or provide data about the program so that you can garner more support. No one at the organization should be allowed to say “I don’t do the money thing.” Money is everyone’s job, because with no money there is no mission, remember?
Budget for Having Too Much of It
It is unseemly for a nonprofit to operate a surplus. Funders don’t like to see an organization too far into the black, and board members become uncomfortable when “too much” money sits idle. But money sitting in a bank account means the organization no longer lives hand to mouth, continually putting out fires, and focusing only on keeping the doors open. Operating reserves allow an organization to think strategically, take some risks, streamline the business model, innovate the solution, and weather economic uncertainty all in the name of delivering bigger, better social impact. So overcome the taboo and budget for a surplus that creates operating reserves.
Talk About It. All. The. Time.
Because money is so central to mission you cannot make decisions about the organization, about programs, about staffing, really about anything without understanding the financial implications of those decisions. Therefore, you must be talking about money all the time. Not just when the finance committee of the board meets, or when you are reviewing the monthly financial statements, or when your latest fundraising event falls flat. Money must be a constant conversation. It must be fully integrated into everything you do.
The key to financial sustainability, and ultimately significant social change, is being smart about managing money. But you cannot be smart with money if you are afraid of it. Money can be a beautiful, powerful tool for creating social change. Embrace it.
Photo Credit: orudorumagi11
There is something pretty interesting going on in Illinois around nonprofit overhead costs. I have written many times (here and here for example) about how the distinction between “overhead” and “program” costs in the nonprofit sector is meaningless at best, and destructive at worst.
I’m really excited to see that the Donors Forum in Illinois is starting to host real conversations between nonprofits and philanthropists about the Real Costs (including administrative costs) necessary to create effective social change.
With the help of the Bridgespan Group, in March the Donors Forum brought nonprofits and philanthropists together for a one-day discussion about real costs in the nonprofit sector. They want funders to understand that it is not enough to fund only nonprofit programs. In order to create effective social change, nonprofits must also be able to fund the infrastructure, staffing, space, tools, and research costs of their work.
The image above is a graphic facilitation of the March session. The Donors Forum has also developed a great website with resources for nonprofits and philanthropists about real costs, including Ann Goggins Gregory and Don Howard’s seminal article in the 2009 Stanford Social Innovation Review “The Nonprofit Starvation Cycle,” reports and resources about nonprofit fiscal fitness, Grantmakers for Effective Organization’s study on how philanthropy is changing, and much more.
As part of their efforts, the Donors Forum has also put together this video that helps to explain, in very clear terms, the critical importance of funding ALL of a nonprofit’s costs:
I’m excited to see where this conversation goes and whether more nonprofits and philanthropists start having open, honest conversations about what it really takes to create lasting social change. I’m hoping to interview Valerie Lies, President and CEO of the Donors Forum, later this year about this initiative and where they hope to go from here. So stay tuned.
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