Social Velocity » return on investment

Moving From Fundraising to Financing

Nell Edgington — Wed, 24 Apr 2013 13:05:54 +0000

I’ve had a lot of great questions about the upcoming Financing Not Fundraising E-Course for nonprofit leaders. So I created a video that breaks the e-course down and explains exactly how it will work.

The Financing Not Fundraising E-Course is an excellent opportunity for nonprofits stuck in the starvation cycle to figure out what they can do to more effectively raise money and then create a plan for a more sustainable financial engine. The registration fee is per organization, so if you would like your executive director, development director and a board member, for example, to participate, they all can for one fee. You will just simply appoint one person as representative of the organization to participate in the coaching calls, and the others are free to “listen in” and help you with each step along the way.

The total time commitment over the course of two months is approximately 10-15 hours, which includes the webinars, coaching calls, Google Hangouts and homework assignments.

This E-Course is truly an investment in the future of your organization. By making the investment of the time and cost you will transform the money engine of your organization and recoup that investment many, many times over.

Watch the video below (or click here) to learn more. And if you have additional questions about the E-course, don’t hesitate to send me an email at nell@socialvelocity.net.

Register for the Financing Not Fundraising E-Course here

I hope you can join us!

About the Author: Nell Edgington is President of Social Velocity (www.socialvelocity.net), a management consulting firm leading nonprofits to greater social impact and financial sustainability. Social Velocity helps nonprofits grow their programs, bring more money in the door, and use resources more effectively. For more information, check out Social Velocity consulting services and clients.

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How to Use Real Performance Data to Raise More Money

Nell Edgington — Mon, 22 Apr 2013 14:02:09 +0000

A big topic of conversation lately has been whether donors really care about impact, or whether they simply just give based on less scientific things like their emotions, or their friends recommendations. Which is why I’m excited to announce that I’ll be participating in a Google Hangout April 30th about using data to attract donors.

Writing in the Stanford Social Innovation Review, Tim Ogden claims that donors have never really been interested in impact. And Ken Berger from Charity Navigator and William Schambra of the Hudson Institute debate (here and here) whether moving the nonprofit sector toward performance management helps or hurts social change efforts.

To add to this conversation, David Henderson and I are hosting a Google Hangout, “How to Use Real Performance Data to Raise More Money,” on Tuesday, April 30th at 2pm Eastern. David is a super smart guy who runs Idealistics, a consultancy that helps nonprofits learn from their outcomes data, increase impact, and demonstrate results to funders and stakeholders. David’s professional focus is on improving the way social sector organizations use information to implement higher impact poverty interventions. He has been quoted in the Chronicle of Philanthropy and has written for Change.org and the Huffington Post. You can read my interview with him from a year and a half ago here.

David and I thought it would be interesting to host a conversation with nonprofit leaders about how nonprofits can use real performance data to raise more money. We’ll kick off the hour-long conversation with a couple of points and a case study or two of nonprofits that are using data to raise more money, but then we’ll open it up to you for questions. You can send us your questions ahead of time (via email to nell@socialvelocity.net or dhenderson@idealistics.org) or simply post them to the Google Hangout here as you watch.

I hope you’ll join us!

How to Use Real Performance Data to Raise More Money
A Google Hangout with David Henderson and Nell Edgington
Tuesday, April 30th, 2013
2pm Eastern

Can nonprofits that use real performance data to raise more money? Are donor increasingly interested in impact data? How can nonprofits communicate their program data to donors? And how should nonprofits respond to questionable performance claims by other organizations? Join David Henderson from Idealistics and Nell Edgington from Social Velocity in a Google Hangout on Tuesday, April 30th at 2pm Eastern to discuss these and many more questions about how nonprofits can use real data to raise more money. We’d love to have you participate in the discussion, so send your questions ahead of time to Nell or David, or leave a comment at the Google Hangout here.

Photo Credit: 401(K) 2013

Investing in a Sustainable Nonprofit Future

Nell Edgington — Wed, 10 Apr 2013 13:05:20 +0000

I wrote last month about the crippling nonprofit fear of investment. Related to that, nonprofits need to understand and embrace the concept of Return on Investment. Nonprofit leaders often exist in such a world of scarcity that they don’t recognize that an investment today can have a huge payoff down the road. And not recognizing the value of a return on investment, particularly when it comes to a nonprofit’s fundraising function, can keep nonprofits in starvation mode.

One of the ways I consult with nonprofits is coaching a development director or executive director to increase money flowing to the organization. We work on getting board members to bring money in the door, identifying new donors, crafting a compelling message, launching new revenue streams, developing an overall financing plan.

This work could have a huge future payout:

Board members no longer sit on their hands but actively recruit new donors to the organization.
New donors are acquired through a thoughtful, strategic major donor campaign.
A compelling case for investment convinces foundations and major donors to invest at higher levels and for longer periods.
A new earned income stream brings in unrestricted revenue.
An effective financing plan puts scarce resources to their highest and best use.

If you think of this in terms of return on investment it’s a no-brainer. You have two options:

Continue to struggle day-to-day for the foreseeable future, or
Make an investment today in order to dramatically increase funding and sustainability tomorrow

Let’s do the math. If a nonprofit with a budget of $1 million were to spend, say $5,000 on hands-on coaching to develop a financing plan, create a compelling case for investment, get their board engaged in fundraising, and launch a major donor campaign those elements could translate into well over $100,000 of new money annually for the nonprofit.

Here’s how:

A financing plan clarifies and marshals resources so staff and board know exactly where the money flows and who will do what to make it happen. The very act of creating and monitoring a financing plan could increase funding by 5%, or $50,000.
A case for investment, when done well, becomes the backbone of any and all money-raising efforts. It can be integrated into your website, your social media efforts, your donor letters, your presentations. Telling a concise, compelling story makes donors sit up and take notice and adds perhaps another 2% increase, or $20,000.
If your entire board starts (in their own unique ways) bringing money in the door that could increase your bottomline as well. If each member of a 15-person board starts to increase their own giving and/or the giving of those in their network by $1,000 each, that’s another $15,000.
A major donor campaign charts a logical, strategic way for you to identify and acquire new donors. Getting strategic about how you find and recruit those donors will ensure much greater success, perhaps a 5% increase, or $50,000.

So with very conservative estimates the original $5,000 investment in coaching translates to $135,000 in new money every year thereafter.

My favorite example of this is when I helped KLRU, Austin’s PBS station use $350,000 in capacity capital to do many of the above things. After 3 years of implementing a new financing plan, using a new case for investment, and more, they were raising $1.6 million in NEW REVENUE each year. That’s a huge return on investment.

If you make a smart investment in improving the money engine of your nonprofit, that investment will pay off many times over, creating a more secure financial future for your organization.

If you’d like to learn more about how I coach nonprofit staff to bring more money in the door, check out my Coaching services, or send me an email to schedule a time to talk further.

Photo Credit: MeckiMac

Using Social Media to Reach Mission: An Interview with Wendy Harman

Nell Edgington — Wed, 03 Apr 2013 13:05:34 +0000

In this month’s Social Velocity blog interview, I’m talking with Wendy Harman. Wendy is the Director of Social Strategy at the American Red Cross. Her goal is for the Red Cross to be a social organization ready for 21st century humanitarian work. She is responsible for their national social media presence, including the listening program, social content and community engagement.

You can read past interviews in our Social Innovation Interview Series here.

Nell: The Red Cross has fully embraced social media. How specifically has it helped you get closer to achieving your mission?

Wendy: Our social engagement philosophy centers around using social tools to execute our mission. That is, moving beyond using social engagement for communications and marketing purposes and onto using these tools and our increased ability to network horizontally with huge communities for service delivery. The Red Cross has five main service areas: disaster services; international services; serviced to the Armed Forces; preparedness health and safety; and biomedical services (blood). We have probably made the most headway in operationalizing during disasters. For example, we’ve created the Digital Operations Center (funded by Dell) in order to holistically see and synthesize social conversations from disaster-affected areas. So far, we’ve found three main purposes for the center:

We use the center to provide real-time and anticipatory situational awareness. This means we can provide all decision makers in the Red Cross disaster services, as well as many of our partners outside the organization, with real-time trends from the affected areas. We can identify gaps in service, the biggest needs, the most talked-about subjects as they relate to the disaster, and more. This helps us know what’s happening on the ground in the moment and also can help our experts anticipate service delivery that will be needed in the coming days or weeks.

We use it to route needs. When we see an individual tweet that says, “I need a peanut butter and jelly sandwich. I haven’t eaten in days because of this hurricane,” we can route this information to our teams on the ground who are organizing our mobile feeding efforts.

We provide individualized information. We have built a digital volunteer role and now have trained volunteers who can “deploy” in place and help to get information, resources, shelter locations, mobile feeding locations, real time tips, and a bit of confidence and support to people who need it. For example, during tornado warnings we often see a big increase in tweets from people hunkered down in their basements or bathtubs—and they are scared. The Red Cross has a lot of expertise on exactly what to do when you find yourself in this situation, and we’re able to provide those tips in the exact moment people need them. In addition, a big part of our mission is to provide hope and comfort in people’s worst moments, so we’re also encouraging the digital volunteers to offer that hope and comfort via digital “hugs,” or words of support.

Nell: How do you manage the ever-changing and ever-expanding social media environment? How do you determine where to spend your time and when to change your approach?

Wendy: The age of the social web has affected the role of the nonprofit sector in general and the role of the Red Cross, particularly during disasters. We are expanding from an organization that executes discrete relief activities with trained experts and volunteers, to an organization that acts as a platform to connect and mobilize people affected by disasters. We are tool agnostic; the foundation of our social engagement program centers around listening to, engaging with and acting on social conversations. This way we stay nimble in our content, and we can adapt quickly with the public.

Nell: The Red Cross is a huge nonprofit and has more resources to put behind social media. How do you suggest small nonprofits logistically work social media into their marketing mix?

Wendy: Huge doesn’t necessarily translate to big budgets for social engagement. We are lucky to have three staff members dedicated to social engagement, but we’re really trying to work our way out of our jobs. In other words, rather than having the three of us triaging thousands of conversations per day, we’d like to see social engagement become part of every Red Crossers’ workday. My more concrete advice is to do what you can do well—you don’t have to be everywhere, you just have to really be in the places where you say you will be.

Nell: In some ways your role at the Red Cross is to help an aging institution embrace change and the new realities of the world we live in. Why do you think the Red Cross has been open to change when other large and seasoned nonprofits have not?

Wendy: I think innovation and adaptation has always been baked into the DNA of the Red Cross. One of my favorite Clara Barton quotes is, “I have an almost complete disregard of precedent, and a faith in the possibility of something better. It irritates me to be told how things have always been done. I defy the tyranny of precedent. I go for anything new that might improve the past.” No doubt we have built up institutional walls over the years, but at the same time, we have broad recognition of the value of partnerships and collaboration, and we’re working to be sure we make openings in those walls so everyone can participate in the Red Cross network and our humanitarian mission. We’re also getting quicker at adopting new technologies, but I think the openness in our organizational culture to strive to be better is more of a key indicator about our relevancy than our adoption to a particular technology.

Nell: Some nonprofits will embrace social media if they think there is a fundraising payoff, but the Red Cross has obviously found a huge mission payoff as well. How do you explain to nonprofits that are hesitant to spend time building communities what the payoff could be and how to be patient in finding it?

Wendy: This is the million-dollar question. I think my favorite quote about this is from Socialnomics author Erik Qualmann who says, “The ROI of social media is that your business will still exist in 5 years.”

Picking Up Where Uncle Sam Leaves Off: An Interview with Erine Gray

Nell Edgington — Fri, 14 Dec 2012 13:23:20 +0000

In this month’s Social Velocity blog interview, we’re talking with Erine Gray. Erine is the founder of Aunt Bertha, an online Benefit Corporation that matches people in need with federal, state, county, city or nonprofit services to specifically address their situation. Erine studied economics at Indiana University, public policy at the University of Texas and spent the better part of eleven years consulting (six of which were spent helping governments operate more effectively).

You can read past interviews in our Social Innovation Interview Series here.

Nell: Aunt Bertha essentially exists to fix an inefficient system of connecting services to those who need them. It seems to me your model is at the heart of an ongoing debate about whether there are some public goods that simply cannot be turned into marketable items. Obviously you believe there is a market for you, but why? What sorts of public goods can be turned into a market?

Erine: I’ve always been kind of a public policy nerd and understand that government has a vital role in the social safety net. Having graduated from the LBJ School of Public Affairs, I understand that government programs don’t have the luxury of catering to a certain segment. Programs like Food Stamps (now called SNAP) and Temporary Assistance to Needy Families (TANF) don’t get to choose who they serve because they *are* the safety net.

The private sector is different. A consulting firm can choose to only serve telecommunications companies with 200 – 500 employees. A shoe store can focus on high-end running shoes. These types of organizations can survive if they hustle and convince enough people to become customers.

When you start to look at the amount of money spent by both government social service programs and charities, the figure is spectacular. It just takes a little research and a few clicks in Excel to see the enormous amount of money that is spent every year either telling people about these programs or determining whether or not people qualify.

If we accept, for a moment, that the public social safety net should exist (and I believe it should), we then must ask the question: is the public doing a good job of administering these programs?

I’ve spent the last 10 years working in this industry, with six of those years working on projects with city and state governments. My answer to this question would be: there’s plenty of room for improvement.

We don’t need to start over because government does some things very well. But we should break down the problem and see what should be outsourced to qualified vendors.

Should governments build their own marketing teams to tell people about their programs? Or should governments work with professional marketing firms to get the word out as needed? Should charities build their own fundraising software or would Blackbaud [fundraising software] do the trick?

Nell: The fact that you are a for-profit company is fascinating to me. Can you explain how your business model works and how you make money in a space that has traditionally been dominated by the nonprofit and public sectors? And do you envision those public-run services (like 211) eventually going away?

Erine: Aunt Bertha picks up where Uncle Sam leaves off by making it easy to find and apply for social services online and through mobile devices. Our service is and always will be free for people in need or those working on their behalf. Our users include everybody from the homeless (yes, they definitely have internet access in many cases), working moms, family caretakers, social workers and case managers.

We list every government and charitable program we can find on our site for free as well.

Many charities and government agencies don’t yet offer a way for people to apply online. We offer a software platform that allows them to accept and process applications online. Charities pay us a monthly fee for this service. Our customers are housing programs, churches, government agencies, charter schools or any other organization that provides need-based services to people.

In your question you refer to the 211 service, I would hope that there will always be a place for these call centers. The 211 call centers are staffed with committed volunteers that help people navigate very difficult circumstances, 24-hours a day. However, if Aunt Bertha is successful, more people in need will be able to find social service programs themselves (without needing to call someone). We believe that if more people find help themselves, the cost of running a government funded call center will go down – which is better for everyone involved.

Nell: Any social entrepreneur just starting out struggles with the question of whether to organize as a for-profit or nonprofit. How and why did you make your decision?

Erine: I went back and forth about this one. Our mission is to make human service information accessible to people and programs. To truly be successful at this mission, I believe we need to be a sustainable business.

With our software, governments and charities are saving money over the way they currently work. They are willing to pay us a monthly fee to help them provide a better service to people in need. We think this is a better approach and more importantly, we never wanted to be in a position where we are competing with our customers for donations. That’s why we chose to be a certified Benefit Corporation (a business that meets higher standards of mission and accountability).

Nell: How widespread is Aunt Bertha? How many people are using the service now and what are your goals for the future?

Erine: Aunt Bertha is available in every zip code in the United States. Our service is both on the web and available on most smart phone browsers. Although our service works everywhere, our focus so far has been in Texas – where we have a critical mass of programs in most zip codes.

So far we’ve helped more than 20,000 people find help and we believe we’re just getting started. Right now we’re focused on making our service as intuitive and user-friendly as possible. We think we’re on to something big, but we don’t want to skip the important steps of listening to our early adopters.

Nell: You were part of the Austin Technology Incubator and an Unreasonable Institute fellow. Have you been able to attract investment capital and if so what about your model is attractive to them?

Erine: We were fortunate enough to have been accepted as an ATI company this year and it has provided us access to coaching, introductions and inexpensive office space. ATI is a joint initiative between the City of Austin, the State of Texas and the University of Texas and it feels like they’re all behind us. Whenever you can be in an environment where more and more people are rooting for you it’s always a good thing.

The Unreasonable Institute was a very memorable experience for us. I had a chance to live with 21 of the world’s most interesting social entrepreneurs and words can’t describe what I learned during that experience. I highly recommend people check out the site and try and figure out a way to get to know as many people associated with the Unreasonable Institute as possible. They’re making a big dent in the world.

We recently raised capital after bootstrapping the business for the first two years. We’re very excited about our future. Our investors so far have liked the audacity of our mission. We think we can organize the world’s social service information so people and programs can find what they need in seconds. And because we sell software-as-a-service in a huge industry, we’re an attractive investment with a scalable model.

Most importantly, we’re starting to see – in real-time – the supply of and demand for social services. That’s never been done before and we hope that this data will allow some amazing things to happen. It’s hard not to get behind this goal.

10 Great Social Innovation Reads: November 2012

Nell Edgington — Fri, 07 Dec 2012 13:07:18 +0000

With a national election, hurricane Sandy, and Giving Tuesday, November was a busy month. All three events encouraged reflection about social change. And at the same time we had some pretty interesting arguments for how two of the sectors supporting social change (philanthropy and government) needed to shift as well. All made for a fascinating month of reading.

Below are my top 10 picks for what was worth reading in November in social innovation. And as always, please add what I missed to the comments. And if you want to see an expanded list, follow me on Twitter, Facebook, LinkedIn, Pinterest or ScoopIt.

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

Even though hurricane Sandy hit at the end of October, much of November was spent cleaning up and reacting to the powerful storm. Patrick Davis reflects on what our reaction in natural disasters says about human nature.

And from Sandy we moved into the national election where, once it was over, there was much to learn. First Lucy Bernholz marvels at Nate Silver (the statistician that very accurately predicted the outcome of the election) and wonders what the corollary is in the philanthropic world. She asks “Who will be the first big philanthropist to put predictive analysis to the test in the social sector?” And apparently there is much to be learned from the Obama campaign’s email tactics during the campaign.

November also saw the launch of “Giving Tuesday,” an online effort to kick off the philanthropic season, just as Black Friday and Cyber Monday are the beginning of the commercial Christmas season. While it seems like a great, innovative idea, Tim Ogden disagrees arguing that it won’t “materially affect giving in any positive way.”

It looks like it’s time to get tough with foundations. The PhilanTopic blog argues, “No More Free Rides: Foundations Need to Increase General Operating Support Now.” Amen to that! And GlassPockets, the Foundation Center’s online effort to increase foundation accountability and transparency now has 50 foundations participating, representing $138 billion in assets and more than $6.5 billion in annual giving, or 15% of all U.S. foundation giving.

And the government has work to do as well. Former Social Innovation Fund Director Paul Carttar writes a call to action about what government can do to more effectively encourage social innovation.

The drum beat for nonprofits to measure outcomes continues. Writing on the Stanford Social Innovation Review blog, Mollie West and Andy Posner encourage nonprofits to go the way of business and government and start using The Math of Social Change.

And there is a really interesting new development in the ongoing effort to compare and rate social change organizations. The Social Impact 100 Index was unveiled in November. Modeled after the S&P Index in the financial markets, this effort by the Social Impact Exchange analyzes and picks the best 100 nonprofit investments for donors. It will be very interesting to see how this effort evolves and whether it transforms the nonprofit rating space.

Despite a tough economy, charitable giving rose slightly in 2011. But the real news is that online giving has grown to a $22 billion industry.

And speaking of fundraising in the online world, social media has completely disrupted the old model for how a nonprofit engages a donor, so says Julie Dixon and Denise Keyes. And Kivi Leroux Miller agrees.

On the Managing the Mission Checkbook blog, Kate Barr cautions that nonprofit sustainability isn’t just about revenue, it’s about 1) working to achieve your mission 2) integrating a successful business model and 3) adapting and changing. Agreed!

Photo Credit: kadorin

10 Great Social Innovation Reads: October 2012

Nell Edgington — Fri, 02 Nov 2012 12:48:04 +0000

It seems that October had two primary themes: moving nonprofits to measure outcomes and the evolution of philanthropy. The drum beat that nonprofits must find a way to measure what change they are creating has been growing louder, and every nonprofit leader would be wise to listen and understand this new trend. But in order to get to a place where most or all nonprofits are measuring outcomes, philanthropists must start paying for measurement. It is interesting to watch this all evolve.

Below are my top 10 picks for what was worth reading in October in the world of social innovation. And as always, please add what I missed to the comments. And if you want to see an expanded list, follow me on Twitter, Facebook, LinkedIn, Pinterest or my newest social media network, ScoopIt.

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

There were several great articles about the need for nonprofits to prove the change they are creating. Steve Boland at Nonprofits Assistance Fund kicked if off by encouraging nonprofits to compare their resources to the outcomes they achieve. The New Philanthropy Capital blog encouraged nonprofits to approach measurement with theory, courage and creativity. And on the Center for Effective Philanthropy’s blog, Lauren Gilbert provided a case study of BELL and how they measured outcomes.

And then to the ultimate question, “Will funders pay for measurement?”. Beth Kanter asks the question What is the Funder’s Role in Supporting Good Measurement? and Mario Morino (author of Leap of Reason) weighs in. And Phil Buchanan, CEO of the Center for Effective Philanthropy, argues “Foundations must step up and support robust nonprofit performance management systems.” Oh yes, please.

Writing in the New York Times Paul Sullivan explores how the advent of impact investing is pushing philanthropists to measure the impact of their dollars.

Even though the premier social entrepreneurship conference, Social Capital Markets, was in September, there were two great round-up blog posts about how SoCap moved the conversation about investing in social entrepreneurship forward. First was Jeff Raderstrong’s argument that we need to beware of the hype around impact investing and focus on solutions to social problems. And Christine Egger wrote a fabulous post on the Idealist blog about new ways to think about, fund & inform social change.

There were a couple of great posts about (the really sexy topic of) nonprofit budgeting. It may sound dry, but a nonprofit’s budget is an incredibly powerful tool for creating social change, so the more organizations that can harness that tool, the better. On the Nonprofit Finance Fund blog, Peter Kramer demonstrates how to connect your budget to your overall organization strategy. And Kate Barr argues that breakeven budgeting is the “biggest barrier to nonprofit financial health.” Amen to that!

Two great pieces this month from Lucy Bernholz who always makes us think, especially about the future. First is her piece on libraries and the future and then her laundry list of things we can no longer assume about the world around us.

I always love a well done infographic and PhilanTopic offers one with their Nonprofits’ Impact on the Economy.

Writing on the Social Earth blog Ashok Kamal reminds us that the work of social change is an exhausting roller coaster and we all need some “inspiration capital” to keep us going.

Nancy Lublin, CEO of DoSomething.org, describes that for the millennial generation, innovation is the status quo and they are “poised to bring the social and business worlds closer together – tying profit to social change, and strong local communities to a new global society.” Let’s hope!

It looks like the old is becoming new again as cities revive the idea of public, inner city markets.

Photo Credit: x1klima

How Do We Measure Nonprofit Effectiveness?

Nell Edgington — Wed, 24 Oct 2012 13:48:27 +0000

There is something exciting happening around measuring the value that nonprofits create. Several new efforts are underway to create a system for measuring and comparing how effective nonprofits are.

Just a few years ago, the only measure for a nonprofit’s effectiveness was the percent they spent on overhead expenses. If a nonprofit spent a magic 20% or less on non-program expenses they were deemed worthy of donations. This destructive way of evaluating nonprofit organizations has been losing favor over the last few years as rating agencies like Charity Navigator have recognized the need for a broader evaluation of nonprofit effectiveness. New measures have started to include outcome and impact elements.

But all of this begs the ultimate question which is how do we create a system for measuring and comparing nonprofits across the many social issues and operating models that make up the sector? Because however faulty the overhead percentage measurement was, at least it allowed a comparison of apples to apples. You could see how one nonprofit stacked up against another. But if each nonprofit organization is now creating their own theory of change, and their own outcome and impact measurements, how do we compare those to another nonprofit’s outcome and impact measures?

Enter a host of efforts to solve that very problem. One of these efforts is Markets for Good. They aim to create an infrastructure for evaluating nonprofit effectiveness based on outcomes and impact. You can watch their video explaining their efforts below, or if you are reading this in an email click here to watch the video.

And there are many other efforts to move the nonprofit sector toward measuring outcomes instead of spending practices. These include Idealistics, GiveWell, Philanthropedia among many others. But it’s not clear yet how any of these efforts will be able to analyze and compare the effectiveness of social change efforts because there are many pieces to that puzzle.

To truly be able to evaluate and compare the effectiveness of social change efforts, we have to:

Encourage nonprofit organizations to develop a theory of change, because you can’t measure whether an organization has created change if they have no idea what they are trying to change in the first place.
Give nonprofits resources with which to measure whether their theory of change is actually coming to fruition. Measuring outcomes and impact takes time and money.
Separate a single nonprofit’s efforts to create change from other forces working on the same social problem so that we can understand the effectiveness of a single organization.
Create a standardized system for comparing the ability of one nonprofit organization to create change to another’s ability to create change.
Connect such a system for measuring nonprofit effectiveness to systems already being created for for-profit social entrepreneurs (like GIIRS) so that those with money to invest in social change efforts can compare the social return they would get in a for-profit and/or nonprofit setting.
Communicate the results of those measures to philanthropic and social investors so they can make more informed, more results-focused investments, whether those be to nonprofit or for-profit social change organizations.

To me, comparing the ability of organizations to create social change is an enormous nut to crack. But it is an incredibly worthy endeavor. I applaud Markets for Good and the many other efforts working to create a system for understanding and comparing social change efforts. It will be fascinating to watch this space develop.

Photo Credit: KJGarbutt

Financing Not Fundraising: 7 Mistakes in Your Nonprofit’s Fundraising Plan

Nell Edgington — Wed, 17 Oct 2012 13:22:49 +0000

I can’t tell you how often I hear nonprofit leaders complain about how difficult it is to raise money, how tired they are of banging their head against the wall, how difficult this economy is. Well, there really is a better way. And it starts with a really good money plan for your organization. But again and again I see the same mistakes being made in nonprofit fundraising plans, which is the topic of today’s installment of our regular Financing Not Fundraising blog series.

If you’re new to the series, our Financing Not Fundraising blog series shows nonprofits how to break out of the narrow view that traditional FUNDRAISING (individual donor appeals, events, foundation grants) will completely fund all of their activities and instead work to create a broader approach to securing the overall FINANCING necessary to create social change. You can read the entire series here.

Here are the 7 mistakes to avoid in your fundraising plan:

Not Having A Plan At All. Yeah, not even having a plan is a huge mistake. It boggles my mind how many nonprofit organizations expect that money will magically appear at their doorstep. It takes an overall money strategy, what I call a Financing Plan, to effectively marshal your resources (staff, board, other volunteers, technology, materials) so that enough, and the right kind of, money comes in the door to achieve your goals.

Creating Just A One Year Plan. You cannot expect to create a financially sustainable organization if you are only planning for money one year at a time. Your financing plan should project at least 3-years into the future in order to ensure that you have sound financial footing from which to operate. A true financial strategy takes a long view and plans accordingly.

Including Only Private Dollars. Your money strategy must include ALL sources of money flowing to your organization, making it a Financing Plan. You cannot just plan for individual, corporate and foundation dollars, you also must plan for how government and earned income sources will flow, if they are appropriate to your model. And if you don’t have other sources of money beyond private dollars, you probably need to at least explore whether diversifying makes sense for your organization.

Not Connecting It to Your Strategic Plan. Ok, I’m going to assume that your nonprofit has a strategic plan, even though many nonprofits don’t have one or they have a poor one. But once you have a strategic plan in place, you have to connect your money strategy to that plan. What good is it to have lofty program goals if you have no idea what those goals will cost (expenses) and how you will raise the money to make them a reality (revenue). You must have a multi-year financing plan that directly relates to your multi-year strategic plan.

Ignoring Capital Goals. You can’t just raise revenue (the day-to-day money to keep the organization going), you also probably need capital (the money to build infrastructure, technology, systems) once in awhile. If you don’t include dollar goals for the amount of capacity capital your nonprofit needs, I doubt you will ever raise it. You cannot continue to operate with infrastructure, staffing, technology and systems that are inferior to your needs and goals. Determine how much capacity capital you need and include those goals in your financing plan.

Not Giving Your Board a Role. You cannot leave the burden of raising money solely on the shoulders of your staff. One of the key responsibilities of a nonprofit board of directors is to ensure the financial viability of the organization they serve. So this means that the board as a whole and each individual board member must understand and play a role in the money strategy of the organization. So start by requiring each board member to give and/or get a certain amount (usually your major donor level) and then make sure your board “money committee” is active and engaged, and finally integrate money into every meeting and conversation your board has. Money MUST be top of mind for the entire board.

Not Focusing On High Return Activities. Some fundraising plans include activities that a nonprofit has always done to bring money in the door without analyzing their effectiveness or expanding into new or more profitable activities. Start by analyzing the return of every money raising activity you engage in and then focus your money strategy on those that actually have a positive return.

I would love to see more nonprofits create a smart, long-term financing plan for their organizations. Because the reality is that those that do so will create more sustainable social change.

If you want to learn more about how to creating a financing plan for your nonprofit, sign up for our Creating a Financing Plan webinar.

And if you want to apply the other concepts of Financing Not Fundraising to your nonprofit, check out our Financing Not Fundraising Webinar Series, or download the 27-page Financing Not Fundraising e-book.

Photo Credit: Hiking Artist

How to Calculate the Cost of Fundraising

Nell Edgington — Fri, 14 Sep 2012 14:28:31 +0000

There is an analysis I wish every nonprofit leader would do which could transform how the sector is financed. If more nonprofit leaders took a step back and calculated the cost of fundraising, in all the various ways that they raise money, they could focus their efforts on the most effective activities. And stop pursuing things that exhaust their board and staff.

If nonprofit leaders understood the net revenue and cost to raise a dollar of every fundraising activity they engage in they could answer questions like:

How much does that gala really get us?
How effective is our direct mail campaign?
How does it compare with our email campaign?
Would it make sense to cancel our annual event and hire a major donor fundraiser instead?
Should we keep writing that government grant?

The Social Velocity recorded webinar “Financing Not Fundraising: Calculating the Cost of Fundraising” will help you answer these (and more) questions.

I asked for audience participation prior to the webinars. When people registered for this webinar, I asked them to submit some numbers from one of their past fundraising activities (an event, a direct mail piece, a foundation grant) so that I could calculate the fundraising costs of a couple of participants during the webinar.

Financing Not Fundraising: Calculating the Cost of Fundraising Webinar
Recorded
Download Now

This webinar will help you:

Calculate the return on investment of all your revenue-generating activities
Give you the net revenue raised and cost to raise a dollar formulas you need
Analyze which are effective fundraising activities and which are not
Articulate to board and staff why this analysis is important
Provide case studies of other nonprofit ROI calculations
Give you a process for analyzing and making decisions about all of your fundraising activities
Help you deal with the politics of abandoning poor performing activities

All webinar registrants receive:

A link to a recording of the webinar, which you can watch as many times as you like
The PowerPoint slides from the webinar
The ability to ask additional follow-up questions after the webinar

Download Now

Photo Credit: loco’s photos