One of my predicted “5 Nonprofit Trends to Watch in 2017” is that we will see “More Analysis of What Nonprofit Financial Sustainability Requires.” In other words, I think (hope) in this new year that nonprofit leaders and their funders will work to figure out how to make nonprofits more financial sustainable.
Financial sustainability means that both the way money comes in the door (revenue) and the way money goes out the door (expenses) happen in a smart, strategic way. When they do, you have a robust financial model.
In my mind, one of the first steps toward that sustainability is for nonprofit leaders to look inward. While there are many reasons for the financial instability that plagues the nonprofit sector — from the Overhead Myth, to restricted funding, to lack of financial training — nonprofit leaders sometimes perpetuate the dysfunction themselves with an unhealthy attitude toward money.
Nonprofit leaders must embrace money as a tool — rather than a scourge — that can help them better achieve their mission.
So in this new year, in order to get closer to financial sustainability in your own nonprofit, I challenge you to ask yourself these questions about money:
- Do I embrace money as a tool to achieve our mission?
As the ultimate cheerleader of your nonprofit’s board and staff, you must ask whether you yourself fully embrace money. Money has long been viewed as a necessary evil in the nonprofit sector. We don’t want too much of it (for fear of scaring off donors); we don’t want to ask people for it (for fear of rejection); we don’t want to make our board go out and get it (for fear they will bolt). But it is your role as leader of your nonprofit to eschew those outdated notions and instead recognize that a smart, well-executed money strategy can be instrumental to achieving your mission.
- Do we know our actual costs?
Not just the full costs to run each of your programs (which is important), but the overall costs of executing on your strategic plan. I can’t tell you how many nonprofit leaders I meet who a) don’t have a strategic plan in place or b) if they do, they haven’t tied it to money. You simply will not accomplish anything if you don’t analyze and plan for what it will truly cost to accomplish your goals as an organization. So start by using this Bridgespan tool to figure out the full costs of your programs and then add to that the other organizational and infrastructure costs necessary to achieve your overall strategic goals.
- Do we have a financial model?
So that’s how money flows out of the organization, but to fully flesh out your financial model you need to plan for how money will flow into the organization. The funny thing about money is that if you are smarter and more strategic about it, you will attract more of it. So instead of hoping and praying that enough money will show up at your doorstep, create an overall financial strategy that includes your tactics for how you will attract each applicable revenue line (individuals, foundations, corporations, government, and/or earned income) that flows into your financial model.
- Does our board understand and contribute to our financial model?
Once you’ve figured out your financial model, you must get your board fully involved in it. A nonprofit will never be financially sustainable if money is left solely to the staff to figure out. That means the board needs to understand revenue and expenses, over the long-term, and how they apply to the overall strategy of the organization. And it is not enough for them just to understand it, they must contribute (in many and various ways) to the successful implementation of that financial model.
- Do we ask funders to support the effective execution of our financial model?
You can’t just have a great financial strategy on paper, you also need to invest in the structure and systems necessary to execute on that strategy. That means you have to hire talented money-raising staff, acquire functional technology, develop capable donor systems, create compelling marketing and communications. Those elements make up your money-raising function, and in order to make it effective you have to invest in those elements. So figure out what that will cost and convince some funders to pay for it.
It’s time to get over your money issues. You will not achieve financial sustainability unless you fully embrace money as a critical conduit to the social change you seek.
Photo Credit: Daniel Borman
In this month’s Social Velocity interview, I’m talking with Linda Baker. Linda is the Director of Organizational Effectiveness at the David and Lucile Packard Foundation.
In this role, she leads the Organizational Effectiveness (OE) team as they invest in grantees to build their core strengths and maximize their impact. Through these investments, the OE team aims to build healthier, better connected organizations and networks ready to bring about greater change in the areas the foundation cares most about. The OE team works in collaboration with the four program grantmaking areas of the foundation, and also engages with the broader field on capacity building and good philanthropic practice.
Linda has also served the foundation as program officer in the Local Grantmaking and Children, Families and Communities programs, and as an analyst and associate editor in the Center for the Future of Children.
If you want to read interviews with other social changemakers in the Social Velocity interview series go here.
Nell: You recently took over leadership of the Packard Foundation’s Organizational Effectiveness program. What are your plans for the future of this program? Where do you see opportunities for change or growth in the work Packard does to build stronger nonprofits?
Linda: It is an incredible honor to lead the Organizational Effectiveness (OE) team. I’m proud to be a part of a foundation that actively embraces a commitment to effectiveness by helping our nonprofits partners strengthen their fundamentals so they can better achieve their missions.
The best capacity-building grantmaking happens in open and authentic conversation with nonprofits. At the Packard Foundation, this means that changes in OE funding are driven through continuous listening to our nonprofit colleagues about where they are strong and where they would like to grow – as leaders, organizations, and networks. While many of the funding requests remain similar to the past (like support for strategic planning and fund development planning), a few topics have recently become more prevalent. For example, as nonprofits and leaders focus on movement building and their ability to be flexible and strategic in an ever-changing environment, we are hearing more requests for funding on leadership development and diversity, equity and inclusion. We have also seen an increase in interest in projects that focus on nonprofits better understanding their financial situation and increasing their financial resilience.
I’m also excited about our participation in the Fund for Shared Insight, a funder collaborative that supports nonprofits in seeking systematic and benchmarkable feedback from the people they seek to help. This collaborative believes that foundations will be more effective and make an even bigger difference in the world if we are more open—if we share what we are learning and are open to what others want to share with us, including our nonprofit partners and the people we seek to help. It is early days, but the possibilities are promising.
Nell: The Packard Foundation is way ahead of the pack in terms of actively investing in stronger nonprofit organizations. What do you think holds other foundations back from providing capacity building support (like planning, leadership development, evaluation, etc.)? And what can be done to get more foundations funding in these areas?
Linda: This work is incredibly important. People are the engine of change, and they need appropriate training, tools and support to get their work done. The good news is that momentum seems to be building. Last year we talked with twenty foundations who reached out to us on this work—and we are always happy to provide insight to our peers in this way. I’m also encouraged by the standing-room-only crowds at Grantmakers for Effective Organizations (GEO) conferences, which often focus directly on the importance of capacity building.
An increasing number of our peers have embraced this approach to grantmaking. Both the Hewlett Foundation and the Meyer Foundation have OE programs similar to ours. The Ford Foundation’s BUILD program works to support institutional strengthening in a big way. Many others support the capacity of leaders – we particularly admire the work of the Haas Jr. Fund in this area.
JPMorgan Chase and the Aspen Institute recently issued a report discussing roles and opportunities for business in nonprofit capacity building. And the 2016 GEO publication on capacity building is full of examples of foundations providing capacity building support to nonprofit partners.
For any foundations on the fence, we will soon be releasing our 2016 Grantee Perception Report data that shows that our grantees who receive OE support rate the foundation as more responsive and a better partner. Data from our evaluation last year shows that one to two years after their OE support ended, nearly 80% of grantees reported significant increases in capacity and 90% reported continued investments in capacity building a year after grant completion. We are confident that these investments build lasting change.
Another bright spot is the feedback work of the Fund for Shared Insight that I mentioned earlier, which is investing in stronger nonprofit organizations through experimenting with investments in feedback loops. Shared Insight provides grants to nonprofit organizations to encourage and incorporate feedback from the people we seek to help; understand the connection between feedback and better results; foster more openness between and among foundations and grantees; and share what we learn.
Nell: You have been actively involved in the Real Costs effort to get funders and nonprofits to understand and articulate the full costs (program, operating, working capital, fixed assets, reserves, debt) of the work nonprofits do. How do you see that movement progressing? Are minds changing? Are we, or when will we, reach a critical mass of nonprofits and funders embracing full costs?
Linda: As you and your readers know, this question is fundamentally about the relationship between funders and nonprofits. Nonprofits that have trusting relationships with their funders and an understanding of what it takes to run their organization can talk with funders about what it truly costs to deliver outcomes over the long term. In response, funders with a nuanced understanding of a nonprofit’s financial requirements will be able to structure grants more effectively to achieve those outcomes.
The move for funders to understand the financial resources nonprofits require for impact is gaining steam. I’ve been encouraged by the level of interest and conversation in California alone, and I know conversations are happening nationally too. The Real Cost Project in California is gearing up for the next phase, and we are pleased to be supporting that work and to be thinking about these ideas at the Packard Foundation. I am hopeful that California funders will continue to embrace the conversation and consider how funders can strip away unnecessary processes and promote transparent dialogue about how to best support the work of nonprofits.
One part of the challenge is that we are going up against misguided notions that good nonprofits should not invest in their infrastructure or their people. These ideas are embedded in our culture, and it takes time to change perspectives. If we can get a critical mass of foundations to join the conversation and consider what they can do to improve, and ensure that nonprofits have the tools to understand the financial requirements needed to get to outcomes, that will be progress.
Nell: You and your team at Packard OE have created a great Organizational Effectiveness Knowledge Center website with a deep set of resources for building stronger nonprofit organizations. Foundations are sometimes hesitant to offer resources (beyond money) to nonprofits, but you have made a conscious choice to move in this direction. Why and what could other foundations learn from your experiences here?
Linda: Thank you! We created the Knowledge Center to share our perspective and resources about improving organizational and network effectiveness with the goal of helping nonprofits, our consulting partners, and other funders make their work even stronger. The Knowledge Center is a place for us to share our perspective on a number of topics from network development to leadership and coaching to evaluation, and discuss the latest in the field from conferences and publications.
In addition to providing grantmaking support, we believe that sharing this information will increase our impact on the nonprofit sector and advance the capacity building field. Change does not happen in silos, and we don’t want our nonprofit partners to spend time reinventing the wheel. So, we decided to create a space to exchange what we’re learning and the resources available to help support organizations in this work.
We hope that the Knowledge Center will be a place to exchange learning and reflections, and we encourage users to engage with us by commenting on your experience with these topics or submitting resources that you would like us to consider sharing. And, while you’re there, leave us a comment to let us know what you think of the Knowledge Center and how we can improve.
Photo Credit: David and Lucile Packard Foundation
I don’t have to tell you that November was rough.
A shocking end to an intensely divisive presidential campaign has left many in the social change world reeling. From trying to understand the underlying issues that are dividing our country, to figuring out how to move forward from here and what the future may hold, November was full of soul-searching, blame and calls to action. And growing activism and protest added to the feeling of unrest. But beyond the election there were some bright spots — a new experiment in growing individual giving, a new way to evaluate nonprofits, and new technology to watch in 2017.
Below are my picks of the 10 best reads in the world of social change in November. But I know it was an incredibly busy month, so please add what I missed in the comments. And if you want a longer list, follow me on Twitter @nedgington.
You can see past months’ 10 Great Reads lists here.
- With a presidential election outcome that almost no one predicted, there was plenty of conversation about what everyone missed. From deep rural disaffection, to the “class culture gap,” to political correctness on college campuses, there was no shortage of analysis about what might be causing such deep political divides in our country. As always, Pew Research added critical data to the conversation by breaking down America’s political divisions into 5 charts.
- Some lay blame at the feet of philanthropy. From philanthropy forgetting about the white working class, to elite distance, there were many theories. But philanthropic historian Benjamin Soskis was perhaps most insightful: “We must admit that philanthropy…failed. With a few notable exceptions, grant makers have not given enough attention to our nation’s civic health. No matter how much more attention nonprofits and foundations have given to advocacy work, this election calls out the need for deeper structural investments in the civic infrastructure on which advocacy rests. There is a desperate need for more funding of grass-roots social-justice organizations that can speak to the anxieties and fears of Americans across the nation.”
- And there was real concern about what a Trump presidency could mean for the social change sector. Vu Le provided some balm to worried nonprofit leaders, David Callahan predicted 6 effects on the social change sector, and Lucy Bernholz worried about the impact on civil society. But at least in these early days, some nonprofits have actually seen a significant spike in support.
- Amid the soul-searching and prediction there were also many calls to action. NPQ offered 10 questions for nonprofit boards to ask themselves and 4 things for nonprofits to do post-election, Vu Le suggested nonprofits and foundations get on the same page, and Lucy Bernholz offered some practical advice.
- But perhaps most inspiring was Ford Foundation President Darren Walker urging social change leaders to stay hopeful because “We can, and must, learn from history that the greatest threat to our democracy is not terrorism, nor environmental crisis, nor nuclear proliferation, nor the results of any one election. The greatest threat to our democracy is hopelessness: the hopelessness of many millions who expressed themselves with their ballots, and the hopelessness of many millions more who expressed themselves by not voting at all. If we are to overwhelm the forces of inequality and injustice—if we are to dedicate ourselves anew to the hard and heavy lifting of building the beloved community—then the cornerstone of our efforts must be hope.”
- Amid the political upheaval, activism and protest were on the rise. The ongoing protest of the Dakota Access Pipeline that would carry oil from western North Dakota to Illinois at the Standing Rock Indian Reservation continued to grow in size and attention in November.
- And Chobani yogurt CEO Hamdi Ulukaya has become something of a corporate activist by fighting for and employing immigrants and refugees.
- Writing on the Markets for Good blog, Andrew Means is completely over Overhead. Instead he encouraged us to move to a cost per marginal outcome metric to evaluate nonprofits. Yes!
- Beginning the 2017 predictions a bit early, the Nonprofit Tech for Good blog offered 5 Nonprofit Technology Trends to Watch in 2017.
- Along with the Gates Foundation, ideas42 is experimenting with a new approach to growing charitable giving in the US — helping individuals set philanthropy goals. Fascinating.
Photo Credit: Emanuele Toscano
Amid all of the uncertainty in the wake of the election, one thing is sure. In order to survive and thrive, nonprofit leaders cannot stick their heads in the sand. As others have already enumerated, there is much to be done to prepare for the road ahead — from ensuring your board is actively engaged, to bolstering your partnership with funders, to growing (or launching) your advocacy efforts.
As part of all of this, it is critical that nonprofit leaders not go it alone. They must understand and harness the power of networks in order to grow their ability to influence the future.
As Jane Wei-Skillern and Sonia Marciano put it, networked nonprofits
“see themselves as nodes within a constellation of equal, interconnected partners, rather than as hubs at the center of their nonprofit universes. Because of the unrestricted and frequent communication between their different nodes, networked nonprofits are better positioned to develop more holistic, coordinated, and realistic solutions to social issues than are traditional nonprofit hubs.”
And now — more than ever — we need a social change sector that is coordinated and offers real solutions to the many social challenges we face.
But what does that look like? How does a single nonprofit leader analyze and begin to grow her organization’s networks?
She must work with board and staff to analyze their current and potential networks and create a plan for growth, by asking these questions:
Who Else Is Working on Similar Social Issues?
What other entities are working on similar issue areas? Are you connected to them? In a significant way? If not, make a list and start getting your board and staff to forge alliances, where possible. And ask each of these entities where else you should be connected.
Who Are the Leaders in Other Sectors?
Beyond just the nonprofit space, are there key for-profit industries or local, state or federal government entities that impact your set of social issues? Are you connected to these networks in a significant way? If not, get busy.
Who Are the Policymakers Impacting Your Issue Area?
To the earlier point about moving into the advocacy space (which more and more social change experts are encouraging nonprofits to do), think about local, state or federal policies that might impact your work. Who are the policymakers you should be talking to in order to make sure they fully understand the issues and their impact? Do your networks include these policymakers? If not, get to work.
What Expertise Do We Lack?
A single organization has only a very limited list of core competencies, but you will need a lot of varied expertise to create the social change you seek. So where are you lacking? And who out there (people, organizations) have that expertise? Find them and figure out how you can partner in a significant way to move forward.
Who Are the Influencers?
What about people who are not represented above, but who have the ear of those who are? Who are the key influencers, and are you connected to them? If not, again make a list and start attacking it.
Once you know all of the people and groups to which you want your organization connected, start assigning parts out to your board and staff. Set up meetings to explore how you can start partnering towards bigger social change.
Because we need social change leaders who are not frightened by the looming future, but rather aligned and empowered to face it together.
If you want to learn more about building networks for social change, read my interviews with network experts Anna Muoio, Jane Wei-Skillern, and Sean Thomas-Breitfeld and check out the New Network Leader website.
Photo Credit: Martin Grandjean
In this month’s Social Velocity interview, I’m talking with Ruth McCambridge.
Ruth is Editor in Chief of the Nonprofit Quarterly. Her background includes forty-five years of experience in nonprofits, primarily in organizations that mix grassroots community work with policy change. Beginning in the mid-1980s, Ruth spent a decade at The Boston Foundation, developing and implementing capacity building programs and advocating for grantmaking attention to constituent involvement.
If you want to read interviews with other social changemakers in the Social Velocity interview series go here.
Nell: The Nonprofit Quarterly sometimes serves as a watchdog for the nonprofit sector. For example, shortly before his death last year, Rick Cohen took the nonprofit sector to task for not standing up against anti-refugee legislation. But in some ways the sector’s hands are tied because of real or perceived rules against too much political activity. What is (or should be) the nonprofit sector’s role amid an increasingly polarized, gridlocked political system?
Ruth: The nonprofit sector’s hands are by no means tied and pretty much everyone knows that. We who work in 501(c) 3s do have to avoid partisan political activity and be a little careful when it comes to direct lobbying, but this leaves a whole world of political activity in which nonprofits can be and are involved, and there are plenty of powerful examples of political activism by nonprofits.
Look at the way that planned Planned Parenthood Action (a 501(c)4) has mobilized around this election season. Four years ago, in fact, the Sunlight Foundation found it had the highest ROI of any electorally focused PAC.
This response you speak of, of not being allowed to be political is, it seems to me, a convenient and patently obvious cop-out. It’s not that nonprofits do not know they can be involved in these kinds of issues, it is that they are employing a facile excuse for not doing what is right.
What is perhaps most disturbing about this dynamic – what most exposes the true nature of the excuse – is the tendency of some nonprofit infrastructure groups to mobilize nonprofits only on the most institutionally self-interested causes, resisting any limitations on fundraising, for instance. The fact that these campaigns are launched in favor of refugee rights to a safe harbor is not attractive to those who expect integrity from the sector.
Of course, there are issues that combine long term institutional self-interest with the interests of communities – for instance, recently a few statewide nonprofit networks have stood up for a living wage requirement and have accompanied that with work on rate adjustments, but in general, nonprofits, specifically those which are not expressly organized around advocacy, need to consider how to use their institutional power for what is right and stop playing coy in the face of current intense political scrums around issues of basic human and civil rights.
But let’s get back to the NPQ as watchdog idea. We have been hearing this increasingly over the past few years, but we have always tried to afflict the comfortable so maybe our voice has just become louder. We have many more readers than this time last year – I know that!
Nell: The mainstream media is sometimes criticized for holding the nonprofit sector to an unfair standard compared to the private sector. Do you agree with that criticism, or is the nonprofit sector not analyzed enough?
Ruth: That unfair standard coin has two sides. The nonprofit sector is more trusted by the public than government or business and that means that people expect more from us in terms of consistency of ethics. When we violate those higher expectations – yes – we may look like we are being held to a higher standard because the contrast between what they want and expect to see from us and what we give them is sometimes so starkly disappointing. This, by the way, causes some of the obsession with executive salaries that are seen as overly high. There is a sensitivity to wage justice in the context of mission and other compensation of staff that is easy to play on because people just expect us to act from the highest possible ethical position.
Nell: As a journalist, what is your take on the state of journalism and its role in democracy given the 30% decline in the number of journalists over the last decade. What will become of journalism and its role in democracy? And what do you make of the emerging breed of nonprofit newsrooms?
Ruth: Journalism is a changing form, and I would be talking far above my pay grade to suggest that I knew exactly what it was evolving toward, but it has always been clear to me that the role of journalism is central to democracy – to the ability of a populace to act in an informed manner and thus it is as important to democracy as the right to associate, which is at the basis of our nonprofit sector.
In a way, this commonality of purpose links the two, and so it is no surprise that there are now more nonprofit journalism outlets springing up – entities that are not placing profit above mission. That makes sense.
Just as interesting are the conversations around how people choose who can be trusted to inform them and on what basis, and who is going to pay for the long term investigative journalism that always has to be central to the mix, and what part open data plays in breaking stories. Other interesting trends are the evolution of citizen journalism, collaborative journalism and niche journalism. It is unendingly interesting.
Nell: In your interview last Spring with Douglas Rushkoff he had some very interesting things to say, one of which was that the nonprofit business model is superior because it more equitably distributes wealth than the for-profit model. Do you agree with his assessment, or what is your take?
If we do not want to encourage the pillaging of the earth and its peoples by the few – I guess I do agree.
Photo Credit: Nonprofit Quarterly
October was a bit of a whirlwind in the world of social change. Continued concerns that philanthropy is not positioned to truly impact wealth inequality, a confusing pivot by Charity Navigator in the Overhead Myth movement, some case studies of networked approaches to social change, and a great blog series on nonprofit financial health all made for some interesting reads.
Below is my pick of the top 10 social change reads in October. But, please add what I missed in the comments.
- There seems to be a growing discussion around whether philanthropy, which results from wealth inequality, can actually be effective at remedying that inequality. Writing on the openDemocracy blog, Michael Edwards takes the Ford Foundation and other foundations working on wealth inequality to task for not seeking to reform the underlying systems that feed that inequality. As he puts it, “Imagine what would happen if we re-configured the supply of money for social change…It would mean the wholesale transformation of institutional philanthropy, since for Ford and others like it an assault on privilege is essentially an assault upon themselves.” And in an interesting and related development, this month head of the Ford Foundation Darren Walker joined the corporate board of Pepsico, which some argue contributes to the obesity epidemic and ultimately economic inequality. But David Callahan argues that Walker could serve as a positive force to push Pepsico to “do better.”
- For only the second time in its 26 years The Chronicle of Philanthropy‘s annual Philanthropy 400 list ranks a nonprofit other than the United Way Worldwide as the biggest fundraiser. This year Fidelity Charitable, which houses donor advised funds, took the #1 spot. And some think this is a bellwether for philanthropy. But Jim Schaffer has some issues with the list and how it ignores the deeper complexities of philanthropy.
- If you are looking for data about where the social sector is going, this month provided lots of it. From Fidelity Charitable’s report on the future of philanthropy, to a new study from the Alliance for Nonprofit Management on nonprofit board chairs, to new data from the Urban Institute on the nonprofit workforce.
- In a head-scratching move, Charity Navigator, one of the proponents of the campaign to overcome the Overhead Myth wrote a blog post arguing that nonprofits that keep their overhead percentage to 15% or less are “excellent.” Many, took them to task.
- On the eve of the presidential election, Kiersten Marek from Inside Philanthropy offers some predictions about how philanthropy focused on women’s and children’s issues might fare under a Clinton presidency.
- In what has become an incessant drumbeat, ProPublica again criticizes the American Red Cross, this time for a botched response to the Louisiana flooding this summer.
- As I mentioned earlier, I’m a huge fan of Twitter, but it’s struggling. NPR tech writer Laura Sydell wonders if becoming a nonprofit might be the answer for this social network that is playing a growing role in social change efforts.
- Using networks for social change is a hot topic lately. Talia Milgrom-Elcott provides a case study for a networked approach to growing STEM education, and R. Patrick Bixler, Clare Zutz, and Ashley Lovell provide a case study on using networks for regional conservation. But Jake Hayman, writing in Forbes argues that philanthropy actually dis-incentivizes nonprofits to pursue a networked approach.
- In a not-to-be-missed blog series, the Nonprofit Finance Fund provides a great tutorial on “Best Practices for Nonprofit Financial Health” (part one, part two, and part three).
- And if you wonder why you are here and what your role is, look no further than Steven Pressfield who writes: “I believe that life exists on at least two levels. The lower level is the material plane…The higher level is the home of…the Muse. The higher level is a lot smarter than the lower level. The higher level understands in a far, far deeper way. It understands who we are. It understands why we are here. It understands the past and the future and our roles within both. My job, as I understand it, is to make myself open to this higher level. My job is to keep myself alert and receptive. My job is to be ready, in the fullest professional sense, when the alarm bell goes off and I have to slide down the pole and jump into the fire engine.”
Photo Credit: Peter Griffin
In this month’s Social Velocity interview, I’m talking with Jane Wei-Skillern.
Jane is the co-author of the groundbreaking 2008 Stanford Social Innovation Review article, “The Networked Nonprofit,” and a leading researcher on networks for social change. She is a senior fellow at the Center for Social Sector Leadership at the University of California Berkeley’s Haas School of Business and has also served on the faculties of the London, Harvard, and Stanford Business Schools. For the past 15 years, her research has focused on high impact nonprofit networks, network leadership and network cultures.
You can read other interviews with social changemakers in the Social Velocity interview series here.
Nell: Jane, you and Sonia Marciano arguably coined the term “networked nonprofit” with your 2008 Stanford Social Innovation Review article of the same name. But is the idea of creating and using networks to create social change necessarily new to the space? How is a networked nonprofit different now than in the past, or what has changed?
Jane: In our article, we were most interested in the ways in which leaders and organizations catalyzed and engaged in collaborations successfully. Thus, the focus in the article was much more on the culture, or the norms and values, of what makes collaborations succeed, rather than a strict definition or structure of what collaborations should look like.
The concept of partnerships, collaboration, alliances, networks, or any number of other terms we could use, are of course nothing new in the nonprofit sector. In fact, we are not particular about the terminology that is used to describe collaborative efforts or whether they choose to use the term “networked nonprofit” at all. These lessons were drawn from detailed case studies of successful networks, many of which had been operating for years or decades before we studied them as researchers.
At the same time, we used the term “networked nonprofit” to describe a particular approach to collaboration, one that was oriented around social impact above all else, that emerged from the bottom up by community members in the field, as a way to address problems more effectively, rather than collaboration for collaboration’s sake. The networks were unique in that while they might have been catalyzed by a few instrumental actors initially, all participants worked in true partnership, as peers and equals to drive toward field level impact.
Consequently, they were able to achieve significant commitment, investment and support from participants, and generate leverage on resources and capacity, to achieve mission impact much more efficiently, effectively, and sustainably. It is this experience and wisdom about what was working well in the field that we wanted to bring attention to, especially at a time when so many in the field were struggling to scale impact through individual social entrepreneurs/social enterprises by proliferating program/organization innovations, building organizational capacity, scale, and brands.
Nell: How is the concept of a network different than or related to the concept of a social movement, like BlackLivesMatter? Are social movements the same or different than networks?
Jane: I believe that the concepts that enable social movements to succeed are very similar to those that would enable networked nonprofits to succeed. Social Movement scholars and analysts have highlighted four stages of successful social movements which were succinctly described in this article. These four stages are:
- A community forms around a common goal
- The community mobilizes resources
- The community finds solutions (what I call “fourth options”)
- The movement is accepted by (or actually replaces) the establishment
In this respect, networked nonprofits are very similar. The network emerges around a common goal, rather than a particular program or organizational model. The community mobilizes the resources from throughout the network, and based on existing relationships in the community. The solution is emergent and comes from the community members themselves, rather than being pushed from the top down. And finally, once a network is up and running and proves itself to be effective, it becomes the primary vehicle for change, rather than the individual organizations themselves.
Nell: You recently launched a new site offering resources to those interested in becoming a networked leader. What is your goal with this new site?
Jane: The stated mission of the website is: “To champion network leaders, and the networks that they serve, to nurture change on the challenges that dwarf us all.” It’s an interesting story about how we came to create this website together.
In early 2016, I had the opportunity to work with Children and Nature Network to share my research on network leadership through a series of webinars with their network members. Through this project I got to know Amy Pertschuk, co-founder of Children and Nature Network, who found the ideas so compelling that she offered her services pro bono to help develop a web site to share resources.
Initially, Amy asked if we should create a domain name focused on me and my research. I immediately realized that that would be too limiting. In order to achieve leveraged and scalable impact through this website, I absolutely needed to practice what I preach and make the site much less about me and much more about championing network leaders and the networks of which they are a part.
It also made sense to reach out to some of my most inspiring and trusted colleagues who have deep experience leading, developing, and writing about networks themselves to develop the website jointly. We have all worked to build this site to support experienced and aspiring network leaders. The resources on the site have been collected and curated by a community of practitioners and network supporters working to increase the impact of social sector leaders and organizations by promoting the principles of successful networks.
Nell: Is the networked approach right for every nonprofit, or does it apply better to certain types of leaders or organizations? And how can a nonprofit leader interested in this approach move forward with it?
Jane: I like that you emphasize that it is an approach rather than a structure or model. Sometimes people think that they need to reorganize or restructure in order to be a network. Instead, I view it as a mindset and leadership approach that can be used by people in all types of organizations, whether in the private, public, or nonprofit sectors. Though I do believe that it is particularly relevant in the social sectors where the primary objective is, or should be, to generate social value that is not owned or captured by any single entity, in contrast to private sector organizations whose objective is to generate shareholder value.
The network leadership principles focus on: mission before organization; governance through trust-based relationships, rather than top down controls; promotion of others rather than oneself; and building of constellations rather than stars. These can be applied at all levels of an organization, from the executive suite to leaders out in the field. It is a shift from traditional leadership approaches that focus on the charismatic individual who has formal authority to get things done, to a more open-sourced approach to addressing social problems.
Network leaders start with the mission and engage others (especially those they seek to serve) to mobilize resources to support them doing what they would have wanted to do for themselves. It is a significant departure from doing ‘to’ and instead working with others as peers, equals, and true partners.
Photo Credit: Harvard Business School
I was in a meeting with a group of nonprofit leaders the other day, and one of them voiced an often-heard complaint: “There just aren’t many foundations funding nonprofit capacity building.”
I was instantly reminded of my mother’s admonishment when I would come home from school with complaints about a classroom rule or a frustrating teacher. She would say, “Well, you have a mouth on you, don’t you?” Her quip was intended to encourage me to stop complaining about an inadequacy (however small, in my case) and do something to change it.
While I am the first to bemoan the lack of adequate resources in the nonprofit sector, nonprofit leaders themselves do have some agency to turn the tide and find funding to create more effective and sustainable organizations.
Rather than searching for donors who already express an interest in funding nonprofit capacity (like fundraising staff and systems, program evaluation, technology), it is actually more effective if a nonprofit leader takes it upon herself to create her own capacity funders.
But that requires a process, like this:
Move From Scarcity to Abundance Thinking
You can’t hope to solve your capacity challenges without thinking that they are, in fact, solvable. Many nonprofit leaders are so used to going without that they don’t allow themselves and their staffs to envision what could make things better. So start by brainstorming with your staff the hurdles standing in your way (lack of fundraising staff, inadequate technology, poor long-term planning, disengaged board of directors). Then list the kinds of investments you could make to solve those challenges (new staff positions, new technology and systems, strategic planning, board training) without constraining those potential solutions due to their costs.
Create a Capacity Building Plan
Once you have articulated what is standing in your way and the potential solutions to those hurdles, create a plan for overcoming your nonprofit’s challenges. Because funders often see capacity funding as more “risky” than traditional programming support, a nonprofit leader interested in securing capacity building funds must put together a clear plan for the need, solutions, costs and execution plan for capacity support. Clearly articulate what capacity changes you need to make, why, what those changes will help you accomplish, and over what timeframe.
Create a Capacity Building Budget
Attached to your capacity building plan must be the dollars necessary to implement the plan. What would it cost for a new donor database, a program evaluation, or your other needed capacity investments? Do the research and then create the capital requirements, over an adequate timeframe (2-3 years), for the capacity building needs you have. Now you know how much capacity capital you need to raise.
Brainstorm Capacity Donors
Just as you would with a traditional capital campaign, create a list of potential donors to whom you will pitch this “capacity capital campaign.” This is where the real magic happens — when you turn traditional donors into capacity building donors, perhaps without them even knowing it. A good capacity building donor is someone (a major individual donor, board member, or foundation funder) who is already a donor to your nonprofit and can be convinced (through your excellent persuasion skills) that an investment in your capacity building plan (above) will actually help your organization do even more of the things they love.
Work the Prospect List
Just as you would in a major donor campaign, begin meeting one-on-one with these prospective capacity building donors to share your capacity building plan and articulate how critically important these capacity building investments are to the future of your work together. Make a clear, compelling argument about how greater organizational capacity will help you further the mission that these donors love. Connect greater effectiveness and sustainability directly to more programming, more people served, more outcomes achieved.
Demonstrate the Return on Their Investment
Once you’ve secured them, provide those donors who become capacity builders a regular update on the progress of your capacity building efforts. And I have seen tremendous results that nonprofits can report on these types of capacity investments. One of my clients was able to translate $65,000 worth of capacity building investments in strategic planning, board development, fundraising training and leader coaching into 300% growth in the number of people they reached with their services. Another client turned $350,000 worth of capacity building investments in a new donor database, fundraising staff and training, and donor research into a $1.4 million annual increase in fundraising. If you make enough and the right kind of capacity investments, you can see gains in programming, efficiency, and fundraising effectiveness, so share those wins with those who invested in them. And believe me, your capacity donors will be hungry for more.
Instead of continuing to complain about a lack of capacity funding in the nonprofit sector, let’s fix it. A big part of the solution lies in nonprofit leaders planning for and initiating capacity building conversations with their current donors. And in so doing, nonprofit leaders themselves can change philanthropy for the better.
To learn more about turning your donors into capacity funders, download the Launch a Capacity Capital Campaign Step-by-Step Guide.
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