Reader Question: How to Create a Budget for Nonprofit Growth

I announced last week that I’m launching a new series on the Social Velocity Blog. At least once a month I will answer a reader’s question on the blog. You can send me questions about social innovation, philanthropy, financing, fundraising, nonprofit management, strategic planning, you name it. This first time around I received so many great questions it took me a long time to choose. But I finally settled on a great one from Kelley Nicoloff.

I love getting your questions, so if you have a question you’d like to see answered on the blog, send it to me at nell@socialvelocity.net, post it on the Social Velocity Facebook page, or send it to me via Twitter @nedgington.

Here’s Kelley’s question and my response.

Hi Nell,

How do you determine a good budget for your non-profit when you are just starting out and have no funding? Right now, I am writing a grant and the grant is requesting statistics on the capital necessary to reach growth goals for the next three years. This is in reference to scalability and opening new sites across the country. Thanks!

Kelley Nicoloff, Uteam4u, Inc.

Kelley,

Whether you are just starting a new organization or you are 20 years into it you always need a plan for the future with an integrated financial plan. Creating a budget is really step 2, so don’t skip the most important step 1, which is to create the overall strategy. If you are writing a grant that requires growth goals over the next 3 years you need an overall plan for the next 3 years of the organization. So before you write that grant request you need to develop a 3-year strategic plan, which will detail your growth goals as part of an overall organizational strategy.

The strategic plan should include:

• Long-Term Goals. A handful of broad goals you want to accomplish over the next 3 years. Typically, the goals break down into:
• 1-2 program, or mission-related, goals. This is where you determine how you want to grow, where and over what period.
• 1 funding goal that describes how much money it will take to make this growth a reality, this is directly related to your budget described below.
• 1-2 infrastructure-related goals that describe the marketing, technology, staffing, board necessary, this is where you will start to outline what capital improvements you will need for growth to happen.
• Objectives for Each Goal. You need to break each goal down into the steps required to get there.




• An Operational Plan. It’s not enough to have a general sense of the direction you want to go in, you need to make the plan completely operational: include activities, deliverables, people responsible, and timeline.




• A Budget. You need to figure out the costs for all of these goals (expenses) and how will you raise the money to meet those costs (revenue and capital). As part of this you need to create a capital budget for the one-time costs of building an organization ready for growth. Your final budget must be directly tied to the goals and objectives of your 3-year strategic plan.

If you follow these steps and come up with a 3-year strategic plan, not only will you have the “good budget” that you need for the grant proposal, but more importantly,  your nonprofit will have put together a measurable, actionable plan for the future. It won’t be just a hoop you had to jump through for this particular funder. You will have a real growth plan that you can feel confident you can actually bring to fruition.

If you want to learn more about creating a financing plan for your organization, check our Creating a Financing Plan webinar.

Photo Credit: Cellular Immunity

Tags: creating a budget, grant proposal, nonprofit budget, nonprofit financing plan, nonprofit grant writing, nonprofit growth planning, nonprofit strategic plan

10 Great Social Innovation Reads: March 2012

March, perhaps because it included SXSW Interactive, seemed to be largely about the use of new media to tell social change stories. There are an increasing number of ways and examples of how those working to solve social problems can tell their stories and get people motivated to act, from video, to Pinterest, to infographics, to data visualizations and much more.

Below are my ten picks of the best reads in social innovation in March, but as always, please add what I missed in the comments. And if you want to see other things that caught my eye, follow me on Twitter, Facebook, LinkedIn or Pinterest.

1. By necessity, nonprofits and social entrepreneurs are turning to new mediums to tell their story. The Chronicle of Philanthropy has created a showcase of nonprofit infographics and visualizations, and the MediaShift blog profiles the various ways educators are using Pinterest for curation, and finally while at SXSW Interactive, The Chronicle of Philanthropy got 25 nonprofit leaders to film their elevator speeches–it’s fascinating to see the various ways people tell their story quickly.




2. Speaking of video storytelling, there was much debate about the Kony 2012 video produced by nonprofit organization Invisible Children. But I think Paul Shoemaker from Seattle SVP had the most reasoned and interesting take on it all when he argued that nonprofits should not be evaluated based on “one-size fits all” metrics.




3. A new campaign aimed at solving staggering youth unemployment combines technology, crowdfunding and social entrepreneurship. It will be interesting to watch.




4. From the Atlantic, the results of a new study that demonstrates that because of technology and the social media environment how Millennials think and process is changing dramatically, so how we educate future generations must change dramatically as well.




5. Amy Sample Ward gives a great recap of the social good focused sessions at SXSW Interactive.




6. Writing in the New York Times, David Carr, examines “Hashtag Activism,” and whether someone clicking a “Like” button can really change the world.




7. As the arts continue to struggle to find funding amid shrinking audiences and competing charitable priorities, crowd-funding may be the answer.




8. Beth Kanter hosted a great group of guest bloggers from the GeoFunders National Conference on her blog in March, my favorite of which was Adene Sack’s post describing the 3 myths about scaling nonprofits.




9. Writing on the Harvard Business Review blog Navi Radjou, Jaideep Prabhu, Simone Ahuja argue that Millennials take a do-it-yourself approach to solving large social problems, “they rely on a frugal and flexible mindset…and use the tools they have on hand to create a simple but effective solution to a highly complex problem. They are the contemporary MacGyvers.”




10. Rich Tafel takes social entrepreneurs to task for “failing to recognize the complex nature of the problems we face [and] engaging in linear, simplistic solutions, when lasting change requires collaborative efforts.”

Photo Credit: kadorin

Tags: Artspire, Foundations, Kickstarter, Kony 2012, Millennials, nonprofit scale, NPTech, Paul Shoemaker, Philanthropy, Pinterest, Seattle SVP, Social Entrepreneurship, SXSW Interactive

Send Me Your Questions

I’m launching a new series on the blog today. I receive so many great comments and questions from readers on the blog. So I want to start a new regular series that answers  readers’ burning questions.

Once a month (or maybe more often depending on the response) I will pick a reader’s question to answer. It can be about anything related to nonprofits, social innovation, boards, financing, fundraising, social innovation, philanthropy, you name it. Each month I’ll pick the most interesting question and write a blog post response to it.

If you have a burning question that you would like me to write about, send me an email at nell@socialvelocity.net, send me a Tweet at @nedgington, or post it on the Social Velocity Facebook page.

And as an incentive, the person whose question is selected for the first month’s post in the series will receive a free copy of my e-book, “10 Traits of a Groundbreaking Nonprofit Board”

So start sending me your questions. I can’t wait to read them!

Photo Credit: e-magic

Tags: board development, Fundraising, nonprofit board of directors, nonprofit fundraising, nonprofit strategic planning, Philanthropy, Social Entrepreneurship, social innovation

Real Innovation in Social Change Lies in Reinvention

I’m excited to announce that I have a new post up at the Chronicle of Philanthropy’s Mission:Innovation blog. It is reprinted below. The Chronicle’s Mission:Innovation blog is one of my favorites and was launched last year. Nicole Wallace, a senior writer at the Chronicle, manages the blog, which “reports on nonprofits that are taking bold, new approaches to the way they work, explores what charities can learn from other disciplines, and provides advice from experts on how organizations can better foster new ideas.”

I’m honored to contribute to the blog. Here is the article:

“Innovation” has become such a buzzword lately, particularly among people working on social change. But let’s take a step back and talk about what the word could really mean. Innovation is more than just new ideas. To me, it means taking a completely new approach to how we finance, structure, and prove social change.

The nonprofit world has never lacked new ideas to address problems. In fact, you could argue that nonprofits are innately entrepreneurial, being borne out of a recognized market failing and a new idea to remedy it.

The need, then, is not more new ideas. Rather, true innovation lies in reinventing a field built on social change.

Here are some ways that is starting to happen:

New support mechanisms. The avenues for sending money to social-change efforts are increasing significantly. What started 10 years ago with venture philanthropy has now expanded into nonprofit campaigns to raise growth capital, foundation loans and other investments in organizations, social-impact bonds, and investments that seek both financial and social returns. And that creates an opportunity for social-change efforts to be much more flexible and (we hope) successful, because access to enough and the right kind of money can often make or break a great idea.

A converging economy. We used to suffer from pretty strict delineations among the public (government), private (business), and nonprofit sectors, but that is changing. True innovation is happening where those lines blur—like businesses that make a profit solving social problems. Or governments developing new mechanisms to finance and evaluate nonprofit efforts, such as the Department of Justice’s Pay for Success program.

Proof of social change. Nonprofits used to be viewed as benevolent charities that received donations to support their good work. That’s not enough anymore. Nonprofit donors and social investors are increasingly demanding a social return on investment—proof that the organization is making a difference—in exchange for their money. And nonprofits are now competing not only with other nonprofits but also with for-profit social entrepreneurs. So nonprofits can no longer focus on how many children they’ve read to, meals they’ve served, or animals they’ve saved. They must track and prove how they have changed lives, changed systems, or changed communities.

Although these innovations are encouraging, there is room for so much more. What if:

• The best and the brightest of Generation Y worked to remake existing organizations from the inside out instead of just starting their own social-change groups?
• The social-capital market that’s emerging to provide financial vehicles for budding social businesses also included support for social entrepreneurs in the nonprofit world?
• Venture-philanthropy funds (growth capital for nonprofits) shared investor prospects with social-venture funds (growth capital for social businesses) and vice versa?
• All nonprofits interested in growth and with a proven model for success had access to enough capital and management expertise to expand?
• A nonprofit that solves social problems received as many resources and as much respect and attention as a business that solves a consumer need?

These things require sweeping, fundamental changes to the current structures of the nonprofit, government, and private sectors. To me, that’s real innovation.

Photo Credit: mademoiselle lavender

Tags: Chronicle of Philanthropy, Convergence, Mission:Innovation blog, Nicole Wallace, nonprofit outcomes, social entrepreneurs, Social Entrepreneurship, social impact bonds, social innovation, Venture Philanthropy

Upcoming Financing not Fundraising Webinar: Creating a Message of Impact

In order for nonprofits to start effectively financing their efforts, they must get prospective donors excited about their impact. Creating a message of impact is the only way to engage and invest people in the work you do. The next webinar in the Financing Not Fundraising webinar series will help your nonprofit create a message of impact.

Our Financing Not Fundraising webinar series has been very popular. Comments from past webinar participants include:

“This webinar was more useful than whole three-day conferences that my nonprofit has sent me to.”

“I loved the reframing of financing for desired results instead of funding for operations…your message to wed money to the mission was a big AHA moment – and am now figuring out how to bring this to life for staff and board.”

“Social Velocity conceptually is way ahead of the curve in nonprofit consulting. Visionary and spot-on!”

The next webinar in the series, Creating a Message of Impact, will help your nonprofit have a more compelling conversation with potential donors. No one likes to beg for money. And donors increasingly aren’t moved to respond to the “tin cup” approach. A far more effective way to communicate with potential donors is to talk about the change your nonprofit is creating in the community.

Donors invest in nonprofits that share their values and are creating change to things the donor really cares about. So in order to attract those donors, nonprofits need to understand and articulate the change they are creating in the community. They need to create a Message of Impact.

This webinar will help your nonprofit:

• Move from begging to investing
• Create a compelling case for support
• Target donors who care about your work
• Get your board excited about asking for money
• Differentiate between donations and investments
• Talk about the work your nonprofit does in the community
• Articulate a social return on investment (SROI) for donors

The registration fee will get you:

• Access to the live, interactive webinar
• 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 follow-up questions after the webinar

I hope to see you there!

Financing Not Fundraising: Creating a Message of Impact – Live Webinar
Tuesday, March 27, 2012
12 noon – 1:00pm Eastern

Tags: community change, financing not fundraising, impact messaging, nonprofit fundraising, nonprofit impact, social return on investment, theory of change

Technology for Good: An Interview with Craig Newmark

In this month’s Social Velocity blog interview, we’re talking with Craig Newmark, the founder of craigslist, the web-based platform that has fundamentally changed classified advertising. In early 2011, Craig launched craigconnects, his initiative to link everyone on the planet using the Internet in order to bear witness to good efforts and encourage the same behavior in others.

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

Nell: You seem to be a different breed from other high-tech philanthropists. What is your philosophy about philanthropy? For you, what’s the best way to do it?

Craig: I’m a nerd, and can be somewhat simplistic. If there’s some area where I can help, I should to that. My broad theme is “technology for good”, where people work together using social media for the common good. So, I proceed on that basis, finding groups who are good at something, usually using tech, at least using social media for outreach, fundraising and more.

Nell: Why is Craigslist Foundation winding down? How and why did you come to that decision?

Craig: I’m not really a part of CLF, and I think the consensus was that it had run its course, and had accomplished a lot.

Nell: With Likeminded and craigconnects you obviously have an interest in making the social sector more transparent and integrated. Do you think that is happening? Are those working on social change (nonprofits, foundations, social entrepreneurs, social investors) getting better at sharing information and what will encourage that?

Craig: I feel that people in the social sector are starting to work together in more and better ways, but it requires folks like me to nudge them together. In particular, I’m chatting with nonprofits about promoting each other in social media, with little success so far.

Nell: A big part of craigconnects is to get nonprofits to collaborate more effectively. Collaboration is often a tricky concept in a sector where the reality of scarce resources breeds constant competition. How do you reconcile collaboration and competition in the space?

Craig: I don’t know yet, but will figure it out, with lots of help.

Nell: Part of the craigconnects model is that you vet the nonprofits that you showcase there based on ratings services like CharityNavigator and GuideStar, so what do you make of recent efforts to move nonprofit ratings systems to outcomes as opposed to use of funds? What are your thoughts on how we create meaningful ways to evaluate nonprofits?

Craig: I think that real measures of nonprofits will involve their effectiveness, but the means of doing so are still under development. Charity Navigator, GuideStar and GreatNonprofits are making real progress.

Tags: CharityNavigator, Craig Newmark, craigconnects, craigslist, craigslist foundation, GreatNonprofits, GuideStar, high tech philanthropy, Likeminded, Philanthropy, social entrepreneurs, social media

Sparking Social Change Movements

Scott Goodson’s new book, Uprising: How to Build a Brand – And Change the World – by Sparking Cultural Movements, has an ambitious goal that eventually falls flat. Goodson provides an excellent analysis of the new movements sweeping the globe and how social change organizations can learn from them. However, when he tries to connect that reality to corporate brand building, the book becomes more about exploiting social movements for profit, rather than for social good.

The first half of Goodson’s book is eye-opening. He describes what he calls “our current movement mania.” The Egyptian uprising, Occupy Wall Street, Etsy, the Tea Party, the Pepsi Refresh Project are all examples of movements. He argues that we are seeing an explosion of movements because of a confluence of trends:

The Internet, and particular the rise of social media, has made it easy to find and connect with like-minded souls. And that same technology makes it possible for a group, once formed, to organize, plan and take action.

Goodson examines countless examples of movements sparked by individuals, nonprofits and companies.

The bulk of Goodson’s case studies are what I would call “social entrepreneurs.” Some of these are for-profit (like TOMS Shoes), many are nonprofit (like KaBoom!, FIRST, and DoSomething), and many are not really legal entities at all (like the Occupy movements).  All of these examples are fascinating when understood through Goodson’s “movement” lens. He helps us understand how these movements form, how they build momentum and find direction and how they’ve resulted in some serious change. In particular his discussion of “the swarm effect” is fascinating. He explains how these social movements behave like a swarm of insects:

A swarm moves in one direction as a group, and although it has no leader, it is capable of changing directions quickly to avoid a threat or pursue an opportunity…the group is able to share information instantly, based on tiny individual interactions…that allow members to guide each other as to what to do next…This combination of being adept at picking up on cues all around and being able to share that information quickly enables the swarm to be highly productive and move with great purpose and momentum.

But I wish the book could have ended there.

In the second half of the book, Goodson equates these social entrepreneurial movements to corporate re-branding efforts. The movements launched by companies which he profiles feel contrived. He points to Frito Lay, Pepsi and Jim Bean whiskey as great examples of companies that built their brand by sparking a movement.  Frito Lay launched the “True North” movement for their health-conscious snack food line targeting baby boomers. I don’t quite understand how this dressed up ad campaign is a social movement.

What if instead Frito Lay recognized the growing epidemic of obesity and revamped their business model to create and market ONLY healthy snacks? It would be far more interesting to encourage companies that are interested in tapping into social movement “mania” to start by authentically re-evaluating their business model and then working to bake social good into it. Instead Goodson seems to be suggesting that corporate brands try to hijack a growing interest in social good for their own profit. To connect exciting, game-changing social entrepreneurial movements to things like Microsoft dropping copies of Office Accounting software via parachute just doesn’t compute (interestingly Microsoft has since discontinued the Office Accounting product).

But what I take from this book is that we are living in a new reality. Social media, a growing restlessness with the world as we know it, a struggling economy, and a passion for social change that defines Generation Y, have combined to make movements a powerful new trend. It is no longer the purview of the nonprofit or government sectors to create social change. Anyone sitting in front of their computer can tap into a latent dissatisfaction, get people talking, and spark a game-changing movement. Nonprofits, government and business alike should take note.

Tags: DoSomething, Etsy, FIRST, Generation Y, KaBoom!, Nonprofits, Occupy Wall Street, Pepsi Refresh Project, Scott Goodson, social change, Social Entrepreneurship, social movements, tin cup

A Contest to Help Your Nonprofit Manage to Outcomes

I’m excited to announce something a little different on the Social Velocity blog: a contest! Mario Morino, author of one of my favorite new books, Leap of Reason: Managing to Outcomes in an Era of Scarcity, has generously offered to give away a Leap of Reason board package to three lucky nonprofit readers of the Social Velocity blog. You can read my past review of the book and why I like it so much here and my past interview with Mario here.

The Leap of Reason board package will include a copy of the book for each board member and other supplemental materials to get the board discussing how to manage toward outcomes. If you would like to be entered into the contest, simply respond in the comments with a brief (1-3 sentence) description of why you think your nonprofit is ready to start managing toward outcomes.

In Leap of Reason, Morino, co-founder of Venture Philanthropy Partners, argues that every nonprofit MUST, if it wants to survive in this new environment of “brutal austerity,” create a culture of performance. Many nonprofit organizations simply exist to “do good work.” But that is just not enough anymore. It’s not enough for those that fund the work, and it’s not enough for those who receive the services. Nonprofits must determine what they exist to change and whether they are actually creating those changes. Mario is ever-mindful, however, that large scale evaluation projects are simply unrealistic for the vast majority of nonprofits. They don’t have the money or time to devote to such projects. He and other experts in the book provide key initial steps and case studies to encourage nonprofits to develop their own ways to manage to outcomes.

So, if you think your nonprofit is ready to start managing to outcomes, and you’d like the Leap of Reason board package to help you along, respond in the comments with a short (1-3 sentence) explanation of why you think your nonprofit is ready.

I will then pick three winners. Each nonprofit winner will receive:

• A Leap of Reason book for each board member
• A Leap of Reason User Guide for each board member
• A Leap of Reason Supplemental Reading Packet for each board member
• A Leap of Reason Board Package Overview (a how-to guide for the executive director or board chair leading this process)

Good luck!

Update on February 21, 2012: The response to this contest was so great that Mario Morino graciously agreed to increase the number of winners to 20. Those 20 nonprofit winners have all been notified with the specifics about how to claim their Leap of Reason board packets. Thank you so much to everyone who participated! And I look forward to future Social Velocity blog contests!

Tags: Board of Directors, Leap of Reason, Mario Morino, nonprofit board of directors, nonprofit evaluation, nonprofit outcomes, nonprofit performance measurement