Social Enterprise
5 Reasons Your Nonprofit Isn’t Raising Enough Money
The majority of nonprofits struggle to bring money in the door. And they often don’t know why. When you are on the inside of an organization that is used to doing things a certain way it can be nearly impossible to see new opportunities, to understand what you could do differently. There can be many reasons why a nonprofit doesn’t bring enough money in the door.
But here are the top 5 reasons a nonprofit struggles financially:
- Too Many Programs Drain Money From Your Organization. It sounds like a truism — you struggle with money because your programs cost money. But the reality is that few nonprofits analyze their programs to determine each one’s individual impact on the bottom line. Often they will add a new program because it has an impact on the mission (or because a single funder wants the program), without understanding how the new program fits into the organization’s overall financial picture. The end result is an organization that is stretched to the breaking point. Nonprofits must analyze all of their programs to understand their impact not just on mission, but also on finances, then they can make decisions about where to more sustainably focus resources.
- You’re Leaving Money Up to One Person. The financial engine of a nonprofit must be a team effort. Yes, it is important, if you are large enough, to have a staff member whose sole job is to think about money, but you cannot leave it all up to her. The entire organization, from the front line program staff all the way up to the chair of the board must understand the critical importance of money and what role they individually play in securing it. Although program staff won’t actively solicit donors, they can still share client stories with donors, write blog or newsletter articles, participate in program tours with donors, and even suggest new ideas for tying money to their programs. And there are countless ways for board members to bring money in the door, but you have to make sure they are aware of and doing their part.
- You’re Not Effectively Telling Your Story. It is so common for nonprofit staff and board members, who believe so passionately in their cause, to think that it’s obvious to outsiders why they should get involved. But it isn’t. And in an increasingly crowded social change marketplace it is more important than ever that nonprofits be able to articulate, in a compelling way, what value they are providing a community.
- You’re Doing What Everyone Else Does. It drives me crazy when a nonprofit that is struggling financially witnesses another nonprofit’s fundraising activity and tries to replicate that perceived success, without analyzing if it makes sense. Just because it looks like a recent gala or a new thrift store rakes in the money doesn’t mean a) that it did actually make a profit for the nonprofit and b) that it would make a similar profit for your nonprofit. The key is to make the best use of your specific assets as an organization. Think about what value you have to offer and who might be interested in paying for that value. For example, a homeless shelter could financially partner with local businesses to move people away from storefronts and into more stable and life-changing accommodations. You have to analyze what you have to offer and who specifically would be willing to pay for that value.
- You’re Not Investing In Your Money Raising Function. If you don’t have enough or the right kind of staff in place to raise money it is little wonder that you struggle. And if you’re not giving them effective tools they will be at a loss. Think about your financial engine and the various revenue streams you employ. Do you have the technology, staffing, systems, materials, space you need to raise money well in those ways? For example, if you want to raise money from individuals you need an effective database system that tracks contact information, interactions, history, interests. Whatever ways you bring money in the door, you need to ensure you have enough and the right kind of tools to do it well.
If you’d like help to both assess why your nonprofit isn’t raising enough money and create a plan to raise more, join us for the Financing Not Fundraising E-Course. I’ll analyze how your organization brings money in the door, give you ideas for increasing your financial engine, and help you put together a new financing plan. You’ll also get to hear from and work with other nonprofit leaders in your shoes. Find out more about the Financing Not Fundraising E-Course here.
Photo Credit: tuppaware_001
Live Chatting Mission and Money
I’m excited to announce that I will be participating in a Chronicle of Philanthropy Live Chat on Tuesday, March 26th at 12 noon Eastern. Karina Mangu-Ward, from EmcArts will be joining me to answer questions from the audience about connecting mission and money. You may remember Karina from a past interview I did with her. She’s really amazing and is the Director of Activating Innovation at EmcArts, a social enterprise for innovation and adaptive change across the arts sector. She leads the strategy and development of ArtsFwd.org, an interactive online platform where arts leaders can learn from each other about the power of adaptive change and the practice of innovation.
Karina and I will be live chatting and answering questions from the audience, so I hope you can join us. It promises to be a fast-paced, interactive hour.
Here’s an excerpt from the Chronicle of Philanthropy description:
In the mad dash for donor dollars, nonprofits often take money for projects that distract them from their missions. Some donors pitch new programs but provide too little money to pay for a big enough staff to run it, so the charity ends up skimping on efforts that its clients really need. Other nonprofits might think holding a fancy gala will raise tons of money but don’t consider how the time spent planning the event will affect the group’s critical services. Join us on Tuesday, March 26, at noon U.S. Eastern time for a live online discussion about how to take a more strategic approach to fundraising. You’ll learn how to focus your fundraising efforts on your organization’s mission—and why saying no to some opportunities might actually help your nonprofit raise more money.
If you’re interested in participating, it’s easy. Just go to the Chronicle Live Chat page here at 12 Eastern on Tuesday, March 26th. You don’t need to RSVP or login, just show up.
I hope to see you there!
Photo Credit: wikimedia
10 Great Social Innovation Reads: January 2013
January was about looking ahead to 2013 and being prepared for the many changes to come. It was also about understanding and embracing new generations, thinking about risk differently, re-evaluating growth, and analyzing the unique and critical role of foundations.
Below are my top 10 picks for what was worth reading in January in social innovation. But please add to the list in the comments. And if you want to see more, follow me on Twitter, Facebook, LinkedIn, Pinterest or ScoopIt.
You can see the 10 Great Reads lists from past months here.
- The predictions about what 2013 will mean for social innovation continue this month. As part of their whole Outlook 2013 series, the Chronicle of Philanthropy provides 5 Ways Nonprofit Work Will Change in 2013 and 5 Nonprofit Innovators to Watch. And the Philanthrocapitalism blog makes 20 predictions for 2013 chief among them is the rise of the woman philanthrocapitalist. Writing in Forbes, Antoinne Machal-Cajigas tells us What’s Next in the World of Social Innovation?
- January saw the second inauguration of President Obama, and Mathew Forti and Colin Murphy argue that his re-election campaign offers nonprofits some ideas about how to measure performance.
- Phil Buchanan, head of the Center for Effective Philanthropy, likes to stir things up, and I love him for it. He argues that nonprofit dependency on philanthropic dollars is NOT a bad thing. And because there is no rest for the weary, later in the month he argues against “the stampede to embrace the idea that for-profits — or for-profit models — can more easily combat our toughest social problems.”
- Writing on the HBR blog, Kimberly Dasher Tripp reminds us that scaling social impact is not about growing organizations, it’s about growing solutions.
- And speaking of impact, if you haven’t started figuring out what results your nonprofit is achieving, you may want to start since it looks like your youngest donors are demanding it.
- Bradford K. Smith, president of the Foundation Center, wrote a moving post about the critical role foundations play in our society, “Free from the bottom-line pressure of markets, the partisanship of electoral politics, and the demands of fundraising — [foundations] can use their independence to do remarkable things, whether it’s taking on issues that no one wants to touch, sticking with an issue for decades if required, or keeping the rest of us from forgetting the millions of people who, through no fault of their own, continue to be harmed and/or excluded by war, economic injustice, disease, and discrimination.”
- Beth Kanter writes a great post about overcoming the risk-aversion of the nonprofit sector by taking “little bets.”
- As you plan your conference schedule for the year ahead, check out the William James Foundation’s comprehensive list of social entrepreneurship conferences.
- Social change can be exhausting, demoralizing work. Here’s how a New York City teacher, with arguably one of the hardest jobs in education, stays committed to social change.
- The millennial generation is no longer willing to separate work and life, so says Ryan Steinbach on the UnSectored blog. In fact, “millennials see their careers as not a part of their lives, but rather what they do with their lives – and life is so much more than making ends meet. It’s social, emotional, physical, and spiritual. It’s about pursuing your passions, building relationships, and giving back.”
Photo Credit: thatdisneylover
Calling All Nonprofit Social Entrepreneurs
There is a really interesting research study about social entrepreneurs going on at the University of Massachusetts and you may want to join in.
John Walker, Finance Director at Echoing Green and Nardia Haigh, Assistant Professor of Management in the College of Management at UMass Boston are investigating social entrepreneurs who went through a process of deciding whether to establish their organization as a non-profit, a for-profit, or a hybrid. They want to understand the range of circumstances under which social entrepreneurs identify which type of business model fits best for different situations.
While they have already interviewed many for-profit social entrepreneurs, they are having a hard time finding nonprofit social entrepreneurs, which is where you come in.
If you are a social entrepreneur and struggled with the decision about whether to form a for-profit/nonprofit/hybrid entity, Nardia would like to interview you about your organization’s strategies, structure, and direction.
According to Nardia, there are many circumstances under which hybrid organizations are established, and to date, two distinct variations of the hybrid business model are evident: Multi-entity and Integrated:
- Multi-entity hybrids link for-profit and nonprofit entities – often through contracts and/or ownership. A nonprofit may establish and own all or part of a for-profit subsidiary (e.g. Embrace and Embrace Innovations), or a for-profit may establish a nonprofit and provide it with equity or other means for it to derive non-discretionary revenue.
- Integrated entities are either for-profit companies with a strong social or environmental mission deeply embedded within its business model (e.g. TOMS Shoes or Maggie’s Organics, and companies registered as L3Cs), or are nonprofit organizations that use for-profit methods to generate revenue (e.g. Ten Thousand Villages or Ecosia.org).
In this study, they seek to understand the decision-making process entrepreneurs go through in choosing which to pursue.
Nardia’s research at UMass Boston focuses on business models and strategies that address large-scale sustainability issues in positive ways. And John has significant experience as an entrepreneur, an executive, and as a board member in a range of industries, where he specializes in financial analysis, capital raising, and structuring acquisition and investment deals.
If you are a social entrepreneur and would like to participate in this research study, contact Nardia at Nardia.Haigh@umb.edu.
Nardia has promised to share the results of the study with Social Velocity readers when it’s completed. I can’t wait to hear what they find out.
Photo Credit: piermario
Chatting About Social Entrepreneurship
As I announced in an earlier post, yesterday I participated in a Live Chat organized by the Foundation Center about social entrepreneurship. Abby Chroman from Ashoka joined me as a fellow panelist, along with The Foundation Center’s Katie Artzner who moderated.
We took questions from the audience about social entrepreneurship, social change, where nonprofits fit in the social innovation movement, social return on investment, measuring outcomes, fundraising and much more. It was a fast and furious hour with great discussion and great questions. This was a fun format because there was no audio, only text chatting.
If you missed it, you can still view the chat on the Foundation Center’s website here. And below is an excerpt from the discussion just to give you a taste.
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Foundation Center’s Grant Space Live Chat
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You can see the whole live chat here.
Photo Credit: AlexDixon
Are You a Social Entrepreneur?
I’m excited to report that a week from today, July 26th, I will be participating in a live online chat at the Foundation Center’s Grant Space website, titled “Are You a Social Entrepreneur?“.
Abby Chroman, leader of global community curation for AshokaHub, and I will be fielding questions from the audience about social entrepreneurship, social change, nonprofit innovation, capacity capital, social return on investment and much more.
Some of the questions we’ll be discussing include:
- What qualities do social entrepreneurs possess?
- How is this concept different from traditional corporate structure, even one with a socially-minded mission?
- How do you truly accomplish social change vs. simply doing “good” work?
- How can nonprofits especially incorporate some of this thinking to be successful in fulfilling their missions?
- How do you measure social impact and return?
But the majority of questions are up to the audience. This live chat will happen entirely in the chat window on the Grant Space website. When the chat goes live, you can submit your questions and comments and interact with Abby and me and other readers, but you can also send questions ahead of time.
So join us! Registration is free at the Grant Space web site here. I look forward to your questions!
Photo Credit: Colin_K
A Career Guide For a New Generation of Change Makers
Billy Parish and Dev Aujla’s new book, Making Good: Finding Meaning, Money and Community in a Changing World, is a career guide for the generation that finds themselves on the precipice of some pretty monumental global challenges.
Parish and Aujla argue that 3 major trends are creating an unprecedented opportunity for people to find “the sweet spot between altruism and selfishness.” The trends are:
- A rise in global empathy, or the ability for people separated geographically to be bound by common desires and goals
- The Internet as a platform for global collaboration
- Breakthrough smarter and greener technologies
These trends have resulted in “enormous new opportunities to change the world.” Far from the bleak unemployment picture facing the Millennial generation, this book turns that challenge into an enormous opportunity. This generation won’t enjoy the same careers that those who came before them did. They will create their own careers by combining the need for an income with a desire to make the world a better place.
Part self-help book, part social entrepreneurship primer, Making Good at times verges on the feel good, but for a generation faced with staggering unemployment, a really messed up global economy, and the inheritance of other equally crippling social and political problems, they probably need a little hand holding.
The authors start by laying out the opportunities that exist within seven major industries that are undergoing tremendous turmoil (crumbling education system, weak transportation infrastructure, inadequate healthcare system, broken food chain, to start.). It seems there is an endless list from which this new generation could carve out solutions.
Then they go into the 6 steps for moving from idea to action (Reflect, Adapt, Connect, Design, Launch, Organize), which is sort of like the What Color is My Parachute for the social change set. The book is a nice companion to the more case-study heavy Echoing Green book, Work on Purpose. But what is interesting about Making Good‘s approach and different than most social entrepreneurship books, is that these authors see social change work in a broad spectrum, from new start up companies and nonprofits, to freelancing, to being a social intrapreneur (within an established company).
Perhaps in some ways, though, this book is trying to cover too much ground. Probably because it is one of only a few books in the emerging social change career genre. My hope is that as social change becomes a more established industry there will be many more books like Making Change that help those entering the working world and those trying to make a move within it to embrace social change careers.
In the Introduction to the book, Van Jones, special advisor to Obama on Green Jobs, writes “”We don’t know yet if we are going to be in a continued vicious downward cycle politically, economically, culturally, and spiritually–or whether this is just volatility preceding a beautiful rebirth and rebuilding…we could be seeing the beginnings of a positive ecological U-turn, one in which democracy is renewed by a new generation taking the stage with new information technology and cooperation tools and the economy is renewed by new models of commerce that respect people and the earth.”
The authors of Making Good seem to think that by giving the Millennial generation a road map for translating their desire for change into a sustainable way to make a living we will find that ecological U-turn. I tend to agree.
Is Earned Income Right for Your Nonprofit?
Earned income, or the sale of goods and services, is a somewhat misunderstood and unexplored financial opportunity for nonprofits. Yet there are countless examples of nonprofit organizations that sell goods or services to supplement their revenue, like the Girl Scouts, Goodwill, museum gift shops, hospitals, charter schools.
If you’ve ever wondered if earned income might be an opportunity for your nonprofit to raise unrestricted revenue, download our “Evaluating Earned Income” webinar. This webinar is part of our ongoing Financing Not Fundraising webinar series that shows nonprofits how to create a more sustainable financial engine for their organization.
Earned income is not right for every nonprofit, but every nonprofit should at the very least analyze whether earned income is a potential opportunity.
This webinar will help nonprofit leaders:
- Understand what earned income is and when it is most successful
- Learn about other nonprofits and their earned income businesses
- Evaluate whether earned income is a possibility for their organization
- Determine if their organization is ready to explore earned income
- Understand the steps in launching an earned income stream
Evaluating Earned Income Webinar
Recorded
The registration fee will get you:
- 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
And if you missed last month’s sold out Raising Capacity Capital webinar, we are did repeat of that webinar. Capacity capital is the money that every nonprofit needs, but most find so hard to raise. Capacity capital can help your nonprofit to:
- Hire a development director
- Launch an earned-income stream
- Expand your programs
- Evaluate your impact
- Train your staff
It is money for infrastructure and organization building. If you want to move your organization out of the starvation cycle, you have to learn how to raise capacity capital.
The Raising Capacity Capital webinar will show you how to:
- Talk about the importance of capacity capital to your donors and board
- Create a budget for the capacity dollars you need
- Break the goal into donor ask amounts
- Identify prospective donors
- Give your board a role in the campaign
- Gain the confidence to start asking for the money you really need
Raising Capacity Capital Webinar
Recorded
Photo Credit: www.girlscouts.org
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