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Antony Bugg-Levine

Guest Post: Nonprofits Must Be Able to Adapt

antony bugg-levineNote: As you know, I am taking a few weeks away from the blog to relax and reconnect with the world outside of social change. I’ll be back later this week, but I have left you in the incredibly capable hands of a rockstar set of guest bloggers. The last, but certainly not least, is Antony Bugg-Levine. Antony is CEO of Nonprofit Finance Fund, a national nonprofit and financial intermediary that works with philanthropic, private sector and government partners to develop and implement innovative approaches to financing social change. Here is his guest post… 

When we asked nonprofit leaders to identify top challenges as part of Nonprofit Finance Fund’s 2015 State of the Nonprofit Sector Survey, 32% said “achieving long-term sustainability,” by far the most popular response.

What does it take to reach the promised land of sustainability? It may seem counter-intuitive, but one of the best measures of organizational sustainability is not stability but adaptive capacity, the ability to act as circumstances require and opportunities allow. A truly sustainable enterprise must have the capacity to nimbly respond to external conditions. A strong balance sheet must allow for flexibility.

In the nonprofit sector, where pursuit of a mission is paramount, the ability to thoughtfully tack toward progress as funding conditions and community needs change is a hallmark of a success. That does not change the reality that our sector is notorious for restricted funding and hampered by a lack of available enterprise-level investment capital.

So, how do organizations build adaptive capacity?

Here are a few ways that nonprofits can build their adaptive “muscle” and be better prepared to change as the environment demands and opportunities allow.

Know your costs.
Nonprofits must understand the true costs of providing programs in order to make informed decisions about whether grants or contracts are able to cover those full costs, and how much subsidy might be required from other sources to fill the gap.

Many times, we see nonprofits use a grant amount as a starting point, and try to design a program that fits with the award amount. Heights and Hills, which provides services for older adults in Brooklyn and their families, asked us to help them take a different approach. Using customized tools, leadership now understands not only the current costs of running particular programs, but also how those costs change based on a variety of factors.

Like Heights and Hills, nonprofits need to be able to answer questions such as:

  • “Which programs may be too costly if they are not fully supported by direct revenue?”
  • “How do our costs change if we expand a program and need to hire additional staff?”
  • “What if the amount of grant funding changes?”
  • “Where might collaboration with another organization serve us well?”

Just say “no.”
The social sector attracts passionate activists who have a knack for seeing solutions where others see problems, and who are often driven by a deep inclination to say “yes” to those in need. But in order to build and preserve adaptive capacity and to truly remain mission focus, leaders must protect the nonprofit enterprise and its ability to continue its work. The common practice of accepting pennies on the dollar to deliver programs perpetuates unhealthy funding patterns and expectations. Armed with data about true costs makes it easier to say “no” to opportunities that ultimately detract from an organization’s ability to move the needle on mission.

New York’s Committee for Hispanic Children and Families did just that, and declined to pursue a large government contract because it sapped too many “indirect” resources. While at first glance, it seemed that the small allotment for “overhead” was enough, the amount didn’t nearly cover actual costs associated with the time that executive, finance and administrative staff were spending to keep the program afloat.

Saying “no” to a fiscally unhealthy grant preserves the organization’s ability to serve its clients well into the future. If we want to change embedded, unhealthy funding practices — and perhaps even elements of nonprofit culture that fuel these — we must be more willing to say “no.”

Measure outcomes.
Ultimately, the benefit of adaptive capacity is the freedom to pursue what works. Some programs are more easily measured than others, but nonprofits and our funders need to invest in understanding impact. This is especially critical as we move toward an outcomes-based funding environment.

Scenarios USA, a nonprofit that uses storytelling for youth sex education, found a rare partner in the Ford Foundation when it decided to dramatically change its approach. Scenarios was open to asking, “Are our programs working?” and accepted that its core assumptions were inaccurate. With the Ford Foundation’s support, the organization revamped its program to focus on fostering critical thinking, which has tremendous influence on youth behavior.

Evaluating programs, experimenting with new ways of meeting mission and measuring outcomes over time are necessary to positive social change.

Seek support for major changes.
Money for programs is far more plentiful than money for enterprise-level change. Our survey found that nearly half of nonprofits report that they can have an open dialogue with funders about expanding programs, but just 6% feel comfortable conversing with funders about flexible capital for organizational growth or change.

There are exceptions. The California Community Foundation has partnered with Nonprofit Finance Fund and several others to offer strategy, management, and financial services aimed at strengthening the region’s nonprofits and building the durability of the sector. New York Community Trust has launched an initiative to help small arts organizations navigate various transformations and milestones such as leadership succession, business model changes, and facility renovations or moves. And New York’s Change Capital Fund is a collaboration of 17 foundations and financial institutions that is funding five New York community development organizations to help them refocus their strategies and develop new business models to address persistent poverty more effectively.

It is time to challenge the notion that funders aren’t willing to talk about money for adaptation and adaptive capacity, and to make the case for the right kinds of support.

It is hard to know what will be required of our sector in the years to come, but a steady trend of increased demand seems to indicate that the answer will be, “more.” Limited resources make doing more of the same nearly impossible. We must change the way we approach the challenges of our day, and organizations with adaptive capacity will lead the way.

 

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Social Velocity Summer 2015 Guest Bloggers

As I mentioned earlier, it is so important to take time away to rejuvenate and reconnect with your passions, family and friends. So I am taking my own advice and taking some time off later this summer to connect with the world outside of social change.

And so for the second summer in a row I’ve asked a group of social change thought leaders to write guest blog posts in my absence (you can read last summer’s guest blog posts here).

I am so excited about this year’s group of amazing social change thinkers. They are experts in social change finance, philanthropy, political reform, outcomes data, organizational effectiveness and much, much more. They are smart, thoughtful, engaged and visionary leaders. And they are all helping to move social change forward in big ways.

Below is the lineup of guest bloggers with background information on each of them. Their posts will begin in late July. Enjoy!

 

antony bugg-levineAntony Bugg-Levine
Antony is the CEO of Nonprofit Finance Fund (NFF), a national nonprofit and financial intermediary where he oversees more than $340 million of investment capital and works with philanthropic, private sector and government partners to develop and implement innovative approaches to financing social change. NFF also creates the annual State of the Sector Survey. Antony writes and speaks on the evolution of the social sector and the emergence of the global impact investing industry. Prior to leading NFF he was Managing Director at the Rockefeller Foundation. He is the founding board chair of the Global Impact Investing Network and convened the 2007 meeting that coined the phrase “impact investing.” You can read my past interview with Antony here.

UPDATE: Here is Antony’s guest post.

 

Kelly_Born

Kelly Born
Kelly is a program officer at the Hewlett Foundation working on their Madison Initiative, which focuses on reducing today’s politically polarized environment. Before joining Hewlett, Kelly worked as a strategy consultant with the Monitor Institute, a nonprofit consulting firm, where she supported a range of foundations’ strategic planning efforts. In addition to her experience as a strategy consultant, Kelly has worked with various nonprofit and multilateral organizations including Ashoka in Peru, the World Bank’s microfinance group CGAP in Paris, Technoserve in East Africa, and both The Asia Foundation and Rubicon National Social Innovation in the Bay Area. Kelly guest lectures on impact investing at Stanford’s Graduate School of Business and often writes for the always thoughtful Hewlett Foundation blog.

UPDATE: Here is Kelly’s guest post.

 

phil buchananPhil Buchanan
Phil is President of the Center for Effective Philanthropy (CEP), a nonprofit that is the leading provider of data and insight on foundation effectiveness. CEP helps bring the voice of grantees and other stakeholders into the foundation boardroom and encourages foundations to set clear goals, and coherent strategies, be disciplined in implementation, and use relevant performance indicators. Phil writes and speaks extensively about nonprofits and philanthropy and rarely pulls punches when he does.  He is a columnist for The Chronicle of Philanthropy and a frequent blogger for the excellent CEP Blog. He was named to the 2007, 2008 and 2014 “Power and Influence Top 50” list in The Nonprofit Times. You can read my past interview with Phil here.

UPDATE: Here is Phil’s guest post.

 

kathy reichKathy Reich
Kathy is Organizational Effectiveness and Philanthropy Director at the David and Lucile Packard Foundation where she helps grantees around the world improve their strategy, leadership, and impact. Her team makes grants on a broad range of organizational development issues, from business planning to social media strategy to network effectiveness. She also manages the Packard Foundation’s grantmaking to support the philanthropic sector. Prior to joining the Foundation, she worked in a non-profit, on Capitol Hill, and in state and local government in California. Kathy serves on the board of Grantmakers for Effective Organizations and on the advisory committee for the Center for Effective Philanthropy. You can read my past interview with her here.

UPDATE: Here is Kathy’s guest post.

 

david hendersonDavid Henderson
I asked David to be a guest blogger again this summer because he is so insightful and often points out things that few others in the sector are willing to acknowledge. He is Director of Analytics for Family Independence Initiative, a national nonprofit which leverages the power of information to illuminate and accelerate the initiative low-income families take to improve their lives. David is also the former founder of Idealistics, a social sector consulting firm that helped organizations increase outcomes, demonstrate results, and organize information. He writes his own blog, Full Contact Philanthropy, which is amazing. You can read his past guest blog post here and my interview with him here.

UPDATE: Here is David’s guest post.

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How Do We Scale Social Change?

This week I attended the 5th annual Social Impact Exchange Conference in New York City. It was an interesting gathering of funders, change makers and intermediaries all grappling with how to reach and sustain scaled social solutions.

“Scale” is such a challenging concept, and as I mentioned earlier, there are many entities struggling with exactly what scale means. According to Heather McLeod Grant (author of Forces for Good) whose keynote address kicked off the conference, “scale” is no longer about growing individual organizations or addressing individual issues, but rather about building movements and networks.

The idea of a networked approach to social change is not a new one (see the great Stanford Social Innovation Review article from 2008 by Jane Wei-Skillern and Sonia Marciano on this approach), but Heather underlined the importance of a more integrated and aligned approach to creating social change. I would have liked to see this idea taken further, perhaps with some of the Transformative Scale discussion that is happening elsewhere, included in this discussion.

There were some real highlights of the conference for me. First was the luncheon panel on the Black Male Achievement Movement and President Obama’s My Brother’s Keeper initiative. Tonya Allen of The Skillman Foundation was a hard hitting moderator of Shawn Dove, from the Campaign for Black Male Achievement, William Snipes from Pipeline Crisis/Winning Strategies, and Andrew Wolk from Root Cause.

The group had a fascinating conversation about the movement to address “a whole generation of young men being pushed to the side.” As Snipes so eloquently put it, “This is a problem about who we are as a society, whether or not we are going to survive. The road we are on is not sustainable. We cannot continue to incarcerate one third of a community. This is an impractical way to run a society.”

The panel described and debated the complexity of addressing a huge systemic problem and how they have launched a movement to do just that. It was a candid and thought-provoking exchange.

Jacob HaroldAnother highlight was GuideStar CEO Jacob Harold’s talk on their exciting efforts to transform the nonprofit information landscape (Jacob is describing this landscape in the picture at the left).

GuideStar’s goal is to address the “two elephants in the philanthropic room:” 1) some nonprofits are better than others (they create more impact per dollar spent), and 2) some donors are better than others (they create more impact per dollar given).

To address these “elephants,” GuideStar is collecting and analyzing deeper information about nonprofits and then distributing that information so that donors make better investments. (More on this next month when I interview Jacob as part of the Social Velocity Interview Series.)

The other real highlight of the conference for me was the keynote address on financial sustainability from Antony Bugg-Levine, head of the Nonprofit Finance Fund. Antony defined financial sustainability as “Repeatable and reliable revenue that exceeds ongoing operating costs, coupled with the ability to fund periodic investment in adaptation and growth.” In other words, a financially sustainable nonprofit brings enough reliable revenue in the door and can, when needed, raise capital for change and growth.

And that capital piece is often overlooked by nonprofits and funders. Antony described 5 types of capital helpful to nonprofits:Antony Bugg-Levin

  1. Change Capital to position an organization for growth.
  2. Working Capital to handle fluctuations in cash flow.
  3. Recovery Capital to address shocks to an organization (natural disaster, fire, etc.)
  4. Risk & Opportunity Capital to develop a new program or different approach.
  5. Endowments which can provide some unrestricted money, but should not be considered reliable revenue.

Antony also described 5 things that funders do and 5 things that nonprofits do to derail sustainable growth (pictured at right.)

I also enjoyed participating in the “Business Models for Sustainability at Scale” panel with my colleagues Dana O’Donovan from Monitor Institute, Megan Shackleton from the Einhorn Family Trust, Heidi Shultz from the Helmsley Charitable Trust and Craig Reigel from the Nonprofit Finance Fund. We had a great discussion with very thoughtful and engaging audience questions about how to create sustainable financial models and how philanthropy can help move that forward.

The Social Impact Exchange assembled a smart, talented group of people to grapple with how we fund and grow solutions to the wicked problems we face. It was a thought-provoking couple of days.

 

 

 

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The Tricky Work of Scaling Nonprofits

Social Impact ExchangeThe idea of “scale,” or growing to a point at which you are solving the underlying social problem, is a tricky one in the nonprofit sector and something that is a growing topic of conversation.

Jeff Bradach from The Bridgespan Group launched a new 8-week blog series on the Stanford Social Innovation Review blog last month about what he calls “Transformative Scale.”

Bradach asked leaders and thinkers in the scale movement – like Risa Lavizzo-Mourey from the Robert Wood Johnson Foundation, Billy Shore from Share Our Strength, Wendy Kopp from Teach for All, and Nancy Lublin from Do Something – to contribute their insights to the series. Bradach is doing this because he believes we have not yet figured out how to grow solutions to a point at which they are actually solving problems. As he wrote in his kick-off post to the series:

Over the past couple of decades, leaders have developed a growing catalog of programs and practices that have real evidence of effectiveness. And they’ve demonstrated the ability to successfully replicate these to multiple cities, states, even nations in some cases, reaching thousands or even millions of those in need. Despite all this progress, today even the most impressive programs and field-based practices rarely reach more than a tiny fraction of the population in need. So we find ourselves at a crossroads. We have seen a burst of program innovation over the past two decades; we now need an equivalent burst of innovation in strategies for scaling.

One of the places where scale has been an on-going topic of conversation is the annual Social Impact Exchange’s Conference on Scaling Impact. Now in its fifth year, this conference next month in New York City brings together “funders, advisors and leaders to share knowledge, learn about co-funding opportunities and develop a community to help scale top initiatives and build the field.” The conference is organized, in part, by the Growth Philanthropy Network, which “is creating a philanthropic capital marketplace that provides funding and management assistance to help exceptional nonprofits scale-up regionally and nationally.”

I’m excited to be attending this year’s conference and participating in a panel called “Business Models for Sustainability at Scale.” From my perspective, one of the biggest hurdles to scale is a financial one. Very few nonprofits have yet figured out how to create a sustainable financial model, let alone how to create one at scale. And this hurdle exists for many reasons, including: lack of sufficient capital in the sector, lack of sufficient management and financial acumen among nonprofit leaders, an unwillingness among funders to recognize the full costs of operation. So I’m excited to be part of this important conversation about how we can actually create financially sustainable scale.

It will be interesting to see how the conversations at the Scaling Impact conference – led by rockstars in the field like Antony Bugg-Levine from the Nonprofit Finance Fund; Tonya Allen from the Skillman Foundation; Heather McLeod Grant, author of Forces for Good; Paul Carttar from The Bridgespan Group; and Amy Celep from Community Wealth Partners – will relate to the perspectives of those writing in the “Transformative Scale” blog series. I wonder where there will be overlap and where there will be disagreement or even controversy. Scale is an incredibly difficult nut to crack. And as Bradach rightly states, no one has figured it out yet.

I will be posting to the blog during the conference about what I’m hearing and where there are common threads or separate camps.

I hope to see you there!

Image Credit: Social Impact Exchange

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10 Great Social Innovation Reads: July 2013

10 Great Social Innovation ReadsSince I was out of the office for part of July and checked out of social media (which I highly recommend!), the below list is in no way comprehensive. But it is what caught my eye in the world of social innovation in July (when I was paying attention). More than ever, please add what I missed in the comments below.

And, as always, you can see more of what caught my eye by following me on Twitter, Facebook, LinkedIn, or Google+.

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

  1. In a highly provocative op-ed, Peter Buffett, son of Warren Buffett, wrote a pretty scathing rant against today’s philanthropy, calling it “conscience laundering — feeling better about accumulating more than any one person could possibly need to live on by sprinkling a little around as an act of charity.” Needless to say, much argument followed, including Howard Husock’s post arguing that Buffett is “far too pessimistic about what philanthropy, well-conceived, can accomplish.”

  2. Dan Cardinali, CEO of Communities in Schools and an emerging voice on the importance of measuring nonprofit outcomes, wrote a third piece in his series on redefining the nonprofit sector. This one explores the need for nonprofits to “hold ourselves accountable to objective measures and quantifiable outcomes.”

  3. And another nonprofit leader trying to shake things up, Bill Shore of Share Our Strength, offers the provocative “We Just Don’t Have the Money, and Other Fibs We Tell Ourselves“.

  4. Antony Bugg-Levine from the Nonprofit Finance Fund provides additional fodder to the conversation with his post “Navigating Tough Trade-offs in the Era of Scarcity.”

  5. Lucy Bernholz, philanthropy truth teller and future seer, offers three ways we can reinvent philanthropy in this great, short video brain dump.

  6. Kathleen Enright, CEO of Grantmakers for Effective Organizations, talks with Paul Carttar, former Director of the Social Innovation Fund, about what he learned there. It remains to be seen what impact the Social Innovation Fund will have, but as Paul says, government can and must play a role in social innovation, “The challenge for everybody — for government and for philanthropy — is to understand what each has to offer.”

  7. The New York Times uses Think Impact (which encourages entrepreneurship in third world communities) to provide an interesting case study of the dilemma of deciding whether to be a for-profit or nonprofit social change organization.

  8. Ever provocative, Phil Buchanan from the Center for Effective Philanthropy argues that the approach MBA programs take in teaching philanthropy “denies the reality that nonprofits and philanthropy work to address the problems that have defied markets…and, in many cases, are a result of market failure.”

  9. Writing on the Pioneers Post blog, Jeremy Nicholls takes issue with the word “impact” and encourages us to think about “value” instead.

  10. The National Committee on Responsive Philanthropy found that in 2011 American foundations increased unrestricted giving by 50% (from 16% of all grant dollars going to support general operating in 2010 to 24% in 2011). Now that’s an exciting trend!

Photo Credit: josue64

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10 Great Social Innovation Reads: June 2013

10 Great Social Innovation ReadsJune was all about attacking some pretty fundamental roadblocks in the way of social change. From the pivotal “Pledge Against The Overhead Myth,” to a new database for all nonprofit organizations, to moving philanthropists from innovators to capacity builders, to ideas for growing the level of giving, it seems June was about putting everything on the table and exposing what stands in the way of progress.

Below are my 10 favorite social innovation reads in June. But, as always, add your favorites to the list in the comments below. And if you want to see my expanded list, follow me on Twitter, Facebook, LinkedIn, or Google+.

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

  1. The big news in June was GuideStar, Charity Navigator and BBB Wise Giving Alliance’s Open Letter to the Donors of America and their kick-off of the Pledge to End the Overhead Myth. The three nonprofit review organizations are on a quest to expose the destructive nature of the overhead myth.

  2. This exciting announcement was followed quickly by some great articles. Kjerstin Erickson’s (former Executive Director of FORGE) eye-opening post about how the overhead myth can ruin a great nonprofit. And Ann Goggins Gregory (most famous for the seminal Nonprofit Starvation Cycle article in a 2009 Stanford Social Innovation Review that arguably started the entire overhead debate) great post about what nonprofits can do to speed adoption of the idea of overhead as myth. And Phil Buchanan from the Center for Effective Philanthropy chimes in with what foundations can do. And writing on the Grantmakers in the Arts blog, Janet Brown seems to agree, arguing that “with more efforts for honest assessment and honest communication between funders and nonprofits, we can stop dancing solo and begin dancing as real partners.”

  3. Antony Bugg-Levine, from the Nonprofit Finance Fund, gets down to brass tacks, gleaning 3 things that funders can do to help nonprofits from the NFF’s most recent State of the Sector survey.

  4. Echoing these same themes, Dan Cardinali, President of Communities in Schools, argues in the Huffington Post Impact blog that “Philanthropists…must come to grips with their new role as capacity builders rather than innovators.” Amen to that!

  5. But the reality is that foundations aren’t using innovative tools already available to them. A recent study by the Indiana University Lilly Family School of Philanthropy found that only 1% of US foundations are using PRIs (program-related investments), which I think is an enormous missed opportunity.

  6. Keeping with their ultimate goal of building the data infrastructure necessary for social change to thrive, Markets for Good announces the new BRIDGE project, which assigns all nonprofits a “numerical fingerprint” so that we can eventually understand the global social sector at scale.

  7. The annual unveiling of philanthropic giving numbers shows the same result, giving as a share of Gross Domestic Product has not strayed far from 2 percent over the past four decades. Suzanne Perry offers some reasons why, past failed attempts to grow the figure, and new ideas for moving the needle.

  8. The Dowser blog interviews Patrick Dowd, founder of the Millennial Trains Project, a ten day transcontinental train journey where each of the 40 Millennial riders profiles a crowdfunded project to build a better nation.

  9. If you wonder whether social media can actually move social change forward, check out this fascinating case study. A Facebook app encouraging organ donation resulted in an initial 2000% increase in organ donor sign ups. Who knows if those rates will continue, but the experiment definitely demonstrates the power of social media.

  10. There is a lot of hype in the world of social innovation, and two contrarians offer some thought-provoking perspectives about digging beneath the hype. First Daniel Ben-Horin is fed up with social entrepreneurs who don’t realize what a long haul social change is, when he notes “This making a difference stuff, it turns out, can be a real grind.” And Cynthia Gibson argues that we need to create a culture within the social change space that “encourages healthy skepticism.”

Photo Credit: mindfire3927

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10 Great Social Innovation Reads: May 2013

10 Great Social Innovation ReadsMay was about the “era of adaptation.” We are living in an age where change is a true constant, and we must adapt. We must adapt how we use technology, give money, get educated, use data, and the list goes on. It is an exciting (if sometimes overwhelming) time filled with opportunity.

Below are my 10 favorite social innovation reads in May. But, as always, add your favorites to the list in the comments below. And if you want to see my expanded list, follow me on Twitter, Facebook, LinkedIn, or my newest addition, Google+.

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

  1. The Era of Adaptation is upon us, so says Antony Bugg-Levine from the Nonprofit Finance Fund, and as such “adaptation requires nonprofits to invest in building and sustaining their organizations, not just running programs.” Amen to that!

  2. And how people give is definitely undergoing change. A really interesting article in the Wall Street Journal profiled Laura and John Arnold and their scientific approach to giving away their billions, while hoping to redefine philanthropy in the process.

  3. Google announced a new giving app that allows users to give $1 donations to nonprofits. Doesn’t sound like much, but nonprofits should keep an eye on this. As Google continues to be everywhere, this is an innovation where you may not want to be left behind.

  4. Warren Buffett and his sister Doris are doing something pretty interesting this summer. They are offering the first  ever philanthropy MOOC (Massive Open Online Course). Over six weeks, participants will learn about philanthropy and then some participants will be given money to give away to nonprofits.

  5. As women increasingly control wealth, Anya Kamenetz from Fast Company asks the question, “Will Women Billionaires Make Better Philanthropists?”

  6. And then there’s technology and all that it is changing. Writing as a LinkedIn Influencer, David Kirkpatrick describes the coming of age of the Millennial generation and the opportunity (and burden) of deciding whether to use the gift of technology for the greater, or just their own, good.

  7. Big data has the potential to create enormous change as well. Regardless of your politics, Obama’s reelection team included some really great minds and one of them is now working on using big data to solve social problems.

  8. And how about higher education? Ben Thurman breaks down the growing innovations in higher education on the Dowser blog. From online courses, to apprenticing, to Silicon Valley’s growing interest in higher education innovations.

  9. Writing on the Stanford Social Innovation Review blog John Gillespie provides a very useful set of 5 questions nonprofits should ask themselves to determine if they are truly ready to scale.

  10. In a thought-provoking two-part series (here and here), Caroline Fiennes explains why nonprofits should monitor, but not evaluate, their work, and the role social scientists play in the evaluation of big ideas. Hers is a great distinction, but I’m not sure how we execute on the concept in the real world.

Photo Credit: AngryJulieMonday

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The State of the Nonprofit Sector in 2013

Screen Shot 2013-03-25 at 8.50.38 AMThe Nonprofit Finance Fund (NFF) today released the results of their fifth annual State of the Nonprofit Sector survey. This year almost 6,000 nonprofits responded and the results point to a nonprofit sector that is shifting fundamentally, where traditional funding sources (like government dollars) are shrinking, while demand for services is increasing. Nonprofit leaders must adapt their business models in order to keep up.

As NFF CEO Antony Bugg-Levine put it:

Nonprofits are changing the way they do business because they have to: government funding is not returning to pre-recession levels, philanthropic dollars are limited, and demand for critical services has climbed dramatically. At the same time, 56 percent of nonprofits plan to increase the number of people served. That goal requires systemic change and innovation– both within the sector, and more broadly as a society that values justice, progress and economic opportunity.

With demand increasing and traditional resources drying up, something has got to give. Nonprofits are finding that they must get more strategic about using money and determining the impact of their work.

Some of the most interesting findings from the 2013 survey are:

  • 42% of survey respondents report that they do not have the right mix of financial resources to thrive and be effective in the next 3 years.
  • Over the next twelve months, 39% plan to change the main ways they raise and spend money.
  • 23% will seek funding other than grants or contracts, such as loans or investments.
  • For the first time in the five years of the survey, more than half (52%) of respondents were unable to meet demand for their services last year (up from 44% in 2009), and 54% say they won’t be able to meet demand this current year.

As one survey respondent put it, it is time to move from the reactive to the strategic:

Our greatest challenge is financial stability and sustainability. We must be more effective to raise 50% more money than we did two years ago—with the same number of staff members, but using all the skills and talents each staff member brings to the table to maximize our efforts. Our budget is to the bone, and our staff is overstretched….We…must learn how to work proactively and strategically… and stop playing catch up, as we have for most of our existence.

 

Because NFF has  been doing this survey for the past 5 years they can start to look at trends over time. They’ve developed a pretty cool Survey Analyzer Tool that lets you slice and dice the data by geography, sector, budget, and more.

I encourage you to dig in and take a look at the data. You can find all of the survey reports and tools at the Nonprofit Finance Fund website here.

Photo Credit: Nonprofit Finance Fund

 

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