Fundraising is such a misunderstood enterprise. And it’s not just misunderstood by nonprofit leaders in the trenches.
I was talking to a normally very savvy foundation program officer the other day who wondered if one of his struggling grantees should think about launching a new gala event to raise some additional money. I swallowed my first inclination to scream “NOOOOOO!” in the middle of a crowded restaurant and instead calmly explained why events are a bad money fix, and why any short-term money generating strategy is probably a really bad idea.
But this well-meaning program officer is far from alone in his understanding of financial sustainability in the nonprofit sector. If I had my way, nonprofit leaders would stop making these 5 big fundraising mistakes:
- Taking a Short-Term Approach
If you don’t have enough money today, a single fundraising activity isn’t going to solve the problem in the long-term. If you want to solve your ongoing money woes, you have to create a long-term plan. The single best way to bring more and larger dollars in the door is to create a smart, long-term strategy for your nonprofit. And that long-term strategy must include a corresponding long-term financial strategy. With a compelling Theory of Change (an articulation of the value your nonprofit creates), what you are hoping to accomplish, and how you will get there, you will be better able to convince funders (no matter what your financial model) to come aboard. People invest in a compelling and believable vision for the future. If you are just raising money for the day-to-day, you will always struggle.
- Looking Under the Same Rocks
Often when there is a money shortfall, nonprofit leaders think they simply need to ask the same people to give again or more. If only it were that easy. To attract more people and organizations you have to have a wider net. But not just on your Facebook page or in your mailing list. A wider net means that your board’s networks need to grow, your distribution channels need to grow, your friend-raising activities, your strategic alliances need to grow — the overall network of your nonprofit needs to grow. You need to think holistically about how to grow the reach of your organization and get everyone involved in making that happen.
- Chasing A Magic Bullet
Seriously, listen when I say this: There Is No Magic Bullet to Fundraising. Fundraising, like so many things, often falls victim to shiny object syndrome. From the Ice Bucket Challenge, to crowdfunding, to social media, it seems there is always something new that nonprofit leaders, philanthropists, or board members think will finally solve a nonprofit’s money woes. But the reality is that finding enough and the right kind of money for the results you want to achieve as an organization is hard work. There is no easy fix. Instead you have to get strategic and create, and then systematically execute on, a financial plan for your nonprofit. It may sound boring, but believe me, once you attach strategy to money, the transformation — to your staff and board, to your funders, to your financial model, to your overall results, to your effectiveness and sustainability as an organization — can be incredible.
- Giving People a Free Pass
When you tell certain board members or certain staff members that they don’t have to worry about money, you are essentially giving them a free pass and placing a larger burden on the rest of the organization. While money must be led by your Chief Money Officer (whatever their title — Executive Director, Development Director, CDO), it must be a team effort. Your money person’s job is to develop an overall money strategy and then mobilize all her resources (staff, board, other volunteers, technology, systems) to bring that money strategy to fruition. She CANNOT do it alone or with only half a board. Money has to be part of the conversation for everyone in the organization.
- Not Fundraising for The Fundraising Function
If you want to get better at raising money, you must invest in the right strategy, staff, and systems — your fundraising function –to raise that money. You need to pay market rate for a fundraising person who is a smart, strategic leader. You need to put time and effort into an overall financial strategy, and you need to create the infrastructure (technology, systems) to make that financial strategy a reality. To make these investments, you might have to raise capacity capital from your donors, a one-time infusion of significant money that helps strengthen your organization. A capacity capital investment in your fundraising function can more than pay for itself in a few years when your transformed financial engine is running at a much more profitable rate. But failing to invest in your fundraising function means you will continue to struggle financially.
Oh nonprofit leaders, please stop hitting your heads against the fundraising wall. I promise you, a more sustainable financial engine awaits if you simply invest the time and energy into a smart strategy, a broader network, effective staff and systems and a real team effort.
Photo Credit: hobvias sudoneighm
I was speaking to a group of nonprofit leaders in Pittsburgh last month about how to Move From Fundraising to Financing and there were some parts of the presentation that raised eyebrows and (sometimes) controversy. And it usually happened around the topic of the nonprofit board.
I strongly believe that the board of directors is a nonprofit’s most critical financial asset. A board that is actively engaged and has the specific skills, experience, and networks required to deliver on the organization’s strategy can make the difference between a nonprofit that is just getting by and a nonprofit that is truly creating social change. And money is an inextricable part of that. Therefore, a nonprofit’s board cannot avoid its money role, or the organization and its mission will suffer.
Is your board avoiding their money role? Here’s what it looks like when they are:
The Board Isn’t Raising 10% of the Budget
I know it’s heresy, but I believe that a board should be charged with raising at least 10% of a nonprofit’s annual budget. But that doesn’t mean they all have to write personal checks (or get their friends to write them). Rather, there is an endless list (here and here) of ways board members, who are fundraising shy, can bring money in the door. Because why should the entire financial burden be left on the shoulders of the staff? That’s just not sustainable. And if you can’t get your board to step up to the financial plate, how will you have any hope of getting others to do so? There are really so many reasons why your board should take on more money responsibilities.
The Board Doesn’t Enforce a Give/Get
So to reinforce the idea of complete board involvement in the financial engine, you need to make it a practice. And that’s where the give/get comes in. A give/get requirement is a minimum dollar amount at which each individual board member must either “give” themselves, and/or “get” from somewhere else. Every single member of the board must understand and contribute to how money flows to the organization. They cannot argue that money is the purview only of the staff or a subset of board members. Money has to be part of the ENTIRE board’s job. Until you force the board to really participate in creating and maintaining an effective financial engine, you won’t be able to have substantive conversations about or get real engagement in raising or spending money.
New Program Decisions Ignore Money
It is not enough for a board to approve new programs or program expansion by only analyzing the potential impact on the mission. The board must also understand how a new program will or will not contribute to the long-term financial sustainability of the organization. The board needs to analyze all of the costs (including set up, opportunity costs, and ongoing operating costs) of the program and whether the program can attract enough money to at least cover those costs. And if not, whether the new program can be subsidized by other activities already in the mix. But the board cannot blind themselves to the financial downfalls of a sexy new program.
Real Conversations About Money Happen Only in Crisis
Most board meetings include an update on a nonprofit’s budget, which is the extent of any money conversation. If there is a problem (expenses are too high, or revenue is not flowing as budgeted) a long conversation will ensue about the crisis. But bigger, regular discussions about the overall financial strategy of the organization are scarce. If the board is to be the financial steward of the organization, they have to spend time analyzing and developing their nonprofit’s financial model — where revenue should flow and how money should be employed to meet the mission. Money is a tool. But to effectively wield that tool, the board needs to think, talk, and act strategically about it.
For a nonprofit to be truly effective and sustainable, its board — the entire board — must embrace its money role. Because their is no mission without money. And no successful board turns a blind eye to the financial engine of their organization.
If you want to find out more about developing a sustainable financial model for your nonprofit, download the Develop a Financial Model Bundle. And if you want to learn how to create a more effective board, download the Build an Engaged Board Bundle.
Photo Credit: Luis Miguel Bugallo Sánchez
It is such a common complaint. Nonprofit boards are notorious for shirking their fundraising duties. But the good news is that there is a solution, and it doesn’t involve pleading or bribery. As part of the growing Social Velocity Slideshare library, today I offer the 9 Ways to Get Your Board Fundraising Slideshare.
If you want your board to share the responsibility for creating a sustainable nonprofit, you must get strategic. And you must stop apologizing. This Slideshare helps you begin to understand the steps for transforming your board into a financial workhorse.
And if you want to learn more about getting your board moving, download the the How to Build a Fundraising Board on-demand webinar.
You can see the entire library of Social Velocity Slideshare presentations here.
I’ve been conducting a lot of Financial Model Assessments lately (where I analyze how a nonprofit raises money and show them how to do it more effectively) and, not surprisingly, the board of directors often comes up as an impediment to greater financial sustainability.
There are so many reasons why a nonprofit’s board is not helping to bring money in the door. Often board members:
- Don’t know who or how to ask for money
- Can’t articulate why someone should give to their nonprofit
- Are unable to figure out where they can be most helpful
- Don’t understand how money works in the sector
- Can’t connect their individual actions to the larger financial engine of the organization
…and the list goes on.
But instead of pleading with, chastising, or complaining about your board, you need to take a big step back and get strategic.
By figuring out your nonprofit’s long-term goals, determining who you need on your board to get you there, tapping into their unique strengths, and creating a system for involving each one in the financial engine, you can transform your board into a money-raising machine.
They can become a board that no longer drags their feet about fundraising, but rather acts as a team to fully finance the nonprofit in which they believe so strongly.
The newest Social Velocity webinar, How to Build a Fundraising Board will show you how to get there.
How to Build a Fundraising Board Webinar
This webinar will help you:
- Analyze what kinds of board members you need
- Create a system for getting each individual member involved
- Give them clear money raising responsibilities
- Create a message they are excited about delivering
- Give them many options for bringing money in the door
- Get them excited and engaged in the future of the organization
And remember, all Social Velocity webinars are available On-Demand.
Photo Credit: Dennis Skley
I am really in to Slideshare lately. I uploaded my first Slideshare presentation, Calculating the Cost of Fundraising, last month and people seemed to really like it. So I plan to create regular Slideshare presentations and share them on the Social Velocity Slideshare site.
Today’s Slideshare is 7 Ways to Kiss Fundraising Goodbye. Traditional nonprofit fundraising is broken. It lock nonprofits in an endless cycle of chasing low return activities. A much better approach is to create a sustainable financial model that aligns well with your mission and core competencies. Nonprofits must move from Fundraising to Financing.
If you want to move your nonprofit from a Fundraising to a Financing approach, download the Build a Nonprofit Financing Plan Step-by-Step Guide.
Wrangling a group of volunteers who have competing and often conflicting interests is an exhausting job. It’s no wonder that nonprofit leaders often want to throw up their hands and soldier on without the rag tag group that’s supposed to further, as opposed to impede, the work.
But it doesn’t have to be that way. An “engaged board” is not an oxymoron. It is actually attainable. But you don’t get there by cajoling, guilting, ignoring or dismissing your board.
You get there by marshaling this critical army to grow your resources, your community of supporters, your results. Because an engaged board raises more money, recruits and trains other engaged board members, connects your nonprofit to key people and organizations necessary to achieve the mission, puts your nonprofit above their self interest, and ultimately leads your organization to greater results and impact.
There are very clear steps you can take to build an engaged board:
- Create a clear idea of the specific skills, experience and networks board members should possess
- Continually focus the board on the big picture
- Get them ALL to raise enough money
- Help them embrace money as an effective tool
- Make them understand and be able to articulate the impact of your nonprofit
- Create a commitment among them to build the organization
- Encourage them to ask hard questions
- And more…
You can help them become the board of directors they were meant to be.
An engaged board understands and fully embraces their charge. They have extremely high standards, and they hold themselves, their fellow board members and their nonprofit to those standards. They are constantly pushing, striving, and building the nonprofit to whom they are devoting their service. An engaged board may be an anomaly, but it doesn’t have to be.
If you want to build an engaged board, the Build an Engaged Board Tool Bundle can help you get there. The Bundle includes:
- The “Getting Your Board to Raise More Money” Webinar
- The “10 Traits of a Groundbreaking Board” E-book
- The “How to Build a Fundraising Board” Webinar
Here’s what some people who have already downloaded the board tools had to say about them:
“This was very concrete and actionable – gave specific suggestions regarding engaging board members. This was very useful. Well done.”
“This really opened my eyes to new possibilities – thank you so much!”
“This was one of the best and most helpful and informative webinars I’ve been on. It was exactly what I was looking for in terms of beginning to get our board energized and on track and I will use the slides to help me prepare for our upcoming board retreat.”
An ineffective board is not just a frustration for the executive director. Sadly it is a HUGE missed opportunity. Your board could be so much more. When you effectively engage your board of directors, you grow your resources and ability to create social change exponentially.
You can download the Build an Engaged Board Tool Bundle here.
Photo Credit: Dr. Strangelove
If I had one wish for the nonprofit sector in this new year it would be for nonprofits to get much smarter about money and finally start using it as a robust, strategic tool for creating more social change.
But you can’t get smarter about something that you fear, or don’t understand, or avoid, or can’t access.
Which is why I’m really excited about one of the new tool bundles I’m offering in the newly revamped Tools section of my website. The Develop a Financial Model Tool Bundle provides the guidance you need to create a financing plan for your nonprofit in this new year.
A financing plan (as opposed to a fundraising plan) is a long-term strategy for bringing enough money in the door to achieve your mission, ultimately bringing you closer to creating sustainable social change.
The Develop a Financial Model Tool Bundle will help move your board, staff and donors to truly understand a financing approach and give you the roadmap for developing your nonprofit’s own financing plan. It will help move your nonprofit from the exhausting hamster wheel of fundraising to a robust, sustainable financial model.
The tool bundle includes 4 components:
- The Financing Not Fundraising, vol. 1 E-book that describes the theory behind moving from fundraising to financing, why financing is a much more sustainable and effective approach, and how to begin moving your organization to a much more sustainable way of thinking about and securing money.
- The Financing Not Fundraisng, vol. 2 E-book expands on the ideas behind a financing approach, gives concrete examples of this new approach, and describes how to change your, and your board and donors’ thinking in order to fully make the switch to this new approach of financing your work.
- The 60-minute Create a Financing Plan On-Demand Webinar moves you from embracing the theory of a financing approach to fully understanding what a financing plan is, how it differs from a fundraising plan, the framework for a plan, and the steps necessary to create one. This webinar can be watched whenever you want and however many times you need.
- The Build a Nonprofit Financing Plan Step-by-Step Guide is the final piece of the puzzle. This guide helps you create your nonprofit’s own financing plan. The guide walks you, step-by-step, through the questions, calculations and frameworks you need to build your nonprofit’s financing plan.
This Develop a Financial Model Tool Bundle takes you from understanding the theory behind a financing approach all the way to creating your nonprofit’s own financing plan. As a bundle, the cost is 15% less than the cost of purchasing the e-books, guide and webinar separately. Download the Develop a Financial Model Tool Bundle Now.
This tool bundle, along with all of the other guides, e-books, webinars and bundles available on the Tools page, is designed for smaller and younger nonprofits that may not have the resources to seek customized consulting help, or just need some initial guidance to find a new way on their own.
But if you would rather find out about the customized consulting I provide for creating a financing plan and/or coaching your board and staff to adopt this new approach, let me know.
Note: I was asked to write a guest post for the Nonprofit About.com site about how to move a nonprofit’s board of directors from fundraising to financing. An excerpt of this blog post is below, and you can read the entire post on the Nonprofit About.com site here.
Nonprofit boards of directors are notoriously fundraising averse.
There are often countless excuses nonprofit staff and their board members give about why some board members should be excused from fundraising. Some of the most popular excuses include:
- “We want client representation on our board, but our clients don’t have money.”
- “Some board members aren’t good at fundraising.”
- “We want board members with program expertise to focus on mission, not money.”
- “Some board members are uncomfortable with asking for money.”
Fundraising is hard, I get it.
But it is absolutely critical that the entire board of a nonprofit understand how fundamental money is to the work — without it, nothing else matters. And you simply cannot understand something that you only observe from afar.
Which is why I strongly believe that every single board member should fully understand and contribute to how money flows to the organization. The board cannot argue that money is the purview of only the staff; money HAS to be part of the board’s job. Until the entire board really participates in making the financial engine run, they will be unable to have substantive conversations about how to raise or spend that money.
I know that this is a fairly controversial view, but perhaps it would be less controversial if we moved away from fundraising for nonprofits and worked to finance nonprofits instead. Just changing the terms can make a huge difference for a board.
We have to recognize that fundraising is a broken model. Most nonprofits chase low-return fundraising efforts that keep them from achieving financial sustainability. Instead nonprofits and their boards must together create and execute on an overall strategic financial model for the impact they want to achieve.
And in so doing, perhaps we will find that nonprofit boards become much more effective, willing, and confident contributors to financially sustainable nonprofits.
A financing approach that effectively involves the entire board looks like this…
You can continue reading the entire article on the About.com site here. And to learn more about moving your nonprofit board from fundraising to financing download the Financing Not Fundraising, vol. 3 e-book.
Photo Credit: ShellVacationsHospitality