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building nonprofit organizations

New E-Book: Money to Build Your Nonprofit

Capacity CapitalI’m delighted to announce that we’ve just released a new e-book called The Power of Capacity Capital.

Capacity Capital is a fairly new concept in the nonprofit world that has the power to completely transform the sector by releasing it from the “starvation cycle” and making nonprofits more effective and sustainable at creating social change. “Capacity capital” (or “philanthropic equity”) is just a fancy term for the money so many nonprofit organizations desperately need. And it’s a topic I’ve written about many times on the blog.

Capacity capital is a one-time infusion of significant money that can be used to strengthen or grow a nonprofit organization. It can be money that grows a successful program to other clients, other cities, other regions. Or it can be money that strengthens the organization and makes it more sustainable.

Capacity capital is NOT the day-to-day operating money nonprofits are used to raising and employing. Rather, capacity capital is money to build a stronger, more sustainable organization. It’s a one-time infusion of significant money to fundamentally and positively change the functioning of the organization.

But because this is such a new concept for the nonprofit sector, it can sometimes be difficult for boards and staffs to envision how this new kind of money could be used. Here are some examples to get you thinking:

  • To plan and execute a program evaluation 
  • To plan and launch an earned income stream
  • To create a strategic financing plan
  • To hire a seasoned Development Director
  • To purchase a new donor database
  • To improve program service delivery
  • To upgrade website, email marketing, and/or social media efforts

This The Power of Capacity Capital explains what capacity capital is, what it can be used for, how to convince funders of its importance, and how to raise it. It includes the following sections:

  1. Overcoming the Bias Against Nonprofit Organization Building
  2. What is Capacity Capital?
  3. Uses of Capacity Capital
  4. Convincing Funders To Provide Capacity Capital
  5. The Steps to Raising Capacity Capital
  6. A Case Study in Raising Capacity Capital
  7. Getting Started

If you want to learn more about the enormous opportunity capacity capital holds for your nonprofit, download the book.

And if you are interested in our other books, take a look at the 10 Traits of a Groundbreaking Board and the Financing Not Fundraising series.

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Overcoming the Catch-22 of Nonprofit Capacity

Ask a nonprofit executive director their biggest challenge and most will say securing enough resources. It can seem a vicious cycle: a struggling nonprofit needs to raise money to build their capacity, but they have to have enough capacity in place to raise that money. So they continue to struggle.

A reader of the Social Velocity blog, an executive director of a smaller nonprofit, recently emailed me interested in Social Velocity’s consulting help to grow their ability to bring money in the door. However, the organization is so strapped that they don’t currently have the money to hire Social Velocity. So they are stuck in the vicious cycle: not enough money to raise enough money.

But there is a way out.

The clients we work with are all small and medium nonprofits that are at some sort of inflection point. They too have realized they need to do something different in order to grow their impact and/or become more financially sustainable. Yet, the trouble is they can’t make that change without some outside help.

So they have gotten smart. They have embarked on a series of steps to secure enough investments to hire Social Velocity to help them create a stronger, more effective nonprofit. These are the steps they went through:

  1. Gather Champions: The executive director identifies a few board members who believe as strongly as they do in the desire for some sort of change to the organization and the need for help to get there.

  2. Create a Vision for Change: Together these few leaders agree on their vision for change, for example: stronger financial footing for the organization, expanded programs, a more effective board. They may have no idea how to get there, but they all agree on a desired change.

  3. Make a Roadmap: They meet with Social Velocity to get more clarity around the kind of change they want and what it would take to get there. Once I have a clear sense of where the organization is and what it would take to get them to their vision for change, I put together a detailed proposal listing activities, deliverables, timeline and cost so that they have a very clear roadmap for the investment required to make change happen.

  4. Find Prospects: The small group identifies 3-5 people (board members, current major donors, volunteers or other friends of the organization) as potential investors in securing Social Velocity’s assistance. These people possess 3 key criteria that make them likely prospects to fund this capacity-building effort:
    • Connection: They are already close to the organization, whether as a current donor, volunteer, board member or friend. They know the organization well.
    • Concern: They strongly believe in the organization and the work it is doing and want to see the organization do more and better.
    • Capacity: They have the capacity to make at least a $3-5,000, one-time investment in the organization so that it can get to the next level.
  5. Secure Investments: Once the nonprofit identifies this list of prospects, they go out and start meeting with prospects to discuss:
    • The nonprofit’s vision for change
    • The plan (Social Velocity proposal) for getting to that vision for change
    • The investment required
    • Whether they would like to make an investment

The end result has been nonprofit organizations, that had for years been stuck in the vicious cycle of never having enough money to do enough, finally breaking free with a plan and the investment to make some significant changes to their organizations. You can read our ongoing blog series, Raising Money to Grow On, about one of these clients who did exactly what I’ve outlined above. And you can also read a past blog post about how you can make your donors organization builders.

Nonprofits must break free from the idea that they just have to hobble along with dwindling resources, continuing to squeeze another drop out of a completely dry rock. If you have a core group of people who love your work and want to see you do more, you possess the key to building your own capacity.

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