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Charlotte Chamber Music

Raising Money to Grow On: Creating the Fundraising Pitch

In May 2011 I launched an ongoing blog series that profiles Social Velocity’s work with Charlotte Chamber Music, a small performing arts organization that has a big vision, but lacks the capital to get there. Charlotte Chamber Music enlisted Social Velocity’s help in 2010 to create a strategic plan and a capacity capital pitch to raise the money to execute on their big plan. You can read the whole series here.

Capacity capital (or “philanthropic equity”) is the money so many nonprofits desperately need. Capacity capital is dramatically different from the day-to-day operating revenue for which nonprofits are always fundraising. Capacity capital doesn’t fund delivery of nonprofit services (beds for a homeless shelter, new productions in an opera house, books for an after-school program). Rather, capacity capital builds the organizational infrastructure of the nonprofit (technology, systems, administrative or fundraising staff, materials) that allows the organization to become more effective or grow. But you cannot simply go out and ask for capacity capital. First, you must develop a compelling, inspiring, actionable and measurable plan for what you would do with the capacity capital.

In the earlier posts in this series, I described how we developed an inspiring, investable strategic plan, and a budget and operational plan to ensure that the plan would actually come to fruition. Once those critical pieces were in place Charlotte Chamber Music was ready to develop a capacity capital pitch and prospect strategy.

The first piece was the pitch. A funding pitch is an argument for why a donor should invest. In the case of raising capital, the pitch has to demonstrate some key components in a logical way. The key components of a capacity capital pitch are:

  1. The Opportunity or Need: The community need that exists and why people should care
  2. Your Solution: The solution that your nonprofit provides to that need and the results you are achieving
  3. Plan: Your strategy for the future
  4. Team: The management team you have in place and why they are uniquely positioned to successfully implement the plan
  5. Budget: The amount of capacity capital you need to implement the plan and what it will be used for
  6. Ask Amount: How much you are asking a specific prospect to invest
  7. Projected Social Return on Investment: How the investment of capacity capital compares to the ultimate impact your organization will achieve once the plan comes to fruition

Over several iterations Elaine Spallone, the Charlotte Chamber Music Executive Director, and I came up with a strong compelling pitch that included all of these elements. We created this pitch in both a PowerPoint presentation and in a 2-page leave behind document, or “Prospectus.” Both elements create a compelling argument through text, pictures, and graphical elements. The leave-behind, however, is more text heavy and allows the prospect to dig deeper and explore more on their own.

Then we started in on the prospect strategy. Once you have determined your capacity capital goal, you need to break it into pieces, or investment levels. An investment range chart, like the one below with a goal of raising $100,000 in capacity capital, helps you break a large goal into donor “pieces.” You want your lead gift to be 10-20% of the overall goal and then you create “reasonable” levels below that. A rule of thumb is that it takes 4 asks to get 1 yes, so you calculate the number of prospects you would need at each level. You will see at the lower levels the ratio diminishes to 3-to-1 and 2-to-1, this is because although some prospects at the higher level will say no to that level, they may say yes to lower levels.

Once they had an investment range chart that they were happy with, Charlotte Chamber Music could start to slot prospects at the various levels. For this, they evaluated potential prospects along 3 criteria:

  • Capacity to give at the desired level
  • Connection to a peer at the organization
  • Concern for the mission of the organization

With a compelling pitch and prospect strategy in hand, Elaine and her board set off to start raising the capacity capital they needed to bring their strategic plan to fruition.

In the next and last post in this series, we’ll check in with Elaine to see how they are faring in raising capacity capital and implementing their strategic plan.

If you want to learn more about capacity capital, download our e-book “The Enormous Opportunity of Capacity Capital.”

Photo Credit: loop_oh

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How to Raise Money to Strengthen Your Nonprofit

There is a revolutionary concept that could dramatically transform the nonprofit sector, if only every nonprofit leader knew about it: capacity capital. Capacity capital is the money nonprofits so desperately need to strengthen and grow their organizations. Happily,the Financing Not Fundraising webinar “Raising Capacity Capital” will show nonprofit leaders how to raise this critical kind of money.

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.

I have worked with a number of small to medium sized nonprofits to create a pitch for capital to strengthen revenue functions, grow programs and otherwise build organizations.

Let me give you an example.

Elaine Spallone, executive director of Charlotte Chamber Music, felt that they were stuck. As a small, but beloved arts organization they had a great product, but they couldn’t get beyond the vicious cycle of never having enough money, never being able to expand their presence and impact. They had a solid board, and a great vision for the future, but lacked philanthropic equity to build the organization to achieve that vision.

I worked with Elaine and her board to create a long-term strategic vision, a plan to get there, and a funding pitch for capital to build the organization. You can read the on-going case study about this work to raise philanthropic equity at a small nonprofit here. Charlotte Chamber Music is now actively raising capacity capital, and it’s very exciting.

It’s incredibly powerful to think about the implications of this concept for the entire nonprofit sector. If a nonprofit that provides a solution to a social problem was no longer impeded by a lack of capital, it could be revolutionary.

We’d no longer see great programs wither on the vine. The best and the brightest ideas could travel all over the country, indeed, all over the world. All it takes is the right kind of money, invested in the right place at the right time, and the solution can take off.

If you are interested in raising capital for your nonprofit, 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
  • Develop a campaign goal
  • 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 Details:

On Demand

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

Download Now

Photo Credit: gfpeck

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Raising Money to Grow On: Putting the Strategic Plan in Place

Last May I launched a new ongoing blog series that profiles Social Velocity’s work with Charlotte Chamber Music, a small performing arts organization that has a big vision, but lacks the capital to get there. Charlotte Chamber Music enlisted Social Velocity’s help last Spring to create a strategic plan and a capacity capital pitch to raise the money to execute on their big plan. You can read the whole series here.

Capacity capital (or “philanthropic equity”) is the money so many nonprofits desperately need. Capacity capital is dramatically different from the day-to-day operating revenue for which nonprofits are always fundraising. Capacity capital doesn’t fund delivery of nonprofit services (beds for a homeless shelter, new productions in an opera house, books for an after-school program). Rather, capacity capital builds the organizational infrastructure of the nonprofit (technology, systems, administrative or fundraising staff, materials) that allows the organization to become more effective or grow. But you cannot simply go out and ask for capacity capital. First, you must develop a compelling, inspiring, actionable and measurable plan for what you would do with the capacity capital.

After several months of working with Charlotte Chamber Music we had a strategic plan that staff and board were excited about and invested in. But it’s not enough to have a great strategic direction and goals and objectives to get there. You have to make the plan operational. That means you have to tie the big plan to the day-to-day activity of the organization and the price tag need to get there.

The next step in the process was to develop:

  1. An annual operational plan built from the strategic plan, and
  2. A budget

To do this, Executive Director Elaine Spallone needed to create milestones for each year of the plan. She needed to articulate what had to be accomplished in each year of the plan. This allowed her to start to break the big 3-year plan into annual chunks. Once she was happy with those milestones, she created a laundry list of activities that had to be accomplished in the first year in order to hit the first milestone. Once she was happy with that comprehensive list of activities, she tied each activity to a deliverable, a deadline and a person responsible.

As Elaine said:

Creating the operational plan was intense in the time investment and level of detail required, but worth every minute spent in its creation. It is especially gratifying to check off items and see the progress made. To be fair, it can also be frustrating to realize what is not moving forward. But the good news there is that those issues are clear, and can be articulated, shared and modified.

At the same time, she needed to project revenue and expenses over the period of the strategic plan. It’s not enough to have big goals, you need to understand the price tag associated with those goals (expenses) and how the money (revenue) will flow into the organization to meet those expenses. So Elaine created a 3-year revenue and expense projection that was tied to the goals and objectives of the plan.

Once she had these two key pieces in place (annual operational plan and 3-year budget) she could begin to put some key monitoring pieces in place to ensure that the strategic plan was being executed on. These monitoring pieces are:

  • Each monthly staff meeting is tied to the deliverables of the operational plan that are due that month
  • Each monthly board meeting includes a dashboard report on the status of the goals of the plan
  • At the end of each fiscal year, Elaine will create the next year’s annual operational plan tied to the strategic plan
  • Annual employee evaluations will be tied to an employee’s performance on their part of the operational plan
  • Each annual budget will be tied to the costs of the annual operational plan

So now that Charlotte Chamber Music had an inspiring, investable strategic plan and a budget and operational plan to ensure that the plan would actually come to fruition, they were ready to go out and raise the capacity capital they needed.

In the next post in this series, we’ll talk about how we created a capacity capital pitch and a strategy for going after prospective funders.

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Raising Money to Grow On: Creating The Plan

In May I launched a new ongoing blog series that profiles Social Velocity’s work with Charlotte Chamber Music, a small performing arts organization that has a big vision, but lacks the capital to get there. Charlotte Chamber Music enlisted Social Velocity’s help last Spring to create a strategic plan and a capacity capital pitch to raise the money to execute on that plan. You can read the first post in this series that details what gave Charlotte Chamber Music the desire to raise capacity capital.

Today I describe how we developed a strategic plan for Charlotte Chamber Music, which is the very necessary first step in raising capacity capital.

But first, let’s review. Capacity capital (or “philanthropic equity”) is the money so many nonprofits desperately need. Capacity capital is dramatically different from the day-to-day operating revenue that nonprofits are always fundraising for. Capacity capital doesn’t fund delivery of nonprofit services (beds for a homeless shelter, new productions in an opera house, books for an after-school program). Rather, capacity capital builds the organizational infrastructure of the nonprofit (technology, system, administrative or fundraising staff, materials) that allows the organization to become more effective or grow. The vast majority of nonprofit organizations don’t have access to this kind of money because:

  1. Funders are hesitant to fund “overhead,” and
  2. Nonprofits don’t know how to make the case for why this kind of money is so critical to their ability to deliver impact.

But you cannot simply go out and ask for capacity capital. First, you must develop a compelling, inspiring, actionable and measurable plan for what you would do with the capacity capital. And this is where we started with Charlotte Chamber Music.

Over a period of almost 6 months, Elaine Spallone, the Charlotte Chamber Music Executive Director, and I went through the strategic planning process:

Analyze the Internal Situation: We developed SWOT (Strengths, Weaknesses, Opportunities, Threats)  and core competency analyses. We also created an organization logic model, which helps the organization articulate how they take community resources ($, people, artists) and turn them into social change. Then Elaine took those 3 elements and “shopped them around” to board members, funders, staff, and other constituents to refine what we had developed.

Analyze the External Environment: Elaine and her board and staff then researched their competitors (those providing similar services in the community) and consumers (funders and clients) in order to understand trends, how their core competencies related to community needs, and the competing forces working to address those needs.

Refine Vision and Mission: Several month prior to working with Social Velocity CM had created a new vision and mission statements. But they were very internally focused.  Now, with all of the above data, analysis and feedback in hand, Elaine, her staff and board reviewed their current vision and mission and refined them to better reflect their new understanding of the value CCM brings the Charlotte community. As Elaine observed:

Working with Nell on the mission and vision was critical. We as an organization had in fact addressed them several months earlier and created something we felt good about. But Nell helped us understand that we created something that talked about us as an organization, and not about the way we were going to change our community. It is a critical distinction. It made all the difference and paved the way for our “aha” moment.

So, their new and improved vision and mission statements became:

  • New Vision: Charlotte becomes the cultural center of the Southeast through the vibrant engagement of its citizens, connected to their humanity, history and each other.
  • New Mission: To stimulate, animate and connect Carolinians to each other and their region through the presentation of curated chamber music performances.

Develop Goals and Objectives: With their new vision and mission statements as the guiding elements and filters of the strategic plan, CCM developed a strategic direction. What was really interesting about defining their strategic direction is that the final direction was much different than what they had thought it would be. Before our strategic planning process started, Elaine and her board thought their ultimate goal was “to become a top tier arts organization,” in essence to mirror the largest, most successful, most well-funded performing arts organizations in the city.

However, what they realized in a key “a-ha” moment was that that direction didn’t fit with their core competencies or their place in the external environment. There are countless arts organizations vying to be “top tier.” But CCM’s strength is it’s scrappiness–it’s ability to easily adapt to the changing environment and experiment because they don’t have an expensive staff or infrastructure that needs to be slowly moved. Thus, CCM came up with this strategic direction:

By 2020, through an expansion of venues and channels, Charlotte Chamber Music becomes a new model for engaging people in broader and deeper ways with the cultural arts community

CCM made a very strategic decision: they want to be a new, innovative model that connects people in their community through the cultural arts. They want to draw on their assets of ingenuity, flexibility, innovation and the inherent qualities in chamber music that are so good at connecting people to each other in its intimacy, engagement and accessibility. With their new strategic direction in place, they developed 5 broad goals, and the objectives to get to each of them, for the next 3 years.

With this exciting new strategic plan in hand, Elaine remarked:

A year ago, before we met Social Velocity, we held an informal board and staff retreat. At one point, the board chair called on each board member to share what they felt was the most critical issue we faced as an organization. Overwhelmingly the response was: “What are the measurements for our mission and vision, what are the goals?” and “No clear understanding of where we are going”. I am excited a year later to know all these questions have been answered, and we have a completely new  trajectory in which we have set ourselves upon!

CCM’s new strategic plan has begun to dramatically shift the culture of the organization. CCM now has an exciting, compelling long-term vision (and a detailed plan to execute toward that vision) that is getting staff, board and funders excited for the future.

In the next post in this series, we’ll talk about how we created the day-to-day operational plan to execute on this strategic direction, the 3-year budget to get there, and a system for monitoring the plan going forward.

Photo Credit: laura padgett

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A Case Study in Raising Money to Grow On

Last fall I wrote a blog post arguing that small nonprofits need access to philanthropic equity (money to build their organizations) just as much as larger, more sophisticated nonprofits do. My post was in response to George Overholser’s Social Velocity blog interview where he argued that philanthropic equity (or growth capital) campaigns, where a nonprofit is raising money to build the infrastructure of the organization, are not feasible for small nonprofits. George’s argument and my subsequent post set off a chain of events that led Social Velocity to work with Charlotte Chamber Music to plan and prepare for a philanthropic equity campaign. Over the course of the next several months I will give you an insider’s view of our work with CCM in order (I hope!) to prove my argument that philanthropic equity campaigns can and should be accessible to any nonprofit that has a vision for something bigger and the determination to put that vision to action. Today is the first post in this Raising Money to Grow On series.

In George Overholser’s September 2010 Social Velocity interview he argued that philanthropic equity campaigns just aren’t feasible for small nonprofits:

What about the small organizations that DO aspire to undergo a big transformation?…I believe that it is absolutely vital that we come up with a way to better capitalize these smaller organizations. Sadly, though, at this stage of capital market evolution, it is still quite expensive to prepare for a successful nonprofit equity campaign. Unless several million is being raised [the costs are] prohibitively high. This constrains us to campaigns of $5 million or more, which, in turn, constrains us to organizations that are already pretty large.

A Social Velocity blog reader, Elaine Spallone, Executive Director of Charlotte Chamber Music took issue with George’s argument and responded in the comments:

As the ED for a very small nonprofit (<$300K) I am greatly disheartened to essentially read “yes, we can cure the large guys, but for the rest of you -80% – well good luck! No answers for you yet.” WOW…Really is education and awareness for buyers to support the whole organization vs. its programs enough? (Although I agree wholeheartedly, a needed step.) I believe there has to be a way to “create compelling ‘asks’ for equity capital” that is less expensive. There has to be way to finance a small organization’s desire to meet the needs of the community, which could mean doubling their impact. We are asked to relearn, redo, change our practices to support (finance) the organization’s mission to change the world, but is no one considering the relearning, redoing or changing the expensive processes/methods so all nonprofits can benefit?

Since that is exactly why I launched Social Velocity, to help smaller nonprofits benefit from new ideas like philanthropic equity, Elaine and I began to talk about the challenges that Charlotte Chamber Music was facing.

Elaine felt that CCM was stuck. As a small, but beloved arts organization they had a great product, but they couldn’t get beyond the vicious cycle of never having enough money, never being able to expand their presence and impact. They had a solid board, and a great vision for the future, but lacked philanthropic equity to build the organization to achieve that vision. They had been talking to consultants about conducting a capital campaign to raise money for a permanent artistic director and a new or refurbished building. As Elaine recalls:

At first, we thought we had to launch a major campaign to raise funds for an Artistic Director- that was our major missing piece, and we seemed lost as to how to make that leap in securing significant funds. That is where we were stuck — for over a year.

But I counseled Elaine that they couldn’t get unstuck until they created a strategic direction and plan to get there that included the various infrastructure elements they needed to get to the next step. Again, Elaine recounts:

What Nell helped to clarify in the beginning is that investing in infrastructure will change our picture. It’s not just about one person [an artistic director]. We were a step ahead of ourselves. To get there, we needed to create the compelling plan for philanthropic equity…we were missing a huge step by not having a detailed plan for our future.

I suggested that they launch a philanthropic equity campaign, to raise money for an artistic director, fundraising infrastructure, technology, systems, all the things they needed to build a more effective, sustainable organization. But, before they think about a philanthropic equity campaign, they needed a compelling strategic direction and a plan for getting there. Because people don’t invest significant money in an idea, they invest in a coherent, compelling, executable, exciting, measurable plan for the future.

We put together a proposal for how Social Velocity could help Charlotte Chamber Music create

  1. A compelling, investable strategic plan, and
  2. A pitch and prospect strategy to raise the philanthropic equity needed to execute on that plan.

Elaine then went to her board and a few key major donors to make the case that in order to get out of the vicious starvation cycle, expand their impact, and become the top-tier arts organization they knew they could be, they had to invest in an organization-building process. A couple of key donors stepped up to make the investment to hire Social Velocity.

In the next post in this series, I’ll discuss how we went about creating a compelling, investable strategic plan and the pivotal moment when Charlotte Chamber Music realized that they had a tremendous opportunity to develop a new model for the 21st century arts organization.

Photo Credit: naitokz

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