financing not fundraising
I am amazed by the reaction of some nonprofit leaders when faced with a budget shortfall. Some simply shake their head in innocent confusion, some blame an “inexperienced” development director or a “checked-out” board, and others throw together a knee-jerk fundraising event in order to stem the tide.
But a much better approach, when you don’t have the money your nonprofit needs, is to step back and assess the viability of your nonprofit’s overall money function, which is the topic of today’s installment in the ongoing Financing Not Fundraising series.
If you want greater, more reliable funding for your nonprofit, you must get strategic. And the first step to any real strategy is analysis.
Instead of viewing the money that flows to your nonprofit as a side note, or worse, a completely uncontrollable force, you must view money as a very necessary and integrated function that is just as important as your nonprofit’s programmatic function. And in order to determine how well your money function operates and how to transform it, you must assess it.
A transformative financial model assessment uncovers how all aspects of the organization contribute to or detract from money flowing through the doors. It analyzes the financial impact of 7 areas of the organization, like this:
Does your nonprofit have a long-term strategy that integrates money, programs and operations? Does your strategy help articulate the value your nonprofit provides the community in order to compel outsiders to invest? Does your strategy include measures for whether that value is actually being created?
- Mission and Vision
Does your nonprofit have clear, compelling vision and mission statements? The two statements are not “nice to have” marketing language, rather they articulate the very essence of why your nonprofit exists. Does your vision paint a bold description of the social change you seek? Does your mission describe the day-to-day work towards that vision?
- Board and Staff Leadership
Does your board have the skills, experience and networks necessary to execute on your strategic plan? Are they engaged and invested? Are they actively connecting the organization to people, resources, partnerships? Does your staff have the knowledge and experience necessary to make money flow? And are they structured and managed effectively?
- Program Delivery and Impact
As a nonprofit you have two sets of “customers.” Those you serve (or your “clients”), and those who fund those services (or your “donors”). Without a compelling and effective delivery of services to clients, donors won’t fund those services. Is your nonprofit strategic about which programs to grow and which to cut? Do you measure the effect of your programs on clients? Are your programs financially viable, or are too many of your programs mission-rich, but cash-poor?
- Marketing and Communications
Do you make a compelling case for your work and for support of it? Once you’ve made the case, are you using the right marketing channels (website, social media, events, email, etc.) to attract and engage your target funders, volunteers, advocates, board members and other supporters?
- External Partnerships
In order to move the mission forward and in order to attract funders, volunteers, advocates you must be strategic about building alliances that make sense. Do you have the necessary external relationships to execute on your strategy? Are you constantly working to strengthen or grow the right partnerships in the right ways?
- Financial Model
And only now do we look specifically at money. Because without all the previous elements (thoughtful strategy, compelling vision and mission, strong leadership) money simply will not follow. Does your funding mix fit well with your mission and core competencies? Are there other revenue streams that make sense to pursue? Are there fundraising activities that are actually costly rather than profitable?
When money isn’t working the way you want it to, don’t stick your head in the sand. Wrest the money sword from the beast of chance by taking a hard look at your nonprofit’s money function.
If you want to learn more about the Financial Model Assessment I provide clients, click here. And if you want to learn more about the Financing Not Fundraising approach, download the newest e-book in the Financing Not Fundraising series, Financing Not Fundraising volume 3.
Photo Credit: Pen Waggener
Although the definition of a “startup” is an organization that has been around for only a few years, there are many nonprofits that are still in startup mode despite their 20+ years of existence.
But the good news is that you don’t have to wait around for a knight in shining armor to save you from the endless startup existence, which is the topic of today’s installment in the ongoing Financing Not Fundraising series.
The power to begin scaling the startup wall is actually in your hands. Here are the steps to begin:
- Create Your Business Plan
Probably a big part of the reason that you are still struggling as a startup (more than) several years in is that you haven’t strategically connected operations and financing to your mission. A business plan that answers questions like “How will you finance the business?” and “Who are your target customers (clients AND funders)?” and “What’s the right staffing structure?” and “What are the goals of the business?” and much more. Just because the profits from your business enterprise go back into the organization (nonprofit) instead of into the pockets of the owner or stakeholders (for-profit) doesn’t mean you don’t need a business plan. Figuring out how to align money, mission and operations is the first step to a stronger future.
- Grow Your List of Champions
If your nonprofit’s inner circle consists of a founder and a few friends you will never grow. You have to convince people beyond those who already love you to internalize the work of the organization and become actively involved as board members, advisors, fundraisers. But you cannot target anyone and everyone. You have to identify people whose values connect with your work and your mission. And they have to have some specific skills, experience and networks that will help your organization move forward. But if you’ve only ever had your friends behind you, how do you convince outsiders to become champions and board members? Keep reading…
- Develop a Value Proposition
If you are unable to articulate among internal board and staff what your nonprofit is hoping to accomplish and the value it provides the community, how can you possibly convince others to become involved? The first step in really taking things to the next level is to develop that value position, or a Theory of Change. A Theory of Change is basically an argument for why your nonprofit exists — how you take community resources (inputs) and create changes to program participants’ lives (outcomes). To move from merely getting by to really making strides, you must create this argument.
- Convince Others to Give
Once you have your Theory of Change in place you need to make a compelling argument for how more inputs (funding) will help you create more outcomes. A case for investment is a logical, reasoned argument that helps you to make this case convincingly. Once completed, pieces of your case for investment can be used in fundraising appeals, on your website, in thank you letters, in marketing campaigns and much more. It is the fundamental building block to attracting more dollars to your nonprofit.
It doesn’t have to be a rule that the vast majority of nonprofits subsist in an endless startup mode. If you need some help finding your way out of startup mode, download the Nonprofit Startup Tool Bundle.
Photo Credit: Chad K
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
It becomes increasingly obvious to me that the nonprofit sector suffers from a lack of confidence. Centuries of being sidelined as “charities” while the real work of the world (business) took center stage has made the nonprofit sector continually apologize for the work they do and how they do it.
Nowhere is this more true than in the financing of their work.
But for the nonprofit sector to start to demand a seat at the big money table, nonprofits must stop apologizing for needing money. To truly begin to use money as a tool, nonprofit leaders have to stop regretting their need of it and start demanding that they receive enough and the right kinds of money to successfully accomplish their work, which is the topic of today’s installment in the ongoing Financing Not Fundraising series.
Note that this post is included in the recently released Financing Not Fundraising, vol. 3 E-book.
You can’t simply decide to stop feeling bad about asking for money. Instead you have to find the confidence to identify and secure the right financing for your work.
Ask for Change, Not Your Organization
You shouldn’t be asking for money for your organizational needs, rather you should be asking for money as a vehicle to help your organization create social change. Everyone is uncomfortable when asking for a handout. If instead you are asking for resources to make positive social change, which a donor cares about, it is much more powerful, compelling and confidence-inspiring.
Find the Right People
It surely can be awkward asking for money if you are asking the wrong person. Don’t fall into the trap that many nonprofits do by thinking that anyone with money is a potential donor to your nonprofit. People give based on values, therefore you only want to target people for whom your mission and your work resonate deeply. No matter who your target is (an individual, a foundation, a corporation) think about whether they have the Capacity to give at the level you need, have a Connection to someone at your nonprofit, and have a Concern for your nonprofit’s mission. Being strategic about who you are targeting makes you much more confident when you finally make the ask.
Tie Money to Your Goals
If you know as an organization what you are trying to accomplish and how much that will cost, you will have much more confidence asking for money. Instead of just asking for money, you will be asking for the financing necessary to accomplish your strategic goals. If you have a smart organizational strategy you can confidently ask a potential donor to invest in a solid, well-thought out plan for creating change to a problem they care about. And that’s much less awkward than asking someone to just give, right?
Take Out the Middle Man (or Event)
So many nonprofits sidestep the awkwardness of asking for money for their mission by holding a big gala event instead. The thinking is that if they camouflage the ask inside twinkly lights, great music and food, and a loud band that people won’t mind opening their wallets. Aside from the very real fact that you are leaving money on the table, events simply enable the lack of confidence I am describing. Instead of feeling so guilty about asking for money that you run your board and staff ragged by staging a huge event, take out the middle man and identify, cultivate and solicit donors who truly care about your work and will give more significantly through a major donor campaign.
Share Your Results
If your nonprofit is truly creating social change, then you can very confidently ask others to join you as partners in making that change continue to happen. Collect, analyze and share the results of your nonprofit’s programs. Demonstrate the change that you are creating and that donors care about. With solid results to point to, you can confidently ask other people to invest in your successful work. At the end of the day, if your nonprofit is creating positive community value then you should confidently be asking for the money necessary to make that value grow.
Stop apologizing for needing the financing necessary to do the work and start finding and confidently inviting interested investors to partner with you. In so doing you will be moving your nonprofit from fundraising to financing.
Photo Credit: myguitarzz
I am delighted to announce today’s release of the newest volume in the Financing Not Fundraising e-book series, Financing Not Fundraising, vol. 3.
The idea behind Financing Not Fundraising is that the traditional way nonprofit leaders, boards and donors have approached funding the work of nonprofits doesn’t work anymore. Traditional nonprofit fundraising forces nonprofits to work harder and harder for a smaller and smaller return. Nonprofits must break free from this vicious cycle and take a much more strategic approach to securing the overall financing necessary to achieve their goals.
The first step in this process is to fully integrate money with the mission and core competencies of the organization. In creating such a strategic financial model for her organization, a nonprofit leader will be setting her organization on a path towards financial sustainability, growth, and ultimately change to the social problem her nonprofit attempts to address.
The Financing Not Fundraising, vol. 3 E-book expands on the basic elements of the Financing Not Fundraising model and helps those nonprofit leaders who are ready to start moving away from fundraising to really dive into this new approach.
Contained in this e-book are new ways of thinking, new tools of analysis, new questions to ask. All with the intent of pushing your staff, your board, even your donors, to fund your work in a more effective and sustainable way.
Here are the chapters in the Financing Not Fundraising, vol. 3 E-book:
- Overcome Nonprofit Taboos
- Remove Money Hurdles
- Find and Keep a Great Fundraiser
- Recruit a Money Raising Board
- Set a High Board Fundraising Bar
- Enlighten Your Donors
- Break Free From the Starvation Cycle
- Create Donor Personas
- Calculate Opportunity Costs
- Stop Apologizing
- Get Started
If you are tired of hitting your head against the unmovable fundraising wall, I invite you to explore a new way of sustainably financing the critical work you do.
Yep, it’s true, the nonprofit sector doesn’t have enough money. There are lots of reasons for that, but part of it stems from the taboos the nonprofit sector (and the staffs, boards and donors within it) perpetuates. But perhaps if we lay them bare, we can start to break free from them, which is the topic of today’s installment of the ongoing Financing Not Fundraising blog series.
If you are new to this series, the idea is that nonprofit fundraising is broken. Instead of continuing to hit their heads against the fundraising brick wall, nonprofit leaders must take a strategic approach to financing their work. You can read the entire Financing Not Fundraising blog series here.
Nonprofit taboos are so insidious because they are unwritten and unquestioned. But that has to stop. If we want to move the nonprofit sector forward, we must uncover certain taboos and determine whether they are really unacceptable anymore.
Here are the five most egregious taboos in the nonprofit sector:
- Nonprofits Shouldn’t Raise a Surplus
For some reason it is unseemly for a nonprofit to have more money than they immediately need. If a nonprofit is not just barely breaking even, it is somehow unworthy of raising more money. To the contrary, a nonprofit that has operating reserves can invest in a more sustainable organization, conduct R&D to make sure their solution is the best one, recruit a highly competent staff, and weather economic fluctuations. It is far better to invest in an organization that is well poised to attack a social problem than one that is barely able to keep the lights on.
- Nonprofits Shouldn’t Pay Market Rate Salaries
I won’t join the crazy controversy that surrounds nonprofit executive salary levels, but let me simply point out that nonprofits exist within a market economy, that is a fact. If someone is great at what they do, and they can make more money elsewhere, eventually they will do so. It is simple economics. I understand that mission is a driving force for people attracted to the nonprofit sector, but as competition in the social change space continues to grow, the best and brightest will be lured away by other nonprofits, government entities, or for-profit social enterprises. So if you want to attract and retain a really talented employee, you’ve got to pay them accordingly.
- Nonprofits Shouldn’t Demand Board Members Fundraise
Why not? Seriously, I don’t get this one at all. If your governing body is free to make strategic and programmatic decisions without understanding, first hand, the financial implications of those decisions, you are setting your nonprofit up for failure. Mission and money must be strategically aligned, and the first and most important place that alignment occurs is at the board level. There are plenty of ways for board members to get involved in the financial engine of their nonprofit. Let’s stop apologizing for having to make money in the nonprofit sector and start requiring every single board member get actively involved in the process.
- Nonprofits Shouldn’t Question Donors
Donors hold the purse strings so nonprofit leaders are unwilling to tell them how it really is. But if the sector continues to act like a grateful recipient of a wealthy person’s or institution’s largesse, that power imbalance will continue, as will the dysfunctions that accompany it. If instead nonprofits and funders were equal partners working together to solve a problem, maybe we could get somewhere. But this will only happen if nonprofit leaders become more confident at telling their donors (and board members) how it really is. And if nonprofit leaders are more strategic about diversifying their financial model so they are no longer beholden to a few funders.
- Nonprofits Shouldn’t Invest in Fundraising
In the nonprofit world the fundraising function is equivalent to the sales and marketing function of the business world. No one expects Apple to create amazing gadgets and then sit back and hope people show up and buy them. They have an extensive and well-financed marketing and sales function. But nonprofits are expected to spend as little as humanly possible on fundraising. Added to that, nonprofits are even more challenged because they have two, not just one, set of customers: 1) the clients they serve who often can’t pay for services, and 2) the funders who pay for those services. So we are telling nonprofits to recruit and serve two sets of customers on a shoestring. That’s crazy. We have to get over the idea that investing in fundraising (high quality staff, technology, expertise, planning, marketing) is a bad thing.
At the end of the day, we have to stop apologizing for the realities of the nonprofit sector. It’s time nonprofit leaders stand up and start demanding the end to some serious strictures that hold them back from doing their jobs. And, let’s remember, those jobs are to solve some of the most complex problems facing our communities. Those jobs are probably more easily and effectively done in the absence of crazy taboos.
If you want to learn more about moving your nonprofit from fundraising to financing, check out the Financing Not Fundraising page.
Photo Credit: wheat_in_your_hair
There are some exciting things happening at Social Velocity. I have spent the last several months revising and expanding the e-books, webinars, and step-by-step guides I offer nonprofit leaders in the Tools store of the website. These Tools help nonprofit leaders, board members and donors understand the trends facing the nonprofit sector and how to become more strategic and sustainable at creating social change.
And we are moving to a brand new shopping cart system to make the purchase and download of the Tools much easier for you, with additional payment options, a streamlined process and more. I will reveal the brand new Tools store in the next week or so.
But if you want to hear about the launch of the new Tools store first (and enjoy a discount on Tools purchases) sign up now for the Social Velocity e-newsletter. Prior to the official launch of the new Tools store, we will send all subscribers an early bird announcement and discount code to use.
And, as an added bonus, if you sign up for the Social Velocity e-newsletter now you can immediately download the revised and expanded Financing Not Fundraising, volume 1 E-book (a $9 value) for free. Here’s what one reader of the e-book had to say about it:
“I felt a lot of affirmation when I read your e-book as I too believe fundraising as we knew it is history and sometimes that is hard for the board to understand and accept. Your series was incredibly powerful for me and will have a huge impact on us. I think your e-book will give [board and staff] some confidence to make tough decisions. On lots of different levels your e-book was exactly what I think we need right now.”
So if you haven’t already, sign up now for the Social Velocity e-newsletter.
And stay tuned for our new and improved Tools store coming soon!
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