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When A Funder Takes Your Nonprofit Off Course

It’s fairly common knowledge that in the nonprofit sector the relationship between funders and nonprofit leaders is often fraught. A power imbalance between those with the purse strings and those without can sometimes lead to poor decisions about a nonprofit’s future direction.

The other day I was advising a nonprofit leader — let’s call him “Tim” — about whether he should expand his after-school program to a new school district, an expansion that one of his key foundation funders was championing. Tim was intrigued by the idea because due to a mix of circumstances (high need, proximity to other programs, etc.) investing in this school district had recently become popular among foundations.

But Tim was conflicted because, through years of experience implementing his very successful program, he knew that this new school district would not be a good fit for his program. The school district leadership was not fully invested in Tim’s program and approach, the district was located too far away for the nonprofit to ensure program quality, and the expansion would stretch Tim’s staff too thin, to name just a few of the issues. Despite the drawbacks, Tim was seriously considering expanding to this new district for the sole reason that one of his funders was really keen to see Tim’s program there.

This is a recipe for disaster. It’s an example of a nonprofit leader paying too much attention to the noise. But most troubling, this is an example of a nonprofit leader elevating a funder’s opinion above what the nonprofit leader knows is right.

Don’t get me wrong, I get it.

As a nonprofit leader, there are so many interested parties, so many stakeholders, so many voices telling you what is right and what is best. But the problem is that often those voices have inserted their, or their organization’s, self interest. That’s not to say that this foundation leader was acting with malice. Rather I would bet that he was simply acting with a lack of complete information. Perhaps the foundation leader thought, from his limited viewpoint, that Tim’s proven program would be the perfect addition to this troubled school district. But the foundation leader didn’t understand the larger dynamics at play. And if Tim kept quiet he would actually be doing both himself and the foundation a disservice by keeping his expertise out of the equation.

So when faced with a critical decision (and so many competing voices) how do you get clear about the right move for your nonprofit and then articulate that potentially unpopular decision to others?

First, you have to get quiet. I’m serious — take a walk, turn off your devices, go out in the woods, whatever it takes. You simply cannot make a critical strategic decision amid the ringing phones, your staff’s questions, the constant ping of emails, or the lure of social media.

Once you’ve gotten truly quiet ask yourself: “Which of the possible directions facing our nonprofit is most likely to increase our ability to achieve our desired outcomes?” If you haven’t yet articulated your nonprofit’s desired outcomes, then you need a Theory of Change, which is an excellent guiding document when facing critical strategic decisions like this.

In Tim’s case, if he had gotten quiet and asked himself this question, the answer would have been clear. An expansion to the new school district would actually decrease his nonprofit’s ability to achieve their desired outcomes because 1) they were unlikely to achieve those outcomes with the new students (for all of the reasons outlined above), and 2) the additional drain on his staff would likely decrease the outcomes they were already achieving with their current students.

Once you have arrived at your answer (not the answer someone else wants) articulate (on paper if it’s helpful) why this is the right decision for your nonprofit’s mission and desired outcomes. Then convince a few board champions of your argument. Finally meet one-on-one with your funder, or whoever is trying to take you away from what you know to be the right path. In a clear, evidence-based, confident way explain the reasons behind the decision you have made.

Making the right decision for your organization might be terrifying at first – especially if you risk losing a key funder. But trust me, making the right decision will put your nonprofit in a much better place in the long run.

In Tim’s case, deciding not to expand to the new school district could result in one of two things: 1) he could convince his funder that this is the right decision and through Tim’s honesty and strategic decision-making solidify the funder’s long-term support, or 2) he could lose a funder who doesn’t have his nonprofit’s best interests at heart. And if Tim has a solid financing plan for his nonprofit, the loss of that single funder does not have to be a death knell for the organization.

Either way he has put his nonprofit on a stronger, more sustainable path.

Photo Credit: U.S. Coast Guard

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