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Nonprofit Scarcity Thinking Will Get You Nowhere

Scarcity thinking is incredibly pervasive in the nonprofit sector. And it makes sense that it would be. Nonprofit leaders have been told for so long that they must scrape by, are not worthy of real investment, and deserve only the leftovers. No wonder the belief that resources are scarce is baked into their DNA.

This scarcity thinking is the starvation cycle in which nonprofit leaders often exist – we can’t attract enough money so we skimp on staff and systems, becoming less effective, forcing us to serve fewer clients, resulting in less social change. It is a vicious downward cycle. And one that funders certainly play a key role in as well.

But when a nonprofit leader chooses instead to come from an abundance mindset – the idea that there are an abundance of resources and you need only to get crystal clear about what you want to achieve and those resources will come to you – it is amazing to see what she can accomplish.

Most recently I saw this with a national membership organization that had spent years either just barely scraping by or having to cut staff and budgets because they simply could not attract enough support. But once they got crystal clear on their goals for the future and what it was going to take to make those goals happen, they attracted some significant new and long-term investments from funders.

Moving from the pervasive scarcity mindset to the incredibly powerful abundance mindset can be a game changer.

And we can start by flipping some of the most common conversations happening each day in nonprofit boardrooms around the country, crossing out the typical scarcity mindset and fully embracing an abundance mindset, like this:

Scarcity Mindset: “How much money are we able to raise?
Abundance Mindset: “How much money will it take to accomplish our goals?”

Rather than thinking of money as an extremely scarce resource, figure out what social change your organization truly wants to accomplish. Chart your future course, figure out what it will take (in terms of staff, systems, technology, dollars) and then use that strategic plan to engage donors and others to invest in bigger ways. The excitement you generate from board, staff, and funders when you think big and long-term will translate into the money you need to accomplish your future goals. This is the cornerstone of moving from a fundraising approach to a financing approach.

Scarcity Mindset: “Let’s not add fundraising staff until we have the money”
Abundance Mindset: “Let’s fully invest in our fundraising infrastructure”

So many nonprofit leaders are unwilling to take the risk of hiring a top-notch fundraiser (or securing the best donor database, or revamping their online presence, or investing in other critical fundraising infrastructure) because they don’t have the money. But without making improvements to how you raise money, you will never raise more money. So figure out what it will take to upgrade your fundraising infrastructure and how much those improvements will cost and then convince a couple of close donors to provide the capacity capital necessary to get you there. And keep in mind, the right improvements to your fundraising infrastructure will pay for themselves (many times over) after 12-18 months, so it is really just a short term investment you need to take your financial model to the next level.

Scarcity: “We can only breakeven”
Abundance: “We will create a healthy reserve fund”

It amazes me that there are still nonprofit leaders who believe (and funders who insist) that the ideal nonprofit income statement show only a slight net income. On the contrary, a healthy, effective, and sustainable nonprofit organization should have a robust (at least 3-6 months of operating) reserve fund. This reserve allows a nonprofit leader to feel secure about cash flow, invest in program development, and engage in other normal and necessary activities as a successfully functioning organization. And donors tend to be more attracted to organizations that demonstrate sustainability (like having a reserve fund), than organizations that can barely breakeven.

 Scarcity: “There just aren’t enough hours in the day to get the work done”
Abundance: “Let’s engage more people and organizations in our work.”

Because of their perception of resource constraints, often nonprofit leaders isolate themselves and their organizations from others with similar social change goals – those entities who may be competing with them for limited funds. But instead of thinking that you must go it alone, break down your walls and connect with other people, organizations and networks that have similar visions for the future. Figure out how you can combine efforts for much larger gains. Because a networked nonprofit is far better positioned to create sustainable social change than an isolated, solitary organization is.

Scarcity: “Given the difficult political climate, we must limit our goals.”
Abundance: “How can we seize the opportunity of this challenging political climate to engage new people in new ways?”

Since the 2016 election and the resulting and ongoing blows to progressive social change agendas, I have seen some nonprofit leaders bury their heads in the sand, figuring they will wait out these punishing political winds until something better comes along. But if you have a compelling social change vision, there is an abundance of outrage and activity that you can tap into now — in fact some argue that nonprofit advocacy is enjoying a rebirth. And while the federal government may be outside your current purview, there is opportunity for policy change happening at the state and local levels. In fact, research suggests that a state-by-state strategy is often the way real social change happens in this country anyway. So stop seeing what isn’t possible and instead embrace what may be.

Certainly there are real challenges facing every nonprofit leader. But you do have agency. You can choose to see the limits in front of you, or the opportunities. And in seeing the opportunities, and the abundance, you can accomplish so much more.

Photo Credit: Pixabay

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How Nonprofits Can Thrive While Awaiting Economic Recovery

After 3+ years of a difficult recession it looks like the economy might be starting to turn around. That’s great news. But for the nonprofit sector, which is always the first hit by and last to rebound from a recession, it might still be awhile until they enjoy the looming economic recovery. But it does no good for nonprofit leaders to throw up their hands and curse the economy. Instead, nonprofits should seize this opportunity to rethink how their organization brings money in the door.

There are some key things nonprofit leaders can do to create a sustainable financial model in the midst of lingering economic uncertainty:

  • Take a Step Back. Stop putting your organization in the “fundraising” box and take a big step back. Figure out an overall financial model for your organization that connects with your mission and your organization’s core competencies. Don’t just go through the regular fundraising motions (direct mail, events, grants). Rather, analyze how to create a long-term financial model for your organization.

  • Harness Your Board. Your board of directors ideally is a group of people who bring connections and expertise that could help your organization. Tap into that. Educate them on what your organization needs and brainstorm how they can help. Now is not the time to be shy. Be strategic about what your board can do and get them to do it.

  • Create a Plan. If your organization doesn’t have a strategic plan and a revenue plan, create them. You raise money by being strategic, first about what your organization is and does, and second about how you are going to create sustainable revenue streams. People give to causes that they care about, and they give even more money to organizations that are strategic about what they do and how. A good strategic plan is an invaluable tool around which you can build investment. And a good revenue plan gives you a step-by-step way to generate money.

  • Reallocate Resources. As a nonprofit organization you have limited resources (money, staff, technology, time) with which to raise money. You want to make sure that the effort you put in has the highest return on investment. Calculate the direct and indirect costs of every revenue-generating activity and determine the real net income you generated. Are there better, more effective ways to raise more money for less cost and effort?

  • Use Technology. Move your communications with donors and prospects online. You’ll save money and have a better chance of getting more and bigger gifts. Send email newsletters, campaigns, event invites. Survey your donors. Create an online community through social media where people can get to know your organization and become involved. People will become more interested in your work and more invested in the organization.

  • Learn from the Best. Now is the time to learn from others, get a fresh perspective, find a mentor or coach for your Development Director. Use social media to find interesting and innovative people and ideas. Talk with your fellow social change leaders locally, nationally and internationally. Attend online conferences and webinars. By getting out and hearing what others have done and how they have innovated you will find new ways to grow revenue.

  • Strengthen Your Case. Money is raised around a case for support. It can be tempting when times are tough to fall back on a message of need. “We need to raise $50,000.” But the better way is to clearly connect donors with the change you are creating in the community. If you don’t have a case for support write one. If you have one, revisit it and make sure that it is compelling, clear, concise, inspiring. Invest donors in the change you are creating.

  • Clone Your Best Donors. When you are struggling to find new donors, go back to the source. Dig into your database to determine the characteristics (demographics and psychographics) of your best (most years of giving, biggest dollar, greatest upgrade) donors. Then survey them (formally or informally) to find out why they give, what messages resonate with them, what they read, where they get their information. You want to understand how they tick so that you can find others like them.

  • Diversify Your Funds. When one revenue stream (or several) are down, you want to be able to draw on other streams. Are there other revenue streams you could launch or strengthen? Have you explored earned income? Could you grow your individual donor base? There are many ways to raise money and always potential for new avenues. Explore whether some of these make sense for your organization.

Things may be looking up, but it’s going to be awhile for the nonprofit sector. Instead of waiting around for a better economy, make some significant changes now to how you raise money. In so doing you’ll be turning this challenge into a tremendous opportunity for your organization.

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