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.
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.
I’ve had a lot of great questions about the upcoming Financing Not Fundraising E-Course for nonprofit leaders. So I created a video that breaks the e-course down and explains exactly how it will work.
The Financing Not Fundraising E-Course is an excellent opportunity for nonprofits stuck in the starvation cycle to figure out what they can do to more effectively raise money and then create a plan for a more sustainable financial engine. The registration fee is per organization, so if you would like your executive director, development director and a board member, for example, to participate, they all can for one fee. You will just simply appoint one person as representative of the organization to participate in the coaching calls, and the others are free to “listen in” and help you with each step along the way.
The total time commitment over the course of two months is approximately 10-15 hours, which includes the webinars, coaching calls, Google Hangouts and homework assignments.
This E-Course is truly an investment in the future of your organization. By making the investment of the time and cost you will transform the money engine of your organization and recoup that investment many, many times over.
Being the leader of a nonprofit can be incredibly lonely. You have a million demands on your time, countless people to keep happy, ambitious (if not impossible) goals to achieve, and few resources with which to achieve them. It can be an overwhelming place to be.
But it doesn’t have to be that way. I have found that if a nonprofit leader has someone to confide their challenges and concerns, strategize solutions, brainstorm new approaches, and hear about alternative options they can emerge with greater confidence, inspiration and energy.
I believe there is a tremendous need for this kind of coach for the leaders of the nonprofit sector. That is why I’ve begun offering nonprofit staff coaching services.
I coach executive directors to:
- Create a more effective, engaged board of directors
- Structure your staff to better meet your goals
- Implement and monitor your strategic plan
- Establish or strengthen key external relationships
- Better communicate with and engage staff
- Develop dashboards for reporting progress to board and funders
- Raise growth or capacity capital
- And much more
And I coach development directors (and executive directors who also wear the development director hat) to:
- Create an effective annual financing plan
- Launch a major donor campaign
- Engage your board in fundraising
- Use social media to recruit donors
- Develop compelling fundraising letters, proposals and materials
- Streamline donor cultivation and stewardship
- Develop more efficient and effective back-end fundraising systems
- And much more
I provide phone, email, and in-person coaching to nonprofit staff to help gain new perspective, try new ideas, get unstuck and move their organization forward. You can download the Coaching one sheet here.
The duration and price of coaching depends on the level of counsel your staff needs. You can purchase a package of coaching hours to use over a month, several months, or a year. The more hours you purchase, the lower the hourly coaching rate. Coaching prices range from $250 for a single hour of coaching to $10,000+ for 50+ hours of coaching.
And if you’d like to schedule a free consultation to learn more about how coaching might work for your nonprofit, email email@example.com.
Photo Credit: JPtHart
There is a way off of the exhausting nonprofit hamster wheel of trying to do more and more with less and less. If your nonprofit can articulate the value you provide, strengthen your organization, develop a groundbreaking board, chart a strategic direction, and attract more support, you will set yourself up to achieve the holy grail of the nonprofit sector: lasting change to a social problem.
It’s a process where your nonprofit assembles 5 building blocks that each build on the next one:
- Articulate Your Nonprofit’s Value
It is no longer enough for nonprofits to do “good work.” Funders, policy makers, board members, and others are increasingly demanding that nonprofits explain what value they provide a community and what change they exist to create.
- Strengthen Your Organization
Once you know your value, you must build your organization. Nonprofits can no longer scrape by without the staff, infrastructure, technology and systems they need to deliver results-driven programs. They must create a plan to strengthen their organization and raise capacity capital to implement it.
- Develop a Groundbreaking Board
A strong organization requires a groundbreaking board to lead it. A nonprofit’s board of directors is absolutely critical. Without their leadership, investment and excitement it will be impossible to build community support and create change. A groundbreaking board provides strategic direction, brings money in the door, connects the organization to key decision makers and ultimately leads the organization to success.
- Chart a Strategic Direction
But without a clear future direction a nonprofit is living in the world of just doing good work. A nonprofit that puts together a thoughtful, comprehensive plan for the future will attract more support, increase staff and board investment, and ultimately create more social change.
- Attract More Support
Once these four elements are in place, a nonprofit is ready to attract more support. In an increasingly competitive funding environment it is more important than ever that nonprofits develop a long-term financing plan for their organization. A plan that determines how the organization will bring enough money in the door to achieve their mission.
These 5 elements build on each other and, once assembled, look like this:
The consulting services I provide are tailored to assist nonprofits wherever they are in this process. From developing a theory of change, to raising capacity capital, to revamping the board, to creating a strategic plan, to developing a financing plan. I help nonprofits make the leap from just getting by to creating sustainable social impact.
In order to help you determine where you are in this process and where you need help, we have organized the Consulting page of the Social Velocity website by this 5-stage process.
But there are also nonprofits that are so new or so small that they simply aren’t ready for outside help. Over the past two years I’ve been developing a whole suite of tools for these smaller, younger nonprofits. The e-books, webinars, and step-by-step guides on our Tools page all fit into this 5-stage process as well. So you can determine where you are in the process and what you need in order to move forward.
Photo Credit: Trey Ratcliff
I’m delighted to announce that I’ve just released the Financing Not Fundraising, 2012 E-book. This e-book is the second in the Financing Not Fundraising e-book series. While the Financing Not Fundraising, 2011 E-book laid out the basic elements of the Financing Not Fundraising approach, this new e-book, a compilation and expansion of blog posts in the Financing Not Fundraising blog series from 2012, goes deeper into the concept.
We are living in a new reality. And the old rules of nonprofit funding simply no longer apply. Those nonprofits that take a big step back and create a smart strategy for bringing enough money in the door to achieve their mission are the ones that will survive and thrive in this new environment. In creating that strategy they are moving to finance, instead of fundraise for, their organizations. And the result is a stronger, more effective, more sustainable organization with excited, energized, empowered board, staff and donors.
The 25-page Financing Not Fundraising, 2012 E-book expands on the basic elements of the Financing Not Fundraising model and helps those nonprofits that are ready to start moving away from fundraising to really dive into this new approach.
Here are the elements in this second level of Financing Not Fundraising:
- Stop Fearing Money
- Connect Money to Your Strategic Plan
- Fix Your Fundraising Plan
- Jump Start Your Board
- Align Executive and Development Directors
- Get Real With Your Donors
- Abandon Ineffective Fundraisers
- Kiss That Endowment Dream Goodbye
- Reinvent the Capital Campaign
Earned income, or the sale of goods and services, is a somewhat misunderstood and unexplored financial opportunity for nonprofits. Yet there are countless examples of nonprofit organizations that sell goods or services to supplement their revenue, like the Girl Scouts, Goodwill, museum gift shops, hospitals, charter schools.
If you’ve ever wondered if earned income might be an opportunity for your nonprofit to raise unrestricted revenue, download our “Evaluating Earned Income” webinar. This webinar is part of our ongoing Financing Not Fundraising webinar series that shows nonprofits how to create a more sustainable financial engine for their organization.
Earned income is not right for every nonprofit, but every nonprofit should at the very least analyze whether earned income is a potential opportunity.
This webinar will help nonprofit leaders:
- Understand what earned income is and when it is most successful
- Learn about other nonprofits and their earned income businesses
- Evaluate whether earned income is a possibility for their organization
- Determine if their organization is ready to explore earned income
- Understand the steps in launching an earned income stream
Evaluating Earned Income Webinar
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
And if you missed last month’s sold out Raising Capacity Capital webinar, we are did repeat of that webinar. 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.
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
- 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
Photo Credit: www.girlscouts.org
In part 9 of our ongoing blog series, Financing Not Fundraising, we are discussing the importance of calculating the return on investment of every revenue-generating activity your nonprofit undertakes. This can be fairly easily understood through two basic, but critical analyses: net revenue raised and cost to raise a dollar. If these two calculations were applied to every money-making effort a nonprofit engages in, organizations could quickly determine which are the most effective activities and scarce resources could be more profitably allocated accordingly.
If you are new to this ongoing series, our Financing Not Fundraising series argues that fundraising holds the nonprofit sector back by keeping nonprofits in the starvation cycle of trying to do more and more with less and less. To overcome this, nonprofits have to break out of the narrow view that traditional FUNDRAISING (individual donor appeals, events, foundation grants) will completely fund all of their activities. Instead, they must create a broader approach to securing the overall FINANCING necessary to create social change. You can read the entire series here.
There are two simple, and related, calculations necessary to determine the effectiveness of a nonprofit’s revenue-generating activities. The first is net revenue. NET revenue is so much more informative than GROSS revenue. Gross revenue is the total of all money brought in because of a fundraising activity (a direct mail appeal, a gala, a foundation grant, a major gifts campaign). But that figure is meaningless until you understand what it COST you to bring that money in the door. These costs are both DIRECT (the materials required for the activity, the staff that worked directly on the activity) and INDIRECT (volunteer hours, overhead staff time). You only really know how much money you made once you subtract the costs to make it. Thus,
Net Revenue = Gross Revenue – Fundraising Costs (Direct and Indirect)
Let me give you an example. Let’s pretend that a nonprofit organization with a $500,000 annual budget throws an annual gala with a band, catering, and an auction. One staff member spends half their time getting the event together, and a board committee helps sell tables and provides oversight. At the end of the event the organization grosses $100,000. They are thrilled that they have made 20% of their annual budget in one night, right? Wrong.
That’s only the gross revenue. What is the net revenue of this gala, i.e. what did it cost them to raise that money? The direct expenses for the event (the band, venue, food, decorations, invitations, etc.) cost them $50,000.
Direct Expenses = $50,000
But they also need to factor in the indirect expenses. Their event coordinator spent half a year preparing for this event. Their Executive Director attended meetings, made phone calls to invite people, and came to the event. The Development Director worked on the event. And the board committee put in many hours planning, marketing, and attending the event. So if we calculate the hourly rate of those staff member’s time (salary and benefits) and multiplied it by the hours they each worked, we’d get the cost of their time. We also need to do the same for board members. We can use the standard value of volunteer hours ($20.25) multiplied by the number of board members who worked on the event and the average number of hours they spent. If we add all of this up we get:
Event Coordinator = $15,000
Executive Director = $4,000
Development Director = $5,000
Board Members = $3,000
Total = $27,000
So the total costs of the gala were:
$50,000 (direct expenses) + $27,000 (indirect expenses) = $77,000
And, the net revenue on this event was:
$100,000 (gross revenue) – $77,000 (direct and indirect costs) = $23,000
Which brings me to the second critical calculation: cost to raise a dollar. How much did it cost the organization to raise that $23,000?
Cost to Raise $1.00 = Costs (Direct and Indirect) / Net Revenue
$77,000 / $23,000 = $3.35
So it cost this organization $3.35 to raise $1.00. That’s not an attractive return is it?
Although this organization actually made money, the cost of making that money is far larger than the money they made. And how does the cost of making this money compare to their other fundraising activities?
Well, let’s take another example. Pretend this organization hires a major gift officer at a salary of $65,000 per year plus benefits. Her salary and benefits are the direct costs. The indirect costs could include: the Executive Director’s and board members’ time to go on donor and prospect visits, creation of materials, and the sending of thank you letters. The total for these direct and indirect costs would be $100,000. Say that this major gift officer raises $500,000 per year in major gifts.So the net revenue would be:
$500,000 (gross revenue) – $100,000 (direct and indirect costs) = $400,000 Net Revenue
And the cost to raise a dollar would be:
$100,000 (direct and indirect costs) / $400,000 (net revenue) = $0.25
So it takes $0.25 to raise $1.00. That’s a dramatically better return on investment than the gala that cost $3.35 to raise $1.00 above, isn’t it?
I encourage you to run the numbers on your own fundraising activities and then compare. How does your net revenue and cost to raise a dollar compare across activities? Which are the most effective fundraising activities? What if you poured more effort and resources into the higher net activities? More money would contribute to your bottomline, meaning more money to spend on the social impact you want to create.
That could be transformative.
If you want to learn more about calculating the costs of fundraising, download our Financing Not Fundraising: Calculating the Costs of Fundraising webinar, or download the 27-page Financing Not Fundraising e-book.
Photo Credit: sykez