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mission

Planning for Nonprofit Success: An Interview With David Grant

In this month’s Social Velocity interview, I’m talking with David Grant.

David is the former President and CEO of the Geraldine R. Dodge Foundation and past chair of the Council of New Jersey Grantmakers. He now consults nationally with nonprofits, foundations, and schools and is the author of The Social Profit Handbook: The Essential Guide to Setting Goals, Assessing Outcomes, and Achieving Success for Mission-Driven Organizations.

He is also a member of the Leap Ambassadors, a 100+ community of nonprofit thought leaders, progressive funders, policy makers, and instigators who believe “performance matters.”

You can read other interviews in the Social Velocity interview series here.

Nell: Your book, The Social Profit Handbook, is about assessment, but your central chapter is titled “Mission Time.” Is this akin to the time spent on research and development in for-profit companies?

David: Yes, it is. I would compare it to any time set aside for strategic thinking and reflection on what we are learning from experience. I invoke Steven Covey’s famous Urgent/Important matrix and equate mission time with “Quadrant II,” where we deal with important matters when they are not urgent.

Effective nonprofit leaders often think strategically. The case I make for mission time in my book is that this should be an ongoing collective exercise. I believe there should be more time set aside for staffs and boards, singly and together, to be much more specific about what success will look like for their organization, so they can plan backwards from that shared vision.

I think it’s the most important practice nonprofit organizations can adopt if they are serious about getting better at what they do – which is creating social profit. At its best, I think mission time also includes the voices and perspectives of the people being served by a nonprofit organization. Can you imagine a company conducting R&D without checking in with clients and customers?

Nell: “Planning backwards” is another phrase you use frequently in the book. Is that what you are saying should happen during mission time? And if this practice is as important as R&D is in the for-profit sector, why don’t we see more of it in the social sector?

David: Those are great questions. Let me start with “planning backwards.” I see this phrase as critical to the practice of formative assessment – the kind of assessment whose purpose is to improve performance, not audit it or judge it. I think too many of us view assessment as summative; we think it comes at the end and that somebody gives us a grade. The central argument of my book is that when an organization takes assessment into its own hands, embraces its formative purpose, makes time for it and gets good at planning backwards, they not only improve their workplace culture, they go much further towards fulfilling their mission. In short, they create more social profit.

But here’s where the challenges of assessing and measuring success come in. If you describe what matters most to you – things like increasing a young person’s sense of hope and confidence; improving relationships and building trust between former adversaries; inducing an aesthetic response through great art; inspiring a long-term commitment to equity or a healthy environmental – people say, “You can’t measure that.”

What they are really saying is, “there is no standard unit of measure that applies to that.” Ok, fair enough – that’s why we need to get good at qualitative assessment. We need to be able to respond with confidence, “If you can describe it, you can measure it.” That’s why I spend so much time in my book talking about qualitative assessment rubrics as effective tools for this process. The rubric invites us to describe as specifically as possible along a spectrum what we mean by success, in relation to our criteria for success. It is as if we were creating the test we want to give ourselves a year from now, and we can plan backwards from how we want to score on that test. You can see how that can’t happen without mission time.

Your other question about why we don’t see more mission time, more planning backwards, and more rubrics in the nonprofit sector is one I think about a lot. I don’t think there is a single answer. Part of it is mindset – we tend to focus on programs and direct mission-based actions in the world instead of on building strong organizations and internal practices. Part of it is resources – we are stretched so thin that it is hard to get out of a mode of urgency. Part of it is our habits – we are used to certain kinds of meetings that often don’t make enough room for group education, reflection, and decision-making. Part of it is funding patterns – donors prefer program support to general operating or infrastructure support.

Ironically, I believe mission time and planning backwards make their own cases. But we have to take the time first in order for the case to be made.

Nell: In your previous role as CEO of the Geraldine R. Dodge Foundation, you launched a capacity building initiative for your grantees. What results did you see from doing so and what do you think holds other foundations back from doing something similar?

David: It’s interesting you should ask that this week, because even though I’ve been gone from the Dodge Foundation for seven years, I just saw something I would attribute, at least in part, to those capacity building efforts. I was working with a national gathering of arts service organizations, and we were examining several of their strategic plans to see how they addressed the concept of sustainability. The first two defined it narrowly as financial stability. But then a New Jersey-based organization, a long-time Dodge grantee, defined it holistically, citing elements of governance, human resources, assessment systems, and ongoing capacity building as critical to sustainability, in addition to maintaining financial vitality. I don’t think it was a coincidence that this organization, alone among this national group, had just completed a successful, million dollar capital campaign.

I remember when I was still reading proposals that the groups that participated in our capacity building workshops were much clearer about what they were trying to do, more straightforward about the challenges they faced, and more cognizant of their own needs as a vehicle that carried the pursuit of their mission over time.

What holds foundations back from capacity building? Well, I imagine some might feel it is too indirect as a social investment; others might worry this kind of support carries with it a promise of ongoing funding. All I can say is that I think Dodge got more bang for our bucks in this part of our funding portfolio than in any other.

Nell: One of the projects you are working on is Artists Thrive, which is about developing assessment tools for the arts. What are the goals of this project and how could it be a model for other social issue areas?

David: The Artists Thrive project is the brainchild of the Emily Hall Tremaine Foundation in New Haven, CT and its grantees. It started with creating an assessment tool for those who work with artists – essentially the grantees in Tremaine’s program called “Marketplace Empowerment of Artists.” But it quickly expanded to consider a much larger system and asked: “What would it look like to have thriving artists in thriving communities?” and “Who would need to do what to achieve that vision?”

A group of six arts leaders have been running with these questions for over a year, with me in a support role. We have launched a series of rubrics, with the spectrum of success defined from bottom to top as “Artists Give Up,” “Artists Struggle,” “Artists Survive,” and “Artists Thrive.” The initial rubric, as I said, looked at the mental models and the actions of those who work with artists. The second looked at the range of attitudes and actions of artists themselves. The third will be for funders, describing how different philanthropic practices affect artists and their communities. Those are the front-line players, so to speak, but we plan to look at how others can contribute to the realization of the thriving artists/thriving communities vision as well – mayors, corporate leaders, planning commissions, educators, etc.

As far as models go, I think we already have some fantastic models of rubrics that deal with issues on a national scale, like the Whole Measures for Community Food Systems, which I describe in my book, or more recently, the Whole Measures for Urban Conservation (2017), which is described on The Nature Conservancy’s website..

Nell: Our country is currently divided along many lines, however in your work as a consultant you often lead groups made up of people that bridge these divides in order to create change in their communities. What are some examples of change you have seen recently in your work? And more broadly, what gives you hope in these challenging times?

David: I wish I were doing more of the kind of work you mention. In fact, I had this fantasy during the 2016 primary election cycle that one of the candidates would brandish my book on stage during a debate and say, “What this country needs is a good rubric!”

But I did see an exercise in cooperation recently that I found really heartening. It was in Delaware, where members of the Delaware Alliance for Nonprofit Advancement (DANA) and the Delaware Grantmakers Association (DGA) created a working group to write a rubric titled, “Grantmaker and Nonprofit Relationship for Creating Community Impact.” The title identifies their shared purpose — why their relationship matters.

The DANA/DGA draft rubric evokes a spectrum of performance (the columns of the rubric) in four short words: “Transactional,” “Engaged,” “Partnership,” and “Transformative.” As far as criteria to be measured along that spectrum (the rows of the rubric), the task force went to the critical dimensions of the relationship: the Alignment of beliefs in the purpose of the relationship; the Mutuality of feeling about its importance; the levels of Trust and Transparency in their interactions; and the quality of their Communication. Given that structure, it is no surprise that the draft rubric is both honest about disappointments and aspirational in its description of the possible.

This is an example of what gives me hope whenever I see it – systems thinking. As David Peter Stroh writes, “In conventional thinking, in order to optimize the whole, we must optimize the parts. In systems thinking, in order to optimize the whole, we must improve the relationships among the parts.” It strikes me that at the highest level of the DNA/DGA rubric, it will not be just a relationship that has been transformed; it will be the State of Delaware. All from carving out the mission time and learning how to use it!

Photo Credit: Social Profit Handbook

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Do Your Programs Contribute to Mission AND Money?

There is a tool that I think is incredibly helpful to nonprofit leaders trying to figure out where to focus their resources and how to plan for the future. Indeed it is typically one of the first activities in the strategic planning process I use with my clients.

The Program Matrix helps a nonprofit board and staff analyze their portfolio of programs to understand their overall mission and money mix.

Because those two elements — mission and money — are inextricably bound in an effective nonprofit organization. You simply cannot achieve your mission without an operation that attracts and uses money sustainably.

The Program Matrix looks like this:

And, here’s how to fill out yours.

List Your Programs
A nonprofit leader makes a list of all their mission-related programs and initiatives. But don’t include organization-building work, like pure fundraising activities, or board development. While those activities are absolutely critical to your success, they are a means to an end. For example, conducting a fundraising appeal has the goal of raising money to plow into programs. So in Program Matrix, we want to look at just the mission-related programs.

Plot Your Programs on the Matrix
Once you have that list of programs, plot each individual program on the matrix based on that program’s ability to contribute to:

  1. Social Impact: The social change outcomes you are working toward, which are found in your Theory of Change (on the x axis), and

  2. Financial Returns: The financial sustainability of the organization (on the y axis). A program that can attract enough money not only to cover its own direct and indirect costs, but also to subsidize other programs would be above the line (“positive”), whereas a program that cannot attract enough money to cover its own costs would be below the line (“negative.”)

Analyze the Results
Once you have plotted your entire portfolio of programs on the matrix, take a look at where they fall in the four boxes. These are:

  1. Worthwhile: The program significantly contributes to the nonprofit’s mission and desired outcomes, but it drains financial resources from the organization. A nonprofit will always have programs in this box, and that’s fine.

  2. Sustaining: The program doesn’t appreciably contribute to the nonprofit’s mission and desired outcomes, but it does provide a surplus of financial resources to the organization, which is great.

  3. Beneficial: The program contributes to the nonprofit’s mission and desired outcomes AND it provides excess money that can be plowed into “Worthwhile” programs — this is the best of both worlds.

  4. Detrimental: The program doesn’t contribute to the nonprofit’s mission and desired outcomes, AND it drains financial resources from the organization — this is the worst of both worlds.

Once filled out, the Program Matrix helps to surface issues that a nonprofit must address. First, any “Detrimental” programs should be significantly reconfigured, given to another organization to run, or abandoned. Second, in order to ensure financial sustainability, make sure that there are enough “Sustaining” and “Beneficial” programs to subsidize the “Worthwhile” programs. If not, you need to get strategic about developing programs that can offset the financial drain of the “Worthwhile” programs.

Repeat the Analysis Often
Once you’ve completed the Program Matrix analysis, rinse and repeat. On a regular basis (at least annually) board and staff should take a look at an updated Program Matrix and make any necessary programmatic adjustments. And any time you are thinking about adding a new program, redo the Program Matrix to include your best guess of where this new program will fall, so that you can understand its impact on the overall social impact and sustainability of your new portfolio of programs.

Armed with the power of the Program Matrix, nonprofit leaders can create a mix of programs that ensure achievement of their social change goals in a sustainable way.

Photo Credit: ParentingPatch 

 

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Are You a Social Entrepreneur?

I’m excited to report that a week from today, July 26th, I will be participating in a live online chat at the Foundation Center’s Grant Space website, titled “Are You a Social Entrepreneur?“.

Abby Chroman, leader of global community curation for AshokaHub, and I will be fielding questions from the audience about social entrepreneurship, social change, nonprofit innovation, capacity capital, social return on investment and much more.

Some of the questions we’ll be discussing include:

  • What qualities do social entrepreneurs possess?
  • How is this concept different from traditional corporate structure, even one with a socially-minded mission?
  • How do you truly accomplish social change vs. simply doing “good” work?
  • How can nonprofits especially incorporate some of this thinking to be successful in fulfilling their missions?
  • How do you measure social impact and return?

But the majority of questions are up to the audience. This live chat will happen entirely in the chat window on the Grant Space website. When the chat goes live, you can submit your questions and comments and interact with Abby and me and other readers, but you can also send questions ahead of time.

So join us! Registration is free at the Grant Space web site here. I look forward to your questions!


Photo Credit: Colin_K

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Building a Stronger Organization

We all know the nonprofit sector is really struggling.  Particularly in the midst of a deep recession it can be difficult to figure out how to get out of a vicious cycle of increasing demand for services, relentless fundraising, diminishing capacity and so on.

But there is hope.  In order to break free of the starvation cycle of trying to do more and more with less and less, nonprofits need to make big change.  And in order to do that they need to figure out what is holding their organization back.

Most consultants offer nonprofits what they call an Organizational Assessment.  But I hate the term, and I don’t hold much stock in the results. The solutions they offer to what’s holding a nonprofit back tend to be rooted in what the nonprofit sector has been doing wrong for too long.  Most Organizational Assessments are not bold enough, they don’t push nonprofits to understand and articulate their own theory of change, look at entirely new revenue streams, get rid of non-performing board members, completely revamp their mission, focus their marketing efforts, create a real strategic plan, and so on.

What nonprofits need is an Organization Building Plan. It can transform a nonprofit, give them an understanding of where they stand currently and what it will take to really strengthen the organization and their ability to make social change.  An Organization Building Plan gives a nonprofit a clear, executable road map for making their organization work better, smarter, more effectively, more sustainably.  It demonstrates how to integrate better all aspects of the organization (program, funding, marketing, operations, board, etc), make the organization more sustainable, expand the net of supporters (funders, volunteers, board members, friends), deliver programs in a way that increases social impact, and increase the strengths of the organization, while addressing the weaknesses.

If a nonprofit can strengthen their organization, they can deliver more social impact. Indeed, I would love to see every nonprofit organization with a well executed Organization Building Plan.  So what does a good one look like?

An outsider (it must be an outsider, because, as we all know, someone close to the organization won’t have the heart or the vision to see what is really wrong and how to fix it) interviews board, staff and funders, reviews organization processes, policies, procedures, documents. They then analyze and create detailed recommendations for improvement in the eight key areas of a nonprofit organization:

  1. Mission and Vision: How these basic pillars of the nonprofit galvanize internal and external people to create change.
  2. Strategy: How the organization comes up with and executes on a plan for the work of the organization.
  3. Program delivery and impact: How the organization delivers social change.
  4. Governance and leadership: How the board and key staff drives the organization forward.
  5. Finances and revenue generation: How financially strong and sustainable the organization is.
  6. External relationships: How strong and effective important collaborations and partnerships are in the work of the organization.
  7. Marketing and communications: How well the organization gets in front of the right audiences in a compelling way that drives action.
  8. Operations, systems and infrastructure: How well the organization makes use of resources.

Doing Organization Building Plans is one of my favorite services we offer at Social Velocity.  When I deliver the results to a client’s board and staff it is thrilling to look around the room and see the mix of shock, awe, relief, excitement, energy, innovation.  Finally someone has taken a hard look inside the organization and come up with a new direction that opens a whole new world to the organization.  Ideas start flying around the room “We could do this…”, “What if we did that…”  It serves as a rallying cry to begin to build the organization.

At Social Velocity we are all about big, not incremental, change.  An Organizational Assessment can make a nonprofit incrementally better.  An Organization Building Plan can transform how an organization works, dramatically increasing productivity, sustainability, and ultimately, social impact.


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The Critical Alignment Discussion

I’m back from Spring break, which came right as the flurry of discussion about my blog post The Critical Alignment of Mission, Money and Competence was winding down.  I really appreciate the great comments and discussion from Sean Stannard-Stockton (of the Tactical Philanthropy blog), Nathaniel Whittemore (of Change.org’s Social Entrepreneurship blog), Kjerstin Erickson (founder of FORGE) and Sasha Dichter (Director of Business Development for Acumen Fund), among others.

The great discussion happened and was then picked up by others (such as the Social Capital Markets blog, and the Nonprofit Assistance Fund blog) and taken further by others (Sasha kept going) because of our good friend, Twitter.   For all the jokes and rolled eyes, Twitter has a tremendous amount of value.  The discussion itself didn’t happen on Twitter, 140 characters can only do so much.  But rather, it created a space for a thoughtful discussion about a topic that seems to be of interest to many in the social innovation space, among people who otherwise would not have connected, let alone been able to have a conversation of such depth.

I’m a fairly recent convert to Twitter (aren’t we all?) and at times it can feel like an albatross (one more thing on my very long list of things to keep up with), but if you can keep up with it, even just marginally, it can hold tremendous value. (You can follow me on Twitter @nedgington).

But what came out of this great discussion?  What were the takeaways?  I’m sure the battle rages on, but for me, the key points were:

  1. Although mission, money and core competencies must be in equal alignment in a nonprofit organization, funding must mold to mission, not vice versa.
  2. A sustainable revenue stream is one that is sustainable not because it is based on sale of goods or services (“earned income” is often used interchangeably with “sustainable revenue stream”, which I, like Sasha, really disagree with) but because it is based on a funding mix (whatever that may be) that can be counted on for years down the road.
  3. Finding a sustainable revenue engine is often about creating a context or a “market” for your work.
  4. Nonprofits have to be more analytical about their funding sources and how sustainable, and aligned with their mission and core competencies, they are and will continue to be.
  5. The funding community is best positioned to help with revenue misalignments.

I’m sure nothing was changed by this discussion. But the more that these kinds of discussions happen and the more that some of the assumptions of nonprofit operation and finance are challenged the more apt we are to restructure how nonprofits work so that great missions with great delivery can become sustainable.

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Monday, March 23rd, 2009 Financing, Fundraising, Nonprofits No Comments

The Critical Alignment of Mission, Money and Competence

The struggles and challenges nonprofits face all come down to one key problem:  a misalignment of mission, money and core competencies.

For any organization three things must be aligned:  1) their mission, or reason for existing 2) their core competencies–what they do better than anyone else in the world, and 3) their resource engine–all the ways in which they sustain themselves financially.  So that an organization, at equilibrium looks like this:

Mission, Money, Competency

The mission is supported by the organization’s core competencies which both feed into how it generates money.

Jim Collins calls this the “Hedgehog Concept,” Mark Moore, a professor at the JFK School of Government at Harvard, calls it “The Strategic Triangle.”  It’s such a simple and powerful concept, but it seems to be one that is often left on the bookshelf, a better theory than practice.

But how transformative would it be if this concept were dusted off and applied to the challenges a nonprofit faces? When one or two of these three elements are out of alignment, chaos can ensue.

For example:

Mission is misaligned: A nonprofit that can generate money and operates great programs, but can’t bring it all together in a coherent single purpose, this is otherwise known as “mission creep.”

Core competencies are misaligned: A nonprofit that has a great, clear idea of what they want to do (mission) and can raise money around it, but can’t deliver. This is reminiscent of the dot com era when there were countless businesses with fabulous ideas that successfully raised VC and angel money, but didn’t really have a core competency or product to deliver and eventually went bust.

Resource engine is misaligned: This final misalignment is probably the one nonprofits are most familiar with.  A nonprofit has a great mission and can produce great results, but they can’t find a way to make the organization financially sustainable.  FORGE, a nonprofit working with African refugee camps, which I wrote about before, is a great example of this misalignment.  Their mission and programs are solid, but they struggled with the right financial engine (switching from individual fundraising to web-based fundraising without having the core competencies to make the switch). The end result was a $100K deficit.

And there are various other combinations of misalignment where two, or all three, areas are out of sync.  But often it is the financial piece that causes the most problems. Financial misalignment is so difficult for nonprofits to overcome because the sector is undercapitalized.  It can seem impossible to nonprofit leaders, who tend to be focused on the program and mission they are trying to deliver, to connect a sustainable financial engine to their work.  And indeed, many foundations and government funders will pay for programs and mission, but not a sustainable overall organization.  The incentives do not reward an organization in alignment.

But there are solutions.  If an organization can take a step back and look at all three elements and how they fit together they can start to make strides toward better integrating all three activities:

  • A nonprofit’s mission needs to be one that they can generate financial support around, but it also needs to be something that they can deliver on better than anyone else.
  • The financial support a nonprofit generates needs to complement, not detract from, their mission and core competencies, and
  • The nonprofit must integrate what they do really well with their mission and financial model.

You can no longer leave the fundraising staff alone and hope for the best. You can no longer let the board say fundraising is not their role.  You can no longer create a strategic plan without a corresponding financial plan.  Money, mission and competence must all be at the table finding a way forward together.

If you want to learn more about creating a sustainable financial engine for your nonprofit, download the Develop a Financial Model Tool Bundle.

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What’s Wrong with Fundraising?

One of the things I’m really excited about is the potential for the financial crisis and restructuring we’re experiencing to completely transform how nonprofits are financed.  I’ve written before about how we need to move away from the notion that “overhead” funding is bad, and how we need to restructure nonprofit accounting principles in order to allow equity capital (or money that allows us to build organizations rather than just buy services) into the equation.  We also need to make government funding easier to come by and with less strings attached.  And philanthropy needs to begin to emphasize equity and growth capital as opposed to program-only funding.  The entire way that we fund the nonprofit sector has got to change.

Which brings me to an interesting letter that Hildy Gottlieb’s “Creating the Future” blog received recently.  A fundraiser argues that focusing on a donor’s interests keeps a nonprofit from working on the larger problem they are trying to solve:

I work in fundraising, and I feel like we’re not only merely addressing the symptoms, but we’re actually exploiting the symptoms…To me, my organization exists to address the needs of the population we serve, not the needs of donors…we miss the big picture, the opportunity to solve core problems, when our primary focus is on making the donors feel good about giving…we neglect the big picture, the real solutions when we fundraise to the donors’ fears and egos…our community suffers when we fragment it by each individual’s personal motivation to give rather than unifying it to address the whole picture, and to perhaps finally solve those greater problems…the way we (and most other non-profits) fundraise might be counterproductive to actually creating solutions. So what can I do? How can I advocate for real, big-picture change when our fundraising is entrenched so deeply in its individualized, donor-centric philosophy?

This fundraiser doesn’t understand that nonprofit organizations exist within a market economy.  A nonprofit’s work, their mission, must be in alignment with their core competencies and their revenue engine.  A nonprofit cannot merely “exist to to address the needs of the population we serve, not the needs of donors.”  A nonprofit organization exists to create change in the world, hopefully rectify a disequilibrium, by channeling resources (money, talent, expertise) into a proven theory of change.  The resource piece is critical.  Some in the nonprofit sector would, I think, argue that they should just be left alone to do their “good work” and not have to worry about fundraising (see my previous post about another fundraiser who complained about her self-interested donors) .  But fundraising is an integral and critical element to the work nonprofits are doing.  A nonprofit connects a community to its needs and harnesses the resources of that community to address, and hopefully solve, those needs.  A nonprofit is part of its community and is funded by donors who make up that community.

Fundraising is not a dirty word.  Fundraising, when done right, is about connecting those with resources to the results and impact an organization is creating.  The impact should generate the revenue.  When the mission of the organization is operationalized through the organization’s core competencies, revenue should follow.  Mission, core competencies and revenue are in alignment.

That is not to say, however, that the system works perfectly.  Far from it.  As I’ve said many times, the nonprofit sector is sorely undercapitalized.  We have got to find ways to get more and better capital into the sector, capital that follows results and impact and encourages smart replication of proven solutions.  Philanthropy has to recognize this and change how they invest, accounting standards have to change in order to allow better capital to flow, IRS requirements have to change, many of the systems have to change.  But in order for those structures to change the nonprofit sector has to understand that fundraising is absolutely critical to their work.  It is not dirty, and it does not detract (if raised effectively) from a mission, but rather is part of the mission.  We have got to start being smarter about how we finance the nonprofit sector.  And to do that we have to recognize how critical aligning revenue with the mission and core competencies of an organization is.


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Friday, February 13th, 2009 Financing, Fundraising, Nonprofits, Philanthropy 1 Comment

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