This week I attended the 5th annual Social Impact Exchange Conference in New York City. It was an interesting gathering of funders, change makers and intermediaries all grappling with how to reach and sustain scaled social solutions.
“Scale” is such a challenging concept, and as I mentioned earlier, there are many entities struggling with exactly what scale means. According to Heather McLeod Grant (author of Forces for Good) whose keynote address kicked off the conference, “scale” is no longer about growing individual organizations or addressing individual issues, but rather about building movements and networks.
The idea of a networked approach to social change is not a new one (see the great Stanford Social Innovation Review article from 2008 by Jane Wei-Skillern and Sonia Marciano on this approach), but Heather underlined the importance of a more integrated and aligned approach to creating social change. I would have liked to see this idea taken further, perhaps with some of the Transformative Scale discussion that is happening elsewhere, included in this discussion.
There were some real highlights of the conference for me. First was the luncheon panel on the Black Male Achievement Movement and President Obama’s My Brother’s Keeper initiative. Tonya Allen of The Skillman Foundation was a hard hitting moderator of Shawn Dove, from the Campaign for Black Male Achievement, William Snipes from Pipeline Crisis/Winning Strategies, and Andrew Wolk from Root Cause.
The group had a fascinating conversation about the movement to address “a whole generation of young men being pushed to the side.” As Snipes so eloquently put it, “This is a problem about who we are as a society, whether or not we are going to survive. The road we are on is not sustainable. We cannot continue to incarcerate one third of a community. This is an impractical way to run a society.”
The panel described and debated the complexity of addressing a huge systemic problem and how they have launched a movement to do just that. It was a candid and thought-provoking exchange.
Another highlight was GuideStar CEO Jacob Harold’s talk on their exciting efforts to transform the nonprofit information landscape (Jacob is describing this landscape in the picture at the left).
GuideStar’s goal is to address the “two elephants in the philanthropic room:” 1) some nonprofits are better than others (they create more impact per dollar spent), and 2) some donors are better than others (they create more impact per dollar given).
To address these “elephants,” GuideStar is collecting and analyzing deeper information about nonprofits and then distributing that information so that donors make better investments. (More on this next month when I interview Jacob as part of the Social Velocity Interview Series.)
The other real highlight of the conference for me was the keynote address on financial sustainability from Antony Bugg-Levine, head of the Nonprofit Finance Fund. Antony defined financial sustainability as “Repeatable and reliable revenue that exceeds ongoing operating costs, coupled with the ability to fund periodic investment in adaptation and growth.” In other words, a financially sustainable nonprofit brings enough reliable revenue in the door and can, when needed, raise capital for change and growth.
And that capital piece is often overlooked by nonprofits and funders. Antony described 5 types of capital helpful to nonprofits:
- Change Capital to position an organization for growth.
- Working Capital to handle fluctuations in cash flow.
- Recovery Capital to address shocks to an organization (natural disaster, fire, etc.)
- Risk & Opportunity Capital to develop a new program or different approach.
- Endowments which can provide some unrestricted money, but should not be considered reliable revenue.
Antony also described 5 things that funders do and 5 things that nonprofits do to derail sustainable growth (pictured at right.)
I also enjoyed participating in the “Business Models for Sustainability at Scale” panel with my colleagues Dana O’Donovan from Monitor Institute, Megan Shackleton from the Einhorn Family Trust, Heidi Shultz from the Helmsley Charitable Trust and Craig Reigel from the Nonprofit Finance Fund. We had a great discussion with very thoughtful and engaging audience questions about how to create sustainable financial models and how philanthropy can help move that forward.
The Social Impact Exchange assembled a smart, talented group of people to grapple with how we fund and grow solutions to the wicked problems we face. It was a thought-provoking couple of days.
A new report from the Dorothy A. Johnson Center for Philanthropy and 21/64 gives us the first real glimpse into the minds of the next generation of philanthropists, and it’s fascinating. These are not your father’s philanthropists. Millennial and GenX donors (wealthy individuals, or individuals who will inherit wealth, born between 1964-2000) will control more philanthropic dollars than any previous generation. And more importantly, they think about giving in very different ways than their parents or grandparents did. Which means nonprofits need to pay attention.
This next generation of philanthropists is so critical because it’s estimated that $41 trillion will transfer from the Baby Boom to these next generations in the next 40 years. And since much of this wealth could become philanthropic, some have predicted “a new golden age of philanthropy.”
But it’s not just the unprecedented wealth that makes this new generation of philanthropists so important, it’s the fact that they want to fundamentally change philanthropy. According to the report: “They want to make philanthropy more impactful, more hands on, more networked.”
The key findings from the report are that these NextGen donors are:
- Focused on Impact. “They see previous generations as more motivated by a desire for recognition or social requirements, while they see themselves as focused on impact, first and foremost.”
- Giving Based on Values. “They fund many of the same causes that their families support and even give locally, so long as that philanthropy fits with their personal values.”
- Looking to Be Engaged. “Giving without significant, hands-on engagement feels to them like a hollow investment with little assurance of impact.”
- Paving Their Own Way. “While they respect their families’ legacies and continue to give to similar causes and in similar ways as their families, they are also eager to revolutionize philanthropy.”
This report is further proof of the major trends changing the nonprofit and philanthropic sectors. Given where the sector is heading, there are three things nonprofit leaders should understand and embrace:
- Outcomes are here to stay. In order to compete for funding you must be able to prove the results of what you are doing, what change you are creating. NextGen donors are doing their homework and want to understand what impact their dollars will have. To stay relevant, you need to start by creating a theory of change and then figure out how you can being managing to outcomes.
- Giving has gone social. NextGen donors rely heavily on their social networks to make decisions, including their giving. And they offer their knowledge of worthy causes to their friends as well. So if you aren’t part of the social network you will be left behind. Start to open your organization to become a networked nonprofit and watch your support and influence grow.
- Donors are more than a checkbook. This next generation of donors doesn’t want to just write a check, have their name on a wall and be done with it. They want to really get to know the causes in which they invest. And the word “invest” is an apt one. These donors want to give money, time, mind-share, networks to things they believe in. And if you can employ that passion and investment effectively you will get so much more than just dollars. So figure out how to engage donors in much deeper, more meaningful ways.
This is a really exciting time for philanthropy and ultimately for the nonprofit sector it funds. But it’s up to nonprofit leaders to understand these fundamental shifts and adapt accordingly.
Photo Credit: www.nextgendonors.org
Heather Mansfield’s new book, Social Media for Social Good: A How to Guide for Nonprofits does a great job of breaking down the brave new world of social media and making it accessible to any nonprofit manager. Her very tactical book is a nice companion to Beth Kanter and Allison Fine’s Networked Nonprofit, which painted the big picture view of a new engaging mindset nonprofits need to adopt in this new social media reality. Mansfield’s book gives a down and dirty, step-by-step approach to becoming a savvy nonprofit in the world of Web 3.0.
Mansfield divides the evolution of social media into three stages:
- Web 1.0: The Static Web – brochure-like, non-interactive websites
- Web 2.0: The Social Web – social media applications, like Facebook, LinkedIn, Twitter, that create new communities
- Web 3.0: The Mobile Web – location-based communities, text-messaging, apps
Her argument is that nonprofits have to build their social media engagement in phases. They need to conquer stage 1 before 2, and 2 before 3. And all activities, offline and online, need to be fully integrated as part of a much larger strategic marketing plan. Amen to that.
For Mansfield, there is a real danger for nonprofits that ignore how quickly technology is changing. If they don’t adapt, they risk losing their donors, their relevance, and ultimately their reason for being:
To maintain your online donors’ loyalty, and to recruit new donors, you need to be current and forward-thinking in your online communications and fundraising. Technology moves faster than ever, and to keep up and ensure the long-term sustainability of your nonprofit, you must upgrade your Web 1.0 campaigns or risk becoming obsolete.
Mansfield’s ultimate argument is that offline and online activities must be fully integrated in a strategic way. She even argues that the “old” methods of online fundraising (email, website) actually have the highest ROI, so the idea is to gather people and drive them there.
Apart from this reasoned and necessary argument about social media as part of the overall marketing puzzle, the real value of this book is the very tactical how tos. Mansfield creates a great to do list for the nonprofit manager to move toward the next level of online integration. She also provides tons of examples of nonprofits that are doing it right.
My only complaint is that she doesn’t prioritize the most critical areas a small nonprofit (one with less than 5 staff members) should be focusing on. In her “Deciding What Social Media Tools to Use” section she helpfully suggests how much time a nonprofit should spend on each social media channel. Although this helps understand the value of one channel (Facebook) over another (Change.org), the total number of hours equates to 1.5 full time people. And that’s only social media activity, not email, mobile or website maintenance. That number of hours is something that only medium to large nonprofits could afford. Although volunteers and interns could supplement, most social media experts agree that you can’t really delegate social media to those who are only tangentially involved with the organization. I would have liked to see her recognize the limitations of smaller nonprofits and give tips for prioritizing the time those organizations have to devote to social media efforts.
But overall, Mansfield offers a great and necessary step-by-step approach to overcoming nonprofit fear of the online world and bringing them up to speed. Because as she warns, “If your nonprofit is still in the should-we-or-shouldn’t-we stage, you are quickly falling behind. It is a Brave New Web, and it’s time to muster the courage and take the leap.”
In part 10 of our ongoing blog series, Financing Not Fundraising, we are discussing moving nonprofits away from “push” fundraising and marketing efforts that force their message on innocent bystanders (like acquisition direct mail appeals) and towards “pull” activities that allow interested prospects to opt in to the organization (like social media, friend-raising events, partnerships). In times of increasing competition for supporters, nonprofits can no longer engage in ineffective, non-strategic efforts to get people in the door. Rather, nonprofits must attract people through engaging content, events and activities that encourage people to raise their hand and become part of the organization.
If you are new to this ongoing series, our Financing Not Fundraising blog series demonstrates 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, more strategic approach to securing the overall FINANCING necessary to create social change. You can read the entire series here.
First, let’s define Push versus Pull marketing activities:
- Push efforts are traditional marketing activities where you create marketing or fundraising “messages” and distribute them through various channels and hope that someone sees them and responds to your call to action. Some examples of Push efforts are: direct mail letters to prospective donors, a brochure-like web site where you talk about your work and hope people hit the “donate” button, ads or articles in the local newspaper.
- Pull efforts are when you engage and build relationships outside the organization, join communities and give people reasons to voluntarily draw your organization into their personal experiences. You’re not interrupting them, you’re not controlling the message or the channel. People are getting to know you, liking what they see and opting in to getting to know you and your organization better.
“Push” efforts are controlling and controlled, time and resource-intensive and yield low returns (direct mailings that get a 2% response rate are considered successful). “Pull” efforts are open and inviting and yield much better and longer-term donors because these efforts allow prospects to self-identify.
Key to the whole idea of Pull activities is that you want to find prospective donors who share your values as an organization and believe in the change you are trying to create. So many nonprofit organizations think that they need to mass market their organization. To the contrary, your message will not resonate with the general public. You need to find prospects whose values intersect with a community need that your organization is uniquely positioned (because of your core competencies) to solve, like this:
Pull marketing makes your job easier because you no longer have to look for a needle in a haystack, but rather you simply must be yourself, demonstrate your values and your work and join communities where like-minded people hang out. Introduce yourself and start building relationships. Social media is a fabulous and inexpensive tool for doing just this. And Beth Kanter and Allison Fine’s book The Networked Nonprofit is an excellent primer on how nonprofits can and should completely rethink how they operate in the community.
So how does Pull vs Push marketing look in a nonprofit’s annual revenue plan:
- Instead of pushing your fundraising appeals out to mass audiences through direct mail campaigns sent to people who have never demonstrated an interest in your nonprofit, start a blog that engages people who share an interest in your work to read, comment and become part of a community engaged in social change.
- Instead of sending out invitations for a big gala to a bunch of people who are more interested in the food and entertainment than your work, start holding smaller, more intimate, mission-focused occasions for current supporters to bring friends to learn about the organization, volunteer and get involved.
- Instead of just posting static articles about your nonprofit on your Facebook page, start asking questions and initiating conversations with your fans. Start getting to know them and start encouraging them to drive content, suggest activities, lead efforts.
- Instead of putting up walls and engaging and collaborating only with a small group of advisors and partners, open your organization up to vast networks, partners, supporters and others who share your values and your work. Constantly seek out opportunities to find new friends and organizations in high and low places.
- Instead of focusing only on what supporters can do for you, get to know them and figure out what you can offer them (opportunities to change the word, meet like-minded friends, engage in a broader community).
- Instead of asking supporters simply to give money and volunteer, encourage and empower them to lead their networks of friends, family, colleagues, neighbors to get engaged with your organization as well. Make it easy and attractive for them to do that by asking them what they need, giving it to them, and then getting out of their way.
Pull activities require a complete shift in mindset. The messages and activities are not up to you anymore. You can’t control the outcome. Rather be yourself, build relationships, join communities and engage people in compelling, inspiring and interesting ways. Pretty soon you’ll have more friends and supporters than you know what to do with.
If you want to learn more about applying the concepts of Financing Not Fundraising to your nonprofit, check out our Financing Not Fundraising Webinar Series, or download the 27-page Financing Not Fundraising e-book.
In his New York Times column this week Bob Herbert strongly criticized America and its leaders for not stepping up to the plate to guide us through these very troubling times. As he put it:
As a nation, we are becoming more and more accustomed to a sense of helplessness. We no longer rise to the great challenges before us. It’s not just that we can’t plug the oil leak, which is the perfect metaphor for what we’ve become. We can’t seem to do much of anything.
Although his column is perhaps a bit too bleak, he does make the point that we have forgotten how to lead ourselves out of a mess, and the messes are getting larger and larger.
The messes of the American system are often cleaned up by the nonprofit sector. Nonprofits are usually borne out of some disequilibrium that the market creates (poverty, homelessness, poor education, lack of healthcare).
However, lately the messes have been too much for even the nonprofit sector to bear. And at the same time a deep recession, government’s increasing off-loading of social services to the sector, donors growing desire for measurement, and a more wired world are all combining to demand dramatic changes to how nonprofits operate. As a result, nonprofit leaders need to adapt.
The day has come for a new kind of nonprofit leader, one who has the confidence, ability, foresight, energy, and strength of will to really lead. This new nonprofit leader:
- Embraces the idea of a networked nonprofit and is willing and able to break down the walls of control and risk aversion and let the world in as fully engaged partners in the work they are doing.
- Works toward completely integrating money into the impact they are trying to create, understanding that big plans for impact are not enough, you also must finance them.
- Realizes that it is no longer enough to just “do good work.” They must find a way to measure, in some form, the work that they are doing and be able to demonstrate results to the external market.
- Looks to the social entrepreneurship movement for inspiration and new ideas for accelerating social impact.
- Recognizes the importance of strong infrastructure and works to recruit and keep top talent and create effective technology and systems by fundraising for those real operating costs every year.
- Refuses to play nice with funders who want to undermine the mission and impact of the organization, competitors who are providing an inferior service, and board members who won’t contribute.
- Maintains an external view on how their organization can continue to add value in the outside marketplace of community problems.
- Constantly forces themselves, and their high-performing team of board, staff, funders and volunteers to ask hard questions, make bold goals, push themselves harder, and deliver more and more impact.
It’s a tall order, but true leadership always is. We no longer have the luxury of so-so leaders. These times demand confident, capable, engaging leaders who are a beacon to a society whose mounting problems are overwhelming at best.
Photo Credit: 3n
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