nonprofit board of directors
There is such a hunger in the nonprofit sector for help wrangling the board of directors. Because the board is a disparate group of volunteers, it can often seem impossible to get their attention, let alone get them all pointing in the same, effective direction. This is even more true in fundraising. But if you can get your board members all on the same page, it can transform your nonprofit.
So as we approach the end of the year and the height of nonprofit fundraising I wanted to offer some ways you can get your board more involved, not just for the next couple of weeks, but for years to come.
Here are some strategies to get your board fundraising for your nonprofit:
Start a Game-Changing Board Discussion
One way to plant the seed of change is to engage the board in a thought-provoking discussion. If you’re interested in kicking one off at your next board meeting, ask your board a question like:
- Should the board be responsible for raising 10% of our budget?
- Should we institute a minimum give/get requirement?
- What should the board’s role in our financial engine be?
And if you are uncomfortable starting the discussion yourself, let me do it. Share my video Why Every Board Member Should Fundraise at the meeting and see how board members respond. Be prepared for some disagreement, perhaps even anger and frustration. But I believe it’s far better to get the demons on the table so you can examine them rather than pretending they just don’t exist.
Give the Board Options
If you have board members that are scared of fundraising, or that hate to ask people for money, there are plenty of other things they can do to help. I believe there is an endless list of ways board members can contribute to the financial engine of the organization, from writing a business plan, to negotiating with a vendor, to hosting a friend raiser, and the list goes on. If you want to help your board think outside the fundraising box, these lists (here and here) of ways board members can raise money (without fundraising) can help.
Educate the Board on Fundraising
Often a board’s inertia comes from a lack of knowledge. Very few people know how to fundraise effectively. So remove that barrier by educating your board about how money flows in the nonprofit sector, how other boards raise money, how to ask for money, etc. The Getting Your Board to Raise Money webinar, the Finding Individual Donors webinar, and the 10 Traits of a Groundbreaking Board e-book can all be useful tools to help your board understand how things work and how they can be more helpful to the financial sustainability of the nonprofit they serve.
Involve the Board in Making the Case
You can’t expect the board to raise money if they can’t make a compelling argument for why people should give. And you can’t just hand board members a brochure and expect them to effectively articulate the message. If you really want to get your board excited about raising money for your cause, involve them in making a case for investment. Bring them together as a group to ask and answer a series of questions about why people should give to your nonprofit, what your organization is working towards, why it matters, and so on. The Draft a Case for Investment Step-by-Step Guide will give you the framework to use. At the end of the exercise you will have not only a compelling case to make to prospective donors, but, more importantly, an army of board members excited about making that case.
It is an unfortunate reality that almost every nonprofit leader faces. Boards of directors, as a rule, are not effective fundraisers. But you can move beyond that by getting your board to talk, think and act differently about bringing money in the door.
Photo Credit: Wikimedia Commons
There are some exciting things happening at Social Velocity. I have spent the last several months revising and expanding the e-books, webinars, and step-by-step guides I offer nonprofit leaders in the Tools store of the website. These Tools help nonprofit leaders, board members and donors understand the trends facing the nonprofit sector and how to become more strategic and sustainable at creating social change.
And we are moving to a brand new shopping cart system to make the purchase and download of the Tools much easier for you, with additional payment options, a streamlined process and more. I will reveal the brand new Tools store in the next week or so.
But if you want to hear about the launch of the new Tools store first (and enjoy a discount on Tools purchases) sign up now for the Social Velocity e-newsletter. Prior to the official launch of the new Tools store, we will send all subscribers an early bird announcement and discount code to use.
And, as an added bonus, if you sign up for the Social Velocity e-newsletter now you can immediately download the revised and expanded Financing Not Fundraising, volume 1 E-book (a $9 value) for free. Here’s what one reader of the e-book had to say about it:
“I felt a lot of affirmation when I read your e-book as I too believe fundraising as we knew it is history and sometimes that is hard for the board to understand and accept. Your series was incredibly powerful for me and will have a huge impact on us. I think your e-book will give [board and staff] some confidence to make tough decisions. On lots of different levels your e-book was exactly what I think we need right now.”
So if you haven’t already, sign up now for the Social Velocity e-newsletter.
And stay tuned for our new and improved Tools store coming soon!
I mentioned earlier this year that I would start using Google Hangouts (on the Social Velocity Google+ page) for interviews, videos, Q&As, etc. Well, I’m excited to share with you my first video from the Social Velocity Google+ page. I want to begin doing regular videos that describe an aspect of moving your nonprofit forward. And next week I’ll share my first video interview.
Today, I’m talking about why I think every single nonprofit board member should be involved in bringing money in the door. I know this is a controversial topic, so take a look at why I believe it so strongly.
My hope is that these videos will spur new discussion in your nonprofit. So, you might consider having your board watch this video at an upcoming meeting and then discussing whether your board starts moving in this direction. If nothing else, it’s food for thought.
If you have a topic, issue or question you’d like me to cover in an upcoming short video, let me know in the comments below. And if you want to be notified whenever there is a new Google Hangout, join the Social Velocity Google+ page.
Fall is here (at least by my calendar!) and that means new opportunities to spark conversation about how the nonprofit sector is changing and how nonprofit leaders, board members and donors need to as well.
In recent months I’ve spoken in Phoenix, New York, Washington DC, Atlanta, and Australia (via Google). And what all of these events had in common is that the audience was hungry for a new way forward.
What I love most about speaking is that it’s a chance to really open eyes to new ways of thinking. And I love, love, love engaging with the audience to challenge their assumptions and former ways of operating.
For example, at an event last month a board member and I got into a lively debate about whether board members should really be bothering with the money raising aspects of their nonprofit. His argument was that it’s the job of the board to focus on big picture mission and programs, not the day-to-day dollar concerns of the organization. My argument, no surprise, is that you cannot separate mission from money and every board member should play a role in the financial engine of the nonprofit.
As we continued to debate, the board member admitted that he actually had helped to open a door to a significant (tens of thousands of dollars) contract for the nonprofit. So in essence he was arguing against what he’d actually helped bring about. Through the discussion he came to realize that if every board member were asked to tap into their skills, experience and networks to accelerate the financial health of the nonprofit (as he himself had already done) it could be transformational.
I love those light bulb moments.
The reality is that often nonprofits exist in a series of catch-22s where board members don’t know how to help, nonprofit leaders don’t know how to get board members moving, funders don’t know the questions to ask, and nonprofits don’t know how to identify their constraints. So we keep having the same conversations over and over again with little change.
Which is why I love to speak to groups and shake up these stale conversations.
Here are some of the most popular topics people invite me to speak about:
Financing not Fundraising
Based on the popular blog series, Financing Not Fundraising, I show nonprofits a new, more effective way to fund their work. I explain concrete ways to move efforts to raise money in a totally new direction, resulting in more money flowing through the doors, a more engaged and effective board, a more energized and integrated staff and ultimately more achievement of mission.
The Future of the Nonprofit Sector
The nonprofit sector and the philanthropy that fund it are changing dramatically. A growing convergence between the nonprofit, for-profit and government sectors is altering how social change happens and increasing competition is forcing nonprofits to shift the way they have always done business. Nonprofit leaders must understand trends and embrace change to emerge stronger and more effective.
The Power of a Theory of Change
A theory of change is an argument for why a nonprofit exists. It is the fundamental building block to creating a strategic direction, measuring your work, garnering more support and ultimately creating more impact in your community. Funders, regulators and others are increasingly demanding that nonprofits demonstrate how their work creates community change. I show nonprofits how to create a theory of change and then use it to drive greater support, engagement and success.
Jump Starting Your Board
A nonprofit’s board is often not doing as much as they could to bring money in the door. I take the fear and inaction out of raising money. I show board and staff how money works in the nonprofit sector, where the board can be most effective, how to get the board excited and engaged in fundraising, and the concrete steps to get them moving.
You can see a more complete list of my speaking topics, past speaking events, and videos on the Speaking page of the website.
If you want to start having new, transformational conversations, invite me to come speak. I’d love it!
Note: I wrote the following article for the Summer Issue of Advancing Philanthropy. You can download the Nonprofit Finance section of the magazine, of which this article is part, on the Association of Fundraising Professionals website here.
It has been a really difficult few years for nonprofits, particularly their fundraisers. But the bad news is that the situation won’t get easier any time soon. In order to keep up, nonprofit leaders have to recognize that traditional fundraising doesn’t work anymore.
In fact, traditional fundraising is holding nonprofits back by forcing them to wear out their boards, staffs, and donors, focus efforts on low-return activities, subsist with inadequate technology and infrastructure, and ultimately distance them from their missions.
Nonprofits must emerge from the broken fundraising mold and instead develop a sustainable financing strategy that will bring mission to fruition. That means that 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, nonprofits must take a big step back and create an overall financing strategy. Nonprofits must move from fundraising to financing.
And this fundamental shift needs to happen not just because of a poor economy, but also because of deeper, long-term shifts in our world.
Donors are changing. A recent study by the Johnson Center for Philanthropy found that the next generation of donors is very different than preceding generations. The study looked at Millennial and GenX donors (wealthy individuals, or individuals who will inherit wealth, born between 1964-2000). These donors will control more philanthropic dollars than any previous generation — it’s estimated that $41 trillion will transfer from the Baby Boom to these next generations in the next 40 years. And these donors, unlike their predecessors, are focusing their money on nonprofits that demonstrate change to a social problem, or impact. According to the report, “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.”
At the same time, the fundraising function at most nonprofits is showing real signs of strain. A recent study by CompassPoint reveals that executive directors and their fundraisers are fundamentally unhappy with the results that fundraising achieves. Twenty-five percent of executive directors fired their last development director and 33% are lukewarm about their current one. While 50% of development directors plan to leave within the next two years.
In order to stay relevant to donors, be sustainable and achieve their missions, nonprofits need to shift from fundraising to financing.
Here’s what a financing approach looks like.
Move to Impact
It is no longer enough for nonprofits to just do good work. There is a growing demand for nonprofits to 1) articulate what results they hope their work will achieve, and 2) track whether those results are actually happening. Nonprofits have long discussed the outputs of their work: number of people served, number of services provided. But the sector is increasingly being asked to articulate and track the outcomes they are achieving. How are people’s lives changing because of the work a nonprofit does? Increasing competition for shrinking dollars means nonprofits must develop their own theory of change (how they use community resources to create change to a social problem) and then measure whether that theory is becoming a reality. The more a nonprofit can talk about outcomes and impact, the more donors it will attract.
Connect Mission and Money
The financial woes of nonprofits often stem from a misalignment of mission and money. A nonprofit leader who creates a financial engine for her organization that is fully connected to and supportive of the mission (instead of detracting or isolated from it) will enjoy financial sustainability. Nonprofits must make money one of the goals of the strategic plan of the organization and no longer separate fundraising from mission. All elements of a nonprofit’s operations, including the moneymaking ones, must be fully integrated and moving forward together.
Create a Financing Plan
Once money and mission are connected, a nonprofit leader must create a comprehensive strategy for bringing enough, and the right kind of, money in the door to achieve his strategic goals. This includes revenue and capital, programs and infrastructure dollars, and all funding sources. Money must be understood and used as a tool, instead of feared or ignored. A financing plan integrates all activities that bring money in the door (individual donors, foundation grants, earned income, government contracts) and funds both the short and long term goals, as well as the programs and infrastructure of the organization.
Relying on only one or two funding sources, particularly foundation grants — which make up less than 2% of all the money flowing to the nonprofit sector, is a dangerous strategy. It is far better to create a robust and diverse money mix that fits well with and builds on the nonprofit’s mission and competencies.
Find Money to Build
In such a stark economic environment those nonprofits that don’t have adequate infrastructure simply will not survive, let alone be able to adequately address the social problem they were organized to solve. Nonprofit leaders must become savvy about capacity capital and start raising the money they need to build the organization their mission requires. There are two kinds of money in the sector: revenue and capital. Revenue is the day-to-day money necessary to run programs (staff, beds in a homeless shelter, books in a reading program). Capital is a one-time infusion of significant money to strengthen or grow the organization so that it can create more impact. The band-aid reality of inadequate technology, underpaid staffs, and underfunded systems that riddle the nonprofit sector is not sustainable. A nonprofit will only get better at delivering impact if it has an effective organization behind its work.
So how do you go about creating a financing plan for your nonprofit? Here are the steps:
- Develop a Budget for Your Strategic Plan
The most important first step in creating a financing plan is connecting money to the work of your strategic plan. It continues to amaze me how many nonprofits create a strategic plan but attach no dollars to it. If you truly want to bring your strategic plan to fruition, you must connect that plan to the money it will take to execute on it. Go through your strategic plan and ask yourself how much it will cost to make the strategic plan a reality. Project those expenses out over the time frame of the strategic plan. If you have a 3-year strategic plan, determine what your organization’s expenses must be each year over the next three years in order to achieve the goals of your strategic plan.
- Create Revenue Goals
To meet these expenses of your strategic plan, your final financing plan will have approximately 5 broad goals. These goals come in three types: revenue goals, a capital goal, and a financing infrastructure goal. Revenue is the day-to-day money you need to meet the expenses of your strategic plan. You will have 1 revenue goal for each revenue source that is appropriate to your organization (private dollars from foundations, corporations and/or individuals; government dollars; and earned income – the sale of goods or services). Your revenue goals will make up 3 of the 5 goals of your final financing plan.
- Create a Capital Goal
As mentioned earlier, capital is the one-time organization-building money you need to fund special or infrastructure-related purchases within your strategic plan. It might be the money you need for a program evaluation, or a new data-gathering system, or a new database. If you require capital investments to make your strategic plan a reality, one of the goals of your financing plan will be a capital goal.
- Create a Financing Infrastructure Goal
The last goal of your financing plan should focus on what improvements you will make to the internal systems, staffing and technology you use to bring money in the door. This goal is not a money goal, but rather an activity goal. If you want to significantly grow the revenue that flows to your nonprofit you will have to make some improvements to the financing infrastructure of your organization. This means you might want to add additional development staff, buy a new donor database, upgrade your website, or create marketing materials.
- Create Objectives
Each of the goals in your financing plan will be broken down into objectives (or pieces) to make them achievable. For example, you might have a revenue goal that describes how much private money you will raise. You would then break that total private revenue goal into the individual donor, corporate donor, and foundation grant objectives necessary to achieve that goal.
- Create an Operational Plan
Once you establish your goals and objectives you will break each objective into the activities, deliverables, people responsible, and due dates necessary. This becomes your very tactical operational plan with which you will execute on and monitor the financing plan. It ensures that the goals and objectives actually come to fruition.
In the end, the goals and objectives of a nonprofit’s financing plan might look like this:
Fiscal Years 2014-2016 Financing Plan
1. Goal 1: Raise $548,625 annually from private sources by 2016
- Objective 1: Raise $288,750 from individuals by 2016
- Objective 2: Raise $86,625 annually from corporations by 2016
- Objective 3: Raise $173,250 annually from foundations by 2016
2. Goal 2: Raise $346,500 annually from government sources by 2016
- Objective 1: Raise $120,500 from county grant by 2016
- Objective 2: Raise $226,000 from federal grant by 2016
3. Goal 3: Raise $17,325 annually from earned income sources by 2016
- Objective 1: Raise $5,000 from t-shirt sales
- Objective 2: Raise $12,325 from classes
4. Goal 4: Raise $220,000 in capital
5. Goal 5: Improve our financing infrastructure in order to meet our revenue and capital goals
- Objective 1: Increase the staff and board’s ability to bring money in the door by adding positions and training
- Objective 2: Add key technology
- Objective 3: Improve the quality and effectiveness of our marketing efforts
You would then be ready to create the very tactical operational plan to bring each of these goals and objectives to life.
It’s not just semantics. There really is a better way. Nonprofits don’t have to wear out their fundraisers, their donors, their staffs and their messages. By creating a financing strategy, as opposed to a fundraising plan, a nonprofit can get a lot closer to sustainable social change.
If you’d like to explore how I can help your nonprofit develop a Financing Plan, visit the Financing Plan Consulting page of the website.
Photo Credit: MIT Libraries
The nonprofit starvation cycle is one nonprofit leaders know only to well. Nonprofits rarely have the technology, staff, and systems to function effectively. So they scrape by trying to wring one more drop out of a completely dry rock.
But instead of waiting for funders to fix the situation, it is up to nonprofit leaders themselves to break free. And you break free by raising capacity capital. This month’s Social Velocity webinar, “Raising Capacity Capital,” can help you do just that.
Capacity capital is a one-time investment of significant money that can help build or strengthen a nonprofit so that it can create more social change. Capacity capital funds things like technology, systems, a program evaluation, revenue-generating staff, start-up costs for an earned income business. It is money that strengthens the organization so that it can do more.
But often nonprofit leaders don’t recognize that everything they need to raise capacity capital and break free from the starvation cycle is in right in front of them.
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
- Develop a campaign goal
- 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
This webinar is an encore presentation of one of our most popular webinars. Here’s what some past participants had to say:
“Thank you! this was helpful and wonderfully accessible. I am impressed.”
“Just a note to thank you for the informative webinar. I found it most constructive, as my organization is right at the stage of getting out of starvation mode. I look forward to participating in more sessions.”
On Demand Webinar
And keep in mind all Social Velocity Webinars are “on demand,” so even if you can’t make this date and time you can still register and watch the recorded webinar, receive the slides and get your questions answered anytime.
The registration fee will get you:
- A link to a recording of the webinar, which you can watch whenever you like
- The PowerPoint slides from the webinar
- The ability to ask additional follow-up questions after the webinar
If you are serious about moving your nonprofit out of the starvation cycle, capacity capital can help you get there.
Photo Credit: gfpeck
Board members sometimes stand in the way of a what their nonprofit needs most. I’ve talked before about the meaningless at best and destructive at worst distinction between “overhead” and “program” dollars. And board members often are as bad as donors at forcing nonprofits to ignore the very real costs of the work they do and their very real need for organization building dollars.
But board members could break this pattern by helping their nonprofit uncover, plan for and fund the staffing, technology, expertise and systems required to make the organization more effective at creating change.
Board members need to put their weight behind organization building. And they can start by giving their nonprofit these five priceless gifts:
- Permission to Talk About Real Costs. Stop asking your nonprofit staff to get by with less and less. Stop telling your Executive Director to lower the salary they can offer a talented Development Director, not to spend money on technology, or to use volunteers when they need experts. Instead, start asking what the real costs of the work are and how much you truly need to raise to accomplish your ambitious organizational goals.
- The Support of the Board. Once you start talking about real costs, you need to marshal the rest of the board to support organization building. Boards are often led by a vocal few who convince the rest to go along with their plans. If you can be that vocal member who articulates the need for organization building, how it will result in greater results over time, and how the board must be the champion of and seed investor in organization building, you can create a stronger, healthier nonprofit.
- A Capacity Plan. With the board in support of organization building, it’s time to put an organization-building plan in place. Ask the head of your nonprofit to spend some time coming up with a capacity building plan that will take the organization to the next level. Then present that plan at the next board meeting for a substantive conversation about what is truly holding the organization back and what it would take to move forward.
- An Organization Building Investment. Instead of asking that your annual donation go to your favorite program, be the lead investor in this new capacity building plan. Organization building dollars are very difficult to find. So those closest to the organization should be the first to step up and invest in capacity. And don’t just give the required amount. Make an investment that is significant to you. If you truly believe in this organization, take out your checkbook and make it hurt.
- Access to More Building Dollars. But don’t just stop there. Think strategically about who you could convince to join you in strengthening the capacity of the organization. Then make the case for why a Development Director, or a strategic plan, or an evaluation study, or new technology will grow the results your nonprofit is achieving. If board members start making a compelling case to their friends and colleagues about the importance of capacity building dollars, the sector could be transformed.
Board members can be an instrumental driver of stronger, healthier, more effective nonprofit organizations. But in order to get there, board members have to understand and embrace their leadership role in making organization building a reality.
If you want a roadmap for making your board more effective, download our How to Build a Groundbreaking Board webinar.
Photo credit: asenat29
I started a new blog series in March about overcoming the many fears that cripple the nonprofit sector, the first one being the fear of investment. Today I want to talk about the nonprofit fear of money. Because the nonprofit sector is focused on mission, as opposed to profit, money is often ignored at best, or feared at worst. Many nonprofit boards and staff find money distasteful, burdensome, and avoidable.
But money can be used as a powerful tool to create more social change. In order to overcome the fear of money and start using it effectively, nonprofit boards and staffs must:
Embrace Its Power
Without money, your compelling, inspiring, world-changing mission is only a sentence on paper. As much as we might like to deny it, nonprofits very much exist in a market economy. So instead of trumping all, mission is merely one of the things nonprofit leaders need to be thinking about as they are working toward social change. Because without a smart strategy for how you will secure and use money you are sunk.
Really, Really Understand It
Of course money is scary if you don’t understand it, and most nonprofit leaders don’t have a finance background. So learn all you can about money. Find an accountant who speaks English and can explain how money flows in and out of your organization. Make sure you are receiving and sharing with your board monthly financial statements that are understandable. Ensure board and key staff all have basic nonprofit financial management training so everyone speaks the same language and understands the key ratios they should be analyzing. This common understanding should serve to generate substantive conversations about the best use of money to further the work of the organization.
Involve Everyone in Raising It
I know I sound like a broken record, but EVERYONE at a nonprofit should be involved in bringing money in the door in a way that fits well with their skills and experience. Every board member should have a money responsibility. Be strategic about putting each individual to their highest and best money-raising use. And every staff member, even program staff, can be enlisted to explain the program to potential donors, gather client stories, or provide data about the program so that you can garner more support. No one at the organization should be allowed to say “I don’t do the money thing.” Money is everyone’s job, because with no money there is no mission, remember?
Budget for Having Too Much of It
It is unseemly for a nonprofit to operate a surplus. Funders don’t like to see an organization too far into the black, and board members become uncomfortable when “too much” money sits idle. But money sitting in a bank account means the organization no longer lives hand to mouth, continually putting out fires, and focusing only on keeping the doors open. Operating reserves allow an organization to think strategically, take some risks, streamline the business model, innovate the solution, and weather economic uncertainty all in the name of delivering bigger, better social impact. So overcome the taboo and budget for a surplus that creates operating reserves.
Talk About It. All. The. Time.
Because money is so central to mission you cannot make decisions about the organization, about programs, about staffing, really about anything without understanding the financial implications of those decisions. Therefore, you must be talking about money all the time. Not just when the finance committee of the board meets, or when you are reviewing the monthly financial statements, or when your latest fundraising event falls flat. Money must be a constant conversation. It must be fully integrated into everything you do.
The key to financial sustainability, and ultimately significant social change, is being smart about managing money. But you cannot be smart with money if you are afraid of it. Money can be a beautiful, powerful tool for creating social change. Embrace it.
Photo Credit: orudorumagi11
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