A New Approach to Nonprofit Funding: Financing Not Fundraising Webinar Series

I’m delighted to unveil today our new Financing Not Fundraising Webinar Series. In each of the last three months I held an overview Financing Not Fundraising webinar that explained the concept and how nonprofits should approach their money generating activities in a very different way. This webinar is based on our popular Financing Not Fundraising blog series. Because the overview webinar was so popular and there was such a demand for more in-depth, topic specific webinars, I decided to launch a webinar series beginning this coming January. This series will take the individual concepts within Financing Not Fundraising one-by-one.

Below are the first four webinars in this series. As the year progresses, we will add additional webinars. There will be one Financing Not Fundraising webinar each month. And if you missed the overview webinar, you can still view a recording of it here.

I hope you’ll join us for these webinars!

Financing Not Fundraising Overview-Recorded Webinar
This recorded webinar from December 2011 shows nonprofits what this broader approach to securing the overall financing necessary to create social change looks like, including:

•    How to align your nonprofit’s mission with the money needed to deliver on it
•    Why a message of impact results in more money
•    Understanding the critical difference between revenue and capital
•    Why overhead isn’t a dirty word anymore
•    How and why to calculate the net revenue of money raising activities
•    When to explore new revenue streams

Download the Webinar

Creating a Financing Plan
Tuesday, January 24, 2012
12:00 noon -1:00 pm Eastern

This webinar will help nonprofit leaders create an overall financing plan to bring money in the door. This interactive webinar will help nonprofit leaders develop a plan that includes:

•    All revenue streams flowing to the organization
•    A strategy for funding programs and operations
•    Opportunities to raise money for infrastructure
•    Tactical steps with activities, deliverables, people responsible
•    How to divide tasks by staff and board members
•    Ways to monitor the plan going forward

Register Now

Finding Individual Donors
Wednesday, February 22, 2012
12 noon-1:00pm Eastern

Individual donors make up 80% of the private money flowing to the nonprofit sector, yet many nonprofits don’t know how to find and communicate with individual donors. This webinar will give you tools and strategies to:

•    Engage your board in individual donor fundraising
•    Use social media to connect with individual supporters
•    Create events that resonate with individual donors
•    Identify prospects
•    Create a system for engaging individual donors
•    Launch a major donor campaign

Register Now

Creating a Message of Impact
Tuesday, March 27, 2012
12 noon – 1:00pm Eastern

No one likes to beg for money. And donors increasingly aren’t moved to give through the tin cup approach. A far more effective way to communicate with potential donors is to talk about the impact your nonprofit is having in the community. This webinar will help your nonprofit:

•    Differentiate between donations and investments
•    Talk about what your nonprofit does in the community
•    Create a compelling case for support
•    Target donors who care about your work
•    Get your board excited about asking for money
•    Articulate a social return on investment (SROI) for donors

Register Now

Raising Capacity Capital
Wednesday, April 25, 2012
12 noon – 1:00pm Eastern

Capacity capital is the money that nonprofits desperately need, but find so hard to raise. It is money for infrastructure and organization building. It supports things like revenue-generating staff, launch of an earned income business, technology and systems, evaluation, training and consulting. If you want to move your organization out of the starvation cycle, you have to learn how to raise capacity capital. This webinar will show you how to:

•    Talk about the importance of capacity capital to donors and your 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

Register Now

Tags: creating a fundraising plan, creating a message of impact, financing not fundraising, finding individual donors, fundraising webinar, nonprofit board of directors, nonprofit fundraising, raising capacity capital

Preventing Social Change Burnout

Perhaps it is the nature of trying to solve the intractable, but social change leaders are heading for burnout. I see it more often lately. A nonprofit leader  gives me a dazed look, rubs her temples with exhaustion, throws her hands up in the air, seriously considers just giving up.

The exhausting, endless hamster wheel nonprofit leaders live on is just not sustainable. At some point they will give out.

But the leaders who are driving social change are the very people we need to persevere. Because if they give up, where does that leave those who so desperately need the solutions they are providing?

Here are some things social change leaders can do to overcome burnout:

• Get Brutally Honest. With your donors, with your board members. Stop telling people what they want to hear and start being honest about the limits of your time, your staff’s capacity, your program’s scope. And stop chasing rabbit holes for your board or donors. You know what the reality is, so stop hiding it.




• Stop Fundraising. The thing that burns executive directors out more than anything is the endless, dysfunctional fundraising cycle. But if you could switch to a more effective strategy for bringing money in the door, and start to engage others (board members, donors, volunteers) to help, you would have a much smaller burden on your shoulders.




• Raise Capacity Capital. Executive directors are tasked with way too much. Most nonprofit staffers are doing the jobs of 2 or 3 people. That’s fine for awhile, but not long term. The only way out of that vicious cycle is to raise some money to hire key staff, or buy effective technology. That’s capacity capital.




• Get Inspired. Social change can be very inspiring. When you hit a wall, read about other leaders and the hurdles they faced, visit your own program and see the change that is happening every day, ask your staff and board why they are involved, ask donors why they give.




• Forgive Yourself. One thing I absolutely love about social change leaders is their undying commitment to the cause. So many of them have a deep calling for the work they do. But that can also have a dark side. They can become so passionate that they think taking a day off would be to let down the cause. They sometimes picture themselves as Superman and deny their human need for rest and regeneration. But the only way to create lasting change is to make it sustainable. You need to know when to say when.




• Get Some Help. You may be born to lead change, but a true leader knows how to engage others. You cannot do it all. Recruit and retain a staff to whom you can confidently delegate. Recruit a board that steps up to take key pieces off your plate. Ask your donors to tap into their networks to do some fundraising for you. This is not a one person show, rather you need to view yourself as a cheerleader, organizer, and leader of a vast army of people who are making social change happen.

When you feel your eyes glaze over, your head start to spin, a yearning for the family you haven’t seen in weeks, it’s time to take a step back. You are engaged in a marathon, not a sprint, and you can’t burnout after the first 5 miles. Long-term change takes time. Pace yourself.

Photo Credit: gb_packards

Tags: Executive Directors, Fundraising, nonprofit board of directors, nonprofit burnout, nonprofit capacity capital, nonprofit leaders, nonprofit starvation cycle

The Simplicity of Telling the Truth

There was an overwhelming reaction to my post last week, 5 Lies to Stop Telling Donors. I received more comments on that post than any other blog post in the 3 year history of the Social Velocity blog.

It seems there was a sort of collective sigh of relief in being told that it’s ok to be honest with donors. There were some amazing comments from readers, you can read all of the comments here. But I wanted to highlight a few in particular.

Some readers have been telling their donors the truth for awhile, like Sharon:

I have been honest with my donors for years, but I know I am in the minority, because some of my donors appear shocked when I explain the truth. I hope many more non profits accept this truth, because it’s only when the majority of us pull together that we will see real change.

And this from Linda,

Thank you so very much. This is a conversation that we often have in our world. Amen to transparency and truth. Well done!

And others recounted their own experiences of working with donors who don’t get it, like Curtis:

We recently had someone offer us $1,400 and they had this huge laundry list of expectations. At our new location $1,400 barely covers the electric bill for a single month.

And Kelly:

I am so on board with being real with funders and board members about what it takes to run our program! I had to inform my board that my staff can not be paid with in-kind donations!

I get the sense that there are many nonprofit leaders out there who want to be up front and honest with donors. Maybe they just need permission to do so.

Perhaps Marjorie says it best. The nonprofit sector needs to stand up for what they really need in order to be successful at solving social problems:

In an era of shrinking federal & state funding for human services, it’s tempting to feel relieved at “flat funding”. Trying to make that work just leads to substandard services delivered (in the case of nursing homes, day care, etc) by front-line staff without a living wage or health insurance. Rather than enable the illusion that the nonprofit sector can miraculously make it work, there are times we need to say that WE CAN’T DO IT without appropriate funding … and let public funders and policy-makers deal with the consequences of their budget decisions.

Thanks so much for the comments, everyone, and keep them coming! You are an inspiration to me. Stand up for your work, for your organizations, for your staff, and tell donors what they really need to hear.

Tags: Fundraising, nonprofit board of directors, nonprofit donors, Philanthropy

Financing Not Fundraising: 5 Lies to Stop Telling Donors

In part 11 of our ongoing blog series, Financing Not Fundraising, we are talking about being brutally honest with your donors. If nonprofits are going to truly break free from the vicious fundraising cycle, they must find the courage to tell funders how it really is. And since board members are a nonprofit’s closest supporters and (I hope) donors, you need to stop telling them these lies as well.

If you are new to our Financing Not Fundraising blog series, the series is about how nonprofits must 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.

If you want to learn more about how to apply the concepts of Financing Not Fundraising to your nonprofit, check out our Financing Not Fundraising Webinar Series

If you want to break free of the exhausting cycle of fundraising, a key step is to start being brutally honest with funders. Here are the top 5 lies you have to stop telling donors:

1. X% of your donation goes to the program
   The distinction between “program expenses” and “overhead” is, at best, meaningless and, at worst, destructive. You cannot have a program without staff, technology, space, systems, evaluation, research and development. It is magical thinking to say that you can separate money spent on programs from money spent on the support of programs. Donors need to understand, and you need to explain to them, that “overhead” is not a dirty word. A nonprofit exists to deliver programs. And everything the organization does helps to make those programs better, stronger, bigger, more effective.




2. We can do the same program with less money
   No you can’t. You know you can’t. You are already scraping by. Don’t accept a check from a donor who wants all the bells and whistles you explained in your pitch, but at a lower cost. Explain the true costs, including administrative costs, of getting results. Politely, but firmly, explain to them that an inferior investment will yield an inferior result. If they simply can’t afford the price tag, then encourage them to find fellow funders to co-invest with.




3. We can start a new program that doesn’t fit with our mission or strategy
   Yes that big, fat check a donor is holding in front of you looks very appealing. But if it takes your organization in a different direction than your strategy or your core competencies require, accepting it is a huge mistake. Nonprofits must constantly ensure that money and mission are aligned. Otherwise the organization will be scattered in countless directions with an exhausted staff and confused donor base. Don’t let a donor take you down that road.




4. We can grow without additional staff or other resources
   Nonprofit staff truly excel at working endless hours with very few resources. They have perfected the concept of doing more and more with less and less. But someday that road must end. Nonprofit leaders have to be honest with donors when their staff and resources are at capacity. Because eventually program results will suffer and the donor will receive little in return for their investment.




5. 100% of our board is committed to our organization
   If that’s true, then you are a true minority in the nonprofit sector. Every nonprofit board I know has some dead  wood. Members who ignore fundraising duties, don’t contribute to meetings, miss meetings, take the organization on tangents are always present. It’s a fact that funders want to see every board member contributing. But instead of perpetuating the myth that 100% is an achievable reality, be honest with funders. Tell them that you continually analyze each individual board member’s contributions (financial, intellectual, time) and have a clear plan for addressing deficiency, including: coaching, peer pressure, training, asking for resignations. Getting to 100% is probably never realistic, it is far better to demonstrate that you are tirelessly working toward 90%.

Stop the madness. We need to stop telling funders what they want to hear and then cursing them behind their backs when they set  unrealistic expectations. Funders must be made to understand the harsh realities of the nonprofit sector if they are ever to be expected to help bring change.

To download the 27-page Financing Not Fundraising e-book, click here.

Tags: being honest with funders, financing not fundraising, money and mission, nonprofit alignment, nonprofit board of directors, nonprofit fundraising, nonprofit overhead, program expenses

10 Great Social Innovation Reads: September

There were lots of great discussions and developments in the world of social innovation in September. So much so, that I had a really hard time narrowing down to ten. But alas, here are my top 10 of the last month. As always, please add what I missed to the comments. If you’d like to see the expanded list of what catches my eye, follow me on Twitter @nedgington.

You can also read the lists of Great Reads from previous months here.

1. Two really interesting divergent reports on the results of social change work. First, a $1 million, 6-year study of nonprofit After School Matters shows that the program doesn’t really change lives.




2. And a year after Facebook founder, Mark Zuckerberg’s $100 million grant to Newark public schools, some positive results are trickling in.




3. After the August resignation of Steve Jobs from Apple due to health reasons, people came out in droves to criticize him for his poor philanthropic record. Dan Pallotta rose to his defense, arguing, in a thought-provoking way, that Jobs’ contributions to the world at large make him the World’s Greatest Philanthropist.




4. In an exciting move to kick-start social impact bonds (a government bond that allows private investors to invest capital in nonprofits and then gain a return if the nonprofit achieves promised outcomes), the Rockefeller Foundation granted Social Finance $500K to develop the social impact bond market in the US.




5. September was the month of the 4th annual Social Capital Markets Conference that brings social entrepreneurs and the funders of social entrepreneurs together. Over the course of the four SoCap conferences there has been a recurring tension between philanthropy and impact investing. Adin Miller reported from SoCap that the great convergence between philanthropy and impact investing has disappointingly not yet happened.




6. The Washington Post shows us the devastating impact of the economic crisis in five charts.




7. At long last, CharityNavigator, one of the best known nonprofit rating systems, unveils their Charity Navigator 2.0, an expanded rating system that includes financial health, accountability, and transparency measures. Every nonprofit should understand this important change and what it means for their organization.




8. Lucy Bernholz discusses a fascinating distinction between problems and difficulties and the implications for social change efforts. “Problems have solutions; solve them and problems go away. Difficulties don’t have solutions; they require continual address.”




9. On the Harvard Business Review blog Lucy Marcus argues In Troubled Times, Boards Must Step Up.




10. In a similar vein, Mario Morino from Venture Philanthropy Partners argues that Board Members Cannot Check Their Courage at the Door.

Photo Credit: MMcQuade

Tags: Adin Miller, After School Matters, CharityNavigator, Dan Pallotta, Facebook, impact investing, Lucy Bernholz, Mark Zuckerberg, Newark public schools, nonprofit board of directors, program evaluation, SoCap, Social Capital Markets conference, social impact bonds, Steve Jobs philanthropy

Moving From Scarcity to Abundance: An Interview with Beth Kanter

In this month’s Social Velocity blog interview, we’re talking with Beth Kanter.  Beth is a leading thinker and innovator around social media for nonprofits. She writes one of the longest running and most popular (and one of my favorite) blogs for nonprofits  Beth’s Blog: How Nonprofits Can Use Social Media. She also co-authored the seminal book The Networked Nonprofit with Allison Fine in 2010, which gives nonprofits a road map for understanding the brave new world of social media and how to embrace it. I often recommend the book to my clients because it provides a completely new way of understanding how nonprofits can and should fit into the wider marketplace. Beth has over 30 years working in the nonprofit sector in technology, training, capacity building, evaluation, fundraising, and marketing.

You can read past interviews in our Social Innovation Interview Series here.

Nell: Because the nonprofit sector is undercapitalized it is highly competitive and individual nonprofits tend to isolate themselves and become “fortresses” as you call them. Yet what you are arguing for, a networked  or connected mentality, is a huge change for a risk-averse sector. How realistic is it to think that the majority of nonprofits will embrace this change? What will convince the majority of nonprofits to change?

Beth: That’s a great question.  I’m suggesting that nonprofit shift from a scarcity mentality to embrace abundance.  It is a much less exhausting way of working, plus it is more sustainable. Here’s more, here and here.

Nell: For those nonprofits that haven’t yet recognized social media as a tool for achieving their mission, what do you think is holding them back? What are the hurdles that keep them from a networked approach?

Beth: Risk adversity – issues around organizational culture or changing the way they work or deliver programs.  Here’s a recent example from the classical music world. Nonprofits need to establish a social media policy, there’s more here.

Nell: One idea that you propose is that nonprofit boards use social media to get those outside the organization to contribute to the direction and strategy of the organization (online board meetings, etc). This is a radical idea in a sector that has historically kept their board exclusive and elusive. What is the value of a more disbursed form of leadership, and can it work for every nonprofit?

Beth: It can work, but the nonprofit culture and way of working has to be open enough to accept it and do it.  The value — better quality programs, ideas, potential revenue, and more.   More here and here.

Nell: What does a networked executive director look like? Or does the whole understanding of the nonprofit executive director need to change as well?

Beth: Wow, that is such a good question!  The big thing that needs to change is that ED’s need to work with a networked mindset, a stance toward leadership that prioritizes openness, transparency, relationship building and distributed decision-making, more here.

Nell: What do you think will happen to those nonprofits that don’t move toward a networked approach?

Beth: There will be degrees of networked approaches, but this approach helps nonprofits remain relevant so they don’t need to over think.

Nell: For those nonprofits who have embraced the ideas of the networked nonprofit, what’s the next frontier? What do they need to be doing, thinking about, or experimenting with next?

Beth: Master the networked approach and the next thing on the horizon is the anytime, anywhere nonprofit – the impact of mobility – not just the use of smartphones, but the idea that we’re no longer tethered to a screen.

Tags: Beth Kanter, Beth's Blog, nonprofit board of directors, nonprofit change, nonprofit leadership, nonprofit social media policy, nonprofits and social media, The Networked Nonprofit

A Financial Taboo Nonprofits Must Get Over

There’s a new blog I discovered recently that I’ve grown to really like. Against the Grain, written by Rick Moyers of the Eugene and Agnes E. Meyer Foundation, is about challenging nonprofit boards to be more effective. Recently Rick has been writing about the need for nonprofit operating reserves. Operating reserves are simply an amount of set aside money that a nonprofit has accessible in times of crisis, budget shortfall, etc. In Rick’s most recent post on the topic, he explains how nonprofits can go about building operating reserves. And to him, it’s quite simple. But I would argue that Rick ignores a pretty ingrained nonprofit financial taboo against running a surplus.

Rick argues that creating operating reserves is fairly easy: “The most reliable way to build reserves is by operating at a modest surplus (bringing in more money than you spend) consistently over time.” And the way he suggests doing this is to have “the fiscal discipline to make hard choices and the ability to resist putting all “extra” money immediately into expanded programs and services.”

But Rick ignores the fact that in much of the sector it is unseemly for a nonprofit to operate a surplus. I cannot tell you how many times I have seen nonprofit leaders massage the budget projections accompanying a  funding proposal in order to show break even or a loss in a given year. It is somehow inappropriate to show funders that the organization is too far into the black. And how many board meetings have been lost to a discussion about why money is sitting in a bank account instead of serving more people? Board members become quite uncomfortable when “too much” money is sitting idle.  Because the question is always: if money exists, why isn’t it being plowed into more programs?

Indeed, it seems the majority of nonprofit organizations don’t enjoy much of a surplus. The 2011 Nonprofit Sector Survey conducted by the Nonprofit Finance Fund found that 60% of nonprofits reporting had less than 4 months of expenses as operating reserves and 28% of nonprofits had less than 1 month of reserves, which is essentially breakeven. Rick found similar results in a survey his foundation conducted in the Washington area.

But money sitting in a bank account serves a very real purpose for a nonprofit. It means the organization doesn’t live hand to mouth, no longer continually puts out fires, and stops expending energy on just keeping the doors open. Operating reserves allow an organization to evolve to the next level where they can think strategically, take some risks, streamline their business model, innovate their solution, and weather economic uncertainty all in the name of delivering bigger, better social impact.

So the nonprofit sector must get over the surplus taboo. It’s ok to run a surplus, in fact, a surplus means that the organization is better positioned to deliver more impact down the road. The key to financial sustainability, and ultimately significant social impact, is strategic financial management. And operating reserves are a first step to getting there.

Photo Credit: Jason Tester

Tags: Against the Grain, nonprofit board of directors, nonprofit budget shortfall, Nonprofit Finance Fund, nonprofit financial management, nonprofit operating reserves, nonprofit surplus taboo, Rick Moyers

Getting Your Board to Fundraise

I hear the frustration ALL the time. “My board won’t fundraise.” “They’ve never made it part of their responsibilities.” “They are afraid of the ask.” “Fundraising is all up to the Executive Director.” A board of directors’ view of fundraising tends to range from a general aversion, to total fear. And the result is a very frustrated nonprofit staff.

But there is a better way. I have found that if boards can learn about how funding in the nonprofit sector works, how to communicate what their nonprofit is and does, how to find potential donors interested in what they have to say, and the simple processes for bringing money in the door, that discomfort, distaste, and aversion will go away. And the nonprofit will emerge stronger, more financially sustainable and better able to reach their goals.

If your board suffers from a similar fear of fundraising, join us for our Getting Your Board to Fundraise webinar on Wednesday, April 13th. I hope to see you there!

Getting Your Board to Fundraise Webinar
A Social Velocity Webinar
Registration Fee: $40
Wednesday, April 13, 2011
11:00am-Noon EDT

Nonprofits often struggle to get their board of directors to help with fundraising. This interactive webinar will give nonprofit staff and board the tools they need to get their boards of directors bringing money in the door. We’ll give very tactical steps for overcoming fear and inertia to get board members excited, engaged and committed to raising money for your nonprofit.

Register Now

Photo Credit: tuppaware_001

Tags: board won't fundraise, getting board to fundraise, nonprofit board of directors, nonprofit fundraising, Social Velocity webinar