Getting Real About Nonprofit Overhead Costs

There is something pretty interesting going on in Illinois around nonprofit overhead costs. I have written many times (here and here for example) about how the distinction between “overhead” and “program” costs in the nonprofit sector is meaningless at best, and destructive at worst.

I’m really excited to see that the Donors Forum in Illinois is starting to host real conversations between nonprofits and philanthropists about the Real Costs (including administrative costs) necessary to create effective social change.

With the help of the Bridgespan Group, in March the Donors Forum brought nonprofits and philanthropists together for a one-day discussion about real costs in the nonprofit sector. They want funders to understand that it is not enough to fund only nonprofit programs. In order to create effective social change, nonprofits must also be able to fund the infrastructure, staffing, space, tools, and research costs of their work.

The image above is a graphic facilitation of the March session. The Donors Forum has also developed a great website with resources for nonprofits and philanthropists about real costs, including Ann Goggins Gregory and Don Howard’s seminal article in the 2009 Stanford Social Innovation Review “The Nonprofit Starvation Cycle,” reports and resources about nonprofit fiscal fitness, Grantmakers for Effective Organization’s study on how philanthropy is changing, and much more.

As part of their efforts, the Donors Forum has also put together this video that helps to explain, in very clear terms, the critical importance of funding ALL of a nonprofit’s costs:

I’m excited to see where this conversation goes and whether more nonprofits and philanthropists start having open, honest conversations about what it really takes to create lasting social change. I’m hoping to interview Valerie Lies, President and CEO of the Donors Forum, later this year about this initiative and where they hope to go from here. So stay tuned.

Tags: Ann Goggins Gregory, Don Howard, Donors Forum, Grantmakers for Effective Organizations, honest conversations with funders, nonprofit capacity, nonprofit fundraising, nonprofit overhead costs, overcoming fundraising hurdles, overcoming nonprofit overhead, Philanthropy, raising money for nonprofit infrastructure, Real Costs, Stanford Social Innovation Review, Valerie Lies

10 Most Popular Posts of 2012

As 2012 winds down I wanted to take a minute to thank you, the Social Velocity community, for an amazing year. You are an incredibly smart, innovative, inspiring group, and I’m honored that you take time to read, comment and engage with the Social Velocity blog.

As I did last year around this time, I want to provide a list of the ten most popular Social Velocity blog posts from this year in case you missed some of them. Then I’m taking a break from the blog until January, but I’ll be scheduling some archive posts while I’m out of the office.

I wish you all a fun and relaxing holiday season. I look forward to another year of interacting with the great Social Velocity community in 2013. Happy Holidays!

The 10 most popular Social Velocity blog posts of 2012 were:

1. 9 Ways Board Members Can Raise Money Without Fundraising
2. Why I Love Pinterest and Nonprofits Should Too
3. Jump Start Your Board
4. Tools to Build a Stronger Nonprofit Sector
5. How to Raise Money To Strengthen Your Nonprofit
6. How to Rebut Crazy Donor Demands
7. Connect Money to Your Strategic Plan
8. 4 Times When a Nonprofit Needs a Strategic Plan
9. 10 Traits of a Groundbreaking Nonprofit Board
10. 7 Mistakes in Your Nonprofit’s Fundraising Plan

Photo Credit: ccpixel.net

Tags: fundraising plan, nonprofit board, nonprofit capacity, nonprofit fundraising, nonprofit strategic plan, nonprofit strategy, nonprofit tools, nonprofits and Pinterest

The 5 Building Blocks of Nonprofit Success

There is a way off of the exhausting nonprofit hamster wheel of trying to do more and more with less and less. If your nonprofit can articulate the value you provide, strengthen your organization, develop a groundbreaking board, chart a strategic direction, and attract more support, you will set yourself up to achieve the holy grail of the nonprofit sector: lasting change to a social problem.

It’s a process where your nonprofit assembles 5 building blocks that each build on the next one:

1. Articulate Your Nonprofit’s Value
   It is no longer enough for nonprofits to do “good work.” Funders, policy makers, board members, and others are increasingly demanding that nonprofits explain what value they provide a community and what change they exist to create.




2. Strengthen Your Organization
   Once you know your value, you must build your organization. Nonprofits can no longer scrape by without the staff, infrastructure, technology and systems they need to deliver results-driven programs. They must create a plan to strengthen their organization and raise capacity capital to implement it.




3. Develop a Groundbreaking Board
   A strong organization requires a groundbreaking board to lead it. A nonprofit’s board of directors is absolutely critical. Without their leadership, investment and excitement it will be impossible to build community support and create change. A groundbreaking board provides strategic direction, brings money in the door, connects the organization to key decision makers and ultimately leads the organization to success.




4. Chart a Strategic Direction
   But without a clear future direction a nonprofit is living in the world of just doing good work. A nonprofit that puts together a thoughtful, comprehensive plan for the future will attract more support, increase staff and board investment, and ultimately create more social change.




5. Attract More Support
   Once these four elements are in place, a nonprofit is ready to attract more support. In an increasingly competitive funding environment it is more important than ever that nonprofits develop a long-term financing plan for their organization. A plan that determines how the organization will bring enough money in the door to achieve their mission.

These 5 elements build on each other and, once assembled, look like this:

The consulting services I provide are tailored to assist nonprofits wherever they are in this process. From developing a theory of change, to raising capacity capital, to revamping the board, to creating a strategic plan, to developing a financing plan. I help nonprofits make the leap from just getting by to creating sustainable social impact.

In order to help you determine where you are in this process and where you need help, we have organized the Consulting page of the Social Velocity website by this 5-stage process.

But there are also nonprofits that are so new or so small that they simply aren’t ready for outside help. Over the past two years I’ve been developing a whole suite of tools for these smaller, younger nonprofits. The e-books, webinars, and step-by-step guides on our Tools page all fit into this 5-stage process as well. So you can determine where you are in the process and what you need in order to move forward.

I hope you will explore the revamped Consulting and Tools pages of the website. And let me know if you have questions.

Photo Credit: Trey Ratcliff

Tags: capacity capital, fundraising planning, groundbreaking board, nonprofit board of directors, nonprofit capacity, nonprofit consulting, nonprofit fundraising, nonprofit strategic plan, nonprofit strategy, nonprofit tools, theory of change

New Financing Not Fundraising 2012 E-Book

I’m delighted to announce that I’ve just released the Financing Not Fundraising, 2012 E-book. This e-book is the second in the Financing Not Fundraising e-book series. While the Financing Not Fundraising, 2011 E-book laid out the basic elements of the Financing Not Fundraising approach, this new e-book, a compilation and expansion of blog posts in the Financing Not Fundraising blog series from 2012, goes deeper into the concept.

We are living in a new reality. And the old rules of nonprofit funding simply no longer apply. Those nonprofits that take a big step back and create a smart strategy for bringing enough money in the door to achieve their mission are the ones that will survive and thrive in this new environment. In creating that strategy they are moving to finance, instead of fundraise for, their organizations. And the result is a stronger, more effective, more sustainable organization with excited, energized, empowered board, staff and donors.

The 25-page Financing Not Fundraising, 2012 E-book expands on the basic elements of the Financing Not Fundraising model and helps those nonprofits that are ready to start moving away from fundraising to really dive into this new approach.

Here are the elements in this second level of Financing Not Fundraising:

1. Stop Fearing Money
2. Connect Money to Your Strategic Plan
3. Fix Your Fundraising Plan
4. Jump Start Your Board
5. Align Executive and Development Directors
6. Get Real With Your Donors
7. Abandon Ineffective Fundraisers
8. Kiss That Endowment Dream Goodbye
9. Reinvent the Capital Campaign

You can download Financing Not Fundraising, 2012 here and if you missed the Financing Not Fundraising, 2011 e-book you can download it here.

Tags: Board of Directors, financing not fundraising, fundraising ideas, fundraising planning, fundraising strategy, nonprofit capacity, nonprofit fundraising, nonprofit sustainability

How to Create a Nonprofit Financing (Not Fundraising) Plan

In an earlier post I talked about the common mistakes many nonprofits make in their fundraising plans. The biggest mistake is that they create a fundraising plan, not a financing plan. If you are serious about raising enough money to accomplish your goals, you need to create an overall Financing Plan for your organization. To help you do just that, I’m delighted to offer a repeat of our popular “Creating a Financing Plan” webinar. This webinar sold out when I offered it earlier this year. And here’s what one of those participants had to say about it:

“I loved the reframing of financing for desired results instead of funding for operations…your message to wed money to the mission was a big AHA moment, and I am now figuring out how to bring this to life for staff and Board.”

A financing plan is different than a typical fundraising plan for many reasons. Here is how they differ:

• A fundraising plan asks “How much can we accomplish with the money we can raise?” but a financing plan asks “How much should we raise to accomplish our goals?”




• A fundraising plan sets goals only for private revenue streams (foundation grants, individual gifts), but a financing plan includes goals for ALL money flowing to the organization (government grants, earned income, etc).




• A fundraising plan is for one year, whereas a financing plan is a strategy for attracting money for multiple years into the future.




• A fundraising plan has little to do with a nonprofit’s strategic plan, but a financing plan is based on what the nonprofit needs in order to meet the goals of their strategic plan.




• A fundraising plan is created only by the fundraising staff with no input or knowledge from the rest of the organization, but a financing plan is created with the whole organization’s input (board and staff).




• A fundraising plan only includes activities that raise money for programs, but a financing plan includes strategies for raising infrastructure dollars as well.

The “Creating a Financing Plan” webinar will help nonprofit leaders understand the steps to creating a financing plan for their organization. Webinar participants will learn how to:

• Set goals for ALL revenue streams flowing to the organization
• Determine the infrastructure dollars they need to raise
• Tie their financing plan to their strategic plan
• Create tactical steps to make the plan a reality, with activities, deliverables, people responsible, timeline
• Divide tasks by staff and board members
• Develop ways to monitor and revise the plan going forward

And remember, all of our webinars are available as recordings right after the live webinar, so even if you can’t make the time of the live webinar, you can still register and have access to all of the content.

I hope to see you there!

Creating a Financing Plan Webinar
Recorded

The registration fee will get you:

• A link to a recording of the webinar, which you can watch as many times as you like
• The PowerPoint slides from the webinar
• The ability to ask additional follow-up questions after the webinar

Cost: $39.00
Download Now

Photo Credit: theurchiness

Tags: board fundraising, creating a fundraising plan, financing not fundraising, fundraising plan, fundraising strategy, nonprofit capacity, nonprofit financial strategy, nonprofit fundraising, nonprofit strategy, nonprofit webinars

Helping Nonprofits Navigate Change

Over the past few weeks I’ve started using video more often on the blog. My plan is to do even more of that. So today I’m excited to share the below video with you (click here to see the video if you are reading this in an email.) It explains how I help nonprofit organizations, of all shapes and sizes, navigate dramatic change in their organizations so that they can raise more money, engage their board, achieve their mission, and ultimately create more social change.

I have launched a Social Velocity channel on YouTube, and I plan to add additional videos and even video blog posts in the coming months. I encourage you to check it out and subscribe to the channel if you are interested.

Tags: board development, Fundraising, Nell Edgington, nonprofit, nonprofit board of directors, nonprofit capacity, nonprofit change, nonprofit consulting, nonprofit strategic planning, nonprofit strategy, nonprofit video, Social Velocity

9 MORE Ways Board Members Can Raise Money Without Fundraising

I was blown away by the popularity of my post earlier this year, 9 Ways Board Members Can Raise Money Without Fundraising. It seems so obvious to me that there are a million different ways for board members to contribute to the bottom-line of their nonprofits, that it didn’t occur to me that a list like that could be so valuable. But apparently it was.

So I want to add to the list, to give people even more ideas for how their board can contribute to the financial engine of their nonprofit without ever asking for money. And maybe with all of these options, more nonprofits will institute a requirement that EVERY board member contribute (either with a personal gift or by implementing some of these ideas) financially to the organization.
So here are 9 more ways that board members who are fundraising “shy” can raise money for their nonprofit:

1. Invite 5 Friends to Tour the Program
   If you feel truly passionate about the work of the nonprofit you serve, then you should want to show your friends that work. You show off your new car, your son’s graduation photos, or your best recipes, why wouldn’t you want to show off something that is near and dear to your heart–the organization you spend many hours a year supporting and building? And if one of your friends feels the spark and wants to become involved with the nonprofit themselves then that is a new supporter you’ve found for the organization.




2. Talk About Your Nonprofit on Facebook
   You talk about everything else on your Facebook page, why not dedicate a post or two to your favorite nonprofit? Share a recent blog post from the agency, or pictures of the children you work with, or an invitation to the next tour. And do the same on Twitter, LinkedIn, Pinterest, wherever you currently hang out. If even just a few of your friends noticed and started to become involved you could be bringing new supporters to the organization.




3. Show Up to One of Your Nonprofit’s Events
   Just the simple act of being present at a prospecting or donor event could have huge benefit for your nonprofit. A potential donor who sees and talks with board members from the organization is going to be much more likely to give. The board lends an enormous amount of credibility to an organization. People who witness a board member’s support in person and get to chat with them about why they serve and what they love about the organization could easily become new donors.




4. Tell The Story Of Why You Serve
   If you feel really passionate about your nonprofit, capture that story. Let your nonprofit do a video interview of you, or write your story down yourself. These stories are gold to a nonprofit. They can turn your story into a YouTube video, a blog post, an e-newsletter article, a section on their website, a Facebook post and on and on. It’s a domino effect. If they can demonstrate to others the passion and commitment that exists on their board, they can translate that into more support.




5. Help Craft a Case for Support
   It’s really hard for a nonprofit to raise money if they don’t have a compelling argument for why someone should give. Encourage your fellow board members and the organization staff to sit down together to craft a case for support. The exercise of articulating why someone outside the organization should care strengthens the organization’s ability to ask for money and energizes and re-engages board and staff in the process.




6. Analyze Your Networks

   Every single one of us is part of many networks. Our circle of friends, our co-workers, our neighbors, our fellow church-goers, other parents at our kids’ school. The list goes on and on. If you took 20-30 minutes to analyze all of the people you know and whether they might have an interest in your nonprofit and the capacity to give a gift, you could uncover some  prospects for your organization. But don’t worry, just because you come up with those prospect names doesn’t mean you have to ask them for money. You can give those names to the executive director or development director and ask them to pursue them as a potential lead.




7. Go on a Solicitation Call. 

   I know this list is for board members who DON’T want to make the ask. But simply going on a call doesn’t mean you ever have to actually ask for money. Leave that up to the executive director or development director who go with you. When a prospect is ready for the ask, you should go in pairs, and the staff member/board member pair is ideal. The staff member can do the actual asking, and the board member can be there to voice the community’s support for and investment in the organization. And that demonstration of support and investment goes a long way to turning a prospect into a donor.




8. Educate a Funder About the Power of Capacity Capital
   Capacity capital is the money your nonprofit so desperately needs to build a stronger, more effective organization. But because it is a new kind of money in the sector, funders need to understand why it is so important and why they should give it. If you could convince just one funder of the power of a capacity capital investment to transform the fundraising function of your nonprofit (to pay for a new donor database, or a Development Director for example) you could greatly increase your organization’s ability to raise money over the long-term.




9. Give a Gift

   You don’t have to ask anyone for money if you actually give a gift yourself. It amazes me how many board members serve on a board but never actually write the organization a check. If you truly believe in the organization enough to volunteer your time, expertise, connections and experience, then why wouldn’t you make a financial investment as well? And that financial investment should hurt a little bit, otherwise how can you expect anyone else to make the financial sacrifices necessary to keep the organization strong?

I really could go on and on. To me, there is an endless list of ways board members can contribute to the financial sustainability of the nonprofit they serve. The trick is helping them realize that. Maybe these lists will give you some ways to start that conversation with your board.

And if you want to find out other ways for getting your board involved in fundraising, join us for our Getting Your Board to Raise Money webinar.

Photo Credit: Jon Sullivan

Tags: 9 Ways Board Members Can Raise Money Without Fundraising, capacity capital, Fundraising, fundraising board, getting board to fundraise, nonprofit board of directors, nonprofit capacity, nonprofit social media

New E-Book: Money to Build Your Nonprofit

I’m delighted to announce that we’ve just released a new e-book called Money to Build Your Nonprofit: The Enormous Opportunity of Capacity Capital.

Capacity Capital is a fairly new concept in the nonprofit world that has the power to completely transform the sector by releasing it from the “starvation cycle” and making nonprofits more effective and sustainable at creating social change. “Capacity capital” (or “philanthropic equity”) is just a fancy term for the money so many nonprofit organizations desperately need. And it’s a topic I’ve written about many times on the blog.

Capacity capital is a one-time infusion of significant money that can be used to strengthen or grow a nonprofit organization. It can be money that grows a successful program to other clients, other cities, other regions. Or it can be money that strengthens the organization and makes it more sustainable.

Capacity capital is NOT the day-to-day operating money nonprofits are used to raising and employing. Rather, capacity capital is money to build a stronger, more sustainable organization. It’s a one-time infusion of significant money to fundamentally and positively change the functioning of the organization.

But because this is such a new concept for the nonprofit sector, it can sometimes be difficult for boards and staffs to envision how this new kind of money could be used. Here are some examples to get you thinking:

• To plan and execute a program evaluation 
• To plan and launch an earned income stream
• To create a strategic financing plan
• To hire a seasoned Development Director
• To purchase a new donor database
• To improve program service delivery
• To upgrade website, email marketing, and/or social media efforts

This Money to Build Your Nonprofit E-book explains what capacity capital is, what it can be used for, how to convince funders of its importance, and how to raise it. It includes the following sections:

1. Overcoming the Bias Against Nonprofit Organization Building
2. What is Capacity Capital?
3. Uses of Capacity Capital
4. Convincing Funders To Provide Capacity Capital
5. The Steps to Raising Capacity Capital
6. A Case Study in Raising Capacity Capital
7. Getting Started

If you want to learn more about the enormous opportunity capacity capital holds for your nonprofit, download the e-book.

And if you are interested in our other e-books, take a look at the 10 Traits of a Groundbreaking Board and Financing Not Fundraising.

Tags: Board of Directors, building nonprofit organizations, capacity capital, finding money for nonprofits, Fundraising, growth capital, nonprofit, nonprofit capacity