Financing Not Fundraising E-Book

I’m delighted to announce that, by popular demand, we are releasing today the Financing Not Fundraising, 2011 e-book. This 27-page e-book is a compilation and expansion on the 11 blog posts from 2011 in the Social Velocity Financing Not Fundraising blog series.

In the midst of an incredibly challenging economic situation that is not getting better any time soon, the Financing Not Fundraising, 2011 e-book outlines a new vision for how the nonprofit sector gets funded. Fundraising in its current form just doesn’t work anymore. Indeed, traditional fundraising is holding the sector back by keeping nonprofits in the starvation cycle of trying to do more and more with less and less.

What the sector needs is a financing strategy not a fundraising strategy. 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 work to create a broader approach to securing the overall FINANCING necessary to create social change.

This 27-page e-book is a compilation and expansion of the Social Velocity blog series Financing Not Fundraising from 2011. The blog series is ongoing, with new posts added throughout each year. We’ll begin adding new posts to the series in the new year, but in the meantime, this e-book captures and expands on the posts from 2011 in one place.

The 12 chapters of the Financing Not Fundraising, 2011 e-book are:

1. What is Financing Not Fundraising?
2. Create A Financial Strategy
3. Align Money and Mission
4. Find Individual Donors
5. Develop a Message of Impact
6. Raise Money for Building Capacity
7. Explore New Types of Money
8. Evaluate Earned Income
9. Calculate Net Revenue
10. Move From Push to Pull
11. Stop Lying to Donors
12. Getting Started

You can download the Financing Not Fundraising, 2011 e-book 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

Tags: earned income, financing not fundraising, individual donors, nonprofit capacity, nonprofit fundraising, nonprofit growth capital, nonprofit strategic plan, Philanthropy

Overcoming the Catch-22 of Nonprofit Capacity

Ask a nonprofit executive director their biggest challenge and most will say securing enough resources. It can seem a vicious cycle: a struggling nonprofit needs to raise money to build their capacity, but they have to have enough capacity in place to raise that money. So they continue to struggle.

A reader of the Social Velocity blog, an executive director of a smaller nonprofit, recently emailed me interested in Social Velocity’s consulting help to grow their ability to bring money in the door. However, the organization is so strapped that they don’t currently have the money to hire Social Velocity. So they are stuck in the vicious cycle: not enough money to raise enough money.

But there is a way out.

The clients we work with are all small and medium nonprofits that are at some sort of inflection point. They too have realized they need to do something different in order to grow their impact and/or become more financially sustainable. Yet, the trouble is they can’t make that change without some outside help.

So they have gotten smart. They have embarked on a series of steps to secure enough investments to hire Social Velocity to help them create a stronger, more effective nonprofit. These are the steps they went through:

1. Gather Champions: The executive director identifies a few board members who believe as strongly as they do in the desire for some sort of change to the organization and the need for help to get there.




2. Create a Vision for Change: Together these few leaders agree on their vision for change, for example: stronger financial footing for the organization, expanded programs, a more effective board. They may have no idea how to get there, but they all agree on a desired change.




3. Make a Roadmap: They meet with Social Velocity to get more clarity around the kind of change they want and what it would take to get there. Once I have a clear sense of where the organization is and what it would take to get them to their vision for change, I put together a detailed proposal listing activities, deliverables, timeline and cost so that they have a very clear roadmap for the investment required to make change happen.




4. Find Prospects: The small group identifies 3-5 people (board members, current major donors, volunteers or other friends of the organization) as potential investors in securing Social Velocity’s assistance. These people possess 3 key criteria that make them likely prospects to fund this capacity-building effort:
• Connection: They are already close to the organization, whether as a current donor, volunteer, board member or friend. They know the organization well.
• Concern: They strongly believe in the organization and the work it is doing and want to see the organization do more and better.
• Capacity: They have the capacity to make at least a $3-5,000, one-time investment in the organization so that it can get to the next level.
5. Secure Investments: Once the nonprofit identifies this list of prospects, they go out and start meeting with prospects to discuss:
• The nonprofit’s vision for change
• The plan (Social Velocity proposal) for getting to that vision for change
• The investment required
• Whether they would like to make an investment

The end result has been nonprofit organizations, that had for years been stuck in the vicious cycle of never having enough money to do enough, finally breaking free with a plan and the investment to make some significant changes to their organizations. You can read our ongoing blog series, Raising Money to Grow On, about one of these clients who did exactly what I’ve outlined above. And you can also read a past blog post about how you can make your donors organization builders.

Nonprofits must break free from the idea that they just have to hobble along with dwindling resources, continuing to squeeze another drop out of a completely dry rock. If you have a core group of people who love your work and want to see you do more, you possess the key to building your own capacity.

Photo Credit: HikingArtist.com

Tags: building nonprofit organizations, capacity capital, make donors organization builders, money to build nonprofits, nonprofit capacity, nonprofit consulting, nonprofit starvation cycle, nonprofit vicious cycle, philanthropic equity, Raising Money to Grow On, Social Velocity

10 Great Social Innovation Reads: July

I’ve been out exploring the Western states of the country (which I HIGHLY recommend) for the last few weeks, so my blog posts have been sparse, and my 10 Great Reads for July a bit delinquent, so please forgive me.

Below are the 10 things that got me thinking last month. You can also read past months’ 10 Great Reads here. As always, please let me know what I’ve missed in the comments below.

1. In the Stanford Social Innovation Review, Paul Connolly argues that foundation support of fundraising capacity has limited returns. Although I completely agree that you cannot build fundraising capacity without building the capacity of other aspects of the organization, I think he takes this a bit too far. It is critical that more donors, not less, support the organizational capacity, as opposed to just the programs, of nonprofits.




2. Talk about innovative, arts groups try the airline company pricing approach to ticket sales.




3. From the Harvard Business Review blog comes a great idea: A Gap Year for Grown-ups. Far beyond the author’s argument about the benefits to the individual, something like this could dramatically increase the ranks of national service programs.




4. An MBA myself, I love the fact that more MBA students are turning to social enterprise.




5. The Nonprofit Tech 2.0 blog gives us 11 examples of innovative nonprofit websites that are designed for the social web.




6. Khan Academy, an education website, is being used to teach kids in new, interesting, and controversial ways.




7. From one of my favorite blogs, Full Contact Philanthropy, comes an argument about how even simple evaluation can help create more effective programs.




8. Extending Mario Marino’s argument in Leap of Reason, Phil Buchanan from the Center for Effective Philanthropy argues that foundations need to provide support to nonprofits working on performance measurement.




9. And echoing Leap of Reason’s core argument, Paul Light argues in a Washington Post OpEd that “nonprofit leaders have to get better at measuring the value they produce.”




10. Guest blogging on the Tactical Philanthropy blog, Tony Wang argues that philanthropy needs to be more critical of itself.

Photo Credit: Infrogmation

Tags: 10 Great Reads, Center for Effective Philanthropy, Fundraising, Leap of Reason, national service, nonprofit capacity, program evaluation, Social Enterprise, Social Entrepreneurship, social innovation, Stanford Social Innovation Review

Add Your Voice to the Nonprofit Sector Survey

Today the Nonprofit Finance Fund launched their third annual Nonprofit Sector Survey. The Nonprofit Finance Fund is one of the country’s leading community development financial institutions (CDFI) that makes millions of dollars in loans to nonprofits and pushes for fundamental improvement in how money is given and used in the sector. Their 2011 Nonprofit Sector Survey opened today and will be open to responses until February 15th. If you are a nonprofit leader, consider taking the quick survey and adding your voice to their annual assessment of the state of the sector.

You can read the results of last year’s survey here.  The results of this year’s survey will be released in March.

The first year they got 1,000 respondents, last year it increased to over 1,300, and they’d like to increase that trend this year.  They repeated a number of questions from last year so that they can see trends, but also made some changes.  Their questions focus more on action this year—actions nonprofits are taking, and even their thoughts on what funders can do. The Nonprofit Finance Fund is really trying to expand the number and diversity of responses this year, so they are undertaking a larger push to get out the word. So, take a few minutes and add your thoughts. Click here to take the survey.

I’ll share my thoughts on the results when they are released in March.

If you need additional incentive, watch the short, cheeky video above that NFF created.

Tags: CDFI, nonprofit capacity, Nonprofit Finance Fund, Nonprofit Sector Survey, state of the nonprofit sector 2011

5 Things Board Members Can Do To Build Organizations

I’ve discussed before how important boards of directors are to the effectiveness of the nonprofit sector. But I think they are particularly critical to overcoming the bias against nonprofit capacity.  Boards of directors are a largely untapped resource available to nonprofits.  If nonprofits could figure out how to tap into the expertise, networks, knowledge and resources that board members bring to the table it could be a new day for the nonprofit sector.

But, really, the burden for change lies with the board members themselves.  Board members must take a larger, more strategic role in the organizations that they serve.  And this could be particularly effective in the area of organizational capacity. Board members need to help their nonprofit organizations uncover, plan for and fund the staffing, technology, expertise and systems required to make the nonprofit more effective at creating social impact.

In  my work helping nonprofit organizations to build their capacity and infrastructure in order to grow their social impact, it is board members who sometimes stand in the way of that growth.  Board members tend to like to see most of the dollars that a nonprofit raises go back into programs, not organization building.  But if a nonprofit’s own board of directors doesn’t understand what a losing battle it is to continually starve nonprofits out of the most necessary kind of resources, capacity-building resources, then how will donors ever understand it?  And how will nonprofits ever be able to get better at tracking their results, communicating with staff and volunteers, increasing their fundraising function, marketing to their constituents, etc.?

I am encouraged by some of the organizations I meet with who have been able to convince their boards and major donors to make an investment in capacity and growth planning, but we definitely need to see more. We cannot simply leave it up to beleaguered, exhausted Executive Directors to push organization-building forward. The EDs are often the ones balancing organization needs against funders and board members who have no interest in those needs.

Therefore, I challenge board members to start putting their time, effort and resources behind organization building.  And here are five things they can start doing today:

1. Determine the True and Full Costs of Effectively Running The Organization. Stop asking nonprofit staffs to get by with less and less.  Stop telling an Executive Director to lower the salary they can offer a talented Development Director.  Stop telling EDs they shouldn’t be spending money on technology, that they should use a free database instead of buying a more effective database. Stop encouraging nonprofit staffs who lack expertise in a certain area (fundraising, evaluation, strategic planning) to use volunteers instead of consultants to help them.
2. Encourage the Organization to Create a Capacity-Building Plan. Nonprofit EDs are often so caught up in the day to day that they don’t have the luxury of stepping back and figuring out what is required to make the organization more effective.  Ask your ED to spend some time coming up with a capacity building plan that will take the organization to the next level.
3. Make a Significant, Personal Financial Investment in the Organization’s Capacity. Stop asking that your annual gift to the organization go to your favorite program.  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.
4. Convince Your Fellow Board Members to Follow Suit. 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 can articulate the need for organization building, how it will result in greater social impact over time, and how the board must be the champion of and seed investor in organization building, you can marshal the organization’s greatest resource (its board) toward becoming a strengthened, healthier nonprofit.
5. Tap Into Your Network to Find Organization-Building Dollars. Think strategically about who you could convince to join you in strengthening the capacity of this organization you serve. Then pitch them and get them to invest with you in the capacity plan.  Make the case for why a Development Director, or a strategic plan, or an evaluation study or new technology will expand the social impact that your organization is making. One of the reasons there aren’t more capacity-building investments made in the sector is because board members are not making a compelling case to their friends and colleagues about the importance of capacity and how those dollars can actually provide much greater impact down the road than a direct service grant can today.

The nonprofit sector is struggling, as are many of our institutions and systems.  So things have got to change.  Board members can be an instrumental driver of the change that results in stronger, healthier, more effective nonprofit organizations creating real, successful solutions for the problems we face.  But in order to get there, board members have to understand and embrace the power of organization-building.

Tags: Board of Directors, Capacity Building, capacity plan, nonprofit, nonprofit capacity, organization-building