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nonprofit growth

Leading a High Performing Nonprofit: An Interview with Pat Lawler

In today’s SPat Lawlerocial Velocity interview I’m talking with Pat Lawler. Pat is the CEO of Youth Villages, a national nonprofit dedicated to helping emotionally and behaviorally troubled children and their families live successfully. Youth Villages is often heralded as a model for high performing nonprofit organizations. In 2006, Lawler was recognized as one of “America’s Best Leaders” by U.S. News & World Report.

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

Nell: In 34 years of your tenure at Youth Villages you’ve grown the organization from serving 25 youth to now serving 22,000 families. Very few nonprofits are able to grow to that level, let alone sustain it. What are the factors that make nonprofit growth attainable and what holds more nonprofits back from achieving it?

Pat: First, an organization must have a clear mission and defined values. When we started Youth Villages, we knew who we were. We didn’t just want to respond to RFPs; we wanted to do what was best for kids. No more of the status quo, instead we used our expertise and created best practices. We built our leadership team and our culture around a clear mission and set of values. Our culture is a big part of who we are and what we’ve done over the years. We’ve also been willing to change directions. We’re willing to do different things based on the needs of kids and families. At one time, we only provided residential treatment services, but now residential services comprise only about 35 percent of our work. Don’t anticipate the future, create it.

As an organization, we were also careful not to grow too fast. We were constantly assessing what was best and reevaluating. We also implemented a feedback system to learn what was working and what was not so we could improve our outcomes.

It’s easy for nonprofits, especially those focused on social services, to make decisions with our hearts instead of our heads, but we must still maintain a strong focus on the business aspect of our work. After we got through our first 12-13 years, when we were just trying to survive as an organization, we began thinking about strengthening our financial reserves because we were responsible for more children and families, as well as our staff and their families. So we really started trying to build a stronger financial foundation that would help us successfully transition through turbulent times.

Nell: Often when a nonprofit becomes very large finding on-going sustainable funding sources can be difficult. The majority of your funding comes from state contracts. Is government the ultimate answer to long-term funding for large nonprofits? Or are there other ways?

Pat: It depends, but in general, I think it’s important for organizations to have a diverse set of funders to achieve maximum stability. Having at least three or four funding sources and a relative balance among those sources is a good way to go. If government is a major funding source, you want to make sure that’s diversified among different programs, geographies, etc. and not all one contract.

Nell: Youth Villages is also unusual in that you have a robust performance management system and are considered one of the leading nonprofits in the country in that arena. Why did you make the decision many years back to invest in performance management and what do you think the return on that investment has been?

Pat: Youth Villages’ goal has always been to provide the best services for children and families. That’s one of the reasons why we started collecting data, using measurement, benchmarking and total quality improvement. It was all about getting better outcomes for kids. We didn’t realize how valuable our data could be until the mid-‘90s when some of our state funding was at risk. Using our data, we were able to convince the state to spend money for in-home services and develop a continuum of care — because we had really good data to show them what worked and how much more cost-effective it was. Throughout the years, we started trying to convince other states and funders. A few were pretty enthusiastic about our data and outcomes. When the Edna McConnell Clark Foundation met with us nine years ago, they were very interested in our data and outcomes, and that was the first indication that the private sector was becoming interested in doing what works.

Even today, we’re asking ourselves where is the best place to put our resources, and more often, we’re finding it’s better to serve a larger number of children through community-based services rather than in a residential setting. You can make such a greater impact in the community serving a large number of youth, rather than serving a small number with the greatest needs. We’re trying to do both. But we’re asking ourselves what’s the biggest return on our investment so we can have the greatest impact on our community?

Nell: Funders and nonprofits themselves are often reluctant to invest in nonprofit leadership development. How do we solve this need and how did you grow your leadership skills over the course of your career? What role do you think funders should or could play in leadership development for the sector?

Pat: I read a lot, and I’ve been very fortunate throughout my career to have worked with great boards of directors and mentors to shape my leadership skills. At Youth Villages, we have an outstanding leadership team filled with better leaders than I am. Together, we make a strong team. Any of us independently might not be as good. I know I wouldn’t be at all. At all levels of this organization, we have very bright people and that is what makes the difference here.

If I had to start over at the beginning, rather than asking foundations for money for programs and services, I would have asked for funds to put toward business planning, professional coaches, leadership development and communications to help with the things I didn’t know about. I’d have asked for money to help build a stronger organization, while at the same time maybe a little money for programs and services. I believe it’s a waste of money for governments, foundations or anyone to spend money on an organization that doesn’t have the necessary skills, organizational structure, leadership and business planning to achieve the goals of their program. It just makes no sense.

From the time an organization is created, I think they have to ask the questions: Do we have the right people in place? Do we have the right business plan and strategy to execute? Do we have the support of the community and board of directors? I firmly believe every foundation should put a significant portion of their funding toward strengthening the organization versus funding some programs and services. If you don’t have the right people in place to execute the strategy then it’s not going to happen. It’s also important for foundations to give organizations time. It takes time for leaders to develop, they get better as they encounter and overcome problems, and it’s important to stick with those organizations for extended periods of time.

Photo Credit: Youth Villages

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Financing Not Fundraising: Moving Beyond Nonprofit Startup Mode

staircaseI get a similar question a lot, “We really want to move our nonprofit out of startup mode but don’t know what the right first steps are.”

Although the definition of a “startup” is an organization that has been around for only a few years, there are many nonprofits that are still in startup mode despite their 20+ years of existence.

But the good news is that you don’t have to wait around for a knight in shining armor to save you from the endless startup existence, which is the topic of today’s installment in the ongoing Financing Not Fundraising series.

The power to begin scaling the startup wall is actually in your hands. Here are the steps to begin:

  1. Create Your Business Plan
    Probably a big part of the reason that you are still struggling as a startup (more than) several years in is that you haven’t strategically connected operations and financing to your mission. A business plan that answers questions like “How will you finance the business?” and “Who are your target customers (clients AND funders)?” and “What’s the right staffing structure?” and “What are the goals of the business?” and much more. Just because the profits from your business enterprise go back into the organization (nonprofit) instead of into the pockets of the owner or stakeholders (for-profit) doesn’t mean you don’t need a business plan. Figuring out how to align money, mission and operations is the first step to a stronger future.

  2. Grow Your List of Champions
    If your nonprofit’s inner circle consists of a founder and a few friends you will never grow. You have to convince people beyond those who already love you to internalize the work of the organization and become actively involved as board members, advisors, fundraisers. But you cannot target anyone and everyone. You have to identify people whose values connect with your work and your mission. And they have to have some specific skills, experience and networks that will help your organization move forward. But if you’ve only ever had your friends behind you, how do you convince outsiders to become champions and board members? Keep reading…

  3. Develop a Value Proposition
    If you are unable to articulate among internal board and staff what your nonprofit is hoping to accomplish and the value it provides the community, how can you possibly convince others to become involved? The first step in really taking things to the next level is to develop that value position, or a Theory of Change. A Theory of Change is basically an argument for why your nonprofit exists — how you take community resources (inputs) and create changes to program participants’ lives (outcomes). To move from merely getting by to really making strides, you must create this argument.

  4. Convince Others to Give
    Once you have your Theory of Change in place you need to make a compelling argument for how more inputs (funding) will help you create more outcomes. A case for investment is a logical, reasoned argument that helps you to make this case convincingly. Once completed, pieces of your case for investment can be used in fundraising appeals, on your website, in thank you letters, in marketing campaigns and much more. It is the fundamental building block to attracting more dollars to your nonprofit.

It doesn’t have to be a rule that the vast majority of nonprofits subsist in an endless startup mode. If you need some help finding your way out of startup mode, download the Nonprofit Startup Tool Bundle.

Photo Credit: Chad K

 

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Empowering Students to Succeed: An Interview with Mark Hecker

mark-heckerIn this month’s Social Velocity blog interview, I’m talking with Mark Hecker, Executive Director of Reach Incorporated. Reach develops confident readers and capable leaders by training teens to teach elementary school students, creating academic benefit for both. Mark’s passion for those being failed by today’s educational structures led him to create Reach in 2009. By trusting learners with real responsibility for real outcomes, Mark believes that our young people can drive the change needed in today’s schools. He is the 2006 Washington, D.C. Social Worker of the Year and a 2011 Echoing Green Fellow and writes for the UnSectored blog.

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

Nell: Reach Incorporated has a really innovative approach to literacy tutoring in that you use struggling adolescent readers to teach younger children how to read. Given the countless approaches to teaching literacy that have been around for decades why do you think that yours is the right approach and what results are you seeing so far?

Mark: Throughout time young people have been most successful in schools that connect student learning to the students’ experience of the world. As the contemporary education reform movement has created a growing disconnect between the learners and their lives, Reach represents a return to the most effective ingredients of successful education across the years: individualization, relevance, inspiration, and trust.

We know two things about reading. First, students only see improvement when they practice at, or just above, their current reading level. Second, as students age, motivation overtakes obedience as the driver of student engagement. In DC, 85% of public school students get to high school reading below grade level. In a world of specific standards and rigid learning objectives, there is simply no place in the high school curriculum for students to get the targeted literacy instruction they need to experience improvement. Today’s teens – because we have failed them – require the opportunity to experience dramatic academic improvement in an environment that is both empowering and engaging.

Beyond the mechanics of our model, a familiar adage from Ben Franklin captures it well: “Tell me and I forget. Teach me and I remember. Involve me and I learn.” We trust students to be significant participants in their own education. It’s the only way that real learning occurs.

Though still young, we have seen some promising early results. Our program is after-school, but our tutors have seen GPA improvement of up to 125%. Additionally, participating elementary school students have seen reading growth above that of non-participating peers. Finally, our tutors see significant reading growth, improved school engagement, increased rates of promotion, and exceptional school retention rates.

Nell: How have you gone about finding funders willing to invest in an innovative model like Reach? What is your approach to financing your organization?

Mark: When asked this question, I generally reply by smiling and saying, “I’m really charming.” That’s obviously not the truth.

I have an incredible passion for this work, and I get to share the stories of the amazing tutors and students impacted by the work we help them do. By telling the stories of our participants, we are able to inspire others to invest in the possibility that our participants present. Currently, approximately 50% of our funding comes from foundations. We also have an incredible army of 300-400 individual supporters that are committed to our young people; they provide about 35% of the organization’s funding. The remaining financial support comes from corporations and special events.

While the world of social innovation talks often of efficiency, outcomes, and scale, I’ve found that many are drawn to our work because of their strong belief in justice. DC students are not getting the education they deserve. Reach, with the help of our tutors, offers a multi-directional intervention that improves outcomes for all participants. Our supporters believe in possibility, and they are excited by the potential of our model.

As Reach’s Board of Directors and I look to the future, we know that financial sustainability must be a constant consideration. To build the foundation to support our eventual growth, our focus now is entirely on program quality. We understand that, for the immediate future, we will be entirely donor dependent. Proof of concept takes time.

By pursuing greatness, we believe that we will eventually have opportunities to create revenue through training, curriculum development, and maybe even children’s book sales. For now, we will build the program our kids deserve by finding supporters that believe in our path.

Nell: As a small nonprofit how do you manage increasing pressure to measure outcomes with a lack of available evaluation funding?

Mark: We’ve simply made an organizational commitment to evaluating our work. We do this knowing that our financial investment will not yield immediate returns as it takes time to develop organizationally appropriate metrics. So, to be brief, we simply look at evaluation as part of the cost of business. It’s overhead. It’s necessary.

That being said, it’s exceedingly frustrating that we have never once received funding to be used specifically for the purpose of evaluation.

For now, we respond to this tension by narrowing our focus on five specific metrics: progress toward grade-level reading, GPA growth, efficacy beliefs, promotion to the next grade, and school retention. While we don’t have the capacity to measure everything, we can measure these five indicators – and each has a strong correlation to our long-term goals: high school completion, college success, and stable employment.

To be frank, the recent focus on outcomes measurement leads many organizations to simply lie about what they know about their work. True evaluation takes time and money. To balance this tension, we narrow our focus and work within our means.

Nell: You were named an Echoing Green fellow in 2011. How has that experience been? What have you learned and how has it helped Reach so far?

Mark: Being part of the Echoing Green family has been one of the most powerful experiences of my life. While I could speak about it indefinitely, I’ll limit myself to highlighting three ways that the fellowship has supported my leadership and Reach’s work.

  • When I speak to educators about my work, they generally start asking technical questions about curriculum and content. When speaking to other Echoing Green fellows, conversations happen outside this specific content. They know they’re not experts in literacy just like I know I’m no expert in Kenya’s sanitation infrastructure or Liberia’s health system. By skipping the surface level content, the conversations quickly go to a place of values, leadership, and strategy.
  • Though this hasn’t always been the case, Echoing Green has recently made an effort to build up the strength of the alumni network. It has been particularly exciting to see how responsive Echoing Green alums have been. When I’ve reached out to leaders at some established and exceptional organizations, I’ve been shocked by the alacrity with which they respond. The level of support has been amazing and humbling.
  • Lastly, the community is valuable simply in that it provides knowledge that we’re not alone in this work. Starting an organization has been the loneliest and most difficult experience of my life. Through Echoing Green’s network, I can now reach out to others experiencing similar challenges and know that they have an understanding of the difficulties I face on a regular basis. Because of Echoing Green, I no longer feel alone.

Nell: In a recent blog post on UnSectored you talked about the nonprofit trade-off between effectiveness and faster growth. What are your plans for Reach’s growth and how will you accomplish it?

Mark: Reach’s work is subtly revolutionary. When we say we believe all students have the ability to contribute to the learning of others, everyone agrees. When we ask that those students (our tutors) be trusted with real responsibility, adults get scared. To be sure, the most important thing we must do is to demonstrate that this work can be done. For that reason, we’re currently much more interested in being great than being big. That may mean staying small for a while; we’re okay with that.

To understand what growth can look like, one has to understand the context in DC. Approximately 4,000 students entered high school in DC this fall. Recent statistics would indicate that 3,400 of these students are reading below grade level and approximately 2,300 of them are more than two grades below level. Currently, we serve approximately 50 of these students (and they serve 50 elementary school students). We aim to make DC a better place; that significantly influences the way we think about growth. We have to think about the level of saturation needed to impact a city’s population.

We plan to grow 200-300% in the next three years. This goal, adopted during a recent strategic planning process, will drive our first stage of growth. Over the next three years, we’ll measure the efficacy of our intervention. This programmatic success will drive our future rate of expansion, with a specific focus on those schools with the largest populations of struggling readers. It’s at this second stage of growth, in years 4-10, that we would expect to explore partnerships with DC Public Schools, develop additional programs, and consider expansion beyond DC’s borders.

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Coaching a Nonprofit Leader to Success

I’ve been talking about strategic planning a lot lately (here and here) because I think it is so critically important to the success of a nonprofit organization. But it’s not enough to create a great strategic plan on paper, you have to implement and monitor it. This is why I insist that the strategic plans I help create have a detailed, measurable operational plan that describes the day-to-day work that will bring the strategic plan to fruition.

But sometimes a strategic plan calls for so much change to a nonprofit organization that they need follow-up staff coaching to make the plan a reality. This was the case for one of my clients, ACE: A Community for Education.

ACE is an early childhood literacy tutoring program, with a proven model that really works to get children to grade level in reading by 3rd grade. The outcomes of the program were so impressive that they wanted to expand it to many more schools. But, the program was a well-kept secret. A small advisory board and limited external connections left the organization struggling to build the kind of community, funder, and school district support they need to dramatically grow.

ACE hired me to create a 3-year strategic plan for growth. ACE assembled a working group of staff, advisory board members, funders and other key stakeholders, and I led them through a 5-month process analyzing the internal and external environment, creating the goals and objectives of the strategic plan for growth, determining the projected budget required to get there, and creating a detailed annual operational plan to bring the plan to fruition.

But ACE realized that their strategic plan was so ambitious that they would need some guidance and regular coaching to make it a reality. So once the strategic plan was created and adopted by the advisory board and other stakeholders, ACE hired me to coach their staff on:

  • Restructuring the advisory board to lend more strategic support and expand community connections to ACE
  • Expanding their fundraising efforts in order to support the new goals of the strategic plan
  • Growing the staff and program infrastructure to implement the plan

So over a 10-month period I met regularly with the Executive Director and the Development Director to coach them on:

  • Restructuring the advisory board
  • Creating a major donor fundraising campaign
  • Implementing the strategic plan
  • Using the strategic plan to filter future decisions
  • Effectively using staff resources

The result is that ACE has moved quickly to grow their program. They plan to triple the number of students served by the program by 2016. They have already secured a significantly increased financial commitment from participating school districts to do so. They have also completely restructured their advisory board and expanded its membership. They have hired new staff positions to make growth a reality. They have begun involving the advisory board in their new major donor campaign efforts and have already enjoyed new and renewed interest from funders. Staff and advisory board are energized and focused on their plans for growth.

As ACE Executive Director Mary Ellen Isaacs put it recently:

“Our work with Nell has been critical to developing a viable growth strategy and plan for ACE. The process helped us clarify our core competencies, engage stakeholders, and articulate exactly how and why ACE should grow. As a result of Nell’s strategic planning and follow-up coaching, my staff and I, and our advisory board, have the tools and confidence to reach our larger vision for ACE. This was one of the best investments we have made in ACE!”

If you are interested in learning more about how I coach nonprofit staff to strengthen or grow their organizations, check out my Staff Coaching consulting service.

Photo Credit: VarsityLife
 

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10 Great Social Innovation Reads: May 2012

In the world of social innovation, May was most definitely about innovations in philanthropy and funding of social change. From social impact bond experiments, to hybrid foundations, to impact investing, to the Giving Pledge 2.0, there was much discussion and debate about how funders of social change should and are innovating. And that is very exciting because it is not enough for social entrepreneurs to push things forward, we desperately need new financial vehicles to fund those social change efforts.

Below are my ten picks of the best reads in social innovation in May, but as always, please add what I missed in the comments. If you want to see other things that caught my eye, follow me on Twitter, Facebook, LinkedIn or Pinterest. And if you want to read 10 Great Reads lists from past months, go here.

  1. First up is social impact bonds (or pay for success bonds), a very exciting, new way to fund nonprofits that achieve improved social outcomes that result in public sector savings. McKinsey released a new report on the potential for social impact bonds in the US. And Minnesota is one of the first states to experiment with these bonds with a $10 million pilot.  Twin Cities Business magazine explores the idea and Kate Barr of Minnesota’s Nonprofit Assistance Fund gives an overview of the idea, resources and further conversation.

  2. This month’s second annual meeting of those wealthy individuals who signed Bill Gates’ Giving Pledge (a public promise to give at least half of their wealth to charity in their lifetime) showed some real interest in impact investing, or using their money to make money while creating social change at the same time. Laura Tomasko argues why their interest in impact investing (both mission-related investments and program-related investments) is such an exciting opportunity. And Lucy Bernholz takes their interest in impact investing in another direction arguing that “this century’s great philanthropists should aim not just to match history’s great givers in their largess, but also in the creation of mechanisms and institutions that serve the future as well as their predecessors served the past.”

  3. Finally, in a very exciting move, the Obama Administration has proposed an expansion to the rules about how foundations can use program-related investments (low or no interest loans to social change organizations) and some community foundations are already getting into the game.

  4. And from the nonprofit side of the financial equation comes the Nonprofit Finance Fund’s effort to debunk the myths around endowments as a road to nonprofit financial sustainability.

  5. Financial sustainability must always be on the mind of social change organizations, as this cautionary tale from the North Carolina YWCA that had to close its doors because of poor financial management and oversight demonstrates.

  6. Has the drum beat against judging a nonprofit based on overhead costs gone mainstream? An op-ed in the LA Times argues that administrative costs are “no way to judge a charity.”

  7. At the Social Earth blog Thien Nguyen-Trung cautions against an overemphasis on growth among social entrepreneurs and instead argues for “impact offtakers” or an exit strategy for social entrepreneurs to hand off their solution to government or another larger entity instead of trying to reach scale on their own.

  8. And Patrick Lester seems to agree in his argument that it’s not enough to fund social change solutions: “Foundations and philanthropists need to step forward and fund not just innovation, but advocacy too–only then will our best ideas be taken to scale.”

  9. There were several articles about exciting, innovative approaches to solving food problems. From a $125 million loan fund for healthy food outlets in California, to urban farming in Detroit, to a very successful nonprofit grocery store in Portland, Oregon.

  10. In the Stanford Social Innovation Review Matthew Forti offers 6 things nonprofits should avoid in their theory of change (their argument for what they exist to accomplish).

Photo Credit: C. Frank Starmer

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Social Entrepreneurship at RISE

It’s RISE time in Austin again. The annual RISE (Relationship and Information Series for Entrepreneurs) conference was started by entrepreneurs Roy and Bertrand Sosa (brothers) and Roy’s wife Suzi in 2007 to inspire and empower entrepreneurs.

The brothers immigrated from Mexico in 1986 and started NetSpend, selling prepaid credit cards to recent immigrants.  NetSpend went on to be very successful, and they sold the company in 2006 to launch MPOWER , a double-bottom-line venture capital fund whose mission is to empower the world’s underserved, and MPOWER Labs a research and development incubator and business accelerator.

The Sosas launched RISE as a way to ensure that “Austin continues to be a leader in developing top level entrepreneurs who transform their vision into successful businesses that greatly contribute to our local, national and global economy.”  This year they have expanded the scope of RISE from the original format as an Austin-centered un-conference to a year-round international program dedicated to empowering entrepreneurs.

As social entrepreneurs themselves, the Sosas have always included social entrepreneurship in RISE and last year they made it an official track at the conference. This year is no different with a great line-up of social entrepreneurs. You can check out the entire RISE lineup of sessions this year here.

I am leading two sessions at this year’s conference. The first is Finding Capital for Social Entrepreneurs and the second is Planning for Nonprofit Growth. The details and links to sign up are below.

I hope to see you at RISE!

Finding Capital for Social Entrepreneurs
Tuesday, March 8
10:00am – 11:30am
PeopleFund
Austin, TX

This session will provide nonprofit and for-profit social entrepreneurs a strategy and tactical plan for finding and going after potential funders, at any stage of the enterprise. The session includes how to create a compelling pitch, how to find funding prospects, how to break down your capital goal and much more.

Click here to sign up.

Planning for Nonprofit Growth
Wednesday, March 9
10:00am – 11:30am
PeopleFund
Austin, TX

Nonprofit organizations that want to break out of the incremental growth pattern of the sector and strive for and achieve exponential growth in people served need a growth plan. This session will help organizations understand what significant growth in the nonprofit sector looks like, how to create a plan for growth, how to get your board engaged in the process and much more. Willing participants can bring their growth challenges and goals to the session to be discussed.

Click here to sign up.

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What I’m Reading

Someone asked me the other day how long it takes me to write a blog post. I told them the writing only takes about an hour or two. However, the reading and thinking about what’s being done, or said, or written about and what I want to add to the conversation takes many times longer. So, to that end, I thought I’d give you a list of the blog posts, articles, and books that caught my interest and really made me think in the past month…

What caught your interest this month?  Add to the list in the comments.

Photo Credit: pixel0908

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