The Change.org Social Entrepreneurship Blog

I am delighted to announce that I’ve been asked by the Change.org Social Entrepreneurship blog to become a regular contributor.  It’s a real honor to be part of this phenomenal blog, so I hope that you will check it out and join the conversation.

I will still write for the Social Velocity blog as often as I have been, but if you’re interested in my additional posts, check them out there.  My first post “The Danger of Abandoning the Nonprofit Sector” is up today, and here’s an excerpt:

With all the excitement and energy around social entrepreneurship, there’s a tendency to dismiss the sector that was working on social impact long before it was cool: the nonprofit world.  These days, nonprofits get far less airtime in the social innovation movement than their for-profit, social entrepreneur counterparts…Again and again, I’ve heard that innovation will never become part of the nonprofit system — that nonprofits are too set in their ways. Or that the sector is too broken to emerge anew. That attitude, though, is unacceptable. There’s great danger in dismissing the sector. Sure, it’s inefficient, dysfunctional and broken. Yet it has tremendous potential for innovation. Indeed, without innovation in the nonprofit sector, the broader movement to solve social problems is doomed…

Tags: Change.org Social Entrepreneurship blog, nonprofit, Social Entrepreneurship

Can PRIs Support Fundraising and Capacity Building?

Lucy Bernholz is hosting a great conversation on her Blueprint Research and Design website called “What Capital When?” As part of their work with the John D. and Catherine T. MacArthur Foundation in their Digital Media & Learning initiative, Blueprint is hosting this online conversation around the theories and strategies of program-related and mission investing to advance knowledge and research in the field. They asked that I do a guest post on using PRIs (program related investments) to improve the fundraising effectiveness of nonprofit organizations. Below is that post. You can also read the post on their What Capital When site here, and you can read the whole series here.

I think there is a tremendous opportunity that most foundations and nonprofits are missing.  PRIs (program-related investments) are an under-used tool that could provide much needed capital for nonprofits to transform how they finance social impact.

PRIs are loans that foundations make to nonprofits at low, or no interest.  At the end of the loan period (typically 3-7 years) the loan is repaid, or forgiven.  PRIs are usually used for capital projects or land purchases in the nonprofit world.  But they could also be used to increase the fundraising capacity of a nonprofit organization, through increased fundraising knowledge, planning, tools and staffing.  The current economic climate seems like the perfect opportunity for this new use of PRIs when foundations are trying to hold on to their dwindling corpus while maintaining their past level of community support.

A nonprofit could use a PRI to improve their fundraising infrastructure in several ways:

• Create a strategic development plan. Many nonprofits don’t have the expertise or time to put together a strategy for how they will bring money in the door.  With funding to hire an outside consultant to put together such a plan, the nonprofit would have a much better chance of increasing their fundraising revenue.
• Get fundraising training for their staff and board. If a nonprofit staff and board have the tools and expertise for successfully raising money, they will be more likely to do so.
• Hire a seasoned Development Director. Many nonprofit organizations can only afford to pay the bare minimum for a Development Director, which means that they are often forced to hire someone with little experience who must learn on the job.  If instead they had enough funding to pay a market rate salary for a seasoned fundraiser, they could hit the ground running, increasing the likelihood of fundraising success.
• Purchase a new donor database. A key element to success in individual donor fundraising is an organization’s ability to capture and use data about donors and prospects.  A good donor database makes this effort easier and more successful.
• Upgrade their website, email marketing, social media efforts. As direct mail appeals (a nonprofit fundraiser’s traditional standby) continues to become less and less effective, nonprofits need to move effectively into the online world.  Funds for technology upgrades and staff could help them do this.
• Launch a major gifts campaign. The vast majority of private funding in the nonprofit sector comes from individuals (80+%), so to stay competitive nonprofits need to move into the world of major gift solicitation.  But that takes expertise, staff, collateral and other infrastructure elements.

These are just a few examples of how nonprofits could make investments to strengthen their fundraising efforts. But currently it is difficult to find funding to support things like this.

But a PRI could provide an initial investment that sets the nonprofit on a path toward more diversified, more sustainable fundraising for the social impact they are working to create.

There are tremendous benefits to a PRI program like this.  First, for the foundation:

• Increases their ability to meet past levels of giving, despite any losses they might have found in the market, because the loaned money will eventually come back to them.
• Encourages their nonprofit grantees to be proactive in creating fundraising streams that will make them more sustainable.  Thus, increasing the likelihood that their nonprofit grantees a) won’t have to come back to them year after year for ongoing support and b) will become more sustainable and thus achieve greater social impact.
• Stretches their capacity-building dollars further. Because PRI money eventually comes back to the foundation, they can increase their level of impact by helping more nonprofits improve their capacity than they could with grants alone.
• Increases the level of accountability among nonprofit recipients because of the expectation of repayment.

And second, for the nonprofit:

• More diversified and sustainable fundraising streams.
• Increased fundraising knowledge and experience.
• Increased ability to work towards social impact.

Although PRIs used in this new way seems, at least to me, to be an obvious win-win, very few foundations are doing it.  PRIs in general are used (according to the Foundation Center) by only a few hundred of the thousands of grantmaking foundations in the country.  And I know of only one example of a foundation using a PRI to upgrade the fundraisng capacity of a nonprofit (the KDK Harman Foundation in Austin just launched a program like this last Fall, but does not yet have any participants).

So what is holding foundations back from launching a PRI program like this?  A number of things:

1. Nonprofits lack the expertise to put a plan together and pitch it to foundations. This is where Social Velocity comes in to help nonprofits create a plan to upgrade their revenue function and pitch that plan to foundations and other funders.
2. Most foundations  have an aversion to capacity building funding and prefer that their money go to direct program service.  However, as more nonprofits can demonstrate to funders that capacity building actually results in even more impact, this aversion can be alleviated.
3. Foundations lack awareness of or experience with PRIs.  However, this is changing, especially in the last year when the poor economy has made foundations increasingly interested in finding alternative ways to maintain community investment levels.
4. Foundations that are experienced with PRIs are not aware of using them to improve a nonprofit’s fundraising function.

So there is a disconnect.  But I am optimistic that as nonprofits learn to put a plan together to upgrade their fundraising function and articulate to funders how PRI’s could finance it, more examples of this new use of PRIs will surface.

Tags: Blueprint Research and Design, Development, Foundation Center, Fundraising, John D. and Catherine T. MacArthur Foundation, KDK Harman Foundation, Lucy Bernholz, nonprofit, PRIs, program-related investments, What Capital When

The Power of a Case

Most businesses that are looking for funding know the power of a case for support, although they probably call it their “pitch” or “deck.”  But most nonprofit organizations don’t have an articulated case for support, and this is a real missed opportunity. A case for support is absolutely critical to any kind of fundraising campaign, in the nonprofit or for-profit world, and whether the money sought is investment capital or operating revenue.

A case for support lays out a clear, articulate, compelling argument for why someone should invest in the solution you are providing the marketplace.  Nonprofit organizations do tend to put together a case for support when they embark on a capital campaign to raise significant money for a new building.  But a case for support should be the fundamental building block to ANY fundraising campaign.  Without a case for support, nonprofits are just holding out a tin cup.

I’m not suggesting that a nonprofit create a case for support and then trot it out whenever they meet with, mail or talk to a potential donor.  Rather a solid case for support is a starting point from which the nonprofit can pull arguments and language for use in every aspect of their fundraising operations:  website, appeals, thank you notes, presentations, major donor calls, foundation proposals, etc.

The very exercise of a nonprofit board and staff creating a case statement can be, in itself, transformative.  It makes the organization as a whole articulate why someone should invest in them and what the payoff is.  This articulation can energize and focus the organization and make their fundraising efforts that much  more effective.

A case for support has some key elements:

1. The Need (Market Opportunity)
   What social problem exists in your community, region, state, country, world that needs to be addressed?  Why is this problem significant, why should people care?
2. The Solution
   What is your solution to the social problem? Why is this the right solution?
3. Competitors and Competitive Advantage
   Why is yours a superior solution to other alternatives out there? Something that is often missing in nonprofit articulations of their case is how their solution fits into the competitive landscape.
4. Value Proposition
   Why is your organization uniquely positioned to deliver on this solution?  What is the value proposition you offer and how do your core competencies feed this solution?
5. Resources Required
   How much money, what type, and over what timeline do you require for this particular project (start-up, growth, increased capacity, general operating, etc.)? This section will vary based on the fundraising campaign.
6. Projected Social Return on Investment
   What does the potential investor get by investing in your organization (change to a social problem, increased breadth or depth of service delivery, etc.)?  If you can demonstrate a social return on investment, that’s great.  If you can demonstrate an increase in program and operational efficiency (in the case of a capacity building fundraising campaign) then do.

A full case for support is not something you would normally share with potential donors.  However, the process of articulating your case for support and then using elements of it in all of your fundraising work can dramatically increase your ability to effectively communicate with and secure investments from donors.

Tags: capital campaign, case for support, Fundraising, nonprofit

Financing not Fundraising

As we approach the end of a pretty difficult year for nonprofit fundraisers, and look towards the start of what could be an equally difficult one, I’d like to outline 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.

Really, what the sector needs is a financing strategy, not a fundraising strategy.  By that I mean that nonprofits have to break out of the narrow view that traditional FUNDRAISING (individual donor appeals, events, foundation grants) will completely fund all of their activities.  Instead, nonprofits must work to create a broader approach to securing the overall FINANCING necessary to create social change.

What does this new approach to financing the nonprofit sector look like?  It looks like this:

1. Nonprofits understand that funding programs and general operating expenses is not enough to survive and thrive.  All activities that bring money in the door (individual donors, foundation grants, earned income, government contracts, loans etc) are integrated and part of a larger financing strategy that supports the short AND long term goals, as well as the programs AND infrastructure of the organization.




2. Nonprofits no longer segregate fundraising from their other activities (programming, administration).  All elements of a nonprofit’s operations, including the money-making ones, are fully integrated and moving forward together.




3. Individuals, who make up 80%+ of the private money entering the sector, become a greater focus of fundraising efforts, rather than corporate or foundation philanthropy (which make up 5% and 12%, respectively, of the private money entering the sector).




4. Fundraising messaging moves from an emphasis on the tin-cup mentality and donor benefit, to an emphasis on the social impact a  nonprofit is creating.




5. Money is raised to support not only the direct services that a nonprofit provides, but also the infrastructure (staff, technology, systems, evaluation, training) of the organization.  Nonprofits understand that they will only get better at delivering impact if they have an effective organization behind their work.




6. Other types of capital vehicles (like loans, equity) are added into a nonprofit’s financing mix.




7. Earned-income opportunities are evaluated and, if appropriate, launched.  Earned income is not right for every nonprofit, but it is worth exploring and analyzing opportunities as they come and understanding and being open to the revenue-generation possibilities.




8. The net revenue of every money-making activity a nonprofit engages in (events, individual fundraising appeals, corporate sponsorships, earned income, etc.) is calculated and evaluated.  Low net revenue activities are replaced with higher net endeavors.




9. Nonprofits move away from “push” fundraising and marketing efforts that force their message on innocent bystanders (like direct mail appeals) and towards “pull” fundraising and marketing efforts that bring interested donors/prospects to the organization (like blogs, Twitter, Facebook, friend-raising events, etc.)

There really is a better way.  Nonprofits don’t have to wear out their fundraisers, their donors, their staff and their message.  By working towards financing their efforts as opposed to fundraising for them, they can get a lot closer to social impact.

Tags: direct mail, Financing, Fundraising, nonprofit, Philanthropy, social change

A New Social Innovation Project Comes to Texas

There is something underway in Texas that I’m pretty excited about.  The OneStar Foundation, the Texas state office of nonprofit capacity building and social innovation and administrator of the state’s AmeriCorps grant, has just launched a new project called the Texas Social Innovation Initiative (TSI). TSI is a partnership with Root Cause, a national organization supporting social innovation and headquartered in Boston.

The TSI creates an opportunity and a marketplace for socially innovative nonprofit organizations to present a compelling case for support to scale their programs.  OneStar will pick six nonprofit organizations in the Dallas/Fort Worth area to receive consulting, networking and other assistance to create an investor pitch for growth capital to scale their results-driven program. The award for each nonprofit totals about $25,000 in money and services.  The project is modeled on Root Causes’ Social Innovation Forum, where nonprofits are given strategy consulting, executive coaching, and introductions to social investors.  Their goal is to “build a philanthropic investment community that will invest and re-invest resources based on performance, in order to increase progress in solving pressing social problems.”

OneStar’s TSI will similarly offer this introduction to social investors when the project culminates in June with a Fast Pitch event where these six nonprofits will present their growth pitches to Dallas Social Venture Partners and other individuals with money to invest in nonprofits.

Aside from the fact that it is so exciting to see this kind of social innovation activity in Texas, I’m particularly excited about this project because Social Velocity is involved.  We helped to review applications (which were amazing by the way–I was so impressed with what these nonprofits are accomplishing) from the 60+ nonprofits who applied.  And Social Velocity will be one of the consultant teams working with the six nonprofits to craft their growth plans and pitches.  I love helping a nonprofit organization take the results they are achieving  and translate those into a compelling ask of people who have money to invest.  Bridging that gap between work that creates social change and those who have money to invest in social change is a thrilling experience.

The six social innovators that will participate in this year’s TSI will be notified by OneStar today, and announced publicly at the Governor’s Nonprofit Leadership Conference on December 9th.  The work crafting their pitches will begin in January.  If the project is a success, there is potential to expand it to other parts of the state.  That would be amazing.  I’ll let you know how it goes.

Tags: Dallas Social Venture Partners, Fast Pitch, Governor's Nonprofit Leadership Conference, nonprofit, OneStar Foundation, philanthropic investment, root cause, scale, Social Innovation Forum, social investors, Social Velocity, Texas Social Innovation Initiative

But Change We Must

The social sector, or perhaps more appropriately, those writing about the social sector, seem particularly analytical and reflective this past week. Perhaps its the looming end to a horrible year for the general economy, and nonprofits in particular.  Whatever the reason, the nonprofit sector and the philanthropy that funds it are at an important crossroads.

First, the picture for the current state of the social sector continues to be bleak. A recent Foundation Center advisory reports that foundation giving will decline 10% this year and more next year. And a new survey by Opportunity Knocks reports that more than half of nonprofit organizations froze the salaries of, or laid off employees this year. You begin to see a bad situation getting potentially worse.

But at the same time, there is the flip side of adversity: the opportunity. The nonprofit and philanthropic worlds, and the fundamental shifts occurring in both, are becoming a topic of broader discussion and understanding. First, the Wall Street Journal, in a great display of how the changing landscape of philanthropy has finally hit the consciousness of mainstream media, devoted an entire section this week to improving philanthropy, with the editor’s note: “If there ever was a time to get smarter about philanthropy, this is it. The question is: How?”  And the lead article “What’s Wrong With Charitable Giving and How to Fix It” is noteworthy in its examination of philanthropy, even if its proposed solutions are a bit weak.

And second, the James Irvine Foundation and the Fieldstone Alliance just released a report, “Convergence: How Five Trends Will Reshape the Social Sector,” conducted by La Piana Consulting that details an emerging restructured nonprofit sector. They argue that the nonprofits that will succeed in this changing sector are those that:

• Share leadership across generations, cultural perspectives and styles
• Use technology strategically to engage wider audiences to advance their mission
• Understand and harness new networks, collaborations and partners, both individuals and organizations
• Become skilled at tapping into a larger pools of individuals who want to volunteer in meaningful, skill-specific and diverse ways
• Understand the convergence of the nonprofit and private sectors and embrace new opportunities there
  

The point of the report is that the status quo is no longer an option.  Those nonprofits that recognize and embrace change will survive and thrive: “In this changing environment, transformation is not optional. The future will demand a collective rethinking of what it means to be an organization, how individuals define their work and how best to both compete and partner across many permeable boundaries.”

This is akin to the “resetting” of the nonprofit sector discussed before.  This is not a blip; things are changing in very fundamental ways and the WSJ and others are recognizing that.  And nonprofits must recognize, understand, and embrace those changes.

I am glad that the WSJ thinks philanthropy such an important topic that they have devoted an entire section to analyzing what could make it better.  And I applaud the Convergence report for pointing out what’s changing and what it will take to survive amid these changes.

But I’d like to see this all go even further. Now is the time for nonprofit organizations to overcome their inherent risk aversion. Experiment with new funding models; try social media and other new technologies; analyze and refine your impact; get rid of low ROI fundraising activities; shake up your board; ask hard questions; encourage dissenting opinions and open discussion; let go of the status quo and embrace the opportunity of change.

And on the philanthropy side, I would like to see more risk taking, harder questions, more discussion.  Ask the nonprofits you fund what they really need to succeed; invest in organizations, not just programs; combine strategy and passion in your giving; make gifts based on results, not marketing; leverage your giving with other philanthropists; make investments, not just donations.

Fundamental shifts are occurring in how we approach social problems, how we communicate, how we build support, how we access resources. Those solutions that are bold, courageous and open to change will ultimately survive.

Tags: Fieldstone Alliance, Foundation Center, James Irvine Foundation, nonprofit, Opportunity Knocks, Philanthropy, social sector, Wall Street Journal

Why Do People Give?

There is a great discussion going on at the Tactical Philanthropy blog centered around the new book The Art of Giving: Where the Soul Meets a Business Plan by Charles Bronfman and Jeffrey Solomon who argue that philanthropists (big and small) should take a more strategic approach to giving.  The discussion that has followed the three posts so far gives fascinating insight into the reasons that people give.  Katya Andresen at Network for Good, nicely summarizes the two broad reasons that people give: 1) for personal return on investment (recognition, feels good, status, increase in network) and 2) social return in investment (make a difference, create impact, solve a problem, etc).

For me, there are three takeaways from this discussion.  First, anyone who raises money in the nonprofit sector should read the posts and the comments.  They provide fascinating insight into the various motivations for giving to nonprofits.  A reading of the discussion gets a nonprofit fundraiser out of the mentality of raising money around their organization’s needs and into the more lucrative mindset of what is compelling to potential donors.

Second, I think that there is an increasing focus by philanthropists on the second motivation (social ROI), as opposed to a past focus on individual ROI.   Because of the past philanthropic focus on individual gain, the resulting nonprofit fundraising activities have centered on activities that provided donors an individual ROI, for example capital campaigns that promise a new building with a donor’s name emblazoned on it, or events that provide networking and exclusive activities, or “thank you” gifts.  As social ROI becomes more of an interest to philanthropists, smart nonprofits will focus on creating their logic models and demonstrating impact.  And when they do this, I would argue that they will actually be more successful at raising money (see Kay Sprinkel Grace’s Beyond Fundraising).

Finally, we will never get to a place where all individual giving is social ROI focused. As the authors of the new book point out, philanthropy is very much an individual sport that is focused on the individual’s values and what they want to accomplish (whether that be personal or societal gain, or a combination of both):

When you give, you get, and we believe you need to focus on what it is that you are getting for what you give. We argue that what you get in philanthropy is nourishment for that portion of the body that is so sacred it cannot be found in any book of anatomy: the soul, where all that is best in us resides. It is simultaneously the innermost self and the one so external it seems somehow eternal—which makes it the natural connection point for our philanthropy, for we give to improve the world in a lasting way and to leave it with our stamp.

Which then begs the question, will we ever get to a place where social problems are solved through capital raised from individual philanthropists?  Charitable contributions to the nonprofit sector make up 12% of the sector’s money.  Roughly 80% of that comes from individuals. Government money has been declining and so nonprofits have increasingly focused on dollars from individuals to make up the difference.  If individual philanthropy will always have an individual return motivation, is that ultimately a problem for a sector that is trying to provide social goods?

I don’t know, but the discussion and questions that these authors have raised will no doubt help propel philanthropy forward.

Tags: Beyond Fundraising, Charles Bronfman, Jeffrey Solomon, Katya Andresen, Kay Sprinkel Grace, Network for Good, nonprofit, Philanthropy, social return on investment, Tactical Philanthropy, The Art of Giving

Calculating the Cost of Fundraising

It seems that almost every nonprofit I talk to either has or would like to have some sort of fundraising event.  There is a rampant misconception that a successful fundraising event can be the answer to a nonprofit’s money woes.  That is sadly not the case. Events do not make money for nonprofits.  Sure, they might generate some gross revenue, but when you look at the net revenue raised and the cost to raise a dollar, they break even if you are lucky and lose money if you are not.  And those two calculations, net revenue and cost to raise a dollar, if employed by more nonprofits, could transform how effective fundraising could be for the sector.

At the risk of boring you with the math, let me give you an example. Let’s pretend that a nonprofit organization with a $500,000 annual budget throws an annual gala with a band, nice catering, and an auction.  They have a staff member that spends half of their time getting the event together, and there is a board committee that helps sell tables and provides oversight for the event.  At the end of the event the organization grosses $100,000.  They are thrilled that they have made 20% of their annual budget in one night, right?  Wrong.

Let’s dig a little deeper.  They have grossed $100,000, but what did it cost them to raise that money?  The direct expenses for the event (the band, location, food, decorations, invitations, etc) cost them $50,000.

But they also need to factor in the indirect expenses.  Their event coordinator spent half a year preparing for this event. Their Executive Director came to some meetings, met with the event coordinator, made phone calls to invite people and other activities.  The Development Director also worked on the event.  And the board committee put in many hours on the event.  So if we calculate the hourly rate of those staff member’s time (salary and benefits) and multiplied it by the hours they each worked, we’d get the cost of their time.  We also need to do the same for board members.  We can use the standard value of volunteer hours ($20.25) multiplied by the number of board members who worked on the event and the average number of hours they spent.  If we add all of this up we get:

Event Coordinator: $15,000
Executive Director: $4,000
Development Director: $5,000
Board Members: $3,000

Total Indirect Expenses: $27,000

So the total of the direct expenses ($50,000) plus the indirect expenses ($27,000) is $77,000.

Now, here’s where it gets interesting.  First of all, you see that the net revenue on this event is only $23,000 ($100,000-$77,000 = $23,000).

But how much did it cost to raise that $23,000?  It cost $77,000 to raise $23,000, or if you boil it down it cost $3.35 to raise $1.00.  That’s insane, right? Although this organization actually made money, the cost of making that money is far larger than the money they made.  And how does the cost of making this money compare to their other fundraising activities?

These two simple calculations, net revenue and cost to raise a dollar, could transform nonprofit fundraising efforts.  If nonprofit organizations understood the net revenue and cost to raise a dollar of every fundraising activity they engaged in, they could determine the most effective use of fundraising resources and could focus their resources on those activities.  The bottomline revenue to the organization would increase dramatically, while fewer resources would be expended on low net revenue activities.  It could be transformative.

So let’s take another example. An organization hires a major gift officer at $65,000 per year plus benefits who raises $500,000 per year in major gifts.  If you include in major gift activities the costs for the Executive Director’s and board members’ time to go on fundraising visits and send thank you letters the total indirect and direct costs for major gift fundraising would be $100,000.  So the net revenue ($500,000-$100,000) would be $400,000.  And the cost to raise a dollar would be ($100,000/$400,000), $0.25, so it takes a quarter to make a dollar.

Then if the nonprofit compared that cost to raise a dollar to the $3.35 cost to raise a dollar with a gala, they could make a conscious and reasoned decision to forgo the fundraising event and focus more efforts on major gifts.  They could take the $77,000 they spent on the fundraising event and hire another major gift officer.

I’m not suggesting that nonprofit events go away completely.  I think they absolutely have a place as friend-raising, stewardship, and cultivation activities.  An event can be a great way to celebrate the impact an organization is having and get more people to learn about them, or to thank donors who have been instrumental in the results an organization has achieved.  But in terms of pure revenue-raising abilities, fundraising events are very inefficient.

And a sure path to greater efficiency begins with analyzing the effectiveness of your current activities.  I’d love to see more nonprofits running the numbers on all of their fundraising activities and then making some hard choices about the best use of resources.  The end result could be more money at less cost.

Tags: cost to raise a dollar, events, Fundraising, gala, net revenue, nonprofit

If We Could Be So Bold

Inherent in our current time of constraint (struggling economy, crumbling institutions, unhealthy planet) is the opportunity of possibility.  As Margaret Drabble said, “When nothing is sure, everything is possible.”

But it is only possible if we seize the opportunity.  Nowhere is this more true than in the nonprofit sector.  Let’s admit it, the nonprofit sector tends to be risk averse.  And you could argue that the many constraints that they endure incent them to  be risk averse.  But what if nonprofit organizations seized the opportunity that this restructuring offers and became bold.  I mean really BOLD.

What if nonprofit organizations adopted massive, crazy, BOLD goals? The BHAGs (Big Hairy Audacious Goals) that Jim Collins in Good to Great describes:

A BHAG is a huge and daunting goal — like a big mountain to climb. It is clear, compelling, and people “get it” right away. A BHAG serves as a unifying focal point of effort, galvanizing people and creating team spirit as people strive toward a finish line. Like the 1960s NASA moon mission, a BHAG captures the imagination and grabs people in the gut.

It is a massive, energizing, crazy goal that can bring people together, give them something to work for, make them part of a team that is doing something inventive, game-changing.

To Nathaniel Whittemore of the Change.org blog we are obligated to move the solutions we seek to a loftier realm.  Those working to solve social problems must be bigger, bolder, crazier, more disruptive in their goals:

Where I think it leaves us is with an obligation to push even harder. At the cusp of that last gasp of crazy, the forces that wish to uphold the status quo kick and fight even harder. The former gatekeepers will not leave without a fight. We need to be even more bold, because at the end of the day, I don’t want 20% better nonprofits with a fundraising strategy better optimized for online giving. I want disruptive change that rights wrongs and realigns incentives for a more sustainable, just future.

And Dan Pallotta agrees.  He challenges nonprofits to take a cue from the moon program as well and create massive goals:

Nonprofit organizations have to join forces and begin committing themselves to impossible goals that address the massive social problems we confront, and they must define those goals in time and space — a cure for MS in 10 years; the end of homelessness in Boston in 10 years, and so on. Think of President Kennedy’s challenge: “I believe this nation should commit itself to achieving the goal, before this decade is out, of landing a man on the moon and returning him safely to the earth.” No wiggle room there…

But bold goals are not just for the sake of goals.  Those massive, crazy goals propel an organization forward.  They galvanize staff, board, volunteers, funders to get up from their chairs, to step away from mindless, boring meetings, to enlist their friends, family, colleagues, to invest time and resources until it hurts. Bold goals are the rallying cry that moves us toward solutions, compels us to fix broken systems, to break out of our inertia:

If a courageous group of nonprofits would call for the end of child hunger in D.C. within seven years, we’d have to start talking seriously about…all of the…structural problems like admin:program ratios, inadequate investment in infrastructure…and those discussions would actually be exciting. There would be a reason to reframe the present structure. To try to reframe that structure in the absence of a compelling context…[is] like trying to develop a lunar module in the absence of any goal to get to the moon. You wouldn’t know anything about the booster that would carry it, the rendezvous strategy, weight limits, etc. Everything you did would be ineffective…Daring goals, set in time and space are the only way to get there. Any less courageous path lands us exactly in the chaotic and ineffectual place we stand today. And that’s a long way from the moon.

I’ve seen with my clients how massive goals can transform organizations and galvanize them toward solutions.  When they have decided to take on exponential growth instead of incremental growth.  When they have moved from working to grow their services by 50% each year to working toward addressing 50% of the need.  The former can address the needs of 100 new clients a year, the latter can move towards actually eradicating the problem all together. This change in perspective, in goals, can revolutionize an organization.  No longer are the board, staff and funders content to add a few sites each year with no end goal in sight.  Rather, they understand and rally around their long-term goal, which is to solve a problem.  And they see every effort they make, every meeting they come to, every investment they secure as getting them that much closer to that solution.  It can transform an organization, and ultimately transform a problem.  And isn’t that really what we are all here to do?

Tags: BHAGs, Change.org, Dan Pallotta, Jim Collins, Nathaniel Whittemore, nonprofit