Making Donors Organization Builders

The “starvation cycle” of nonprofit organizations doing more and more with less and less has to end.  But how can nonprofit organizations break out of this cycle when donors won’t fund nonprofit capacity?

The news last week that the Boston Foundation will shift the majority of their competitive grants to unrestricted operating support, which in reality means capacity building, is fantastic.  The Boston Foundation is one of the few foundations that understands that strengthening nonprofit organizations, through money to support technology, infrastructure, fundraising, top talent, management expertise, strategic planning, evaluation, research and development, is absolutely key to making social change possible.

But the Boston Foundation is just one in a sea of foundations and individual philanthropists who have yet to understand the importance of money to build nonprofit organizations.

But perhaps there is hope.  Social Velocity has helped many nonprofits convince foundations and individual donors, who previously may have only provided direct service funding, to become organization builders.

I have discussed before Social Velocity’s work to help Heart House, an after-school program for at-risk kids in Austin and Dallas, strengthen their plan to grow statewide and create a pitch for growth capital.  Heart House could not pay for this planning work through their operating budget, so they went to a foundation that was already supporting their program and asked them to invest in this growth planning.  When the foundation understood that a small investment in organization building would help this organization that they love improve the lives of even more children, they were happy to invest.

Another example is Social Velocity’s client, English at Work, a nonprofit that teaches ESL classes to the employees of restaurants and hotels.  English at Work is a subsidized social enterprise where the hotels and restaurants pay them a fee to run these classes.  The nonprofit is demonstrating great results and has real potential to replicate the model.  First, however, they need to strengthen their overall revenue function to position them for growth, which is where Social Velocity came in.

But again, English at Work didn’t have the operating revenue to pay for that outside expertise. So they approached a foundation in their fold and made the case for how a strengthened revenue function would put English at Work in a position to start planning for replication. And that replication would mean that their results-achieving model could provide more people with stronger English language skills.  Stronger English language skills mean better, higher paying jobs, less stress on the social safety net and a stronger, healthier community.  And what English at Work helped their donor understand is that to get to that positive outcome, English at Work as an organization has to be more effective.  They have to learn how to create a stronger, more sustainable revenue function that can support a larger organization over the long term.  And figuring that out costs money.

Nonprofit organizations need to start approaching the donors and board members who are already supporting their programs and make the case, in an articulate, reasoned, but passionate way that for more results, they have to invest in organization building.  And they need those closest to the organization to make those investments.  It is a process of educating those nearest and dearest to the organization about the power of a stronger internal organization.  It’s a new conversation, but an important, and potentially game-changing, one.

Tags: Boston Foundation, capacity, English at Work, Foundations, Heart House, nonprofit, organization-building, Philanthropy, Social Velocity, starvation cycle

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