Social Velocity » social impact

Financing Not Fundraising Webinar Series

Nell Edgington — Thu, 17 Nov 2011 17:18:36 +0000

Because of the popularity of the past two Financing Not Fundraising overview webinars in October and November, I’ve decided to launch a webinar series that breaks the Financing Not Fundraising concept into its various parts and expands on how to approach each element.

I will kick off this new webinar series in January with a new webinar each month. Some of the webinar topics will be:

Creating a Financing Plan
Finding Individual Donors
Developing a Message of Social Impact
Raising Capacity Capital
Evaluating Earned Income
Calculating the Cost of Fundraising
Moving from Push to Pull
Getting Your Board to Raise Money

If you want to find out when those webinars get scheduled in the new year, sign up for our the Social Velocity e-newsletter.

But in the meantime, if you want to get up to speed on the overall concept of Financing Not Fundraising, I’m doing one more overview Financing Not Fundraising webinar on December 6th.

This webinar, based on our popular Financing Not Fundraising ongoing blog series will show nonprofits what a broader approach to securing the overall financing necessary to create social change looks like, including:

How to align your nonprofit’s mission with the money needed to deliver on it
Why a message of impact results in more money
Understanding the critical difference between revenue and capital
Why overhead isn’t a dirty word anymore
How and why to calculate the net revenue of money raising activities
When to explore new revenue streams

If you’ve been following the Social Velocity Financing Not Fundraising blog series and you want to learn more, or if the series has brought up some burning questions that you’d like to have answered, join us for this interactive webinar.

If your staff, your board, and your donors are worn out, rest assured, there is a better way. Join this webinar to find out how. I hope to see you there!

Financing Not Fundraising: Rethinking How Nonprofits Bring Money in the Door
Tuesday, December 6, 2011
12:00 PM – 1:00 PM (Eastern Time)
$40.00
Register Now

About the Author: Nell Edgington is President of Social Velocity (www.socialvelocity.net), a management consulting firm leading nonprofits to greater social impact and financial sustainability. Social Velocity helps nonprofits grow their programs, bring more money in the door, and use resources more effectively. For more information, check out Social Velocity consulting services and clients.

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Related posts:

A New Approach to Nonprofit Funding: Financing Not Fundraising Webinar Series

Financing Not Fundraising E-Book

Breaking Free of the Fundraising Handcuffs

What Social Value Do Nonprofits Really Create?

Nell Edgington — Fri, 25 Feb 2011 15:03:25 +0000

This post originally appeared on the Change.org Social Entrepreneurship blog earlier this year.

There is a concept that good entrepreneurs know only too well, but nonprofits could stand to explore. A “value proposition” is the unique value a product or service provides a consumer. Without a value proposition a business has no place in the market. For a nonprofit, a social value proposition is just as critical to success, but often ignored. In an increasingly competitive marketplace, due in part to the growth of for-profit social entrepreneurs, nonprofits must analyze, articulate, and deliver on a social value proposition.

In the past, nonprofits could exist without a value proposition. Donors wouldn’t argue that a library, homeless shelter, food pantry or school provided a necessary service. But as we move further down the road of social innovation, the assumption that money will automatically follow good works is no longer valid.

The issue is complicated by the fact that nonprofits have two sets of consumers: those who benefit from the product or service (clients) and those who buy the service (funders, investors, philanthropists). There is increasing competition for both sets of consumers.

In order to attract the consumers who buy services (and who, by the way, increasingly want a social return on their purchase) nonprofits must articulate the value that the consumer (donor, investor, philanthropist, sponsor, whatever you want to call them) receives by writing a check.

In the nonprofit sector the closest thing to a value proposition has been a case for support. But when this is created (which isn’t often) it tends to focus on the organization and its needs rather than on the potential social return on investment for the funder. A good value proposition articulates how an organization is uniquely positioned to create significant social impact that is much greater than the costs associated. It involves an organization analyzing, understanding and delivering on three very important things:

Capability: What is the organization uniquely positioned to provide to the community (the marketplace). Why is this organization better positioned than other organizations (nonprofits, for-profits, government) to deliver it?

Social Impact: What change is the organization creating in the community, region, world? Why is this significant? Why should/will consumers (funders) care?

Cost: How do the costs of the service being delivered compare to that social impact? Is there a social profit being achieved, i.e. are the costs involved in delivering the service significantly less than the benefits? Will a funder (who is paying these costs) receive a significant social return on their investment in the organization?

A value proposition is less about a well-articulated statement and more about an organization’s ability to think through these questions and really understand the marketplace in which they operate. More and more the nonprofit that can effectively execute on a social value proposition will find the financial stability that ultimately leads them to create lasting social change.

Related posts:

What Social Value Do Nonprofits Really Create?

What Nonprofits Can Learn From Netflix

Where Nonprofits Fit in the Social Innovation Movement

Financing Not Fundraising: The Message of Social Impact

Nell Edgington — Wed, 03 Nov 2010 15:47:17 +0000

In part 5 of our ongoing blog series, Financing Not Fundraising, we are discussing how to move fundraising messaging away from organizational needs and toward social impact. In so doing, a nonprofit can enjoy an individual donor base that is more invested, engaged and committed to the work the nonprofit does in the community.

To recap, our Financing Not Fundraising blog series was born out of the reality that fundraising in the nonprofit sector just doesn’t work anymore. In fact, 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 one. That means 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. You can read the entire series here.

Fundraising often uses the messaging of organizational need:

“We need $100 to provide our programs.”
“We need $1,000 to meet our goals.”
“We need to build a new building.”

But that’s not how to raise money effectively. To raise significant money, nonprofits need to focus on how they translate money into social impact. The fundraising message of organizational need stops at the nonprofit. The fundraising message of social impact takes the argument much further, demonstrating how a nonprofit translates funds raised into social change, through a three step process:

A donor invests in a nonprofit organization

That investment is translated by the nonprofit’s theory of change into some sort of social impact

Some change occurs in the community as a result

The nonprofit is merely an intermediary between a donor and social impact. Therefore, the donor is not investing in a nonprofit organization, rather they are investing in the social impact the nonprofit creates.

Helping to create social change is much more powerful to a donor than simply helping a nonprofit organization. And it garners larger, more long-term donor investment and engagement in the work of the organization.

To understand this more clearly let’s take a look at how the message of organizational need differs from the message of social impact:

In every way, from the focus of the messaging, to the fundraiser’s approach to donors, to the donor mentality, to how the organization operates, an organizational needs mindset is so much more limiting than a social impact mindset.

So what does this actually look like in fundraising messaging? Let’s take an example of an after-school program for at-risk children.

According to the nonprofit’s theory of change, they translate dollars into positive outcomes for the children in their charge (increased student achievement, fewer high-school drop outs, fewer behavioral issues, etc.). If the organization were to fundraise around the organization’s needs it might sound like this:

“Help us reach our goal of raising $100,000 for our program.”

But if instead they were to fundraise around a message of social impact, it might sound like this:

“Invest in our work to give kids a better future, making them contributing members of society and our community stronger and healthier.” The first message is about strengthening an organization, the second message is about strengthening a community.

The message of impact is not just something nonprofit’s should use for major donor asks. It can be used to varying degrees in all fundraising campaigns, large or small, and in all channels (social media, direct mail, email, in-person). In so doing, the organization is creating a loyal following of donors who believe in the change the nonprofit is creating and view themselves as critical partners in making that change happen. For help crafting your nonprofit’s message of impact, download our Creating a Case for Support Step-by-Step Guide.

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.

To download the 27-page Financing Not Fundraising e-book, click here.

Related posts:

Financing Not Fundraising Webinar Series

Financing Not Fundraising: Creating a Message of Impact – Live Webinar

Financing Not Fundraising E-Book

Let’s Take a Step Back in the Outcomes Debate

Nell Edgington — Thu, 21 Jan 2010 18:24:54 +0000

There is a growing discussion among social impact organizations and those who fund them about how to measure impact. It is indeed a very slippery endeavor.

Mario Marino, Chairman of Venture Philanthropy Partners (a venture philanthropy fund in Washington D.C. that makes growth capital investments in nonprofits) has been encouraging nonprofits to measure outcomes for years. Indeed one of the fundamental characteristics of venture philanthropy is a reliance on metrics and outcomes for investment to happen. He recently wrote a post arguing that he is “increasingly worried that the vast majority of funders and nonprofits are achieving, at best, marginal benefit from their efforts to implement outcomes thinking.” He argues that in an zealous pursuit of metrics we have left common sense and “softer” impact behind and encouraged nonprofits to move away from the impact they were working towards.

To add further confusion to the outcome measurement discussion, the Gates Foundation’s Melinda Tuan studied 8 approaches to measuring cost vs. social impact, or the value that nonprofit organizations create versus the cost of their activities. The results of the study were disheartening; none of the approaches they studied was a magic bullet, all had significant drawbacks, which led them to conclude: “Integrated cost approaches to measuring and/or estimating social value are still in the nascent stages of development due to the lack of maturity in the field of social program evaluation.”

And there are other camps working towards outcome measurement, like those debating about whether randomized control trials (a research methodology where a random group of program participants is tracked and compared to a random group of cohorts who did not participate in the program) are feasible for nonprofits. And on the social business side, the GIIN (Global Impact Investing Network) is developing standards for measuring and communicating the social impact of investments known as The Impact Reporting and Investment Standards (IRIS). And that’s just a start.

This whole social impact measurement endeavor is incredibly important because if we can figure out a way to measure which social change efforts work, and which don’t, we can allocate resources accordingly and, in theory, get closer to solutions to social problems.

But I think we need to first take a step back. As is so often the case in efforts to build nonprofit capacity, effectiveness and infrastructure (including, in this case, the ability of nonprofits to evaluate their work) the focus is on the largest, most resourced nonprofit organizations. Let’s remember that more than 80% of nonprofit organizations have budgets under $1 million (see the Nonprofit Almanac). Budgets that small leave very little room for funds to support randomized control trials or other kinds of outcome measurements.

But an even bigger roadblock is the fact that many nonprofit organizations have not articulated their theory of change, or their logic model. Many nonprofit organizations are doing good work, but they don’t necessarily have an articulated strategy around that good work. A logic model helps an organization understand and articulate how they believe that they translate resources (inputs) into social impact, or change in a community. This understanding allows the organization to better articulate (to potential funders, volunteers, supporters, partners), and create strategy around, their work. A potential logic model for an English as a Second Language after-school program could be as follows:

One of the first steps Social Velocity undertakes with clients who want to increase organization capacity, sustainability, revenue, growth, or really any kind of progress, is to create a logic model with the organization. The majority of nonprofits that I encounter don’t have an articulated logic model or theory of change. It may seem like an academic exercise, but I would argue that it is absolutely critical to just about anything a nonprofit does. In order to understand their place in the community, the value that their work adds, how additional inputs (like funding) can increase impact, and their strategy for delivering services, they need to articulate this process.

But the larger debate about outcome measurement ignores the fact that the majority of nonprofit organizations have not completed step 1 in outcome measurement: articulating a strategy for using resources to create outcomes. Once this is articulated, we can talk about how to measure whether that strategy is actually coming to fruition.

Related posts:

Sparking a Movement Toward Outcomes: An Interview with Mario Morino

A Step-by-Step Guide to Creating a Nonprofit Revenue Plan

The Balance of Heart and Head

2010 and the Future of the Social Sector

Nell Edgington — Tue, 29 Sep 2009 17:15:06 +0000

Lucy Bernholz, head of Blueprint Research and Design, a philanthropy consulting firm, and thought-leader on trends in philanthropy is preparing a monograph on what 2010 will hold for the social sector. As a true adopter of social media, she is asking others to contribute, in essence crowd-sourcing answers, this year to her annual “what will next year bring” treatise. Last week, she asked her blog readers, Twitter followers, and all others the question: “What trend, change, entity, or idea will matter most to the social sector in 2010?”

She’s gotten a great set of responses, in blog, email, Tweet, and other forms, which she and others are collecting. It’s kind of an interesting experiment to ask a broad question to the universe and see what you get back, and whether it is intelligible and adds anything to what she may have already been planning to write. It is also interesting to navigate the very fine line between future-telling and wishful thinking. I probably tend to fall into the latter category, but if we don’t envision the future we want to see, we probably won’t get there.

I submitted my thoughts to Lucy via Twitter, but it is difficult to distill broad ideas into 140 characters, so I will elaborate on my thoughts here.

There are three things that I think will matter most to the social sector in 2010:

Increased Philanthropic Dollars Will Go to Organization Building. Donors will increasingly realize that they can achieve a greater social return on their investment (more social impact) when they invest in the capacity, or growth of a successful nonprofit. That is to say that donors will increasingly realize the power of BUILDING organizations rather than BUYING services. I don’t think donors will move away from buying services, there will still be a majority of that. But I think donors will start to understand the difference between a “donation” where they are simply supporting an organization’s current program, versus an “investment” that makes the organization stronger, healthier, better positioned to address the social problem head on.

Nonprofits Will Move From Outputs to Outcomes. And in order to meet this trend of donors wanting to invest rather than donate, nonprofits will begin to understand that they will attract more capital if they can demonstrate a social return on investment, or a change in outcomes, not just outputs. Outputs have been a favorite of the nonprofit sector, i.e. 500 kids went through our after-school program, 1,000 meals were served in our kitchen. But outputs don’t demonstrate social impact, or a change to a problem. Outcomes do, which is what investors increasingly will want to see. Outcomes are about changed lives, changed trajectories. It is so much more powerful and compelling to be able to say that the 500 kids that went through our after-school program stayed in school and increased their academic achievement which was a marked difference from their cohorts that didn’t attend our program. Then, if you can continue to track those children and demonstrate that they continued to stay in school at a higher rate than their contemporaries, you have a compelling change to a trajectory. You begin to show how your organization is an intermediary between donors who want to invest in social change and a change you are making in the community. I believe that philanthropic capital will begin to flow more readily to those nonprofit organizations that can demonstrate outcomes as opposed to outputs, and those nonprofits that can comply will be more successful at attracting capital.

The Social Capital Market Will Increasingly Include Philanthropic Capital. The social capital market to date has focused mostly on investing in social businesses that provide both a social and financial return. Philanthropy and nonprofit organizations have been somewhat left behind. But this will change with a growing recognition of the benefits of broadening the definition of social capital markets to include nonprofits and philanthropy. There is much to be gained when ALL organizations working towards social impact and ALL investors interested in social return can pool resources and work towards closer collaboration, creation of new financial vehicles, sharing of ideas and information.

Perhaps 2010 is too early for all three of these trends to really take hold, but I think the beginnings are there. It will be interesting to see what Lucy comes up with, and what actually starts evolving in a few short months when the new year begins.

But in the meantime, what are your thoughts? Where do you see the social sector going in the coming year?

No related posts.

Making a Social Impact Market Play

Nell Edgington — Wed, 23 Sep 2009 17:13:20 +0000

Nonprofits exist in a strange netherworld between market forces and social change. They are trying to create a solution to a social problem, but as much as some might like to deny it, that desired social change exists within a market economy. That means that in order to be successful, nonprofits, just like any business, must continually analyze, understand and create strategies around whatever market forces are at play (competition for funding, clients, partnerships, inputs, results; increased/decreased regulation; changing client/funder demand; changing input costs; changing technology, etc.).

The tendency among some of those working toward social impact is to assume that simply because they are doing good in the world, those market forces can somehow be ignored or dismissed. Good will win out over the market. But it is not a binary system. Organizations that are working toward good are very much subject to market forces and must be strategic about how to address them.

Which brings me to a SWOT analysis, an often misunderstood tool that can help nonprofits do just that. Most people understand that a SWOT analysis helps an organization break down the internal forces at work (their own strengths and weaknesses) and the external opportunities and threats that face them in the marketplace. But once these are uncovered, the more important step is to translate those realities into strategies that increase the nonprofit’s position in the market, whether that is increased profit, increased social impact, or both.

Strengths are the resources, capabilities, core competencies, and experience that could be used to develop a competitive advantage, or a better position in the marketplace than their competitors, such as:

Brand name
Funder/investor retention
Access to clients/customers
Access to inputs required to create the desired social impact
Cash reserves
Demonstrated social impact
Use/understanding of critical technology

Weaknesses are things that the nonprofit should possess in order to create a competitive advantage, but happen to lack. They can also be the flip side of a strength, such as a nonprofit that has a large staff (strength) but whose large staff makes it difficult to be flexible towards changing program requirements (weakness). Some examples:

Lack of staff talent/expertise
Limited network/relationships/alliances
Low funder/investor retention rates
Limited access to inputs required to create social impact
Lack of demonstrated results

The External Analysis exposes the situation in the marketplace and how that situation positively (opportunities) or negatively (threats) could affect the organization. Opportunities are external realities that could result in greater social impact, profit and growth for the organization:

Growing social need/customer demand
New technologies that could decrease costs to deliver programs/products/services
Relaxation of government regulations for addressing the social challenge
Declining competitors for funding or program delivery

Threats are situations that have the potential to diminish the organization’s social impact/profitability/growth. For example:

Increasing competitors
Stricter regulations
Increasing cost of inputs
Diminishing client/customer demand
Changing technology

But this analysis gets you nowhere if you don’t take the most important next step, which is to craft strategies from the results. The various strategies for the organization going forward fall into four categories:

Strength-Opportunity Strategies that use the organization’s strengths to go after external opportunities. For example when a nonprofit uses their strong brand name (strength) to expand into a newly emerging client need (opportunity). Teach for America has recently decided to take a version of their teacher recruitment program to schools outside of America.
Weakness-Opportunity Strategies that overcome a nonprofit’s weaknesses in order to go after external opportunities. For example when Kiva recently decided to give their loaners whose demand outstripped loanee supply (weakness) an opportunity to make loans to American entrepreneurs whose demand for loans due to the bank crisis and the recession were growing (opportunity).
Strength-Threat Strategies that harness a nonprofit’s strengths in order to overcome its vulnerability to external threats. For example a nonprofit that harnesses its well-connected board (strength) to strengthen their relationships with foundations and individual donors who are being bombarded by an increasing number of nonprofits (threat).
Weakness-Threat Strategies that create a defensive plan for preventing the nonprofit’s weaknesses from making it susceptible to external threats. For example when a nonprofit decides to go through the patent process to guard its unprotected results-achieving curriculum (weakness) from growing competitors (threat).

Creating and then employing these strategies allows a social impact organization to be proactive and opportunistic about market dynamics–market dynamics which very much play into whether the solution they seek will come to fruition.

Related posts:

Financing Not Fundraising: The Message of Social Impact

Nonprofits and the Emerging Social Capital Market

Making Change the New Norm

Organizing the Chaos

Nell Edgington — Thu, 03 Sep 2009 15:18:41 +0000

At the beginning of anything there is chaos, so it is with the creation of the social capital marketplace. Day 2 of SoCap was about understanding and starting to discuss the chaos that is emerging in this marketplace. As Antony Bugg-Levine from the Rockefeller Foundation said in the plenary about creating infrastructure for this new market, there are a lot of or’s right now, but we would like to make them and’s. He meant that there are opposing ways of thinking about and doing things in this emerging market, but we would like to be at a place where we don’t have to choose, where we can have both, instead of just one of the options. Some of the or’s he mentioned are:

Knowing vs. believing
Measuring vs. doing
Mission vs. scale
Story vs. substance
Metaphor vs. methodology

And I would add to that:

Nonprofit vs. for profit
Financial investing vs. philanthropy
Venture philanthropy vs. Social investing
Government vs. private money

And the list goes on. The social capital market is emerging from a binary system of financial investment on one side and philanthropic donations on the other. Mission and money never mixed. That either-or, however, is becoming an and. So too, are so many other distinctions. It used to be that a nonprofit organization was about social impact and a for profit was about profit. Now it’s both. And so on.

But what we are talking about is a radical shift in so many areas. It can be overwhelming and chaotic.

But in order for this market to survive we need to organize it. And that list is long:

We need to create metrics for determining social impact
We have to create various financial vehicles for the various projects and organizations out there trying to survive
We have to change the rules and laws to make them more accepting of these new entities
We need to figure out what business models make sense and can thrive
We have to determine how and when to scale great ideas
We need to drive down the high transaction and search costs in the field
We, as entrepreneurs who dislike the bureaucracy of government, have to engage on a policy level to make change
We have to effectively market and communicate the benefits of social investing in order to broaden the reach of the market beyond the few who have tried it

The list goes on and will take time.

There is such diversity at SoCap and that diversity is representative of the social capital markets themselves. As one participant put it “We are 1,000 outliers.” There are bankers, college students, nonprofit execs, philanthropists, VCs all brought together by a single desire to make money work better for the world. But that tremendous diversity can create dichotomies, distance, tension.

For example, the session I moderated yesterday on Growth Capital for Nonprofit Social Entrepreneurs. I feared that because the nonprofit side of the market had been under-represented at last year’s conference that there may not be much interest in the topic. To my surprise, the room was absolutely full, with probably close to 80 people in attendance. And there was a palpable sense of hunger for information among the group about where nonprofits, who have been doing mission work for years, fit into this new market.

But day 3 of SoCap is about to start, so I will leave all of that for a later post.

Related posts:

Nonprofits and the Emerging Social Capital Market

The Future of Financing Social Change: An Interview with Antony Bugg-Levine

The Social Capital Markets Conference 3.0