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social return on investment

How Convincing is Your Nonprofit’s Fundraising Ask?

beggingTired of the endless fundraising circuit, nonprofit leaders sometimes get frustrated when prospective donors won’t invest in their nonprofits, like this executive director:

“Here’s my problem…It’s obvious these people have money, they just don’t want to share it with us.”

What this executive director fails to realize is that the burden to connect the dots for donors lies squarely on her shoulders. It is up to nonprofit leaders to articulate – in a compelling, inspiring way – how their nonprofit is creating a solution to an important social problem, and why donors should care about and invest in that solution.

A Case for Investment can help you do just that.

Now more than ever, nonprofits are struggling for funding amid growing competition and diminishing available dollars. At the same time, burgeoning interest in performance management and impact investing have focused more donors on the outcomes their investment in a nonprofit will bring.

Donors, especially major donors, are less likely to give to a nonprofit because the organization “does good work” and more likely to give because a nonprofit demonstrates how it creates a solution to a social problem the donor cares about.

Those nonprofits that want to continue to attract and grow philanthropic investment must create a compelling, thoughtful argument for why a donor should give to their organization. This argument is called a “Case for Investment.” Driven by a thoughtful combination of data and emotion, a good Case for Investment can help a nonprofit communicate and connect with their target donors much more effectively.

The Case for Investment Step-by-Step Guide can help you create your nonprofit’s case.

case for investment guideAs one nonprofit executive director who used the Guide put it:

“I am using it as a catalyst to create a branding campaign with my Marketing Committee. Of course, this will be used for fundraising and grant writing as well. We really needed the framework to build value for our donors, volunteers, and clients.”

A good case for investment is the fundamental building block from which all donor communications, marketing materials, grant proposals, website language, and more is born.

The Case for Investment Step-by-Step Guide is broken down into ten sections:

  1. Why Create a Case for Investment?
  2. How to Use This Guide
  3. The Need
  4. Solution
  5. Impact
  6. Financial Model
  7. Strategic Direction
  8. Resources Required
  9. Social Return on Investment
  10. Next Steps

In each section there is a series of questions, which you will answer. Your answers to these questions become the basis for your final Case for Investment. Examples of other nonprofit’s cases for investment are highlighted in each section, allowing you to see how others have made their arguments.

The Case for Investment Guide is one of six guides in the Social Velocity Step-by-Step Guide Series. You can learn more and download this and other guides here.

Photo Credit: JHall159

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Chatting About Social Entrepreneurship

As I announced in an earlier post, yesterday I participated in a Live Chat organized by the Foundation Center about social entrepreneurship. Abby Chroman from Ashoka joined me as a fellow panelist, along with The Foundation Center’s Katie Artzner who moderated.

We took questions from the audience about social entrepreneurship, social change, where nonprofits fit in the social innovation movement, social return on investment, measuring outcomes, fundraising and much more. It was a fast and furious hour with great discussion and great questions. This was a fun format because there was no audio, only text chatting.

If you missed it, you can still view the chat on the Foundation Center’s website here. And below is an excerpt from the discussion just to give you a taste.

_______________________________

Foundation Center’s Grant Space Live Chat

Comment From Dan:

How do you deal with accountability in the social entrepreneurship sector? Should social entrepreneurs be democratically accountable to those whose lives they seek to impact?

2:38
Katie:

How about we start with Nell.

2:38
Nell Edgington:

Dan, I’m not sure what you mean by “democratically accountable,” but they should absolutely should be accountable to their theory of change. Any social change org should have a theory of change (argument for how they are using community resources to create positive change). Once they have a theory of change they must measure whether that change is actually occurring.

2:38
Abby:

Accountability is a huge part of social entrepreneurship. It’s why we take a person’s “ethical fiber” as a very very serious part of our selection criteria for leading social entrepreneurs.

2:39
Katie:

“ethical fiber”? Can you explain?

2:39
Abby:

Yes, this is the level of trust we invest in our Ashoka Fellows that they will not only solve the social problem but that they will be accountable for their impact.

2:40
Abby:

It sounds odd, but imagine if you would stand on the edge of a cliff with someone…

2:40
Abby:

Do you trust them 100%?

2:40
Katie:

Depends!

2:40
Nell Edgington:

Can I jump in here for a second?

2:40
Katie:

Absolutely, Nell

2:40
Abby:

If no, why not? That’s the kind of rhetorical question we’d ask.

2:41
Nell Edgington:

That’s a really interesting concept to me. To me, social change is a very complex combination of people, money, ideas, structures, etc.

2:41
Nell Edgington:

It can never be dependent on just one person. So how can you know whether a single actor is actually going to make change happen?

2:42
Abby:

The person is will catalyze the change, but you’re right – it involves whole systems. So we’re back to systems!

You can see the whole live chat here.

Photo Credit: AlexDixon

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Are You a Social Entrepreneur?

I’m excited to report that a week from today, July 26th, I will be participating in a live online chat at the Foundation Center’s Grant Space website, titled “Are You a Social Entrepreneur?“.

Abby Chroman, leader of global community curation for AshokaHub, and I will be fielding questions from the audience about social entrepreneurship, social change, nonprofit innovation, capacity capital, social return on investment and much more.

Some of the questions we’ll be discussing include:

  • What qualities do social entrepreneurs possess?
  • How is this concept different from traditional corporate structure, even one with a socially-minded mission?
  • How do you truly accomplish social change vs. simply doing “good” work?
  • How can nonprofits especially incorporate some of this thinking to be successful in fulfilling their missions?
  • How do you measure social impact and return?

But the majority of questions are up to the audience. This live chat will happen entirely in the chat window on the Grant Space website. When the chat goes live, you can submit your questions and comments and interact with Abby and me and other readers, but you can also send questions ahead of time.

So join us! Registration is free at the Grant Space web site here. I look forward to your questions!


Photo Credit: Colin_K

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Raising Money to Grow On: Creating the Fundraising Pitch

In May 2011 I launched an ongoing blog series that profiles Social Velocity’s work with Charlotte Chamber Music, a small performing arts organization that has a big vision, but lacks the capital to get there. Charlotte Chamber Music enlisted Social Velocity’s help in 2010 to create a strategic plan and a capacity capital pitch to raise the money to execute on their big plan. You can read the whole series here.

Capacity capital (or “philanthropic equity”) is the money so many nonprofits desperately need. Capacity capital is dramatically different from the day-to-day operating revenue for which nonprofits are always fundraising. Capacity capital doesn’t fund delivery of nonprofit services (beds for a homeless shelter, new productions in an opera house, books for an after-school program). Rather, capacity capital builds the organizational infrastructure of the nonprofit (technology, systems, administrative or fundraising staff, materials) that allows the organization to become more effective or grow. But you cannot simply go out and ask for capacity capital. First, you must develop a compelling, inspiring, actionable and measurable plan for what you would do with the capacity capital.

In the earlier posts in this series, I described how we developed an inspiring, investable strategic plan, and a budget and operational plan to ensure that the plan would actually come to fruition. Once those critical pieces were in place Charlotte Chamber Music was ready to develop a capacity capital pitch and prospect strategy.

The first piece was the pitch. A funding pitch is an argument for why a donor should invest. In the case of raising capital, the pitch has to demonstrate some key components in a logical way. The key components of a capacity capital pitch are:

  1. The Opportunity or Need: The community need that exists and why people should care
  2. Your Solution: The solution that your nonprofit provides to that need and the results you are achieving
  3. Plan: Your strategy for the future
  4. Team: The management team you have in place and why they are uniquely positioned to successfully implement the plan
  5. Budget: The amount of capacity capital you need to implement the plan and what it will be used for
  6. Ask Amount: How much you are asking a specific prospect to invest
  7. Projected Social Return on Investment: How the investment of capacity capital compares to the ultimate impact your organization will achieve once the plan comes to fruition

Over several iterations Elaine Spallone, the Charlotte Chamber Music Executive Director, and I came up with a strong compelling pitch that included all of these elements. We created this pitch in both a PowerPoint presentation and in a 2-page leave behind document, or “Prospectus.” Both elements create a compelling argument through text, pictures, and graphical elements. The leave-behind, however, is more text heavy and allows the prospect to dig deeper and explore more on their own.

Then we started in on the prospect strategy. Once you have determined your capacity capital goal, you need to break it into pieces, or investment levels. An investment range chart, like the one below with a goal of raising $100,000 in capacity capital, helps you break a large goal into donor “pieces.” You want your lead gift to be 10-20% of the overall goal and then you create “reasonable” levels below that. A rule of thumb is that it takes 4 asks to get 1 yes, so you calculate the number of prospects you would need at each level. You will see at the lower levels the ratio diminishes to 3-to-1 and 2-to-1, this is because although some prospects at the higher level will say no to that level, they may say yes to lower levels.

Once they had an investment range chart that they were happy with, Charlotte Chamber Music could start to slot prospects at the various levels. For this, they evaluated potential prospects along 3 criteria:

  • Capacity to give at the desired level
  • Connection to a peer at the organization
  • Concern for the mission of the organization

With a compelling pitch and prospect strategy in hand, Elaine and her board set off to start raising the capacity capital they needed to bring their strategic plan to fruition.

In the next and last post in this series, we’ll check in with Elaine to see how they are faring in raising capacity capital and implementing their strategic plan.

If you want to learn more about capacity capital, download our e-book “The Enormous Opportunity of Capacity Capital.”

Photo Credit: loop_oh

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The Rapid Evolution of the Nonprofit Sector: A Podcast

I’m delighted to announce that I was interviewed last week for Georgetown University’s Social Strategist series. The Social Strategist: A Conversation on Cause Based Communication is an audio project of Georgetown University’s Center for Social Impact Communication that aims to create a dialogue on effective cause based communication while showcasing best practices of the most successful organizations, companies and people working in the field today. The series aims to ultimately answer the question: what are the traits of an effective social strategist? Past interviewees include Jane Goodall, Beth Kanter, Katya Andreson, to name a few.

I am honored to be part of this exciting series. In my podcast, John Trybus (series curator) and I discuss the current state of the nonprofit sector, what social innovation really means, financing social change, the future of social impact and much more.

Here’s John’s preview of our podcast discussion:

  • The rapid evolution of the nonprofit sector is happening now. “Our economy is going under a fundamental restructuring and that’s affecting nonprofits as well,” Nell explains. “If [nonprofits] don’t dramatically change the way they do business they’re not going to be able to survive and thrive.” The status quo where nonprofits can hide behind the benevolent shield of charity no longer exists. Nonprofits “have to make some significant changes if they want to survive in this new reality,” she adds.
  • A new type of ROI is fundamental to prove value. Forget the traditional ROI and think about a social return on investment. Says Nell: “It’s not enough to say we are doing good work and we’re helping people. You now need to start to prove that. That’s a real movement in the sector and I think that’s exciting.”
  • Financing and not fundraising is necessary to ensure sustainability. The hamster wheel of galas, dinners and other traditional forms of raising money for good causes no longer works. “The system is broken,” Nell proclaims. To truly create sustainable sources of funding “it starts with taking a much bigger picture view and creating an overall financing strategy,” she adds. “So it’s starting with ‘what do we want to accomplish in the world?’ and how do we create a financial model to do that?” 

So what does the future hold for social innovation?

“I think we are at a critical point where so many people want to see social change and they’re willing to change structures and systems [to make that happen],” Nell says. “This kind of momentum is really exciting. It remains to be seen where it’s going to take us but it’s going to be an exciting ride.”

You can listen to the podcast here.

Photo Credit: faungg

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Financing not Fundraising Webinar: Creating a Message of Impact

In order for nonprofits to start effectively financing their efforts, they must get prospective donors excited about their impact. Creating a message of impact is the only way to engage and invest people in the work you do. The next webinar in the Financing Not Fundraising webinar series will help your nonprofit create a message of impact.

Our Financing Not Fundraising webinar series has been very popular. Comments from past webinar participants include:

“This webinar was more useful than whole three-day conferences that my nonprofit has sent me to.”

“I loved the reframing of financing for desired results instead of funding for operations…your message to wed money to the mission was a big AHA moment – and am now figuring out how to bring this to life for staff and board.”

“Social Velocity conceptually is way ahead of the curve in nonprofit consulting. Visionary and spot-on!”

The next webinar in the series, Creating a Message of Impact, will help your nonprofit have a more compelling conversation with potential donors. No one likes to beg for money. And donors increasingly aren’t moved to respond to the “tin cup” approach. A far more effective way to communicate with potential donors is to talk about the change your nonprofit is creating in the community.

Donors invest in nonprofits that share their values and are creating change to things the donor really cares about. So in order to attract those donors, nonprofits need to understand and articulate the change they are creating in the community. They need to create a Message of Impact.

This webinar will help your nonprofit:

  • Move from begging to investing
  • Create a compelling case for support
  • Target donors who care about your work
  • Get your board excited about asking for money
  • Differentiate between donations and investments
  • Talk about the work your nonprofit does in the community
  • Articulate a social return on investment (SROI) for donors

The registration fee will get you:

  • A link to a recording of the webinar, which you can watch as many times as you like
  • The PowerPoint slides from the webinar
  • The ability to ask follow-up questions after the webinar

 

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How Do You Convince Donors to Give?

Convincing a donor to give to your nonprofit is a tricky business, and it’s getting harder all the time. Now more than ever nonprofits are struggling for funding amid growing competition and decreasing available dollars. It has become harder and harder to stand out and recruit donors. These days, donors, especially major ones, are less likely to give because an organization “does good work” and more likely to give because an organization provides a solution to a social problem the donor cares about.

Which is why every nonprofit needs a compelling Case for Support. Our newest Social Velocity Step-by-Step Guide, helps you create your nonprofit’s Case for Support.

This new environment requires those nonprofits that want to continue to attract and grow philanthropic support create a compelling argument for why a donor should give to them. Driven by a thoughtful combination of data and emotion, a good Case for Support can help you communicate and connect with your target donors much more effectively.

Our Case for Support Guide is organized into the 8 sections of a Case for Support:

1. The Community Need
2. Our Solution
3. Why Us
4. Our Impact
5. Financial Model
6. Strategic Direction
7. Resources Required
8. Social Return on Investment

In each section of the guide there is a series of questions. Your answers to these questions become the basis of your final Case for Support. But your Case for Support cannot be written in just a day, by one or two people. You will need to get feedback and insight from staff and board. And you’ll need to gather data to make your Case for Support stronger. This work will take time, so it may be a few weeks or months before you have a final Case for Support that is compelling, convincing and agreed upon by the organization as a whole.

A good Case for Support is an increasingly critical part of any fundraising campaign. You must be clear about why someone should give to your organization. Because if you don’t know, how will they?

Download Now

Photo Credit: puzzledmonkey

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What Social Value Do Nonprofits Really Create?

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:

  1. 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?

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

  3. 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.

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Friday, February 25th, 2011 Nonprofits, outcomes, Planning, Strategy 1 Comment

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