Category: leadership

case for support, fundraising, leadership, management, planning

4 questions to guide your fundraising

There’s no escaping it: every organization needs to raise revenues to support its work. Amazingly, I’ve worked with several organizations that either don’t have a fundraising plan, or they have a very vague and weak one.

When working with an organization on financial planning, we always cover the basics: goals, objectives, audiences, strategies, and tactics. Plus, I always push clients to think about other components that can really make for a robust plan. But in every case the goal is financial sustainability: ensuring that the organization can cover the cost of doing business and continue its mission in the long-term through recurring, reliable revenue.

In working with a client recently, I realized that every financial planning process starts with a series of questions that every organization should be able to answer clearly and concretely. I boil these down to four key questions:

1. How much do you need? This is pretty basic, yes, but there’s many considerations to take into account. Sure, there’s your programmatic expenses to cover (salaries, supplies, travel costs, administration, etc.) but there’s also other expenses to consider that often get left out (debt, depreciation, technology, web hosting, rent and utilities, etc.). The question is really: what is the total amount of money you need to get the work done successfully? The qualifier here is need. How much do you actually need, at a minimum, to do the work you want to do in the time you have set for yourself to achieve it?

2. What are you going to use the money for? Again, not a surprising question, but you should be able to define it in concrete terms. Related to the question above, on what will you spend the money you receive? Plus, if you want to convince others to contribute to your cause, you need an articulate and compelling way of answering it. Not only should you know what the money will be spent on, but more importantly, what will you achieve once you spend the money? What outputs will you produce and what outcomes will that accomplish? How will it advance your mission and solve the problem?

3. What will you do if you don’t get the money? This is never a pleasant question to ask, but it’s an important one for proper management of the organization. Knowing how to adapt your organization is a key element of resilience and sustainability. This question also forces executives to think about priorities: if you don’t get the money you seek, what must you maintain to continue the mission and what can you cut or reduce? Ideally, leadership considers different scenarios and plans ahead for different outcomes. This way the organization is prepared for economic downturns – and for surprising windfalls.

4. What would you do with more money? Related to the last point above, I encourage executives to dream big and imagine what they would do if money were no object. We often get so caught in the “bare minimum” mindset – a byproduct of living in a limited-resource environment for so long – but it’s good to also think about what you would and could achieve if you had the resources. This sort of thinking helps create a vision for the organization, and it also helps to inspire others to support your cause. If the last question above asks what you would do with the bare minimum, this one asks what you would need to realize the ideal situation.

These four questions ask what you want now, why you want it, how you will adapt, and where you are going in the long-term. Basic ideas that are loaded with lots of complex considerations. These questions are what lay the foundation for a solid plan that can lead an organization to financial sustainability.

Does your organization have a clear financial plan? Have you considered all the questions above? What questions do you find most helpful to ask in the planning process? What do you know now that you wish you had known before you did your financial planning?

board, case for support, communications, fundraising, invaluable, leadership, management, planning, strategy, theory of change

Want big money? Inspire confidence

Over the holidays, I got around to reading Vu Le’s blog entitled “Hey, you want nonprofits to act more like businesses? Then treat us like businesses” in which he points out that while funders demand nonprofits act more like for-profit businesses, they don’t invest in them like they do for-profits.

While I wholeheartedly and passionately agree with Vu’s requests from funders – more money, more overhead, faster decision-making, more risk-taking, less micro-managing – I think he fails to fully consider the funders’ criticism.

His blog begins with the inciting incident – funders once again asking nonprofits to behave like for-profit businesses. Vu’s title states his viewpoint – if you want nonprofits to behave like businesses then you have to treat us that way – but I think that’s confusing the chicken with the egg.

Yes, to a large extent, nonprofits are backed into a very tight corner because of the way funders invest in them. And yes, I personally believe that if change is going to happen on this front, that funders will be the ones to truly make it happen.

However, you don’t treat a child like an adult just because the child says that’s the only way he’ll grow up and act like one.

Let’s first clarify something: Yes, nonprofits are businesses. Like for-profit businesses, they strive to produce enough goods and services to meet demand; they need to advertise and promote their work; they need to raise enough revenues to cover the full cost of doing business; and they need to reinvest in improving the efficiency and effectiveness of their businesses. The differences are that

  1. nonprofits exist for the public good, to better society or the world in some way, and as such
  2. their “customers” (or constituents) usually cannot pay enough to cover the full cost of business, which means nonprofits are dependent on a third-party donor or funder to subsidize their work; and
  3. they do not distribute their profits to their investors (as Vu rightly points out in his blog).

But when people say that nonprofits should behave like for-profit businesses, well, I think they’re right. Some people who say this are misguided and don’t understand how nonprofits operate (the three points above). But what many are talking about is the way nonprofits manage their organization, from leadership and planning to operations and revenue generation. Nonprofits are often started or run by smart, passionate people who identify a societal need and take action, but few of them have any business or management experience. And I’ll be honest: it usually shows.

Take this one client I worked with last year. He fit this description – a university professor with a sharp mind, a keen understanding of his work, a vision of how to solve a problem. But when I asked him what his business is, he responded, “Well, I don’t have a business. I run a nonprofit.” And this kind of thinking is why he had no strategic plan, no fundraising plan… and a fully volunteer-run operation without enough funding to pay for staff or expand his efforts.

Here’s the thing: if you want funders to invest in you like they do for-profit companies, you need to inspire confidence. When you come to a me as a funder with a good idea, I’m interested in hearing more. But when you fail to present a clear, thoughtful plan for executing the plan, financing the work, and producing concrete, measurable results, what makes you think I’m going to just throw a large sum of money at you?

Do you think for-profit businesses just walk up to venture capital firms without a business plan? Without proof of concept? Without projected financials and results? Of course not. Start-ups work hard to put forth a solid, convincing plan based on numbers and hard evidence. (And they are more open and up-front about the risk, which makes it easier for investors to take a risk, because it is known and calculated.)

If you want to be treated like a for-profit company, you need to inspire the same kind of confidence that for-profit businesses do. To do this you should have a handle on basic business principles, including:

  • Planning. Most organizations have a strategic plan, but does that plan provide a convincing picture of how you will create impact? Does it show how you will strengthen and grow your organization to achieve that impact? Does it include concrete measurements and evaluation of progress and success? Do you have a financial plan that illustrates how you will raise enough revenue to cover the full cost of doing business (not just program expenses)? Does it consider what will happen in the event you don’t raise enough funds? Do you have a budget that not only shows how you will allocate your resources but that also reflects your strategic goals? And do you have a thoughtful theory of change (the equivalent of a business plan) that describes the system you work in, what it will realistically take to achieve change, and your organization’s unique role in creating that change?
  • Finance. Do you have a system to properly manage revenues and expenses? Do you conduct thorough financial reporting on a regular basis? Are you allocating your resources to maximize your impact and improve your cost effectiveness? Do you have a diversified revenue portfolio that covers the full cost of doing business? Do your financial reports show that you have learned from the past to improve your financial standing? Are you able to adapt to changing financial circumstances (a big grant you didn’t get, an economic recession, insufficient overhead, etc.)?
  • Management. Does your leadership inspire confidence? Are they organized, thoughtful, compassionate, and focused on the mission? Does your nonprofit have a high turnover rate or high retention rate? Does the organization have a clear and logical structure to achieve its goals? Does the organization have a culture that is positive, cohesive, evidence-driven, and supportive of learning and development? Does the organization have a human resources function, with clear policies and infrastructure to effectively manage staff? Do different people and teams within your organization communicate and collaborate effectively? Has your organization successfully navigated through a period of rapid growth?

There are other aspects of an organization that can inspire confidence – a strong brand, solid partnerships, compelling communications, an honest risk assessment and a realistic risk mitigation plan, a history of success or proof of concept, etc. – but the three listed above are critical aspects of an organization that funders will question when making decisions about whether to fund your work or not.

And sure, you can say, “Well, if funders only invest in our program work, how will we ever have the time and money to invest in all this other stuff?” To which my response is: ask for it. If you can demonstrate a need for these things, and the benefits they’ll bring to your organization, it’s not a hard case to make. Most funders know the importance of supporting the nonprofit enterprise and will at least add some funding to a project grant to help you build out those competencies. Program Officers are real people with real feelings, and they genuinely care about helping your organization succeed (even if their bosses and the decision-makers are more interested in a return on investment). Especially if you have solid relationships with existing funders, ask for what you need.

I am passionate about nonprofits and I admit I am as frustrated as anyone with the way the sector is held back and inhibited by current funding practices. And again, it’s a chicken-and-egg scenario: if we want funding practices to change, we need to inspire more confidence, which might mean asking for funding to do it.

In the end, though, it does no good to play the whiny child, complaining that we won’t grow up until we’re treated like grown ups. Demonstrate that you deserve to be treated like one, and it will be much easier to get the respect and support you deserve.

leadership, logic model, planning, rationale, strategy, theory of change

6 lessons nonprofits can learn from the Avengers

It’s no secret that I’m a fan of superheroes. And why wouldn’t I be? They’re all about people doing extraordinary things to tackle problems for the greater good.

This year saw the second team up of Earth’s Mightiest Heroes in Marvel’s Avengers: Age of Ultron, bringing Iron Man, Captain America, Thor, Black Widow, Hulk, Hawkeye, and others together to take down a global threat. While the movie had its ups and downs, I realized that nonprofits can learn a lot from this group of do-gooders. After all, they too face seemingly insurmountable problems and have to overcome internal and external obstacles to achieve their goals.

So here are six lessons nonprofits can learn from the Avengers:

  1. You can’t do it alone. The Avengers are a group of superheroes who do plenty of good on their own. They each have their enemies and problems that they tackle in their own corners of the world (and universe). So what would force these different heroes to come together? A problem that none of them could overcome by themselves. Yes, they had differences to work through (see below) but they knew they needed each other because none of them could do it alone. Nonprofits are often like Iron Man or Thor, thinking they are mighty enough to do it all without help. Others are like Captain America, rallying others to work together, some are like Black Widow or Hawkeye, ready to work with others as needed, and others are like Hulk, afraid of working with others at all. The bottom line is that if nonprofits want to tackle big problems at scale – solving systemic, root causes – they need to come together. This is how the buzzword “collective action” came about: the idea that we need to work together to achieve real, lasting change. Each organization has its own goals and niche but we come together around a common vision and collectively succeed.
  2. Teamwork is most successful when each member gets to apply their unique skill set. Yes, they’re all pretty fit and strong, but the Avengers are a hodgepodge of heroes, each with their own talents. They clash when there is ego and competition – who’s strongest, smartest, fastest? – but they succeed when they each respect one another’s unique talents and divide the work accordingly. The same is true for nonprofits, whether it’s within an organization or different organizations working together. Instead of one person or organization taking charge of all the work, it’s important to recognize the point above – you can’t do it alone – and divide the work such that each member gets to apply a unique set of skills. Be respectful of each other’s contributions and be humble enough to let others have ownership over something.
  3. Disagreements can be healthy discussion for growth. Because they’re big personalities, each with their own experiences and perspectives, the Avengers don’t always see eye to eye. Captain America and Iron Man/Tony Stark notoriously butt heads, eventually leading to a Civil War among heroes (to be featured in a film next year). In the latest Avengers film, Tony ends up disagreeing with not only Captain America, but Thor and Bruce Banner too, as he pursues his own agenda for creating a security system for the planet. But in the end, these disagreements are how Tony learns to set aside his personal goals and be a better teammate. Sometimes in the nonprofit world, we’re so consumed with our perspective that we don’t want to hear others’ opposing viewpoints. But being open to others’ views and ideas can help strengthen our own by showing us our weaknesses or by offering new questions, thoughts, and insights that help us develop and expand our own thinking. Smart organizations seek out new ideas, rather than dismissing them.
  4. The best intentions can have unintended consequences. In his attempt to protect the planet from another alien invasion, Tony works on the Ultron Project: an artificial intelligence system designed to act as a first line of defense. Of course, what he didn’t foresee was that the system would be so intelligent it would consider humans a threat to themselves, and therefore attempt to eliminate humankind. Similarly, nonprofits set out to solve problems but don’t always consider all the possible effects their actions may have. Taking a simplistic or myopic view of your work and its outcomes may leave you unprepared when things change or the unexpected happens. Organizations should invest in scenario planning – considering different possible futures you may encounter – and in risk assessments that lay out mitigation plans. The best way to ensure you are successful is to plan ahead and be prepared to adapt.
  5. Tackling problems means going after root causes. The Avengers track down Ultron with the aim of destroying him before he destroys humanity. As they attempt to stop their enemy, they also make sure to take care of all the people in danger’s way. But while the Avengers save innocent bystanders, they ultimately they go straight after the root of the problem. Nonprofits don’t always do the same, sometimes dealing with the immediate without ever tackling the root cause. While it’s important to handle the effects of the problem until the problem is solved, it’s far more important to go after the source of the problem, staving off any further negative effects. Effective organizations go after root causes to ensure a lasting solution to the problem they’re facing.
  6. Solving problems means following through to the end. Because Ultron was an artificial intelligence, it wasn’t enough to just destroy his physical form. In order to ensure that Ultron was eliminated for good, the Avengers had to destroy every last robot he built and controlled, so that there was no remaining piece of the program that could survive and rebuild itself. Nonprofits should work towards doing the same – going after the problem with the aim of eliminating it. Not reducing it and not just treating the symptoms of it but pursuing the eradication of the source of the problem. It isn’t going to be easy, but hey, neither is anything worth doing. Organizations should be making progress towards reducing the problem, not just keeping it at bay.

So go ahead. Mock me for liking comic books and superheroes. But don’t dismiss these important lessons for anyone aspiring to tackle societal problems and creating lasting change….