Category: planning

case for support, communications, fundraising, invaluable, leadership, management, planning, strategy

3 misunderstandings about nonprofits that prevent them from succeeding

It’s been six years since “The Nonprofit Starvation Cycle” was published and two years since Dan Pallotta gave his famous TED talk about the financial burdens facing nonprofit organizations. Despite these widespread, articulate, and compelling calls to arms – and a plethora of research, reports, guides, and tools – the sector continues to suffer from financial struggles that have broader impacts on its progress and success at tackling societal problems. In 2013, Guidestar, Charity Navigator, and BBB Wise Giving Alliance started the campaign to end the Overhead Myth, but letters and signatures are meaningless unless we actually put words into action.

What is it that’s stopping us from taking action? Why do we continue to do things the same way when we know there’s a problem and there are solutions at hand?

It strikes me that what drives our behavior is a set of underlying assumptions and beliefs about nonprofits – paradigms that paralyze us from doing things differently. These unspoken paradigms perpetuate the funding and management practices that keep nonprofits from thriving financially and successfully responding to societal problems at scale:

  1. The Misnomer of Non-profit. We associate profit with personal gain and nonprofits with the public good, but nonprofits are businesses, and any successful business needs to earn a surplus. For nonprofits, this surplus isn’t doled out to investors but rather it’s reinvested in the growth and improvement of the organization. Without making a profit, nonprofits live under stressful conditions and cannot expand or innovate to have more impact.
  2. The Overhead Problem. We all know the story: not enough money goes to the nonprofit enterprise – the business side of things that provides for the programs and services we all love and desire, a.k.a. “overhead.” The problem is that the overhead-to-program ratio is seen as an indicator for efficiency, when in fact, it’s actually not, and varies with an organization’s business and business model. We should care less about the overhead ratio and more about important things like effectiveness, or whether the organization is actually solving the problem.
  3. The Restricted Nature of Giving. Unlike the way we invest in for-profit companies, with nonprofits we feel we get to specify how our funding should be used, because hey, it’s our money, right? Unfortunately, this restriction on spending limits an organization’s decision-making and reflects a lack of trust that the organization knows how to spend our money wisely. We should have more faith in the people who dedicate their lives to the causes we care about and the organizations we value so much. (And if we don’t have that much faith in them, should we really be giving them our money?)

There are many different efforts out there to improve nonprofits – how to write better fundraising appeals, how to use social media to attract more support, how to manage volunteers, etc. – but those efforts will only have limited success if the deck is stacked against nonprofit organizations as a whole. Until we get at the root of the problem and change the way we value and invest in nonprofit organizations, everything else is like rearranging the chairs on the deck of the Titanic.

For more on these paradigms – and how funders and organizations can break them by doing things differently – download a free copy of Invaluable today.

 

case for support, communications, fundraising, messaging, planning, strategy, theory of change

The key document your organization is missing

In my experience, most organizations have at least two key documents: a strategic plan and a fundraising plan. A strategic plan explains what you hope to achieve and how you plan to achieve it, and a fundraising plan explains how you plan to raise the money you need to execute your strategic plan.

More sophisticated organizations have two other important documents. The first is a theory of change, which describes the context, rationale, and purpose for your organization. The second is a communications plan, which describes how your organization plans to advance your program goals by building a base of support.

Yet even with these documents to guide the organization’s work, several organizations still suffer from a common problem: an inability to consistently articulate their organization’s value. It is often difficult for them to clearly state why the work they do is unique, important, and worthy of your support. And frequently different members of the organization – staff, board members, volunteers – will talk about the organization differently. Many of the organizations I work with come to me claiming they are not all on the same page about who they are, why they exist, and the work they do.

And this is a big problem. An unclear or inconsistent message about your work makes it difficult to build a base of support. People have a hard time getting behind your organization if it is unclear what it does, and it’s hard to present a strong brand that is both compelling and recognizable if there are lots of different messages out there about who you are and what you do. Perhaps most importantly, not being able to articulate your unique value makes it challenging to solicit funding. After all, if you can’t clearly state why your organization is so important, why should someone give money to you instead of one of the many other organizations out there?

The document most organizations need (but rarely have) is a case for support, also called a case statement. A case for support is a brief, clear, donor-oriented document that states why you need – and deserve – funding. It is the source document for all your fundraising and communications activities, and it is the prayer book that gets everyone in your organization singing from the same hymnal. It takes your theory of change and your strategic plan and synthesizes them into a statement about your organization’s unique value that you can use to build support for your mission. And it should be the precursor to any fundraising and communications planning; the case for support says how much you need and why you deserve it, while the fundraising plan says how you will raise it and the communications plan says how you will build a base of support to achieve your mission.

A case for support is just that: an argument for why someone should support your organization. We all need support to achieve our missions, so shouldn’t we all have a case for support?

For more on a case for support – what goes into a good case for support, how to develop one, and how to make it compelling – check out The Foundation Center’s upcoming webinar, “The Nonprofit Rosetta Stone: Making Your Case for Support” on Tuesday, March 31st. Register today!

collective impact, logic model, planning, theory of change

Your vision statement shouldn’t be unique

I worked with a client recently on developing a theory of change, and part of the process involves coming up with a vision statement. The vision reflects the organization’s desired outcome for the system in which they work. In other words, what does the system look like in a perfect world?

When we came up with a vision statement, it was big – not just bold, but on a global scale that goes well beyond the capabilities of this little organization of just a few people. There were two questions that arose: Is this vision statement too ambitious? And is this vision statement unique enough to our organization?

Here’s the thing: no organization works alone to transform a system (though they may think and act like they do). Transformation of an entire system is a huge undertaking, one that requires a diversity of approaches and competencies. Systems are complex and multifaceted, and multiple types of interventions will be required. An organization that tries to tackle them all will find itself reaching beyond its capabilities. (Conversely, an organization that thinks there’s only one way to solve a problem will not reach far enough.) And because no one can do it alone, the vision statement shouldn’t be unique to any one organization, because hopefully others share your vision and are working with you towards the same goal.

Within any given system, there will be multiple organizations or entities, each trying to transform the system in a different way. Each organization therefore occupies its own niche (hopefully), but collectively they bring about a common vision for the system.

Take education for example. There are several different groups in the Bay Area working on improving the education system in Oakland. Some focus on teacher preparation, some focus on after-school programming, some focus on informal education programs, some focus on testing and standards, and others will focus on policy at the state and federal levels. Then there are government agencies and privates entities with their own goals and contributions to the education system. Each group has its own objectives, but they all are working towards a common vision: an Oakland school district that meets the needs of its students.

A lot of times organizations equate a theory of change with a strategy: if we do this, then we will achieve that. If a theory of change is done right, it takes a broader systemic view, and helps an organization to identify (1) the potential points of intervention, (2) its unique role in bringing about the vision (the mission), and (3) areas of needed coordination, cooperation, and collaboration. In this way, an organization can define its unique value while also understanding how all the different actors collectively create change.

Thus, the vision is a systemic view beyond the organization, a goal to be achieved collectively, and the mission statement is the organization’s role within that system, based on its strengths and competencies and the needs and opportunities in the system.

No organization is an island, and no organization can do it all. But together, with a shared vision and clearly defined roles, organizations can achieve more than any one of them can achieve alone.

Does your organization have a vision statement that defines a collective achievement? Does your organization’s mission statement reflect its unique role within the system? Are you working with others who share an interest in the same issues?