Category: strategy

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!

fundraising, logic model, messaging, strategy

Are you including funds for M&E?

With limited time and resources, nonprofit organizations are often forced to make tough decisions. Given the importance of the work they do – to those who do the work, to the constituents they serve, and to their donors and funders – it takes priority over everything else.

In fact, nonprofits are so busy trying to get the work done that when it comes to monitoring and evaluation (M&E), they often choose to do the work rather than stop to reflect and measure their impact. The result is a focus on outputs (the products or services provided, e.g. number of trees planted) rather than outcomes (a change in the way people or the system behave, e.g. reduced rates of deforestation). After all, it’s easier to measure what the organization has done in terms of activities than what it has achieved in terms of impact.

The problem is that M&E is an essential part of doing the work well. At the most fundamental level, measuring the work helps an organization to learn and improve the work it does, so it can do it both more efficiently and more effectively. It also helps an organization make the case that it does in fact make a difference in the world – that its work is actually solving a problem and it isn’t just spinning its wheels with no lasting effect. Organizations who take the time to monitor and evaluate their work also demonstrate a sophistication in their management and approach that helps them to rise above organizations who don’t prioritize learning and growth. And all of this strengthens an organization’s case for support, which in turn helps it attract more funding for its work.

Of course, even if an organization wants to monitor and evaluate its work, it doesn’t always have the resources to invest in it. Donors provide funds to get the work done but not to do the M&E required to improve it. While an organization can do some basic M&E on a tight budget, it certainly helps to have some financial support – as well as the encouragement from donors.

And donors should be investing in an organization’s M&E. If nothing else, monitoring and evaluating the work helps donors to see and understand the result of their investment. For foundations who have broader strategies to solve a problem, it can help them to measure their progress towards achieving their own goals in the field, as well as better understand what’s happening in the field in ways that could inform their own strategies. And instead of running their own evaluations, foundations should have the grantees do the M&E, for two reasons: (1) because they’re out in the field and closer to the work, grantees can provide more accurate information; and (2) it builds grantees’ own capacity to do M&E and to continuously learn and improve their work.

Since M&E is so valuable to both organizations and their funders, it should be a part of project budgets. M&E can be a line item for a dedicated staff member, or a consultant to help design a system the organization itself can run, or even just a percentage of the grant. Organizations should be asking for M&E funds, and funders should encourage their grantees to include M&E in their project budgets.

The best part about building M&E into the project budget is that it sets expectations that M&E is a part of doing the work – not something apart from it. Because it is part of the work: learning and evaluation is an important feedback loop that keeps the work on track, focused, and ultimately effective.

There shouldn’t be a choice between doing the work or measuring it. They should be one and the same.