The Barricade: Solve Your Main Income Challenge

You are driving smoothly along on the interstate. Ahead you see orange and white saw horses blocking your path. Behind them, large earth-moving equipment moves mountains of dirt. You slow down and prepare to stop.

Almost every viable nonprofit confronts a barricade in the road ahead. The barricade usually concerns income. For established organizations, the barricade is lack of money to pay for one specific need. For many, it is operating expenses or some portion of it, like staff costs. For others, their barricade equals funds for their least-donor-appealing clients. Funding for children might be relatively easy but for young adult males difficult. Is your barricade funding for one of your yearly production? Or, is it a capital need? Organizations that provide housing units barricade is money to construct or buy more units. What is your barricade?

Whatever makes up your barricade, it keeps you from achieving your mission in quantity. To make progress, you need to remove or reduce it. Do you believe the barricade can be removed or improved? How have you sought to overcome it in the past? What steps are you taking now? Have you decided to build new road or create a detour?

Our work, for the last seventeen years, has been helping nonprofits identify ways to make progress on their most pressing needs—often reducing or removing income-related barricades. We can help you to identify the key ingredients required for your success, find innovative ways to solve them (perhaps borrowing from sources beyond the nonprofit field) and move ahead. Contact us if you need help removing a barricade, barricades, building a new road or finding a detour that works.

Can You Make Money with Your Mission?

Questions for Board Members to Ask

Are you a board member looking for earned or mission income opportunities? Before you start new income activities study your organization’s other mission income experiences. Has your organization earned mission income in the past? Were the efforts successful? Can their success be traced to marketing, the products or timing? Are the circumstances repeatable? What percentage of the cost of providing the service did or does the income cover? In short, what strengths and skills has your organization gained with mission income?

For more see March’s Added Value newsletter. It presents a quick overview of this nonprofit funding source for board members.

How Twitter Makes You a Better Presenter

For a nifty exercise on how to hone the message you deliver when you present, see my new blog post for The Communications Network, How Twitter Helps Hone Communication.

Need Money? Check Your Assumptions

From peers in the nonprofit world do you often hear assumptions about how nonprofits can or cannot earn income? Assumptions that hinder their ability to raise funds and earn money like:

“We could never charge a fee.”

“We can never get corporate money.”

“We can’t raise money from individuals.”

If your nonprofit can use more income (and which nonprofit can not?) it makes sense to re-consider the seven nonprofit income sources at least once yearly. Invest time to determine if conditions have changed. Identify any assumptions that need testing.

To help your review, here are the sources in order of the amount of revenue they provide for nonprofits sector as a whole:

1. Earned or mission income

2. Individual donors from annual appeals to bequests

3. Governments

4. Foundations and other groups

5. Corporations

6. Other income, non-mission related (the room that you rent and soda machine change)

7. In-kind, which is not cash but acts like it when matched to your needs

For more help see the most recent edition of Added Value and other fundraising and income related articles on our website.

Our Boards Must Understand How They Operate

I just finished analyzing a governance assessment completed by 15 different organizations participating in a board building program sponsored by our local Community Foundation. It was fascinating. In many cases there would be one person from an organization that would answer the question in the affirmative about whether that organization had a Whistleblower Policy or a Records Retention policy – policies every organization must have. The rest of the respondents would answer “no” or “I don’t know.” In each of these cases, the executive director/CEO completed the survey along with board members. While I didn’t have the access required to manipulate the data, I’d bet my bottom dollar it was the executive director/CEO that was correctly answering the question because he or she was the one who ensured compliance. Even the answers to questions such as whether the organization employs term limits or a consent agenda revealed that oftentimes more than half the board members did not know if they did or didn’t.

While not surprised, I must admit I’m a bit disappointed. Clearly the majority of these organizations are operating according to proven practices, but the board is not aware of it. According to their answers to the question about the ease of getting a quorum, it doesn’t appear the problem lies with nonattendance. It seems as if the chief administrative officer is implementing the right policies and procedures but failing to share this with the board along the way.

What is the answer? First, maybe it’s time that the executive director/CEO turn over the implementation of board-related responsibilities to the board. Using the example above, this would mean that the development and dissemination of policies would be done by the board. And, if the board handles the job, the members would know the policies exist.

Second, perhaps the content of board education should be changed to focus more on proven practices and how the board complies with such practices. The bylaws committee might mention what section in the bylaws is guiding each action. The board development committee might create more or different talking points or initiate a short quiz at each board meeting designed to test whether the board knows how it is/should be operating. The orientation might be enhanced to ensure new board members understand what is expected and why.

Finally, there has to be a better communication. At meetings the board chair might make it a point to explain why certain actions are being taken. Committees might use a report form that spells out how recommendations relate to the organization’s strategic initiatives the budget, staffing and so on.

Hopefully, by working together more as a board each member of the board will know exactly how the board operates and why. Ultimately, that has to result in a more effective board.

Can Your Education Events Help You to Raise Money?

Is one of your goals to educate the community? When you educate others do you do so in a way that enhances fundraising? Is it possible to educate and leave your audience more committed to your cause? The answer is yes. Here is an example:

A hospital foundation holds an annual education luncheon. The event’s cost covers it’s cost. The goal is to educate the community and enhance donor relationships. Staff and board members are on-hand to greet and welcome guests. The event’s one page double-sided program contains two brief presenter bios and the day’s events. It includes a paragraph noting that the event’s sponsor had, “through the generosity of the community, provided $4.5 million to advance oncology in the community.” A slide show throughout the event shows the foundation’s logo. All this is basic. You’ve seen these elements before and include many if not all of them in your events.

The Difficult But Worthwhile Difference to Replicate

The main program consisted of two doctors sharing the latest breakthroughs in their field. Sprinkled throughout their presentations they referenced, and in one case showed pictures, of new equipment purchased by the Foundation. They shared how it helped their work. They shared how it made a difference in the lives of their patients. While one can argue that this was self-serving, since the doctors were thanking donors for their gifts and hoping for more, the impression the doctors gave was one of grateful humbleness (not always a common doctor trait) for having access to cutting-edge tools. One never sensed it was a commercial. Instead, it was a sharing of facts from their perspective and the equipment was a natural part of the breakthroughs.

The event left one educated about newest advances—some of which attendees will remember a week later. More than facts, the education attendees got was an understanding of the foundation’s case. Buying new equipment, in this age of quick technology turnover is not exciting. What is exciting? Giving to enhance my hospital, to make it more competitive, to provide residents (including possibly me and my family) local quality care and creating grateful dedicated doctors.

This community education event did double duty and more. Do your education events do as much for your cause? For more ideas about how to develop income for your organization see the many articles, podcasts and other resources on our website.

Why Reduced Government Funding is a Good Thing

You, like many nonprofits, are facing a cut or one of many cuts in your funding from government agencies. To many this is unwelcome news. While I see much handwringing by nonprofits about reductions, cuts can also be a blessing in disguise. Why? For many reasons, here are four:

1. Re-Invent Yourself. Reductions are an opportunity to decide how you wish to be funded. Government funding is only one of seven major nonprofit funding streams. Often, nonprofits chose it by default or because the money arrives in large attractive chucks. Is this the ideal way for you to be funded? This is a chance to examine the options and choose your ideal path.

2. Farewell to Restrictions. If you are tired of being unable to serve people who need it, because they fail to meet funding restrictions, more flexible funding with fewer restrictions is a “yes!”

3. Less Unnecessary Work. Perhaps your nonprofit is unique, but almost all nonprofits find that government funding requires extra work that you wouldn’t do (it doesn’t improve your outcomes) except to comply with the rules and retain the government money. If you can shift this effort into productive outcomes, it’s worthwhile.

4. Closer to Your Community. Getting your income from large chunks of government money, especially from state, province or federal sources, often isolates nonprofits from local market influences and needs. Growing diverse income sources will bring you in touch with these needs, demand new partnerships, innovative thinking and create greater income stability.

Why is reducing government funding is a good thing? In short, it opens up new possibilities. With creative effort and hard work, you can overcome the reductions you face. Before your current government funding shrinks further (it will!), take steps to grow your future using the resources you have now. If you wait, you risk having to start from dead stop. The sooner you begin the sooner you will be to say, “Reducing government funding was one of the best things that ever happened to our nonprofit.” Contact Karen for help.