Monday, August 29, 2011

Ruined by Success? The Danger of Windfalls

The Young Parent’s Group won a grant of $50,000 to launch their program. It was a great step forward and, at the same time, almost did them in.

Senior Services received a bequest, from an elderly woman no one knew, for $250,000. It nearly ruined them.

Almost every nonprofit over time will receive one or more windfalls. At successful nonprofits, these windfalls create great celebrations. But after celebrating and investing the funds to better their mission and often to buy that new roof that caused so much anxiety, successful nonprofits return to their tried–and-true fundraising and income development plan.

For others, the windfall creates challenges. Like their successful counterparts they celebrate and often make similar mission investments. However, instead of returning to consistent fundraising and income development work, they fixate on obtaining more windfalls. At Senior Services, five hundred people visit them a year. How can they find the next person who will leave a bequest—when the last bequest was from a one-time visitor? The Young Parent’s grant came from the community foundation as it was launching a new initiative in the area. Which, they wonder, of the other 100,000 or so other grant sources available will give them $50,000 to operate next year?

How can you avoid a windfall from placing your nonprofit at-risk? First, be joyous and grateful. After the celebrations, return to a realistic income and fundraising plan that is based on consistent disciplined-work, proven outcomes and fit with your organization’s temperament. Follow the paths that successful nonprofits like you follow. When your nonprofit has lucky breaks—and you will, recognize them for what they are. Celebrate. Then, return to the tried-and- true.

How does your nonprofit handle windfalls? Have you developed a board policy about how to handle them? Has your nonprofit ever been “hurt” by success?

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