You Have to Pay to Play

The Cost of Fundraising

If I were to ask most new nonprofit leaders to explain their perception of fundraising, they would undoubtedly describe it as the process of asking for money to put into programs and services.

Many would likely overlook the fact that fundraising also requires a big investment on the part of the organization.

Let me explain.

When you are preparing for the ask, it needs to go beyond submitting a proposal or meeting with the donor. Often times it requires much more than an investment of your time if you want to be successful.

I was reading an article about one of the most successful nonprofit organizations in the country. Their annual revenue went from approximately $17 million to more than $400 million in 10 years. Now, its current annual revenue hovers between $300-400 million dollars. Incidentally, this is an organization that was only formed 11 years ago.

Obviously, they clearly have a wonderful cause in which people want to invest. But a key thing they attributed to their ability to raise so much money was, in part, the investment they make in courting donors.

Before you start making excuses that your nonprofit is too small to invest, or that it’s easier for a large organization to do that, you should hear me out.

A former nonprofit I worked for had an annual budget of about 1.5% of the aforementioned nonprofit, but they were committed to investing in fundraising. They made a consistent, concerted effort to court donors.

It’s almost like the old joke of what came first, the chicken or the egg? Do they have a large annual budget because they invested in fundraising? Or are they successful in fundraising because of their large annual budget?

Regardless of what you believe, it is indisputable that you can’t get a return on an investment you didn’t make. For a further explanation on what I mean by that, you can check out last week’s blog on that topic.

So, whether you are a small or a large nonprofit, here are some ways you can invest in fundraising:

1. Host events for donors – a simple strategy several nonprofits use is to host a luncheon or dinner for donors and prospective donors to highlight their programs, celebrate successes and sometimes just to say “Thank You.”

Make sure it’s done with excellence. You’ll have to absorb the costs of a nice facility and good food.

2. Create a promotional video – hire a videographer/editor to create a promotional video that highlights the work of the programs and showcases the impact you’re having on your target population.

It’s more effective to hire a professional to shoot the video and edit it. It may be cheaper to shoot it yourself on an iPhone, but it won’t have the quality you need to be successful.

The video can be used to share on social media, send the link to donors via email, or to show at the beginning of a meeting when you’re trying to appeal to a foundation or an individual donor.

3. Produce a highquality annual report – this is a simple tool that can go a long way. It is worth the money and the time to invest in putting together a really good annual report that showcases the accomplishments your organization has made throughout the year.

There’s a lot of information that goes into an annual report, including statistical data. It also consumes a lot of time putting all the stories together, so you must be strategic about it. If you’re a small organization with little to no staff, then you should definitely consider investing the money to hire a consultant to do this for you.

If you are able to write the content yourself, then you’ll need to invest in a good graphic designer to make it visually appealing. This is a great resource to put in the hands of potential donors.

Many organizations create a digital version of this and also make a few hard copies for distribution to potential and current donors. So, you’ll also have to factor in the cost of printing.

4. Produce a quarterly newsletter – if you don’t want to invest in an annual report, you might consider producing a high-quality newsletter that goes out quarterly or twice a year. Ideally, it needs to be created with the donor in mind, so the content should be of interest to a potential or current donor.

You’ll need to absorb the cost of design, postage to mail it, and printing costs. You want this to be a quality representation of your organization, so putting in the money to do this right is a worthwhile investment.

These are just a few simple ideas you should consider as an investment into fundraising.

It may cost you something on the front end to appeal to donors, but if done well, it will yield a significant return on the back end.

Until next time…
Peace and Blessings!

Reality Check for Start-Up Nonprofits

5 Things You MUST Do for Success

One of the greatest pieces of advice I’ve received in recent weeks is this: “You can’t get a return off an investment you didn’t make.”

It appealed to me because of where I am in my career and my desire to get to the next level. I have mentors in my life to help me in this process, but they can’t do the work for me. I have to make an investment of my time, talent and my resources, including finances.

As this advice applies to my business, it also applies to nonprofit organizations, especially start-up nonprofits.

I truly believe the term “nonprofit” has become a disservice to many start-up leaders. It has been my experience that many are misguided and confused by the term.

The term “nonprofit” is primarily a distinction that identifies your tax status. It lets everyone know you’re a charitable organization, and a benefit of that is you and your donors get a tax break from the IRS. Other than that, you are still a business. Therefore, normal business principles apply.

There is no other industry in which you’d start a business and not have the expectation that you need to make a financial investment. Unfortunately, since nonprofit organizations are eligible to receive grants, there is a misperception by many that they don’t need any other funding sources to operate.

That mindset creates a dependency on grant funding and less focus on innovation, creativity and entrepreneurial skills. I have also seen it create a “give me” mentality, whereas the expectation is that everything should be free. If you start out with this mindset you will be unable to sustain your organization.

There are more than a million nonprofit organizations registered in the U.S. Many of them aren’t operational. A large percentage of those organizations exist in name only. They registered with the secretary of state, they applied for their tax-exempt designation with the IRS, and then expected the grants to start rolling in.

They didn’t prepare for success. They didn’t set up the right structure or governance with their board of directors, and they didn’t have any skin in the game. Basically, they made a minimal financial investment by paying the fees to get organized and did nothing else.

For many, the expectation was they could get free labor, free resources, and free money (grants). Once the reality set in, they were stuck.

Obviously, there are a lot of successful nonprofit organizations that exist. I’ve worked with or for several of them. But they all have something in common. They are organized, strategic, collaborative, and fiscally sound.

They realize they need multiple streams of revenue, and raising money through grants is just one part of their overall fundraising plan.

It’s naïve to think you can be a successful nonprofit organization without a strategic plan. It may be cliché but it’s true – if you fail to plan, then you plan to fail.

So, here are five tips to help start-up nonprofit organizations succeed: 

1. Develop a Plan BEFORE you become operational. Commit the time to develop a comprehensive strategic plan that includes a plan for funding that goes beyond just applying for grants. You need multiple streams of revenue. Funders want to see that. It demonstrates your fiscal capacity.

2. Start small. Before you start trying to serve the masses, serve from your current capacity level. You may not be able to serve your entire city, but perhaps you can serve the people in your immediate community. This allows you to fund the work you’re doing, get a realistic idea of what it costs to operate your program, and it gives you the experience funders want to see before they feel comfortable funding your organization.

3. Collaborate with other organizations. Use the first year to build relationships with key community partners, especially people who provide similar or complementary services and programs. It could be an organization that offers wrap around services that your target population needs. The important thing is that you establish a credible reputation. Allow people to get to know your work. People do business with people they know. If nobody knows you, then it becomes more difficult to get organizations to work with you or agencies and foundations to fund you.

4. Make a financial investment in your organization. If you haven’t put any skin in the game how can you ask someone else to. If you and your board members aren’t willing to make a financial investment in your organization, nobody else will. Most funders want to see your financials before they make an investment in you. If you don’t believe in your vision enough to put your own money into it, then you shouldn’t even start a nonprofit.

5. Invest in professional development. Get the training and the credentials you need to do your job effectively and successfully. There is some education and training you can access for free, but you need to allocate funds in your budget for professional development. You need to recognize the value in paying for training and services that will benefit your business and your clientele.

Once you’ve put the time and energy into setting the right foundation for your nonprofit organization by doing these things I’ve suggested, then you can start pursuing major funding to help you get to the next level.

If you’re not willing to put in the work and get some skin in the game, you need to seriously consider why you’re doing it.

Until next time….

Peace & Blessings!

Mastering the Art of Storytelling

I often say that writing grants isn’t rocket science. It’s a skill. Therefore, it’s something that most people can learn.

In my opinion, and in my experience, it all boils down to your ability to tell a story.

So often people get caught up in the logistics and the semantics of the grant announcement that they forget what the process is all about. You’re trying to win the heart of the funder by mesmerizing them with your story. You need to give them a compelling reason to invest in your program and your organization.

When I was in high school there was a defining moment that made me a great writer.  My English literature teacher assigned us to write a report on Macbeth. When I got my paper back I was disappointed with my grade. When I asked her to explain to me what I did wrong she mentioned several key things I left out of the story. To which my response was, “you know that already. You read the story.”

Her response was my aha moment and forever changed me as a writer.  She said, “you have to write as though I don’t know the story.”

That’s the exact same thing you have to remember when you’re writing a grant.  The reviewer of your grant doesn’t know your story. They can’t look it up on Google. So, if you want them to know the great things about your program you have to tell them.

Here are 3 key things you can do to master the art of storytelling.

1. Identify the story you want to tell. There maybe a lot your organization is doing, but what is that one story you want to tell and have the ability to tell effectively. Even in the midst of everything you’re doing there should be a central storyline at the core.

For example, Habitat for Humanity (HFH) is a nonprofit organization that builds homes for low-income families. The story isn’t that it builds houses, it’s the impact it’s having on families and communities around the world.

2. Pick three key points you want to make about that story. Provide supporting statements that make the point. These should be concrete examples.

Using the same example of HFH, an option is to highlight the before and after of a family that was the beneficiary of a new home. What was their life like before and how is it different now? Beyond the obvious of now they have a house whereas they didn’t before. You have to go deeper  by revealing something less obvious, but extremely impactful.

3. Demonstrate why your story matters to the donor. Why should they give to your organization? Ideally, your story and your work should align with the priorities and values of the donor you’re soliciting for help.  Also, be sure to demonstrate the direct impact of their donation by identifying the actual problem it will resolve.

If you can incorporate these three strategies you will significantly improve your ability to tell your story and to write successful grant proposals.

If you want to learn more ways to tell your story, I’m offering a course on this subject in October. I’d love to have you join us.

Until next time…

Peace & Blessings!