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!

Five Reasons Faith-Based Organizations Fail to Get Federal Funds

When I started writing grants 16 years ago I was very intimidated. I wanted to do a good job for the organizations I worked for because I wanted them to get the funding.

In this industry, practice makes the difference. The more grants I wrote, the more confident I became. But what gave me the most confidence was reviewing grants. It taught me what to do and what not to do. It also gave me invaluable insights into the competition, which I used to help my clients.

Over the years, I noticed there was a disparity in the successful applications. In particular, among the faith-based organizations (FBO). It’s not that the federal government doesn’t want to fund faith-based organizations, they do. It had more to do with the quality of their proposals.

My initial motivation for entering the grant writing field was to help faith-based organizations, especially churches, gain the skill sets to obtain federal funding. So, I can’t overlook this teaching opportunity.

There are five common mistakes I find among the proposals from FBO.

  1. Lack Capacity –one of the fundamental things the Feds want to see is whether or not an applicant has the capacity to implement the programs at the level expected. They measure capacity from an organizational standpoint as well as a fiscal standpoint. Applicants need the human resources and financial resources, and many FBO lack both.
  1. No Structure – Feds want to ensure the organization is sound and has competent leadership in place. Many FBOs fail to demonstrate the competency and relevant experience of their board of directors. Whether the board is a governing board or an advisory board,  they need to possess the right skill sets and experience to ensure the success of the organization. Feds want to see executive level experience and the financial qualifications necessary to manage a substantial, and many times, multi-million dollar budget. Therefore, it’s important to demonstrate who is on your board and why, and their roles and responsibilities. Many FBO have a board of directors on paper only. They were only chosen to fill the mandated slots as recommended by the Secretary of State, not to have any key role in the decision making process.
  1. No Strategy – many FBO cannot demonstrate they have a strategy for the long term. Typically, they form out of necessity to meet an immediate need in their community. They operate from survival mode and rarely take the time to develop a viable strategy. Feds want to see your goals and objectives, which must lead to sustainable, measurable outcomes. If you don’t have a strategy, then it’s hard to ensure a positive outcome.
  1. No Funding – part of demonstrating fiscal capacity is the availability of multiple streams of revenue. If you’re solely dependent on the funding in which you’re applying, that doesn’t assure the feds of fiscal capacity. Grantees must be able to demonstrate that their programs can function as intended until the funding is available for drawing down. Federal grant funds are reimbursable, which means you have to perform the work first and then get paid.  It’s also not a good idea to be solely dependent on grant funds – fed money or otherwise- to operate your organization. It helps to consider other means for generating revenue. Many FBO don’t diversify their funding streams, so when the grant funds expire, so do their programs. No funder wants to invest in an organization that is not going to be able sustain itself beyond grant dollars.
  1. No Programming – Feds want to see that organizations are implementing programs that have been proven to work, especially among their proposed target population. They typically require their grantees to utilize evidenced based programs and strategies. Unfortunately, many FBO confuse ministries with programming. They’re not the same. Programs are strategic and structured. They also yield an expected, sustainable outcome. Ministries generally operate from a need-based approach, and often times their efforts aren’t evaluated.

Now, having identified these common mistakes, please know there is hope. There are many faith-based organizations getting federal funds. I just want to ensure that even more organizations can access those funds.

I’m opening registration this week for a new coaching program that specifically targets faith based organizations. I’ll work with 10 faith-based leaders who are ready to elevate their organization and programs to the next level.

Check out this link to get more information.

Until next time…

Peace & Blessings!