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Make Money: Fill Your Dance Card

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Corporate philanthropic giving generally flows in one of three directions. The “Fill Your Dance Card” option links giving back with growing revenue. You give, in part, to build new customers.

One common way to fill your dance card is to sponsor events. Event sponsorships persist because of thier success. Eighty-nine percent of U.S. consumers stated that given similar quality and price, they prefer brands linked with a cause. Dan Ariely writes about a study involving art and donations: “These results suggest that once someone (or some organization) does us a favor, we become partial to anything related to the giving party… the magnitude of this bias increases as the magnitude of the initial favor (in this case the amount of payment) increases.”

Event sponsorships, however, represent just one way to fill your dance card. You have a boat load of other choices.

You might also investigate operating sponsorships. Or “Introduce Yourself” options. Introduce yourself options include prizes, contests, scholarships, free tickets, etc. They help potential customers meet you. For instance, a plumbing supply business offers a competitive scholarship to a local tech school. The company welcomes classes of future plumbers and gains, as Ariely suggests, their favor. At a chamber presentation, a business introduces itself by raffling a free session and other prizes. A theme park offers a free ticket to a child who reads the most books in a year. This introduces the park, supports competitive reading, and creates park partiality among the school’s students, the teacher, and their parents.

To benefit from a full dance card, identify the specific customers with whom to dance. Explore nonprofits that interact with them. Don’t forget the potential value of connecting with a nonprofit's board members, donors, and volunteers. Luxury brands often align with high-end markets, i.e., a Bentley dealer engages with the symphony. Other businesses find their potential customers on Saturday at work-site volunteers at Habitat for Humanity.

Introduce yourself options, events, and operating sponsorships present three of many way to fill your dance card by partnering with nonprofits. What steps will you take to fill your dance card? Don't dance alone when you can dance with potential customers.

For more information about business-nonprofit opportunities subscribe to The Link. Or, contact Karen.

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More Money for Your Non-profit Next Year, Part I

Jackie studies her current year’s income projections and groans aloud. Again, to avoid a shortfall, they will need to create an emergency year-end appeal. She pounds her fist on the table. This is it. This is the last time! Next year, she vows it will be different. Twelve months from now, under her leadership, this non profit will have the income it needs to avoid this yearly crisis.

Money. Not only is it desirable, it is essential. To cover the impact of inflation and to fulfill your mission statement, your non profit must earn more. Have you, like Jackie, decided enough is enough, and that next year is the year? Or, perhaps you avoid eleventh hour drama like this, but just need to earn more revenue or raise more funds. Whatever your situation, obtaining more income starts with knowing that earning it is possible. It starts with knowing it is achievable with the right activities. This series outlines them. While much more can be shared, this series offers a quick map for your journey. As, you learn the steps, we’ll follow Jackie, a non profit executive director with a five-year track record of providing extraordinary service to her community, as she organizes her non profit organization to earn more next year. The thirteen-steps ahead will help you to take the right actions next year, and in the years to come. We start with three thinking steps.

All Starts With Thinking

The first three steps of earning more money involve establishing conducive mental mindsets. Despite other needs or even catastrophes, if you are serious about improving your income, you will make earning more a priority.

1. Vision. How much money do you need? Your financial success starts with a specific amount. This amount combines what you want with what you need. For most, it includes meeting your budget plus some growth to meet inflation and new challenges. What dollar amount is necessary? Give this serious thought. Write the amount of money you need down. My clients find it helpful to determine three: a must have number, a want number and after some consideration a goal. The goal is usually an optimal combination of wants and needs.  

Jackie contacts her budget officer and staff for suggestions. She queries several financial types on her board. With this help, they establish a budget for next year that is three percent higher. One and five percent were her must have and wants. Her emotional touch point is that one year from now, she, her staff, and board will use their energy to celebrate and plan, instead of conducting another all-hands effort to avert year-end fiscal disaster.

2. Believe. Believe your cause is worth funding because of the value you provide to the community. Believe you can solve your income challenges. To make this concrete, calculate your value. Read ROI For Nonprofits: The New Key to Sustainability by Tom Ralser to begin to calculate a ball park figure of the value of your services. Or, for a free peek on how to value your work, listen to a five-minute audio at the bottom of this web page where I share how to calculate the dollar value of a single referral partner.

Good non-profit organizations offer tremendous value. The most successful non profit organizations offer stupendous value. Translating your value in dollars will help you to make this reality concrete. Believe you can and will earn more money next year by providing this value and more to your community. This is not la-la-land thinking, but a belief you hold and act upon that is in your gut. With effort, work, investment, and the continual provision of value, you will reach higher income. Believe.

Jackie listens to her staff, board and volunteers. To engage them, she asks for information on three-income success and three areas to improve from this year. At the end, almost everyone agrees that a three percent increase is possible and desirable. She talks to her most successful peers. She learns that they too expect to increase their income next year. Two agree to support her during the year, to help her increase her skills and to remind her that the goal is attainable if she becomes discouraged. She believes.      

3. Realistic Optimism. While related to belief, realistic optimism is more. It is like donning a pair of glasses. The lenses affect how you interpret the world and your work. Use your realistic optimism view to shape your thinking.  Vietnam Prisoners of War, who embraced uncertainty (we don’t know when) and faith (we will get home) survived. Others perished.

To earn more money next year, adopt realistic optimism. It will be challenging and worthwhile. Even if you earn more money in 367 days rather than 364, the goal is worthy. Embrace uncertainty of timing. Mix it with hope. You can get there.

Jackie considers her own mindset. She has been with the organization five years. Each of the last Decembers, they faced a budget crisis. Jackie decides that this is a behavior that can be changed (faith). She lists the commitments already made for the next year—to begin certification, to finish a building project and to upgrade staff policies. Improving income is as important as these efforts. Improving income will help them all. She believes it is possible and is optimistic that they can do it with focused effort. At her regular meeting with her board chair, she shares her thinking. He agrees changes are in order. They agree, it can happen next year, but they understand that a five-year-old pattern may take longer to exorcise than 52 weeks (embrace uncertainty). It’s worth a multiyear effort if that is what it takes (believe). He agrees to present the challenge to the board as a regular agenda item.  They commit to approaching the challenge with realistic optimism.      

More Money Next Year

Jackie’s successful non profit organization is well on its way to earning more money next year. For Jackie and you, clear and tough thinking is a critical start. Much lies ahead. Next month, in the newsletter Added Value we share the practical steps Jackie takes to earn more money next year, especially securing current income. In the months, that follow, you will learn more about her planning, acting, and evaluating actions. In the meantime, for more information, read some of the many nonprofit income and fundraising articles here. 

To subscribe to Added Value (free), link here.  Sign up box is on the bottom right.

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How to Succeed In Business

The musical, How to Succeed in Business Without Really Trying, traces the adventures of a window washer who climbs the corporate ladder in several days. Your nonprofit can succeed in obtaining business funding. However, it will take time and effort. This article provides a board primer to help you understand and earn this vital source of nonprofit income.

1. Why do corporations and businesses fund nonprofit organizations?

·      Business opportunities. Businesses seek to increase their customer base and goodwill among current customers. Nonprofits that reach their customers or potential customers provide an opportunity.

·      Employee Support. By maintaining loyal employees, businesses reduce recruitment expenses and improve employee morale. Supporting nonprofits demonstrates that the company has a heart.

·      Repayment. The funds represent a concrete expression of business’ gratitude for the community support that made success possible.

·      The cause. A business leader has a passion for your mission. Business income provides him or her with a vehicle to act on their passion.

·      Strategic. The business recognizes that working with a nonprofit is a chance to meet these or similar objectives with one check.

2. What are some examples of business support of nonprofits?

·      “In 2009, Cisco and the Cisco Foundation announced a three-year cash, product, and services grant of up to $4.5M to help City Year build a collaboration and communications platform . . .” (Cisco Website)

·      The Verizon Foundation funded the Boys and Girls Clubs of Miami for $10,000 to support Project Learn. The project provides children with homework assistance and through educational games that sharpen their reading and math skills. (Verizon Foundation Website)

·      An Easter Seals successfully sells gala tables for $2,500. The package includes a complimentary table for eight, website recognition, a half-page program advertisement, an event banner and four invitations to a VIP Reception.

3. What types of support do corporations and businesses offer?

Four types are typical:

a. Grants or gifts. These are competitive opportunities that reflect the corporate responsibility and citizenship values. For the most part, corporate giving is like icing, a thin layer spread wide.

b. Sponsorships.  Cash or in-kind resources paid to a nonprofit. For the business, these represent marketing opportunities and are paid for from this budget rather than the philanthropic one. Sponsorships include many variations like event-naming rights and annual awards.

c. Cause Marketing also relates to a firm’s marketing. The term is used in several different ways. In some cases, it involves a donation with purchase. In others, cause marketing is about “the cause.” A pet food company engages in cause marketing that supports proper pet nutrition with your group and other nonprofits that deal with animal welfare. Besides income, cause marketing helps nonprofits to reach sizeable new audiences. Businesses benefit by increased sales.

d. In-kind. These include goods and staff hours that a business gives to a nonprofit. Often they involve merchandise a business sells or staff loans in the case of employees. In-kind giftsfrom all sources will bediscussed in a fall issue of Added Value.

4. Is this a common source of nonprofit income?

Yes, it represents one of seven sources of nonprofit income. (Read about the others here.) Historically, corporations represent just one to two percent of all nonprofit income. For many, it is a budget enhancement, not a major income source. For others, it is a lifeline. City Year, for example, receives 24 percent of its funding from this source.

5. Besides the money, what are the benefits of business support to a nonprofit?

·      Credibility. Business support enhances a nonprofit’s standing in the community. Partnerships like these enhance brands. Besides money, City Year receives national recognition in part because of its many corporate partners.

·      Resources. The process of exploring potential business relationships helps nonprofits to identify untapped assets they can monetize. Additionally, business relationships often allow you access to their personnel, allowing you to grow your expertise in areas like technology and marketing.

·      Community connections. Business people know other people. Your business partnerships can help you to find new board members, volunteers, and donors.

·      Reach. When well executed, sponsorships and cause marketing help nonprofits to reach new customers and educate the community about missions in ways that would be impossible otherwise.

6. What are the risks?

·      Unsteady income. Fluctuations in economy and business priorities impact commitment and the availability of funds. Your mission is not the primary concern of a business.

·      New thinking. Change can be challenging for nonprofits. Especially with sponsorship and cause marketing, nonprofits often need to reframe their thinking from being a supplicant to a partner.

·      Fear of selling out. For some, working with a corporation, no matter the benefits, represents selling out. This is a bit like rejecting all medicines because of a bad experience with one prescription. By definition, successful business partnerships create wins for the business, the nonprofit, their customers, and, ideally, the community. Consider the now classic example of American Express’ support for the restoration of the Statue of Liberty.

·      Rejection. Rejection is a given. Nonprofits need to take the initiative to show creative opportunities to potential partners. Not all offers will be accepted.

·      Pricing. Pricing is tricky. Many special event tables are offered which fail to provide appropriate return on investment. On the other hand, many nonprofits give value and receive dimes instead of dollars.

7. What is your organization’s experience with corporate support?

Learn about the different business and corporate support your agency receives or might receive. Explore the benefits for both sides of the partnership. Ask questions like: What businesses fund us? What return do they receive for their investment? What assets do we have that we might offer? How can we create wins for the business, for us, and for our customers? Do we have the infrastructure in place to do a stellar job with these funds, especially after we get the money?

8. What is the role of the board?

Here are three useful actions for board members to take to support funding from this source. 

·      Identify opportunities. Almost all nonprofits can access funding from well-known corporations or regional businesses. The latter include those with physical proximity, like the printer next door, and those with mission proximity, such as medical firms that also serve your patients. Many nonprofits overlook these.

·      Make connections. Help your personal business connections to be aware of the opportunities the nonprofit offers. Invite business friends to special events. Set up lunches so that a corporate friend has an opportunity to meet with your executive director or board chair to explore overlapping customers.

·      Balance. If you serve on a committee that supports this effort, seek ways to balance the needs of players. For instance, recognize that the nonprofit’s mailing list is a valuable asset. On the other hand, recognize the organization’s obligation to those on the list. Create wins for each partner and everyone’s’ customers.

9. What is exciting about this income source?

The best ways to partner with businesses to earn funds are still ahead of us. While fundraising in the nonprofit field is young (less than fifty years as a profession), business and corporate philanthropy is even newer. Models and ideas continue to be explored, accepted, rejected, and modified. Great potential exists to further corporate and nonprofit goals. The Chronicle of Philanthropy recently reported on a new $10 million dollar alliance between Dow Chemical and the Nature Conservancy that, “exemplifies the type of in-depth collaboration between business and charity that is needed to protect habitats.”

10. What is the general process of developing corporate support?

Grant: Nonprofits find these opportunities by exploring websites and by invitation. Usually the opportunities are well advertized, since announcing the opportunity supports the corporate brand. Expect intense competition. Apply early, because funds often run out. While labeled a grant or gift, assume that these are funds with strings e.g., a recent application asked, “Through a true partnership, where both parties benefit, how will you increase foot traffic at our stores?”

Sponsorship and Cause Marketing: First, many nonprofit need to recognize that they have multiple assets with value. Brent Barootes, with Sponsorship Group, suggests, “Know what you have to sell, conduct discovery sessions, and custom build proposals.” Sponsorship, he explains, is not about large audiences, but the right audiences. For most nonprofits, this represents a new approach. To start, consult texts like Patricia Martin’s, Made Possible By (good summary) and The Sponsorship Seeker’s Toolkit by Kim Skildum-Reid and Anne-Marie Grey (more detailed).

How to Succeed in Business

Corporate and business funding is possible for almost all nonprofit organizations. These include opportunities from large corporations, local businesses in your neighborhood, and those who serve your customers or volunteers. Corporate funding is in its infancy. Discover ways to work with businesses that benefit them, your nonprofit, your customers, and your mission. Don’t wash windows; succeed in earning business income.

Resources

Corporate and business support is only one of seven nonprofit income sources. This article on corporate funding is #4 in a series about each of the sources. For the earlier issues, click here.

For more on nonprofits and funding opportunities, listen to our collection of audio downloads, especially Money-tastic #2: Nonprofit Income Opportunitiesand Money-tastic #3: Creative Revenue Streams for Your Nonprofit.

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Reason for Hope? What Your Board Needs to Know About Government Funding

If the seven nonprofit incomes sources[1] entered a popularity contest this year, the biggest loser would be government funding. As state legislators across the United States conclude, sessions that caused widespread anxiety, government funding has became unpopular. However, dismissing it entirely is a mistake. Even with current cutbacks, nonprofits will continue to receive significant government money. Grants.gov, the official website for US Federal Grants, lists 26 agencies that offer 1,000 funding opportunities. States, provinces, municipalities and others will continue to provide income. This article provides a board primer on government funding to help your leaders maintain a realistic perspective on this source.  

1. Why do governments pay funds to nonprofit organizations?

  • The activity promotes the common good.
  • More bang for the buck. Nonprofits offer better or cheaper solutions.
  • Nonprofits provide services that increase the impact of government funding, i.e. support services for developmentally disabled or seniors.
  • Voters like the mission. Elected officials like happy voters.
  • An unpopular activity, like tickets from parking in handicapped spots, can be made more palatable by sharing the proceeds.

2. What are some examples of how government support has helped nonprofits?

  • Utah Judicial Council received $30,000 to support the creation of a Court Visitor Volunteer program to assist elderly and incapacitated persons appearing before the court on matters of guardian or conservatorship.
  • The Alberta Ballet Company receives $500,000 CA from Canada Council for the Arts.
  • The Florida Humanities Council awards $2,000 mini-grants to planning and execution of public humanities projects.

3. What types of support do government entities offer?

Typically three kinds:  

a. Grants. Through a competitive application process nonprofits apply for one-time funding. The application and subsequent contract outlines what the nonprofit will achieve with the funds. Often payment is divided into segments.

b. Contracts. While the labels grants and contracts are often used interchangeably, they represent two different arrangements. With contracts, again through an application process, nonprofits obtain funds to provide services. If the service is not performed or less units of it take place than the contract allows the nonprofit receives a reduced proportion of the award.

c. Earmarks. Wikipedia defines an earmark as “a legislative provision that directs approved funds to be spent on specific projects, or that directs specific exemptions from taxes or mandated fees . . .” Generally, your legislator inserts an earmark into a budget or legislation that directs resources to your organization.

4. Is this a common source of nonprofit income?

Yes, it is the second or third largest source depending on the reference. In size, government funding ranks after earned income and either before or after individual donations. Historically, governments represent 21 percent or more of all nonprofit income. 

5. What are the benefits of government support?

  • Significant Money. Government funding ranges from around $20,000 and reaches to multimillions. Individual donations, by contrast, often start with $20 or $100 gifts.
  • High Need. Government funds often help pay for needs that have low individual donor appeal, but high societal need like help for parents who abused their children, juvenile delinquents, or adults with mental health problems.
  • Persuade Few. You only need to convince a handful of decision makers of the your work’s merit, like county commissioners, panel members, and staff. In contrast, individual donor databases include thousands of names.
  • Renewal Opportunities. With contracts and grants, successful early birds often learn and successfully apply the rules of the game. These rules act as barriers that discourage new entrants.

6. What are the risks?

  • Underpayment. Government entities rarely pay for all costs associated with projects, including the expense related to obtain the money.
  • Winners Take All. You will face stiff competition. The difference between success and failure can be one point or vote.
  • Unintended Impacts. To manage the funds you will need infrastructure to deal with the paperwork and a tolerance for bureaucracy.
  • Unhealthy Dependence? The size of the government funding creates huge impacts in budgets both when the funds begin and end. Some nonprofits develop an unhealthy dependence on this money.  

7. What is your organization’s experience with government support?

As a board member it is wise to learn about the different types of government support your agency receives or might receive. Consider asking questions like: What government agencies might fund the nonprofit? What is the process? What percentage of the budget does government funding represent? If significant in size, what plans exist to replace these funds if they are reduced or eliminated for a year—or forever? What actions should we take to ensure these funds remain available to us? Do we have the infrastructure in place to do a stellar job with these funds?

8. What is the role of the board?

  • Determine if government funding makes sense and the percentage of your income you would like it to represent. If you are already heavily government funded, help your organization funding to be more diverse.
  • Vet opportunities and remain objective when the lure of millions impacts the group’s thinking. Qualifying for an opportunity does not equal winning it. Determine if an opportunity offers a greater than 50 percent chance of success—before applying. Many federal programs anticipate funding ten or fewer recipients and set six-week deadlines. Many qualify. Few can develop a quality application 45 days or less unless they anticipate the opportunity before the official announcement.
  • Help your nonprofit to persevere. When you find a program that works or a legislator willing to include your program as an earmark, understand that second or even later request stand increasingly better chances of success, especially when your request was a near miss the last cycle. Obtain any review comments. Second requests allow you work from a template, respond to the review comments and tinker with the project—all actions that increase your success.
  • If government funding fits, develop a “spare income vehicle”—for downturns. Fluctuations will continue.
  • Create positive relationship with your government officials. Listen to them. Help them to meet their goals. Practice good stewardship just as you would with other people who provide you income.  

9. How can we prepare for what is ahead?

Pursue. Don’t let the headlines confuse you. Government funding is here to stay. Identify the sources you need. Seek them. Be aware of trends. Don’t let them keep you from the money you need for mission and a partnership with a government entity.

Be Proactive. Your government income may be immune to cuts, but recognize that for many nonprofits the unthinkable in this arena has happened. Regardless of your certainty, find a spare income vehicle that works and run it around the neighborhood regularly.

10. What is the general process of developing government support?

Best Practices.

For earmarks: Contact your legislators.

For grants and contracts, 1. Identify government entities that share goals with your organization. Review their websites. 2. Talk to their staff. Learn about any existing or pending programs. Ask for copies of successful applications. 3. Develop a proposal concept. Check with staff about it suitability. 4. Draft your proposal in time for a pre-submittal staff review. Adjust the proposal according to any suggestions. Thank staff for their help. 5. Submit the proposal. 6. Prepare for the site visit or panel review meetings. 7. Obtain the results. Celebrate or determine if this source is a realistic opportunity for your organization. Incorporate what you learned. Apply again as appropriate.

The End of Government Funding?

Government funding will remain an important funding source for nonprofits. In all likelihood threats of and actual cuts will be part of the experience. If your mission and the government’s intersect, uncover the opportunities you have and decide how your organization will take advantage of this resource to forward your mission.  

Resources

Government funding is only one of seven nonprofit income sources. For an overview of the other sources, see Can Your Organization Obtain More Income? The 7 Sources. For other in-depth primers on each source, click here. Subscribe to our free monthly newsletter jammed with value for nonprofit leaders.



[1]
Mission earned income, individual gifts, government, corporate, foundation and other groups, other income and in-kind.

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Waiting for Super Donor?

Every nonprofit organization hopes someone will make a significant donation that rescues them from their financial challenges. Do you wait for Super Donor to rescue you? Unfortunately, if you only wait and hope, the odds are that Super Donor is not coming. Nor is he sending a check.

Instead, this article shares what every board member needs to know and do to obtain individual donations.

Know

1. Why do people give money to nonprofit organizations?

Key reasons include a sense of community or duty and the opportunity to pay back, change lives, and to help in time of need.  Most donors also say that they give because they were asked.

2. What are some other examples of how individual donations helped nonprofits?

  • Tom and Dorothy Morris of Ft. Lauderdale, Florida left two million dollars to the University of Georgia’s College of Veterinary Medicine in a bequest.
  • Eight-year-old Caelan McNamara raised $10,000 to help 97 children from around the world who were born with a cleft lip or palate receive corrective surgery.
  • An anonymous donor gave the Twin Cities Food Bank a check for $40,000.

3. Is this a common source of nonprofit income? Yes. Individual donations, depending on the reference, are the second or third largest source of all income. In terms of size they rank after mission earned income and sometimes after government funds. Individual donations represent 75 percent of all donated income and 20 percent of all nonprofit income.

Individual nonprofits vary in their receipt of these donations from none to many. Likewise, efforts to obtain them vary from passive to a complex system involving multiple staff members. For groups that receive large lump sums from other sources, i.e. the government, individual donations are challenging to start with. They begin with $10 and $20 gifts and initially cost more than they earn.

4. What forms do individual donations take?

There are many. Here are six forms:

Nominal Gifts-These are donations you receive from anyone, even if they lack passion for your cause. On Saturday morning, members of the baseball league solicit funds outside the supermarket. While you lack baseball passion, the girls are cute. You give an individual donation of five dollars.

Annual- These are gifts of connection. You solicit them from everyone associated with the organization, mostly by a request letter. Donors with the potential for larger gifts are solicited face-to-face. A major benefit of annual appeals is their ability to identify people with the connection and ability to donate who actually contribute. The goal of established annual appeal drives is not always money, but to identify new and upgrade existing donors.

Special Events- Your organization holds an event, like a gala ball, intimate dinner, or educational workshop. Generally, an entry fee and additional donations are solicited during it. Special events are considered successful if the organization makes 50 percent or more of the event’s cost. Events provide opportunities to deepen relationships and connect people in your community with each other. When done well, they both educate people about your cause and raise money.

The following three forms of individual donations involve greater effort, relationships, and rewards. They focus on donors who give consistently to the organization.

Major gifts- Donations are requested from an individual donor with means, connection, and passion for a specific effort. Each organization determines its own definition of an amount that equals a major gift. The process of identifying candidates, preparing to ask them, and asking them for gifts is deliberate and methodical.

Planned gifts- According to Wikipedia, planned gifts are “several specific gift types that can be funded with cash, equity, or property.” Planned gifts have tax and estate implications that require the help of the donor’s advisors. Donors who give planned gifts have means, connection, and passion.

Bequests- Thesegiftsare the largest subset of planned gifts. They involve connection and passion — and some means. Means is less critical because these gifts are made from a person’s estate. These gifts literally represent money they cannot take with them. Bequests represent excellent opportunities for people concerned about having enough for their own needs and family obligations, but who want to support a nonprofit they love in a meaningful way. The average estate gift is $70,000.

5. What are the benefits of individual donations?Besides money, individual donations offer ways to meaningfully involve people. When gathered, donors create a community that supports, uplifts, and promotes your mission. From the nonprofit culture’s viewpoint, individual donations represent the purest form of income. Individual donations are gifts from people who love your mission enough to invest their personal income. You will love and be in awe of many of these donors.

Finally, since all nonprofit income is based on relationships, successful individual donations help to refine people skills. Individual donations require nonprofits to see the benefits the organization provides from an outside viewpoint. Success with individual donations requires nonprofits to craft a message about the organization that link emotion with logical arguments.

6. What are the risks? Almost every nonprofit would like individual donations. Obtaining them, renewing them, and increasing their size requires disciplined work and expected rejection. Not surprisingly, most nonprofits express less interest in this aspect of the process! Obtaining individual donations is part art, part science, and challenging. You must ask the right people for their money to do something that mostly benefits them only indirectly. Since the best asks are face-to-face, the rejection may feel personal.

Nonprofits that succeed with individual donations are open and outwardly focused. For those who have not succeeded in this arena, learning to express gratitude and creating a culture of philanthropy can represent real cultural shifts. Nonprofits that succeed adroitly balance donor and organization needs. The recent National Public Radio scandal highlights the dangers of being “too eager” to obtain money. High-net-worth donors can demand or suggest actions that get their recipient nonprofits “off track.” The impact can be subtle or dramatic.

Most critically, long-term individual donations require that your organization be healthy and led by healthy, mature people. Fundraising is relationship-based. Donors want attractive, self-assured, and inviting relationships. Undone housekeeping in this area will impede your success.

7. What is the general process of developing individual donations?

Individual giving involves two levels:

Level One- A numbers game. You create as large a community around your cause as possible and encourage people to donate to it. Over time, you help them to renew and increase their donations.

Level Two- A strategy and execution exercise. You identify a subset of passionate, committed donors with means from Level One givers and then focus on them. This level gets the right players on the bus, finds out what motivates them, designs requests around mutual goals, and asks these donors to make significant gifts.

8. Who makes a good prospect for large donations?

The three classic tests for nonprofits of donor readiness are ability, passion, and connection. Ability involves the financial means to make a gift. Passion is that they care about your cause. Connection is based on a relationship with your organization: they volunteer, use the service, or otherwise know about you. Of the three, you have the most control over connections. Offer numerous opportunities for people to increase their relationship with the organization.

Industry-wide, 90 percent of individual donations come from 10 percent of a group’s donors. Most large donors will make a small gift first to test the waters.  For large donations, develop personal relationships with around 20 to 25 people from your pool of donors who are well-to-do local individuals with an interest in your cause. Find donors. Listen to their needs and interests. Develop opportunities that match their interest and your nonprofit’s needs. Ideally a team of two visitors, one of whom is a peer who has made a similar gift, requests a major gift in person. Acknowledge the gift. Continue the relationship. Repeat.

Do

This section discusses what board members can do to support individual donations.

9. What questions should we as board members ask about individual donations? Inquire about yoursuccess. How many people do we have on our contact lists? How many donors do we have? What is the range of gifts? How do these numbers compare to industry averages? What plans exist to gain new donors, keep current donors, and upgrade them? How do we acknowledge and thank donors? What kind of gift do you need from me each year? How can I help you to meet potential donors? How will you help me to be comfortable asking friends and acquaintances to be involved with this organization and even for money?

10. How can I help as a board member?

“Let there be peace on earth and let it begin with me.” Do you remember this song? It reminds us of the need for individual donations from nonprofit leaders. Individual donations begin with the people closest to the organization. The board, volunteers, staff, and customers make gifts first. Why? This group knows and loves the organization and is closest to it. They believe the cause is wonderful and vital. Some organizations set a specific dollar amount for board donations. Others ask for a meaningful gift each board member determines his or her self.

Besides first gifts, sharing your passions with your connections is critical. For grass-root groups, this can be as simple as sending an upcoming special events announcement to your email list with a personal note, and following it up with five personal invitations. For larger organizations, consider serving on committees that plan for and ask for gifts. Make calls to make appointments with your peers. Make calls to thank donors. In all cases, help the nonprofit to network with potential donors.

11. What if this is scary for me?

If you feel uncomfortable asking for a gift or sharing a list of friends, tell your nonprofit staff. Insist that they help you, or find the training needed to make this process something you want to do. This is a group effort. Insist your organization do individual donations well. Learn how they will treat any names you give them. When the preparations are adequate, brave the waters. Believe that when your friends and contacts know what you know, they will want to help.

Are You Sure Super Donor is Not Coming?

Don’t wait for Super Donor. Instead, invite a large community to help your nonprofit. From within them, identify those with means and commitment. Build connections. If Super Donor is within your reach, he or she will slip in among them. Don’t be surprised when Super Donor’s check arrives and outsiders call it luck. Know that the gift is the result of your careful work to invite individuals to share in the work your organization does to change lives.

 

Resources

This article is part of a series on nonprofit income sources in the free newsletter Added Value. Find back issues at here.

Need more help? Buy these audio downloads: Money-tastic #2: Nonprofit Income Opportunities and Money-tastic #3  Creative Revenue Streams for Your Nonprofit at www.kedconsult.com.

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Can You Make Money with Your Mission? What a Board Member Needs to Know

Board member Sue raised her hand to ask, “If this is successful, is it okay for us to make a profit? After all, we are a ‘nonprofit’.”

In this post-recession world, nonprofits continue to seek ways to increase money to create their missions. One option is to expand earned income or mission income that is, income earned while doing mission.[1] In this climate nonprofits that never considered mission income are reexamining opportunities. Others who dabbled in mission income now place it front and center. As a board member, here are ten fundamentals to consider as you explore mission income opportunities for your nonprofit.

1. Is it okay for nonprofits to make a profit? Yes, it is both okay and advisable. It’s “no fun” to end the year in the red. The Maine Association of Nonprofits states it best: “What distinguishes nonprofits is not whether they can make a profit, but what happens to profits. Nonprofits are prohibited from distributing profits in the same way for-profit corporations can. All revenue must be earmarked for the organization's mission.” Good news, when you make a profit you must use it to create more mission.

2. Is mission income a common source of nonprofit income? Yes, in factmission income is the largest source of nonprofit revenue. This surprises many people until they consider entities like theaters, hospitals, colleges and counseling services and their fees. Mission income totals just under $650 billion per year (Nonprofit Quarterly).

3. What is your organization’s current relationship with mission income?Many nonprofits earn mission income. If yours does, you will want to learn about the sources. What percentage of the cost of providing a service does the income you receive cover? Learning about your current sources will help you to make informed decisions. Other questions to ask include: has the organization earned mission income in the past? What were the experiences? How were they successful? Can be traced to marketing efforts, the product offered and repeatable circumstances? In short, what strengths does the organization and staff have around mission income?

4. What are the benefits of mission income? Besides money, mission income offers opportunities for increased sustainability, new ways to involve the community, enhanced brand identify, cause education, greater control, and with a good consumable product—an opportunity to continually reengage the community. A major benefit of mission income is it versatility. There is virtually no end to the possible ways a nonprofit might earn mission income and fulfill its mission at the same time.

5. What are the risks? Risks exist for all income sources. One potential risk is conflict. Some may believe that your services should be free. Your staff may be anxious. Relying on mission income may seem too much like being a business. Staff may lack experience in for-profit ventures. It is important to remember that amongst nonprofit peers, mission income holds less status than individual donations. Staff may fear that a board is selecting mission income opportunities because it appears easier than seeking individuals donations. Additionally, if a conflict between mission and income arises, the board may unwisely make decisions based on income over mission. Besides philosophical issues, the venture may fail. Cost is another consideration. To overcome these and other risks, both mission outcomes and revenue need to significant.

6. What are some additional examples of mission income?

·      Girl Scouts teach girls entrepreneurial skills with cookie sales

·      The Humane Society “sells” puppies and holds special sales when their kennels are full

·      A children’s development service offers fee-based group programs for children under five who need support but not individual services

·      A community center whose executive director has strong ties with Ireland offers a “Tour Ireland with Patrick” trip.

All of these support the organization’s mission and make money that can be used to provide even more mission.

7. What are our fee options? The fees you charge and the percent of the expenses they represent is a board decision. A continuum of options exists ranging from a token amount ($1 for a more expensive service) to a fee that covers all costs plus a donation.

8. Must we compete with Wal-Mart? Not at all. Mission income efforts come in many sizes. Some groups avoid mission income because they envision that to earn it they will have to open a café staffed by clients. Most entrepreneurial activities can start as an offshoot of current programming tweaked to generate income. A successful free festival, for example, decides to charge $1 for parking. The best mission income ideas are unique products or services that do not compete with Wal-Mart –or anyone else.

9. Does mission income help or hurt individual fundraising? Many donors admire nonprofits that earn mission income. Other potential donors may feel that they have done their part when they make a purchase. After a bit of research, I found no study for the industry on this question. If you are in doubt, survey your donors to learn their thoughts. With or without mission income, donors need education about program costs, income gaps and how their donations hold the potential to change lives. Since mission income helps donated dollars go father, I suggest you make your ability to obtain mission income a reason to donate to your organization.

10. What is the general process of developing a mission income opportunity?

While every organization approaches mission income differently a general first step is exploring potential customers and ideas for mission income. The potential ideas and customers are then organized into a shortlist for evaluation. After staff and board select top ideas, a business plan is created and opinions from potential purchasers are collected. Finally, all information is taken into account and the mission income opportunity is launched.

Resources

Karen Eber Davis Consulting helps nonprofits to identify exemplary ideas (yours mine or ours) that propel nonprofits to the next level. We can help you select mission income ideas and create and implement practical proven strategies to make them a reality. See the following resources for help exploring additional income and fundraising opportunities:

Can Your Organization Obtain More Income? The 7 Sources

Want Money? Karen’s Basic Toolkit for The New Year

Audio downloads, especially Money-tastic #2: Nonprofit Income Opportunities and Money-tastic #3 Creative Revenue Streams for Your Nonprofit



[1]
Earned income, mission income and other income. Other income is revenue from room rental, interest and selling candy bars when your mission has nothing to do with any of these three areas. Earned or mission revenue is payment for ticket sales, program fees and memberships that align with your mission goals. Since you must earn both types of revenues, for clarity we prefer the term mission income over earned income.

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What Your Executive Director Would Like You to Know –But May Be Afraid to Tell You

Can your imagine what would be different at your meetings, if you could hear the thoughts that run through your Executive Director’s head? This article shares a dozen of the most common ones. During the last sixteen years of consulting with nonprofits, nonprofit executives have shared these thoughts with me when they talked about their boards. Knowing their thoughts will help you to better lead the organization. To help you create highly productive meetings, we include suggested actions in response to each thought.

1. “Meetings are stressful.” In a well-designed meeting, the executive director must convey critical information, obtain key decisions, avoid wasting time, maintain his or her job security and build relationships with key donors. In other words, in 90-minutes much must be juggled. Action: How can you help?

  • Clarify the key decisions to be made in advance
  • Limit agendas to three or less key items
  • Help everyone to convey information via alternative formats, like email

2. “Can we be on the same page?” Being on the same pageisn’t necessarily agreeing how to handle a $50,000 donation. Instead, it means agreeing about how your meetings will run, including their length and structure. Being on the same page means working together to help speakers to summarize their thoughts. Action: Work together to create an experience conducive to conducting business.

3. “Um, What did we decide?” Some boards discuss issues and move on without clarifying their decisions. Boardmembersare often comfortable with this state of limbo. However, the executive director must act on and communicate decisions to others. Action: Help your organization by clarifying the decisions made “for the minutes.” Take it a step further: help the board outline what will be done, who is responsible and its expected timeframe.

4. “Stick to the agenda.” In part, board members are invited to join boards because of the depth of experiences, passion and connections. When you are passionate about your cause, it is tempting to share everything you know. However, if everyone spends five minutes sharing knowledge or a great story, the whole meeting will be expended without completing the agenda. Action: Resistthe temptation to share irrelevant yarns and information. When others forget, encourage a re-focus on the agenda.

5. “Don’t surprise me.” Its great to introduce new important topics, but when boards spend hours on new concepts because no homework has been done, few quality decisions result. Action: Avoid bombshells. When they fall on you anyway, schedule time to discuss the issue after everyone prepares.

6. “While I don’t want micro managing, sometimes I invite it.” One universal complaint is that “the boss” micromanages them. In this case, the complaint is that the board micromanages staff. For instance, during your meeting, the executive director shares that a program has additional capacity. By raising the topic, he intends to share that in the next 30 days he will research the best ways to respond to this opportunity. Instead, he immediately receives a dozen directions. He perceives this as micro managing. Action: How can you help? Avoid offering solutions until after you hear what the presenter needs from the Board.

7. “I need your help with vision, goals, decisions and establishing limits.” If the executive director brings three options to you and asks for a decision, the board needs to make one –or provide alternative directions. Action: Guide staff by establishing cost and other limits. “Let’s set a price range of $5,000, complete it within three months and ask the special events task force to tackle it.”

8. “Sometimes your ideas, while well-intentioned, send staff on crazy tangents.” By all means share your ideas, that’s why you were invited to join the board. However, recognize that many appealing ideas are difficult or impossible to execute. Action: Ask staff to investigate feasible ideas. Then, move on. You will have more ideas. If you really want to implement ideas, consider a staff position with this or another organization. Or, join a committee whose work is to implement them.

9. “What is the big picture?” With the press of daily tasks, it is easy for an executive director to get lost. They appreciate your help, perspective and sharing the progress you notice progress. Are you increasing your capacity? Are you reaching more members of the community with your message? Do more people express an understanding of your work? Action: Help the executive director and others to notice and celebrate these victories.

10.“I would like to do more strategy thinking when we gather, but the crush the urgent waylays us.” Organization’s that think strategically benefit from making quicker and better decisions about new and current opportunities. Action: How you can help? Ask thoughtful questions about items on the agenda like:

  • What is the big picture here?
  • Do we agree on the best route to our goals?
  • What is success? What will success look like?
  • What others steps can get us to the same goal?

11. “No matter how experienced we are, we all have a lot to learn and opportunities to grow.” Action: Help us to be a learning organization. Read a book on boards. Pick up a text about the field. Attend trainings on your own dime. Budget money for staff and board training.

12. “We need your financial support. Bill Gates and Warren Buffet and their ilk are not going to support us before our own board members. Action: Remember that board members need to jump in financially first. And, while significant gifts are always welcome, you most important gift is your participation. This allows the nonprofit to announce, “we have 100 percent board participation” –a critical threshold in obtaining other donations.

While no one executive director thinks all these thoughts at every meeting, most think all of them sometime during a year. Use the comments in this article to “hear” your executive director. It will increase your value as a partner in your organization’s success. What’s more, your executive is likely to think you both clairvoyant and wise. In either case, you will both be able to work better together to move your organization toward its mission.

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