Hats off to Nell Edgington at the Social Velocity blog for a post titled “The Critical Alignment of Mission, Money and Competence,” which kicked off an interesting conversation between Nell, me, Sean Stannard-Stockton who writes the Tactical Philanthropy blog, Nathanial Whittmore who writes the Social Entrepreneurship blog for Change.org, and Kjerstin Erickson, the CEO of FORGE.
My first observation is that this discussion happened very quickly thanks to Twitter. So I’ve realized that Twitter is here to stay for me, and that even if I’m not ready to commit to more than a 1-2 Tweets/day, Twitter enables very useful conversations that I’d miss if I gave it up. So, if you’re interested in following, you can find me @sashadichter
On the substance of the discussion, there are two threads that I found particularly interesting:
1. The first thread centers on the risk many nonprofits run of their revenue model compromising mission. The stark example is when a nonprofit ends up chasing funding dollars and makes small programmatic contortions for each subsequent grant (more on this here). As I suggested to Kjerstin, your only hope as a nonprofit is if you start with a bright line that says you absolutely will not compromise mission at all to get funding…since even with this much clarity, you will still make the occasional compromise. But if you start saying that some compromises are OK, you’ll be so far off mission in a year or two that you won’t recognize yourself or your organization.
2. The second thread was somewhat more subtle, and it centered around what it takes for nonprofits to have a “sustainable revenue model.” When I read that phrase it implies “earned income,” which worries me because there are tons of nonprofits out there that do not and should not have a model that itself generates a significant revenue stream. Which I why I commented that, “I sometimes feel like there’s an implicit notion in the (sometimes too theoretical) discussions of nonprofit funding models that downplays the fact that philanthropic dollars can beget philanthropic dollars; that there are very powerful network effects that come from the creation of strong communities of supporters/friends/advisors/Board members; and this itself can be a “sustainable revenue model.”
Put more simply, to me a sustainable revenue model is one that gives the organization and its donors a high degree of confidence that 1,2, 5, and 10 years down the line, the nonprofit will continue to exist, will continue to focus on its current mission (or the next iteration of that mission), and will have the capital on hand that will allow it to engage in long-term strategic planning and execution.
There are a LOT of ways to get here, and we shouldn’t forget that most “sustainable revenue models” center around creating an energetic, passionate tribe of donors who want to give and who are fervent advocates for your organization (no matter if they make $10 or $10 million donations.)