Tag: fundraising

Dan Pallotta at TED

~ Sasha ~ 4 Comments

I had the privilege of attending the TED conference last week – a bounty of new ideas, optimistic predictions, and insightful reflections on the world today and the world as it could be tomorrow.

The most challenging and exciting talk for the nonprofit sector was by Dan Pallotta, author of Uncharitable and Charity Case.  Dan made a name for himself creating the then-ubiquitous AIDS and breast cancer walks and rides – these events raised $108 million and $194 million for charity, respectively, according to Dan’s numbers.  Dan’s pitch, which he has been making for years but never as clearly or effectively as he did last Friday, is that we are never going to solve the world’s toughest problems if allow the prevailing orthodoxy to rule in the nonprofit sector and in the minds of the philanthropists who fund them.

Dan Pallotta at TED
Dan Pallotta speaking at TED (Photo: James Duncan Davidson)

Dan has been a lightning rod in the nonprofit sector for more than a decade because he has been such a vocal, unabashed voice for change.  He was fully transparent about this, starting his talk explaining how challenging and frustrating it was when his company was shut down because of the backlash that came when it became clear that putting on the rides/walks used up a big portion of the funds that people raised – despite the nearly $300 million net raised for these charities.

The two most controversial points Dan made in the talk were about nonprofit pay and fundraising.  On nonprofit pay, the line I found most memorable was, “You can make $50 million in a year selling violent video games to kids and they put you on the cover of Wired magazine; but if you make $500,000 as a nonprofit executive director working on solving some of the world’s toughest problems they will run you out of town.”  Indeed.

On fundraising, Dan’s big point is that if you can take a philanthropic dollar and turn it into $10 or $100, then it is absurd not to do so and even more absurd for a philanthropist to feel like you are wasting her money when you spend it in this way.

What I love about Dan’s talk is the conversations it forces us to have, ones that get to the heart of what philanthropy is, why people give, and what it will take to make real change in the world.

To me the conversation starts with a basic question: do you think that the people who work for nonprofits are adding value; or, put more technically, is the amount of good they create – in terms of the problem you’d like them to solve – greater than they amount that they are paid.  (Ironically, it’s easiest to figure out this question when you analyze a person on the fundraising because you can easily quantify the funds she raises against how much she costs the organization.) If you don’t feel like nonprofit organizations/their staff add value, then it’s easy to conclude that the organization itself should take up as few resources as possible.

Philosophically, one wants as much ______ (money, water, chickens, anti-malarial bednets) to land in the hands of the needy recipients as is humanly possible, and so one wants a nonprofit sector whose only role is to do the minimum possible to make those ________ (things) end up in others’ hands, and to eat up as little as possible of each donated dollar to make that happen along the way.

At the other end of the spectrum, if you believe that there’s a thorny set of problems that haven’t yet been solved in the world, then we need the most highly capable, intelligent, hard-working, long-lasting people on the planet to solve those problems.  So making sure one has the tools to get and keep the best people becomes vital and, more importantly, one quickly understands the limitations of a worldview that says that those people are “overhead” (a.k.a. something to be minimized.)

Of course the world does not exist in black and whites.  Development professionals who live in gated communities in multi-million dollar homes, separated by barbed wire fences and Range Rovers from the people they ostensibly are in the business of serving – well that’s obviously hugely problematic.  So the message isn’t “more pay is better.”  We need some basic checks in the system or it’s never going to work.  At the same time we need to ask ourselves whether the system we have today is oriented towards “efficiency” (which itself is elusive) at the expense of effectiveness: I could easily waste very little of your money but never actually manage to solve the problem you ultimately hope to solve, by shoveling 90 cents out of every dollar into direct aid but never change the system that created the need for aid and charity in the first place.

While we know there are no easy answers we cannot pass on asking the tough questions, on having an out-loud conversation about whether this system we have built is actually working. Because many think it is.  A philanthropist I spoke with after Dan’s talk told me that he found the talk to be very troubling: Dan, he said, does not understand the mindset of the philanthropists at all and he completely missed the mark.  “If I find a startup that I believe in,” this philanthropist said (I’m paraphrasing), “I’m happy to put up some risk capital in the knowledge that it might succeed or it might fail.  But when I dip into my philanthropic pocket, I want the charity to treat that capital as precious, to spend it wisely, and to make sure as much of it as possible goes to those in need.”

“….treat that capital as precious…” is the key phrase there.  Guard it, protect it, mete it out carefully and cautiously and be sure you don’t make any mistakes as a steward of that capital.

“So,” I asked, “I absolutely can understand that you want nonprofits to careful with your money.  But where do they go for risk capital?  Or investment capital?”

Unfortunately we couldn’t finish that conversation, but I feel better equipped to have it thanks to Dan’s talk, thanks to seeing Dan’s outrage at how backwards the system we created is, thanks to statistics like the one Dan shared that, since 1970, while only 144 nonprofits have grown to more than $50 million in annual revenues, more than 46,000 for-profits have crossed that threshold. Put another way, a new non-profit is less than 1/300th as likely than a new for-profit to grow big enough to have enough scale to really matter, to have enough scale to figure out what they are doing and have some heft to actually solve a problem.

That doesn’t feel right.

What it feels like, what Dan is saying is that we’re asking nonprofits to take on the toughest problems in the world, problems that the private and the public sector still haven’t managed to solve, and to do it with one hand (“you can’t spend money to make more money”) and one leg (“you can’t use my donation as risk capital”) tied behind our collective back.

Dan’s talk isn’t online yet but you can see a more detailed summary of it on the TED blog.

Progress

~ Sasha ~ Leave a comment

This is a photo of a water fountain at JFK airport that shows how many plastic bottles have been saved by that fountain.

Elkay EZH2

Just like that, I’m part of something. It makes meaning of my (tiny) piece of the puzzle, and helps me feel like I am making a difference.

Funny how much effort we spend shouting at people asking them to give, and how rarely we tell them what we accomplished, together.

Easy, Hard

~ Sasha ~ 1 Comment

I’ve noticed over my last six years of fundraising how different new relationships can take different paths – often self-reinforcing.

Sometimes, despite everything you do, it’s just hard.  I remember a few years ago one donor who, no matter what I did, I seemed to mess things up.  I’d reach out for a meeting and it would be the only day he had to be out of town.  I’d invite him to an event only to be told that he’d told someone else on our staff know that breakfasts never work for him.  I’d write an email and misspell his wife’s name.

And then other times it’s easy, it flows.  From logistics to the flow of the conversation to each step in building the relationship, it feels like everything is just working right and is easy.

The trick is figuring out what part of this is substance, what part of it is you listening or not, and what part of it is just luck.

In mid-2012 I was preparing to head out of town for a major fundraising meeting that I’d worked months to schedule – at least 20 emails and careful cultivation before and along the way.  And then, an an hour before I was to leave for the train, I got a migraine (one of 3-4 I get each year).  That was eight months ago and I still haven’t managed to reschedule the meeting.

Seven months later, it came full circle.  I had another out-of-the-blue introductory meeting that I knew little about going in, but it looked like it had potential.  As I sat down for the meeting I thought another migraine was coming on.  It was bad enough that when I sat down with this person I’d never met before, I said, “I’m sorry, I may just have to leave in 10 minutes because I think I have a migraine coming on, but let’s start our conversation.”  He rolled with it, so did I, and we jumped in.  Thankfully I didn’t get a migraine – and instead we have, since then, been building a great, new relationship that is already going from strength to strength.

If you’re just starting out as a fundraiser, you might not have the experience or the pattern recognition to decipher what’s what or to see that you can’t control each and every situation and how it plays out.  All you can do is keep at it, do your best, and continue to listen and to be present.

Bob Dorf – Two customers

~ Sasha ~ 1 Comment

Recently I, together with Acumen’s Global Fellows, had the chance to spend the day in a training session with Bob Dorf. Bob, together with Steve Blank (who writes a must-read blog), is the author of The Startup Owner’s Manual: a step-by-step guide to Building a Great Company.   Steve, in turn, was an investor in Eric Reiss’ (author of Lean Startup) startup IMVU which I blogged about here.

Bob, Steve and Eric have done incredible work in demystifying and breaking down what it really takes to create a startup – yes drive, vision, tireless devotion, but most importantly it’s about finding customers, talking to those customers, figuring out what they really want and how they’ll really behave with your product.  It’s the opposite of sitting in a garage, having a eureka moment, investing time and energy and way too much money in that idea and then figuring out if people want the thing that you’ve built.

I learned a ton from Bob, and am still processing most of it, but there was one piece that really jumped out at me as being hugely important in the nonprofit space, in particular to fundraisers.

One of the stories we tell ourselves is that our work is different and hard(er) because the beneficiary of our work and the customer from whom we are fundraising are rarely one and the same person.  It’s this disconnect that can make everything so tricky, because just because you deliver transformative impact for your beneficiary doesn’t mean your fundraising goes through the roof.

Bob made the simple point that there’s nothing particularly new about this.  Google, for example, is free to you and me and anyone as customers.  We get the best search in the world served up instantly with an ever-improving suite of accompanying products.  The service that pays for it all is Google AdWords which has a completely different customer set.  In Bob’s language, Google needs two separate business model canvases, one for me (user of Google Search) and one for whoever buys Google AdWords.

“But wait!” you protest.  “That’s different!  Google AdWords only works because Google Search works.  Their growth goes hand-in-hand.  Not so in the nonprofit world where I can deliver a world-class product/service and it has no connection to whether or not I can raise another dollar from a funder!”

Perhaps.

But also perhaps not.  True, funding decisions are not typically made as objectively or in a data-driven way, whereas Google Adwords purchases surely are.

Then again, when was the last time we really rolled up our sleeves and found a way to monitor how good our nonprofit service delivery really is, how satisfied customers really are.  When was the last time we presented clear compelling metrics from the front lines – metrics that proved out hypotheses, metrics that drove to real insights?  And when was the last time we took those metrics and showed them to our funders and said, “THIS is what we’re doing!”

Sure, it’s not exactly the same, but it’s also not so different.  And it’s nice to know that we’re not so special, that having two (or many) customer sets isn’t novel.  And it’s a helpful reminder that building a value proposition and finding customers (aka “funders”) is just as core to everything we do as whatever service delivery work we do.

One month, 100 rejections

~ Sasha ~ 4 Comments

There are great reasons, as a nonprofit, to look for long-term, sustainable sources of revenues, to build a business model that brings in earned income or investor capital.  Philanthropic funds are so hard to come by and often so expensive to raise.

But I also see a lot of intellectually appealing arguments made by founders about not being a traditional nonprofit, when what’s really going on is that they’re just not willing to get out and fundraise.  I’ve seen missions contorted and organizations drifting far away from their original purpose because a founder has decided “I’m not a fundraiser.”

The best part is: all of the best fundraisers I know also say “I’m not a fundraiser.”

(except for one, Jennifer McCrea, who is putting the mojo back into fundraising.)

Here’s the thing.  Most people aren’t fundraisers.  Most people find it petrifying at first.  Most people fail at first, feel like they are hitting up their friends, even feel a little bit ashamed.

But the part I really, truly don’t get is how you could be willing to devote years of your life to a project but not be willing to ask people to fund it.  And I don’t mean write grant proposals, I mean ask people who are philanthropically active to write a check to help make your dream possible.

So here’s my pitch: this thing that you’re willing to devote your life to?   Take one month and get out of the building, knock on every door you can, and promise yourself that you won’t stop until you’re actually rejected 100 times.  Keep track of the 100 rejections so it’s real and you’re making progress.

Because I’m positive you can survive 100 rejections.

Because I’m positive that even if you get rejected 100 times, your idea will get stronger by virtue of talking to all of those smart people.

And because I’m sure that if you set out to get rejected 100 times you’ll raise the money you need long before you hit 100.

More not less

~ Sasha ~ 1 Comment

Recently I had the chance to attend a roundtable discussion on how to scale innovations in global development.

One of the participants, a successful serial entrepreneur, related an important and telling story about why it’s hard to seed innovation in the nonprofit sector. She said she’d raised $200 million in her life, $190M in her four for-profit enterprises and $10M on behalf of nonprofits that had important innovations that needed funding.

With her for-profit ventures, her experience was that when she’d ask a venture capitalist for $1M to fund a new innovation, if they said yes to funding they would typically invest $1.5M or $2M because they knew that she probably needed more money (“runway”) to get it right – that there would be twists and turns in the road, and that the best way to minimize her chance of success was to underfund her.

Her nonprofit fundraising might have the same starting point: asking for $1M to fund a new innovation. In one case she was working on raising $1M from a foundation, and they approved the funding. However, though she asked for $1M they had only approved $750,000 of funding. I wish I’d found this outcome more surprising. If anything I was expecting her to say they gave her $100,000. But the story about VC fundraising was news to me, the idea that a funder would often tell the entrepreneur that they’d asked for too little money.

A big part of what holds us back in the nonprofit sector is that we’re stuck in a program delivery mindset. In that mindset your philanthropy is paying for a set of defined tasks and as a donor your goal is efficiency. And if efficiency is your goal, you might be right in thinking that you could eek out more bang for your buck by giving a little less money than you were asked for.

But new ideas are different – you’re not aiming for efficiency you’re aiming for success. That means that giving less than what’s needed or doing things like challenge grants or other mechanisms designed to “catalyze” other funding are probably a terrible idea. An underfunded innovation cannot get more efficient, it can just have too little cash, which will either suffocate it or force the entrepreneur to spend more time fundraising and less time building the business.

Once we decide a new idea is worth funding, might we take a page from folks whose job is to bet on innovations and write bigger, not smaller, checks?

 

 

Goldilocks giving

~ Sasha ~ 1 Comment

When it finally comes time to ask someone to make a philanthropic donation, how much should you as for – a little, too much, or just right?

“Too little” is never right.  If anything, “too little” is a polite way for someone to say “no.”

“Just right” in my experience also isn’t the answer.

Why?  Because we need to ask the most of everyone if we are going to accomplish great things together.  To be our best we all stretch, we reach just a bit too far, we dream audacious dreams because before something can happen we have to imagine that it just might be possible.  So too with giving.  It should be a stretch, should feel a little outlandish and a bit impossible.  At that moment of connection and excitement and commitment, people will go a bit further if you ask them – and even if they don’t no one gets hurt along the way.  We’re all grown-ups here.

This is particularly important because of how people tend to approach renewals of their giving.  While occasionally someone who gives at a low amount relative their other charitable work will jump to a significantly higher level, those sorts of shifts are rare.  Which means that if things work out well, the giving conversation you are having about this year is setting the bar for giving for next year and the year after that and…

In this case, “too hot” is better than “just right.”

24 hours

~ Sasha ~ 1 Comment

I keep wondering what people are getting at when they put a huge effort into shaking hands, making conversation and swapping business cards and then disappear off the face of the earth.

Almost as bad is following up days or weeks later to say how nice it was to meet.  By choosing to (re)start your conversation weeks down the line when you have the option to do it within 24 hours you’re communicating that lots of other things are more important to you.  This conversation is low on your list.

That may be right.  Just be clear that it is a decision.

The glimpse

~ Sasha ~ Leave a comment

The thing that gets people over the line isn’t how persuasive your argument is.  It’s certainly not because they see a big need in the world.

The thing that gets them over the line is passion.  Ultimately their passion, but before that happens they need to see your passion.  They need to glimpse something raw and unbridled and real.  A deep belief in what is possible.  Conviction.

In order for them to see that, they need to see you first, to understand who you are.  They need to be able to relate to your passion and have it mean something to them.  They need to appreciate that if you’re all fired up about something then it must be something worth getting fired up about.

The biggest mistake fundraisers typically make is to take themselves out of the story.  It’s a natural to try to step aside since what seems to be on offer is the story, or, worse, the need, and not the person telling the story.

Need is overwhelming and paralyzing to most people.  Need seems insurmountable.  We all are looking for real, grounded, plausible passion, possibility, potential and hope.  People begin to see that by seeing what you see, feeling what you feel.

If they don’t glimpse that in you, how are they ever going to feel it themselves?

More than a dollar

~ Sasha ~ 1 Comment

It’s a myth that money is fungible.

Ok, not really.  Money itself is, strictly speaking, fungible, but that doesn’t mean all money is equal.  Who it comes from speaks volumes about your organization, its worldview, and what you stand for.

Some of the pieces of the equation are obvious: money with a lot of strings attached is worth less than unrestricted money.  Money that will take you off mission is money you shouldn’t take in the first place.

But it goes deeper than that.  A few weeks ago I was in Ghana – we opened our Acumen West Africa office earlier this year.  One of our top priorities from the outset has been to raise significant philanthropic funding from West Africans, and by far the most humbling part of the trip was the chance to spend time with the three Ghanaian Acumen Partners who have already stepped up significantly to support our work.  Theirs is not just a vote of confidence from some of the most amazing business leaders in the country.  It also creates a completely different level of accountability, a completely different conversation what we mean when we talk about “our” work in West Africa.   It is truly ours, it is truly shared.

Recently, the UK government made headlines when it announced that it would stop giving aid to India after 2015.  In our lifetimes, the bright lines around which countries are rich and which are poor will fade.  By 2025 India could easily have 500 million people in its middle class and 500 million people in poverty.  Brazil’s GDP per capita could easily pass the $15,000 mark with 10 million or more people living in urban slums.

The time to start cultivating a truly global corps of philanthropists, philanthropists who support both local and global causes, is now.    There’s no doubt that today it is easier and cheaper for your organization to raise a dollar in New York or San Francisco or London than it is to raise it in Mumbai, Lagos or São Paulo.  But if you keep doing that, you’ll miss the boat.

Remember, all money isn’t equal.