Getting through the troughs

I was talking to a nonprofit Executive Director last week about fundraising. We spent most of our time unpacking the heart of every fundraising meeting: the energy you bring into the room.

It’s not just important, it is everything. No matter the words you say, if you say them without the other person being able to feel them then the meeting has already failed.

But what do you do if you’ve had a bad run and you’re not feeling the mojo? Maybe it’s been a tough month or quarter and you can’t seem to put a smile on your face and “stay positive?”

My take is: don’t try to fake it.

Of course you have to be professional, and fundamentally you have to retain your long-term optimism and your deep belief that you’ll get big things done—if you don’t believe in you, no one will. But overly polishing and buffing your delivery will fail most of the time.

Inauthenticity is like a single poisonous drop that contaminates the entire cup of water. Rather than slap on a can-do attitude, bring your truth in that moment into the room. Be willing to lay it bare.

If things are hard, if you are feeling frustrated, if you don’t know how you’re going to storm the next hill, don’t complain, but don’t hide that away. Show faith and trust in the person you’re speaking with; have the confidence to share the real.

Sharing this truth might help you discover what’s really going on, and it will certainly communicate that you need actual help and that this meeting isn’t just another meeting. That’s an honest ask for support that, at a minimum, will be met with humanity and, in most cases, action.

People are craving this sort of connection, and they are more likely to help if they understand that they can, actually, help. Seeing your willingness to be authentic lets them understand the kind of partner you’ll be to them in the long haul—especially when the chips are down.

Time to outsource fundraising?

Peter Haas, the Executive Director of the Appropriate Infrastructure Development Group (AIDG), has a strongly-worded post up on the TED Fellows blog called Show Me The Money – Disasters, Restrictions and The Future of the Fund Raising Industry.  If you’ve ever thought that this “fundraising question” is something off to the side for nonprofits, read Peter’s post.

Peter argues that there’s an untapped business opportunity for professional fundraisers.  The logic goes as follows:

  • It’s really hard to raise money as a small nonprofit
  • Large, capacity-building grants are harder to come by than they were in the 80s and early 90s
  • It’s too expensive for small nonprofits to hire salaried fundraising staff who can raise millions of dollars
  • Many nonprofit CEOs aren’t good at this
  • And, Peter implies, maybe it’s not a particularly good use of nonprofit CEOs’ time to fundraise (in Peter’s words, “I’ll tear through the BS in a system and get to the core error. But I’m not a salesman for high end luxury goods.”)

Peter proposes that professional fundraisers could fill the gap by signing up as fundraisers for hire, taking a cut of the funds they raise. This way, goes the logic, nonprofits don’t have to pay hefty salaries upfront, and fundraisers who have proven that they can raise real money can work their magic.  In Peter’s words: “Somebody accustomed to raising 50-100 million for a big org could probably do a lifestyle changing business, cutting their work week dramatically while earning the same salary, by only raising 10-20 million divided between a handful of smaller up and coming orgs.”

It’s an interesting idea.  In truth there are a handful of these people out there, and I think they and the sector would get a nice shot in the arm if more people stepped up to take this kind of risk and put their skills to use for small, growing nonprofits.

But before we go too far, let’s dig a little deeper into Peter’s post, since he says out loud something that is often left unspoken, namely:

If the mission of the NGO is the service to the community, and fund raising is truly something administrative (as most donors like to classify it in cost analysis), then it should be something an NGO can easily subcontract.

This is where we, our donors, and the sector as a whole go awry – when we think that there’s the “real work” of the nonprofit and this peripheral activity of raising funds.

In 2008 I wrote a Manifesto for Nonprofit CEOs.  Here’s an excerpt:

I’ve met too many nonprofit CEOs who say “I hate fundraising.  I don’t fundraise.”  If you’re being hired as a nonprofit CEO and the Board tells you that you won’t be fundraising, they’re either misguided or lying.

Tell them they’re wrong.  Tell them that your job as a CEO is to be an evangelist for your idea and to convince others about the change you want to see in the world.  Tell them that if this idea is worth supporting then they should jump in with both feet and support it with their time and money and by telling their friends it is worth supporting.

Spending your time talking to powerful, influential people about the change you hope to see in the world is a pretty far cry from having fundraising as a “necessary evil.”

Apparently I still have a few people left to convince.

Which got me thinking, again: why do we keep on running into this wall in the nonprofit sector?  Coke just sells colored sugar water, yet the people who make it a multi-billion dollar company are the storytellers who created and sustained the brand over the past 120 years.

What’s so different in our sector?  Is it because the people we serve (“beneficiaries”) and the people we who are our source of revenues (“donors”) aren’t one and the same person?  And do we honestly think that this bifurcation of stakeholders is healthy or sustainable?  Is there even another sector where we would entertain this kind of dichotomy?

Let me put it another way: if a CEO of anything but a nonprofit said, “I’m starting a new business.  I see a gap in the market and I’m jumping in with both feet and am prepared to sweat blood to make this thing work.  But I don’t want to deal with the whole revenues side of the business.  I’m not THAT guy.”   Could a tech entrepreneur say that they’re not willing to talk to customers and VCs?  Did Kelly Flatley and Brendan Synnott, the founders of Bear Naked, say they’re weren’t willing to talk to the folks at Whole Foods?  Of course they didn’t.  How is this any different?

I’m not saying it’s not hard to raise millions of dollars in grant funding – it is hard. It’s really, really hard.  And this isn’t the same skill as being on the front lines making your programs work.  And, sure, a gutsy fundraiser-for-hire could help.  But funders aren’t cash registers, funding conversations aren’t switches seamlessly from one organization to another, and any nonprofit CEO who thinks he is going to secure million-dollar gifts without seriously rolling up his sleeves and being the person those funders bet on is wishing for a market opportunity that just ain’t there.

So my question for Peter is: are you proposing a short-term solution to a cashflow issue (“I need someone today to help me raise that first million”) or a business model issue (“what I do as the ED is and should be separate from this whole fundraising thing.”)?

If it’s the first one, let’s go for it.  If it’s the second, then I think we’re kidding ourselves.

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The one thing you need to know before launching a nonprofit

I was on a phone call today with a number of young people who are interested in working in the social enterprise space, and the question arose, “What advice would you give to someone who is interesting in launching a social venture?”

The answer is: figure out how you’re going to fund this thing.  Without that, you’ve got nothing.

Does the intervention/program/enterprise and its impact matter?  Yes.  And having the right people to tackle the problem? Absolutely.  And great, smart advisors who understand your space and who are willing to help?  Definitely.  But cash is king.

I’m not saying that people with great social venture/nonprofit ideas don’t know this on some level.  But I have seen too many people launch a nonprofit venture and then say, six months or a year in, “I wasn’t planning to spend so much time fundraising.”

Really?  I cannot think of another sector where figuring out the revenue model is anywhere but at the top of the list.  Try going up to any successful small business owner and saying, “I’m going to start a new restaurant (bakery/gift shop/coffee shop/bed and breakfast).  Only problem is I’m not completely sure how it’s going to make money.”  This would be a very short conversation.

Sure, there are a few network-oriented businesses where winning the market share game first might make sense (Facebook and Twitter today, but there was a time when this applied to Amazon and Ebay too).  But in almost all cases this doesn’t apply to nonprofits.   In fact, you’d think that since, by definition, nonprofits work to fill gaps that the markets alone don’t address we’d care more, not less, about getting revenues right.

Personally, I’m pretty agnostic about whether the funding stream you have in mind is large donations from individuals; government contracts; lots of $25 donations; or some sort of earned income.  What matters is creating a substantial, reliable revenue stream so that you can keep the lights on, pay people, make longer-term strategic decisions, and, of course, do whatever it is you want to do to make the world a better place.  And you want to do things on a large scale, which probably requires double the cash you think you need.

The good news is that you can right-size your cost base today ways that used to be impossible.  Networks of volunteers, low-cost website tools, technology enabling people to work remotely around the globe, free international phone calls on Skype….there is a way to take your nonprofit’s business plan and cut the costs in half.

But if you’ve got a fabulous idea with everything right except for how you’ll raise the first $100,000 and after that the first $1 million…it’s time to redirect your attention to what really matters.

(And if you need a pep talk, here it is.)

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A NonProfit CEO Manifesto (blame it on Seth Godin)

Inspired by Seth Godin, and his new book Tribes, I collected my thoughts after nearly two years in my current role at Acumen Fund.

I wrote a manifesto.  You can read it here.

This one isn’t for everyone, but you probably know someone who’d like to read it. Do me (and them) a favor and send it to them.

And tell me what you think.  I think this one is important, and since the economy is blowing up and won’t improve any time soon, now is a good time for nonprofits to rethink how they think about raising money.