Original passion

I recently came back from a weeklong trip to Europe and was swapping stories with my wife about the week. She admitted what I already knew, that my five-year-old son has started to really notice my absence when I travel for work.

“But,” she said, “It’s actually really easy to explain to him why you’re away.  I say to him that Daddy is out helping get money to help pay for things like safe water to drink or a safe place for a mommy to have her baby for people who need it.  And he understands that and it makes sense to him.”

First, I was overwhelmed by this kind of support from my family.

Second, I noticed that, even to me, this is not exactly how my week felt.

Of course I was talking about the work that Acumen Fund does and explaining to people why supporting Acumen Fund helps bring about large-scale change to persistent social problem.  But, even for me, it is easy to get caught up in the process of it all and lose track of that very simple, very important, very basic connection.

A friend of mine who serves on a number of nonprofit boards recently told me that, in her opinion, there’s no better way to tap into your original passion for a cause than to sit in front of someone else and ask them to support that cause financially.  It forces you to get to the root of why you think that cause matters, to share that original passion with someone else, and to invite someone else to have the same sense of exhilaration and purpose that you feel in being part of that organization – that cause – every day.

Somehow, in the midst everything it takes to do the work – getting introduced to the right people, meeting with them, sharing your story – you can get so caught up in the process that the original purpose gets out of focus.

It helps to remember, every day, “this is why I do this.”

Yes, the act we’re engaging in is raising money, but the thing that’s really happening is that another person has safe water to drink, or a proper place to give birth, or a more productive farm, or a vaccine for a life-threatening disease, or a school that will provide them with opportunity in their lives…and all of this thanks in part to the work you’re doing.

If we can tap into that original passion – in ourselves and in others – I’m sure we can unleash a different kind of energy, and I’m sure that we can overcome all our fears about putting ourselves out there and asking people to walk our path with us.

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Is “fundraising” a dirty word?

Continuing yesterday’s thread, I think we might need a new job title.  “Fundraising” is stigmatized – it sounds transaction-y and narrow and kind of like something you don’t want to do.  (If there’s a job out there that no one can fill, then I probably don’t want it, right?)  “Development” is not so great either – too euphemistic.

One approach is to borrow known words from the for-profit sector.  Personally I have no problem with “sales” because I’ve gotten to know lots of incredible salespeople, and I’m not hung up on the “have-I-got-a-deal-for-you” used car salesman baggage (it is so outdated that it’s lost its power).  “Business Development” seems equally OK, since it implies a level of partnership and co-creation that actually captures a lot of what this work really is about.

Everything else seems a little too clever by half, things like:

  • Head of Resource Mobilization
  • Chief Rainmaker
  • Director of Strategic Alliances
  • Capital Raiser Extraordinaire
  • Head Storyteller
  • Philanthropic Adviser (taken)
  • Etc.

If you ask the best fundraisers (and salespeople) what they do they will say things like: “build partnerships,” “steward relationships,” “mobilize resources,” “make connections,” “build networks and tribes,” “tell stories,” and “translate across lines of difference.”  Of course you “raise funds,” but the word has no moxie and I’m skeptical that we’ll succeed in resuscitating it anytime soon.

Maybe this isn’t all that important, but if we know that there’s a need for a new model of “fundraiser,” one with a broader remit, a deeper connection to the mission of the organization, and a defined role of bringing the voice of top stakeholders into strategic decision-making…  well we’ve got a branding problem on our hands.

Any ideas?

Jeff Immelt was a sales guy

Jeff Immelt, the CEO of GE, was a sales guy.  So was Sam Palmisano, CEO of IBM, and Steve Ballmer at Microsoft.  In fact, Steve Ballmer started in sales at Proctor and Gamble, selling something called the “Coldsnap Freezer Dessert Maker.”   Better yet, while selling the Coldsnap, Steve shared an office with Jeff Immelt, another entry-level sales guy.

When you’re a Fortune 50 company looking for your next CEO, you often pull from the ranks of your top salespeople.  Why?  Because they spend all their time talking to your top customers, who are, in turn, the lifeblood of your business, not just today but into the future.

What about in the nonprofit sector?  A friend of mine who is a very successful nonprofit fundraiser describes fundraising jobs as “the best-paid unfilled jobs in the world,” and while I don’t know all the data, every time I check out the Chronicle of Philanthropy job site I see more unfilled “fund raising” [sic] jobs than any other (today’s count: 233 fundraising, 151 Executive, 98 program, 82 administrative.)  It strikes me that if nonprofit fundraising jobs (sales jobs, right?) were where nonprofit Boards looked for their next CEOs, then this wouldn’t be the case.

My chicken-and-egg question is: why isn’t the “Head of Development” job the proving ground for future nonprofit Executive Directors and CEOs?  Successful EDs and CEOs spend most of their time in external-facing roles (representing the organization, raising funds, working with the Board, creating strategy and positioning and owning the brand and thinking about organizational growth), so shouldn’t at least a typical stepping stone to the CEO role be the top fundraising job?

It isn’t and I wonder if this is because:

  1. Fundraising jobs are confined to the proverbial “boiler room” in the organization – not seen or heard from, with most organizations actively insulating these people from the “important stuff” (including, ironically, interaction with the Board, which is the Executive Director’s job)?
  2. The low status of fundraising self-perpetuates the problem – status is low, so it is hard to get the best people into these roles and harder still to keep them.  As a result, the development staff often isn’t positioned to be the next crop of nonprofit CEOs?
  3. Fundraising professionals, over the years, get so disconnected from the program work that they don’t make good CEOs?
  4. I’m just flat-out wrong – lots and lots of nonprofit CEOs came from careers in nonprofit fundraising?
  5. Something else

This matters because in order to have growth and large-scale impact, nonprofits need to mobilize resources.  And if we could find a way to bring the best people into fundraising roles (however broadly conceived), and if we could groom them to become world-class at mobilizing capital and at creating the best deep, innovative, lasting partnerships, we would take a huge step forward in cultivating a different kind of leader for our sector.

The question I used to hate

For a long time, when interviewing for jobs that I was supposed to want, I prayed that I wouldn’t be asked, “Why do you want to work here?” Because often I didn’t have a clue why I wanted the job.  It often wasn’t my passion.

Now I find myself answering this question nearly every day – not because I’m on the job market (I’m not), but because this is the (often unspoken) question in any fundraising meeting.

“Tell me a little more about yourself,” says the potentially interested donor. Translation: “Tell me why you’ve decided to devote your life to this cause. Tell my why you’re passionate about it, why you believe in the mission, and why you’ve decided to walk this path when so many others with your capabilities are doing something completely different?”

Put another way, “tell me about the commitment YOU’VE made, before we talk about the commitment I might make.”

Every potential donor should ask this question, and every time you or anyone in your organization talks to a potential donor, you need to find a way to tell this story (briefly).

By skipping this, you miss your greatest chance at authentic, personal connection. You miss the chance to talk about your own passion in a personal and genuine way.

Too often, people think their job in a fundraising meeting is to do a dog and pony show about why the organization they work for is so great.  Find the comfort to talk about yourself first, with humility, to tell your own story.

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The fundraising forward bend

I’ve been wondering about why “the ask” for philanthropic funding can be the hardest, most awkward point in the meeting.  Here are some thoughts from somewhere else entirely…

Try this experiment: bend at your waist and, in a relaxed fashion, try to touch your toes (or however close you happen to get, it doesn’t matter).   Then, with no extra effort at all, take four deep breaths, focusing on exhaling.  I promise you by your fourth breath you’ll be a lot closer to your toes than you were when you started.

What’s going on here?  Our nervous systems are well-adapted to protection, so any time the body is in a position that is new or unfamiliar, our sympathetic nervous system tightens muscles to protect us from going into positions that might hurt us.  It’s your body saying “this seems risky…I’m going to tighten up to stay safe.”

The deep breaths tell our minds and our bodies that everything is OK and that we’re not going to get hurt, and the protection reflex passes, which is why it just takes a few breaths to get closer to our toes.

“The ask” can make your body’s protective/panic response kick in.  When you’re new to it, it feels like a standing-at-the-side-of-a-freezing-cold-pool-about-to-jump-in moment that causes so much anticipation that you freeze up – and in so doing make the person you’re talking to freeze up as well.  “Here we go!” your subconscious screams.  “This is probably going to be terrible!”

How do you develop the confidence not to panic?  How do you find ease in this uncomfortable situation?

The only answer I see comes from recognizing the response, and putting yourself in the situation that makes you feel that way as MUCH as possible (tough, I know), and then find what it takes for you not to panic (better yet, shine). You don’t get there by starting at the deepest end of the pool with the coldest water. You start small and build up, and then keep on pushing yourself into situations that ARE hard, but you teach yourself to act easy.  You teach yourself that everything is going to be OK.  You learn to take the thing that you once feared, that once was difficult, and to breathe into it and be your best, most confident self even then. (Sure, there’s plenty of technique and tactics too, but recognizing and addressing the panic response is part of the answer).

Two closing observations: you won’t get better at this without putting yourself in that situation more and more often.  And you’ll definitely bungle some things along that way.

(That’s OK too. How else are you going to learn?)

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Raising investment capital…that ought’a be easy

I was speaking today to the executive director of a small and growing NGO that’s in the grant-giving business – they’re interested in getting into the loan-giving business.

I asked him why they wanted to make the shift, and he explained: to create a sustainable revenue stream; to create more accountability on the part of the grant recipients; to create a capital base that will allow the organization (and its impact) to grow over time; and because it would be easier to raise below-market debt than it is to raise grants.

I agreed on 3 out of 4 points.  The last one is tricky.

There’s a rational argument that says, if someone has to choose between giving money away with no prospect of financial return (a grant) and giving money away with the prospect of some return (a loan), the latter will be more appealing.  So it stands to reason that if you have a more (financially) attractive product, it will be easier to “sell” that product.

But that’s not necessarily how it plays out in practice.  What I think this misses is the different hats we all wear, and how much easier it is to walk well-worn paths than to blaze new ones.

Seasoned philanthropists are familiar with giving.  While each philanthropist makes decisions differently – and solicits advice and ideas from different people – a donor gives based on an (explicit or implicit) set of criteria that motivate her giving.   These criteria could be strategic, analytical, cerebral or intuitive, but giving philanthropically is a known and well-understood endeavor for this person.

At the same time, anyone who has amassed a certain amount of wealth no doubt has experience with and criteria for making investment decisions: the risks she’s willing to take, the amount of diversification she feels comfortable with, the people from whom she gets advice and with whom she pressure-tests investment ideas.

So long as you’re raising funds that fall in either of these two buckets, the rules of the game are known.  These are the well-worn paths.   But something that’s “the best of both” (not quite philanthropic, but not quite an investment) is in a murky middle, where criteria are not well-established, the stakeholders are ill-defined and not used to weighing this particular opportunity.  Suffices to say it’s not a layup.

I think this is important to recognize because there’s a lot of talk in our space about how investors / donors “will” behave, but these discussions often are framed analytically rather than building up from actual experience talking to donors about their own preferences.

How people “should” behave is one thing.  How they will behave is something else entirely.

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The simplest nonprofit ven diagram ever

I presented today to an amazing group of 30+ summer interns and new hires who are about to start working for Acumen Fund, E+Co, Root Capital, Agora, IGNIA and Endeavor – all organizations that are supporting entrepreneurship in the developing world to promote economic development and poverty alleviation.  The training was organized by the Aspen Network of Development Entrepreneurs (ANDE), run by Randall Kempner.

I’ve spoken on enough 3-person panels that I’ve come to realize that the best gift I can give the audience is to leave them with one concrete, meaty thought they can take away and chew on.

So here it is, with the world’s simplest ven diagram in support of my big question:

How much overlap do you (future leaders in this sector) think there is between these two circles?

Ven A

It’s such a simple question to ask, and the group is smart enough to know how they’re supposed to answer: there’s a good deal of overlap.

But push yourself a little.  Is it what’s above (A), or is it (B) or (C)?

Ven B

Ven C

So we know the “right” answer to the question is definitely not (B), possibly (A) but maybe it’s (C).

But what we know isn’t necessarily how we act. How can you suss out what’s really going on in your organization?  Here’s a list of questions to get you started:

  • How much senior management time is spent on strategies for raising capital?
  • What percentage of her time does your CEO spend fundraising? (<10% / 30% / 50%+)
  • How much Board time is spent on this?
  • Do you have a Board Development Committee (yes/no/sort of)?  How much does it raise?
  • How much integration is there between the people who raise capital and the “program” folks?  (None/Some/A little/A lot)
  • Is there an obvious difference in the quality of staff you can recruit for capital raising functions vs. everything else in the organization?  (Yes / No)
  • Is there an obvious difference in the prestige of the different roles within the organization? (Yes / No)
  • Is it possible to be a star performer in your organization if you haven’t proven you can raise money? (Yes / No)

(Please, take this set of questions, develop them further, and use them to shake things up in your organization or at a nonprofit you love).

My take: there’s a huge amount of white space between how we analyze this question and how we act as a sector.

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Call it out

I recently went out to a nice birthday dinner at a new TriBeCa restaurant in New York City.  It’s been open for about a month, and while the food is delicious, the service is still finding its way.  Our waiter was friendly enough, but he would disappear for swaths of time.  At one point, we found ourselves looking longingly at our bottle of white wine, chilling across the room, and discussing exactly how big a faux pas it would be to stand up, grab the bottle, and pour for ourselves.

But no matter.  It was a jovial night, and we didn’t have anywhere to be; the languorous service gave space for conversation.  But things got worse over main dishes when food arrived for everyone but the birthday girl.   She insisted we all start eating, and after some protest, everyone dug in.  But the clock kept on ticking on the one missing dish, so much so that we considered canceling the order altogether.  Finally, a full fifteen minutes later, when everyone had clean plates in front of them, the tardy pizza finally arrived.

In a stroke of brilliance, our waiter said, “We knew it was your birthday, and so we wanted to make your pizza extra-special.  That’s why it took so long for us to make it.”

Poof!  Everyone laughed.  The tension was gone.  What could have been a wrong turn, a souring of our entire meal, became a moment of lightness.

What our server did was brilliant.  The moment was awkward and tense, and he could have (a) Said nothing; or (b) Issued a standard apology.  But he took a different tack – he made a point of calling out the difficult situation, and did so with humor and grace.  Suddenly we were all looking at this bad situation together, calling it out, and laughing.  The dichotomy between the server and the customer evaporated, and with it, so did the problem.

There are a lot of situations that are like this, and since I’m in the business of raising money, I couldn’t help but draw some parallels.  Not every conversation is awkward, but there are definitely times people slip into their roles – the potential donor starts acting like the potential donor, and the fundraiser is stuck in the role of fundraiser.  Usually, this is the beginning of the end of a productive conversation.  It’s just plain awkward, and if you don’t break the tension fast you’re finished.

The thing to remember is that no one likes falling into these roles – they’re uncomfortable to everyone at the table.  So call them out.  Point to the elephant in the room, describe it, make a joke about it, diffuse the situation.  And then go on with your meal.

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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 ‘sustainable’ revenue stream?

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.)

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