How Nonprofits can Thrive in Challenging Times
It’s a tough time for nonprofits. Competition for foundation dollars is fierce as government funding dwindles and the number of nonprofits continues to skyrocket. At ACN’s annual meeting in June, a panel of four experienced consultants offered advice on how nonprofits can raise money, save money, and thrive in challenging times.
Merri Dee, legendary Chicago broadcaster, former manager of WGN-TV’s children’s charities, and now president and CEO of MD Communications, moderated the discussion.
“The first thing nonprofits want to know is how to get more money,” she observed.
Panelists offered these tips:
Develop Relationships. Clara Carrier, founder of Breaking Through Consulting, LLC, said that nonprofits would do well to “stop thinking about fundraising and start thinking about building relationships.”
It’s essential to know where your donors are “coming from and how you can get them to feel comfortable about their investment in your cause and your purpose,” she explained.
She’s developed an assessment tool to help clients define or redefine their purpose. “I think clarifying your purpose is a key to success,” she said.
Hiring the right fundraiser is important, too, noted Amy Schiffman, co-founder and principal of Giving Tree Associates. It’s essential that your development director be experienced at working one-on-one with foundation officers, individual donors, and with board members to mine their own networks, she said.
Passion for your cause is just as essential as skills and experience, she added. “If someone doesn’t care about what you do, they’re not going to be an effective fundraiser.”
Do Your Research. A fundraising strategy needs to be backed up with data, said Schiffman. Nonprofits should know how much money each fundraising activity costs and generates to calculate a return on investment. They should also know the number of donors at each fundraising level and the names of top funders. Many nonprofits have never analyzed their fundraising data, she said.
Carrier noted that since 72 percent of charitable giving comes from individuals, nonprofits should invest time and resources to understand their individual supporters. “What motivates them to give?” she asked. “How do they like to be engaged—mailers, social media?”
Nonprofits also need to give supporters reasons and opportunities to get involved, such as by volunteering or donating goods, she said. “You have to be specific about what you need.”
Document your Fundraising Strategy. Having a documented fundraising strategy is critical, Schiffman insisted. Every nonprofit should have one, but most don’t, she observed. “Even sophisticated organizations don’t have them.”
A documented strategy is more than a fundraising calendar, she explained: in as little as two or three pages it lays out where the dollars are coming from over the next year, the cost of raising them, the tasks, the role of board members, and the hours each staff member will devote to each step of the process.
Such a document gives everyone including the board clear direction, she added, and prevents mid-year brainstorms (Gala! Golf fundraiser!) from upending the rest of the plan.
Hold your Board Accountable. Many nonprofit board members will offer to do anything to support your cause—except solicit money, said Schiffman. But fundraising, including forging relationships for the nonprofit with potential corporate donors, is a board’s primary responsibility, she explained. “We should hold them accountable for doing that.”
At the same time, board members need clear objectives, she continued. “We go into a lot of organizations that say, ‘We had a fundraising committee but it didn’t work.’ It didn’t work because you didn’t give them anything to do.”
Mid-way through the panel discussion, Dee said it was time to talk about how nonprofits can hold onto the money they’ve got. “How should not-for-profits reprioritize their spending?” she asked.
Work efficiently. Every nonprofit should conduct a work flow analysis—a systematic study of who does what—with the aim of increasing efficiency to better serve clients, said Joyce Golbus Poll, principal of the proposal-writing firm J.G. Poll & Associates. Too few organizations take the time to do this, she added, which wastes the money she works hard to raise.
Her favorite approach is for each department to form a team to study what they do. “That builds team spirit and morale,” she said.
Find your focus. When nonprofits try to do too much, they flounder, Poll observed. “A nonprofit needs to run like a business and realize that it can’t serve everyone and do everything well. It absolutely is imperative that they focus on what is the most important.”
Nonprofits that sharpen their focus increase their impact, said Carrier. She works with nonprofits to hone in on their purpose and then identify one or two first steps to better focus their work.
“When we hear ‘change’ our hearts start going fast,” she said. “But change can be one or two things. Small wins empower the team and motivate them to keep doing more.”
Cut big costs. Nonprofits often don’t realize how much they can save on their two biggest costs—healthcare and payroll, said Gregg Mellinger, a vice president at USI Insurance Services.
Hospitals and insurance companies have enormous profit margins, he explained. Some insurance companies even get kick-backs from drug manufacturers for only covering a more expensive drug, he reported. “We’re dramatically overbilled.”
Those huge profit margins leave plenty of negotiating room on health insurance premiums for those who understand the system, he explained.
Nonprofits can also save money by offering a better benefits package, Mellinger said. Many employees will accept a lower salary in exchange for benefits that meet their needs. Where nonprofits fall short is offering a one-size-fits-all benefits plan rather than allowing employees to pick and choose from a menu of options, he observed.
Position yourself strategically. Nonprofits position themselves to win grants when they can clearly articulate their strengths and advantages over the competition, said Poll.
Knowing your competitive edge can also make you a better collaborator, she continued. Foundations look favorably on partnerships, and competitors can become allies on projects when they know how your unique strengths would benefit them.
Consultants to nonprofits need to position themselves strategically, too—both to compete and collaborate with each other, she added. “Your competitors need to be your friends, because that can only strengthen you.”
