Social Impact Funding - Fad or Forever?

In a previous post I quoted a friend who was frustrated that her donations to Hurricane Katrina victims did not result in the ideal outcome she envisioned, which was relocating the entire population of New Orleans to higher ground. What she was really looking for was a permanent solution to a recurring problem. She has donor fatigue, also known as the “tired of pouring money down a black hole” syndrome. In other words, she wants to support a social impact project. 

Many foundations are considering or have recently adopted long-range strategies to move from targeting symptoms of social conditions to trying to fund basic change in the condition creating the symptoms. The current trendy phrase for that is “Social Impact Funding”.

Originally, funding for this concept was limited to very large foundations with a national or international focus. More recently even local community foundations and United Way agencies are adapting that model to derive what they perceive to be widespread societal benefits. To some extent, this is a result of their funding sources demanding that change in focus in order for the umbrella organization to continue to receive funding. It’s “trickle-down” social change or to put it another way, those that hold the purse strings control the mission focus at every level. Call it “go along to get along”, if you will.

I think that this viewpoint will have a significant impact on nonprofits that refuse, or are unable to adapt to this shift. Certainly, in the short term, losing the support of one of these foundations due to mission shift will severely restrict local and regional nonprofit programs.

Too many nonprofits are failing to prove their results or simply addressing the same old problem in the same old way. Survival in the macro-financing world will demand that you understand the changing climate, and provide professional solutions and management of funds.


Citing the example of the United Way of Chicago in an illustrative reference, Jason Saul observes that one way to effect meaningful change is to look at the common denominator of piecemeal programs and design a program around that area, and then employ honest measurements of the results.[1]

Suffice it to say, this trend is getting a lot of attention. Is it really new, or just a repackaging of the concept of bettering a detrimental condition that affects a widespread group through the use of collective dollars and ideas? More importantly, how will affect your local nonprofit?

In spite of the trendy packaging, this is not a new idea. I would venture that every single nonprofit and every funding source supporting them is based in the concept of broad social change. The whole system of Federal grant programs is based upon the idea that big changes happen when you invest big money and apply comprehensive planning to achieve wholesale societal changes.

The problems inherent in remote solutions to local problems arise because the solutions must still be dependent on addressing segments of the problem. Whether your mission is to eliminate hunger, or out-of wedlock pregnancy or AIDS, it will always have facets that need solutions at specific levels.

For instance, if your mission is to eradicate West Nile viral infections in humans, you can (a) kill the vectoring agents (mosquitoes); (b) kill the carriers (birds, horses); (c)eliminate the breeding ground for the mosquitoes; (d) eradicate the virus itself;  (e) instill natural resistance into the entire susceptible mammalian population (vaccine) and (f) eliminate the ability of the virus to replicate itself through bio- engineering (the end goal).  Each one of these “solutions” can be funded individually with the funding going to local or regional NPO’s concerned with just one facet of the problem, or you can amass and disburse funds under the trendy umbrella phrase “Creating a Healthier America to Reduce Our Health Care Costs”. You will still need to invest funding in every step from A to F in the example, and you will still only address a tiny percentage of the reason people are using healthcare. The Federal government has been trying that approach forever, with varying degrees of success.

Will private funding find a more effective way to achieve those results, or will the concept eventually result in the same entanglements and failed initiatives that are inherent in the often-ineffective Federal programs? Time will tell. In the meantime, nonprofits must deal with the consequences. Is it time to redesign your program descriptions and implement measurement methods that are more in line with funder expectations? That’s for you to decide.

Whole new business models have emerged or adapted their business plan to serve that market, and academics are writing papers touting the advantages of social impact funding, either grant or investment-based. A quick search of the term “social impact funding” yields seemingly unending pages of results. I stopped at eighteen pages, and there are lots more.

 

I am not suggesting that all grantors will adopt new criteria that will totally exclude local nonprofits. Rather, I am observing that smaller organizations need to be aware that there is a need to address these shifts in strategy. If you have funders or donors that are indicating that they may be re-thinking their giving strategy, you may want to get out in front of that now. It may be as simple as adding language to your program description that relates it to the grantor's broader focus, or it may require a significant shift in your entire strategic plan. 

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[1] http://missionmeasurement.com/ideas/blog_entry/the-dirty-little-secret-about-measurement1

Is your fund-raising strategy relevant in today’s economy?

In my last post, I addressed the issue of showing that your mission and your strategy are still relevant. Donor focuses may be changing, and some donors are becoming disenchanted with what they see as repeating a failing strategy, while expecting different results. This blog is targeted those of you that don’t have multi-million dollar budgets, but even medium size nonprofits can benefit from reviewing their goals.

Many small and newer nonprofits address local concerns. In the perfect world, these NPO’s would be supported by local or at least regional grant-makers. To some extent, that will continue to be true. Who better to care about the less fortunate in a community than the members of that community? The question becomes not so much whether they will continue to support you, but at what level?

Current pundits are predicting that no matter what “budgetary reforms” take place nationally, they will have a negative impact on the nonprofit world, and there is certainly at least anectodal evidence to support that viewpoint. For instance, if the unemployed lose extended benefits, there will certainly be more people hungry and homeless, driving up demand for services. On the other side of the coin, if there is an adjustment of income brackets and tax rates, it may well impact those at the lower end of the earnings curve. If they have to pay more in taxes, there will be less discretionary income available for everything, and that includes charitable giving. The very wealthy will probably be able to absorb the costs without much impact on their charitable giving, but those people that previously had been giving the average of three to four percent of their income to charity will now see that money going toward taxes. 

Larger foundations may begin to move toward funding nonprofits that focus on eliminating causes of need, rather than alleviating the symptoms of a larger problem.

The point of all this is that your board may need to evaluate your current funding strategy and address different ways to accomplish the mission. For example, if there are several nonprofits in your area dealing with different aspects of domestic violence, perhaps you could collaborate on a single program to address the initial triggers, such as economic pressures caused by joblessness, by providing support for continuing education to retrain or improve worker skills. This may well open up stronger revenue streams that any of you can access as single agencies. Some nonprofits may be able to integrate a for-profit partner into the mission to access program-related investment funding.

If your nonprofit is proactive, rather than reactive, you may even find that you will emerge far stronger and able to help even more beneficiaries than before. If you need help, Cloudlancer Writing Services is happy to be of service. 

The Changing Face of Philanthropy

Sometimes charities are so wrapped up in their localized, immediate problems they fail to understand what drives people to help. The current uncertain fiscal and political climate probably doesn’t help the situation. People feel more personally threatened and are constantly making do with less, and that affects their viewpoint.  Still, it benefits all of us in the nonprofit sector to examine factors that may drive change.

Recently a client shared a letter from a major funder. The gist of the letter was that the grantor was moving on to support social impact organizations that were trying to eliminate the root causes of problems, rather than supporting local charities dealing with symptoms of the larger issues.

The nonprofit in question just received the first installment of a multi-year grant for capacity building, in the hundreds of thousands of dollars. While they have been offered the full amount of the grant in a lump-sum payment, they are considering refusing the funds, since they don’t know if they will be able to maintain services to the larger population they had been planning to serve. In short, their entire ten-year strategic plan may need to be seriously revised, or even scrapped and replaced.

There are significant lessons and clues in this letter. One, the grant maker (a corporate-supported philanthropic foundation) doesn’t feel that they are “getting the most bang for their buck”. Two, the funding organization is anticipating reduced revenues due to national economic and political issues, and they feel powerless to compensate for that. Three, they truly want the root cause of the situation the nonprofit is addressing to be solved. Four, they feel that the nonprofit’s focus is too fragmented or too unrelated to other groups serving a similar population to achieve that change.

Businesses are successful, and have money to support charities because they don’t spend money foolishly, with no expectation of results. The corporate mentality is crystal-clear in the letter. They simply feel that continuing to support local charities is a waste of their money in relation to what they hoped to accomplish.

Regardless of whether you agree with their decision, the grantor letter exposes some weaknesses in the current methods used to address social ills. If you are feeding the same or greater number of people every year, or rescuing the same or greater number of dogs and cats, donors may not see that as solving the larger problem.

Businesses tend to think in terms of identifying a problem, constructing a solution, implementing that solution, calling the project done, and moving on. The grantor in this situation simply doesn't see an end to ever-increasing need. 

Beyond the corporate viewpoint, plain, ordinary, not-rich people are becoming tired of supporting symptom solutions. I recently had lunch with a friend shortly after “Super-Storm Sandy” hit the northeast. I knew that she had sent money to help the victims of Katrina, so I asked if she was doing the same with Sandy. Her answer surprised me. She told me she wouldn’t send any money unless it was to a charity that would support a ban on building in the same areas. I said, “Well, you’re talking about places like Long Island. A lot of people live there, it’s their home.” She replied “And it shouldn’t be. Anyone could see that this could happen. Look at New Orleans. It’s a fish pond. It’s lower than the surrounding land, and they’re just going right back and building in the same spot. It just flooded again this year. Why can’t people see that they need to move the whole (expletive) city to a safer area? I feel like they stole my money, because they didn’t fix the problem”. She went on to say she felt that charities had no interest in really fixing problems, because then they would be out of business.

It would be of value for all nonprofits to review their programs and incorporate more results-driven data in their proposals. Instead of just sticking your finger in the dike, thereby being stuck in one place, show how your program(s) will rebuild the dike so that you can move on. For instance, while nonprofits can’t lobby, perhaps your organization could implement a program of educating the public on what they can do to eliminate the bigger issues. Develop a strategic plan that shows that you recognize donor fatigue and have a plan to address it. Every bank account can be over-drawn. We might be getting there on a national scale. Before your organization reaches that point, have a plan to be one of the survivors. 

Finding funding for nonprofit administrative costs

Every nonprofit is familiar with the capital campaign that seeks to fund some bricks-and-mortar goal. In this post, I propose that you research, design and implement a campaign that has fund-raising for “soft” capacity building as its goal.

What is the definition of “soft” capacity?  To put it simply, it’s the money used to pay the bills and fund administrative costs. It’s the money that buys software, ink, and toilet paper, or pays administrative salaries.

Far too many nonprofits try to pretend that they are somehow able to fund administrative expenses without actually asking for the money to do so.  They try to “sell” their programs and hope that some of the money will slop over so they can pay the phone bill. That’s the accepted model, and it’s one that I spend hours helping clients design, simply because they can’t or won’t acknowledge that if they had better infrastructure, they would be far more effective in accomplishing their mission. Even if they do acknowledge it, they can’t find a way to get funders to support these “non-program” costs.  

If your nonprofit operates in that mindset, I really can’t blame you. There is an obsessive focus by grant makers and even major donors on reducing the percentage of the acquired funds spent on overhead, so that the nonprofit can say, “92% of all money raised goes directly to the service recipients”. Even worse, the nonprofits themselves actually try to run their business that way. The idea of strategic and financial planning/forecasting just never enters into their plans for survival.

Trying to pretend that purchasing toilet paper and printer ink isn’t a part of your service delivery is like trying to pretend that being bitten by a rattlesnake won’t affect your health. In both cases, the outcome could be fatal.

Sometimes, these costs can be allocated directly to a specific program. One mistake I see often is underestimating the cost of putting on an event. Many times, the nonprofit will report that they raised X dollars, yet at the end of the year, there was much less than that actually used as program input.

Let’s examine a typical nonprofit fundraising strategy, the “event”. The nonprofit decides to hold a fundraising dinner at a local hotel dining room. The planning committee sets a gross target of say, $25,000. They factor in the cost of the physical venue, the cost of printing the invitations, and the food costs at $10,000, and project a net “profit” of $15,000. The plan is to sell 25 tables at a cost of $1,000 per table, to arrive at a 33% profit. Putting it another way the nonprofit expects $1.50 in revenue for every $1.00 spent. Unfortunately, that projected $10K is NOT the true cost of the event. What about the “soft” overhead?

What percentage of the executive or program director’s time was spent in planning meetings, donor meetings to encourage attendance, or perhaps media interviews? There is a tendency to say “well, we have to pay them anyway, so what’s the difference?”. If the person makes say, $75,000 a year, and they spent 100 hours on this event, then the event portion of their salary was $3606, not including their per hour benefit costs. What is the cost of volunteer time? The national allowable rate for calculating the value of volunteer hours is in the $20/hour range.   If five volunteers spent 20 hours each on the event, that’s another $2,000. What about the cost of the office staff’s hours specifically used for the event?

The point here is, these costs are directly chargeable event production costs. They do affect how much money can go directly to programs. You do have to pay these costs. They are the reason why when you report to donors on program dollars, you can’t account for $15,000 that actually bought dog food, filled food boxes, or purchased coats.

To arrive at a true adjusted net income, you have to consider these costs. Just using the examples above, your $15000 net return is now $9394. Divide the net cost ($15606) by the net revenue, and it cost your organization $1.66 for every $1.00 of revenue raised. You must either to increase the per-table cost, or sell a lot more tables. It could be that you might actually decide that this event just isn’t worth your investment.

You must find a way to involve your board, your donors and grantors, and the community in a more effective survival strategy. In future posts I’ll offer some suggestions to accomplish that. 

Rebecca Lee Baisch

Cloudlancer Writing Services

What funding changes will the future bring?

Faced with the probability that their funding streams may shrink over the next five, ten or more years, many grant makers are looking for ways to apply whatever future income they may have to models that will sustain their organizations. Even if the proposed limits on charitable deductions and increases in the tax rate on passive income don’t materialize, the conversation in many foundation boardrooms is addressing ways to achieve more effective use of their funds.

Thus, they may change their grant guidelines to fund collaborations that will make that change happen. They may even move their funding model to one of providing PRI (program-related investment), rather than outright grants. That model allows the investment to replenish the pool of foundation funds, rather than depending on what may be a shrinking pool of available donors and dividends for sustainable funding. Many are funding for a broader social impact, rather than an immediate basic need. While this may seem counter-intuitive to the concept of grants, this model often allows nonprofits to obtain capacity-building funding that funds projects year-over-year, rather than constantly chasing the same donor for continuing support each year. It also provides a higher level of certainty for the foundation, since they know the funds will sustain other giving in the future. 

Your nonprofit may have to adapt to a changing funding environment and become sensitive to, and capable of designing programs for, this new environment. Even relatively small (under $500K) nonprofits may have to adapt to achieve continued growth. You may have to furnish a much higher level of sophistication, detail and accountability in your programs to obtain funding than in the past.

What does this mean for your nonprofit?  Let’s look at a hypothetical example.

As an illustration, let’s say that a foundation has historically supported a local nonprofit that provides real-time support for battered women. The symptoms of the problem are the physical injuries to the women, and the need to remove them from the abusive situation. The foundation has been supporting the nonprofit’s program of paying for emergency housing and counseling for the women. That program helps women individually, but does nothing to stop the overall culture of abuse. In many cases, even though the women may get out of the situation, and even have a restraining order in place, they are later injured or killed by the abuser.

This year the funding foundation has decided that the only way to help the women is to fund a regional program to eliminate the causes and not just the symptoms of domestic violence.

A program that might address this focus could be one that will require changes in the law to mandate lengthy prison terms for first offenders, coupled with intensive counseling to obtain true behavior modification. The offender will get days off their sentence for each day they are in the program and early release if they are deemed safe to re-enter the outside world. If they are not successful, they will serve the full original sentence without the possibility of parole. This program will require large cash infusions and even collaboration with government agencies or for-profit businesses.

The social impact element the foundation is looking for is met by eliminating the opportunity for the abuser to be free to contact the woman at all, and force the offenders to accept changes in their basic behavior.

For you, the nonprofit in the middle, this means much greater emphasis on mission refinement, program design and development, targeted and measurable goals and outcomes, realistic and comprehensive financial planning, and constant monitoring of the timelines to meet grant maker expectations. If you don’t have, or discount the need for a strategic plan, you may very well miss substantial funding opportunities.

Cloudlancer Writing Services provides strategic and business planning assistance to both nonprofit and for-profit organizations. Let us know if we can help.

What Does Your Home Page Say about Your NPO?

I look at about a dozen nonprofit website landing (home) pages a month, both by invitation and because something points me to them. Some are for organizations just starting out, while others may have been up for several years. About two-thirds of them leave me asking “OK, what is it these people do, and how do they do it?”

The only place you have to grab and hold the visitors attention is that first web page. Whatever comes up when they visit will determine whether they stay to learn more, or leave. It is your “sales” page.

Here are some of the most common errors I see:

          1. The blank “enter our site here” page. I clicked on or entered your web address, and I expect to  see a landing page. Don’t make me work harder to find it. Don’t use funky background colors. Keep it very light, and with very little pattern. Black type on a very light or white background is still the most readable. Light green lettering on a beige background can be hard to read.

      2.  Slow loading pages. I have a fast broadband connection.  If the page is loading slowly, I will spend only so much time on it, and then I’m leaving. Test your pages before you post them. Too many animations or large images can slow the load time to a crawl.

      3.    You don’t immediately tell me if you are a 501(c)(3). Grant-makers want to see that up front.

      4.  Once I get there, your mission statement should tell me, in very few words, exactly why you are in business, and who or what you are helping.  Don’t confuse a mission statement with a vision statement. Examples:

     Good: Our mission is to provide temporary shelter and basic necessities to women in (your town) who are trying to escape abusive relationships.

Bad: We want to provide all necessary services to domestic violence victims.

The first example tells me who you are helping, indicates what you need grant or other funds for, and how large your service area is at present. The second one could mean that you want to help every domestic violence victim in the world, and is so broad that it may indicate your goals are not attainable.

Once you provide a clear mission statement about your nonprofit, you can expand on it. Referring to the first statement above, you could include a list that looks something like this:

• “Last year, (your town or state) recorded 11,000 domestic violence complaints, 7,000 physical injuries and nine deaths related to domestic violence (answers the question, why are our services needed).         
• Through arrangements with local shelters and apartment owners, we provide vouchers for one month’s rent and gift cards at (list of retailers) for food, clothing, transportation and legal aid. The maximum length of time we can provide assistance is three (3) months.
• Working with local job placement agencies we provide resume writing assistance and notify women of job opportunities.
• ·We provide a list of licensed daycare locations that offer free or low-cost daycare.
• ·The cost of providing these services is approximately $1200 per victim annually

This is about all I would try to cram into one landing page. From there you can have drop down menus or links to other pages on the site for your organizational history, supporting statistics if applicable, contact information, board member biographical information, lists of supporters, or other information that provides context, background, credibility (such as how many people you have helped to date) and a contact or donation page or tab.

If you would like a free website landing page critique, contact me at www.cloudlancerwriting.com.

©2012 Rebecca Lee Baisch  All rights reserved

Win With Tailored Appeals

Cloudlancer Writing Services (http://www.cloudlancerwriting.com) writes or edits dozens of business proposals, grant narratives and business plans each year. Presumably, people hire me to craft those documents with the goal of succeeding in winning the contract, grant, investor or loan they are pursuing. So why do they sabotage their own chances of winning?

Time after time, clients present me with boilerplate they have submitted previously, with an admonition to “be sure the document contains this approved language”.  I have had clients send me files with “board-approved language”, “marketing department talking points” or even text copied from a proposal submitted by a competitor.

 

Some things are redundant for any business. Obviously, your core mission, product or service can only be described uniquely so many times. Your identifying information probably doesn’t change much, unless your physical address or contact names change.

What changes is the audience. Even if you have approached the funding entity or customer in the past, surely there is something new and fresh you can include. Did you expand a product line, improve a process, or reach out to new target populations? Is the information in the document so new that it differs from that on your website?

Nonprofits are particularly prone to recycling content. They restate their core mission and offer the same descriptive copy repeatedly. Once, when working as a grant reviewer, I was handed a proposal with a handwritten sticky note saying, “Just check for mathematical accuracy-they submit the same proposal every year”. The problem was that the foundation had changed its focus emphasis, so the old worn-out proposal didn’t match the new focus. The proposal was rejected for incompatibility with the new focus, as well as for citing stale results.

People and focuses within an organization change. Perhaps last year, the foundation board was comprised of people whose personal interests revolved around scholarships, while this year, a majority of the board is backing social impact goals in the housing sector. You might want to emphasize how your education-based nonprofit can increase the ability of the home buyer to understand contracts or to secure good jobs to pay for better housing. If your old “board-approved language” fails to stay current with the donor’s goals, it may not receive even a cursory review. Addressing the proposal to someone who hasn't been with the organization for three years isn't a good idea either. 

Business proposals are also likely to ignore the basic premise of successful sales. You always want to answer the question “Why is my product or service better for YOU?” If all your proposals contain a long-winded company history, the same list of users of your product/service from 20 years ago, and the same dry cost figures, and stretches out to 800 pages, don’t be surprised if your prospect’s eyes glaze over and they go elsewhere. 

Exclusive of technical items such as engineering, architectural or mechanical drawings and the verbal descriptions of same, if you can’t tell the prospect why your product will solve THEIR problem in 50 pages, you are probably just padding the proposal with meaningless fluff. This is NOT the place to include every sales brochure and sales award your company ever received. Restate the customer’s problem, and as succinctly as possible, show them how you will solve it. Believe it or not, in their eyes, it’s about them and their needs, not your company history. One Gantt chart can take the place of ten pages of prose to illustrate your installation or construction timeline.

The purpose of responding to Request for Proposals (RFP's) is to win the requesting party's support. Make it about them and their needs or goals, and you are already way ahead of the game.

©2012 Rebecca Lee Baisch     All rights reserved

Tips For Preparing Online Grant Applications

It seems since everyone is online, everyone knows how to communicate online.  As a grant writer, researcher and consultant (www.cloudlancerwriting.com), I deal with nonprofit organizations throughout the United States. Surprisingly, I find that many of them are unprepared for online applications and some even avoid them. That’s like refusing a bottle of fine wine or turning down a pot of money because you don’t like the package.

As organizations of all types downsize to control costs, the online grant process is becoming more common. Unfortunately, there is no nationwide standard for formatting an online application. Some foundations simply turn their paper application into a pdf file and expect you to print it and submit it via snail mail or in person, while others have every step painstakingly (and sometimes painfully) detailed online. Some allow unlimited text entries in the narrative section, while others barely allow enough room to enter a headline for your entire mission or program. In short, if you have created a standard or boilerplate application packet, it may not work online. Here are some hints to make the process less stressful.

Make everything “attachable”

In nearly every case, the application will ask you to attach a file when submitting online. Convert your determination letter, audited financial statements, most recent 990, and your annual report to e-files. Unless your accountant is still using a 1953 Royal typewriter, all of your financial information resides in their server or on a disc somewhere. Ask them to send you a copy. If the information is original to your computer system, I recommend saving a copy as a pdf file. Convert your determination letter to a pdf if it is in paper format.

Do a dry run

If possible (and it usually is) download the application outline and create the responses as word docs that you can cut and paste. That gives you the chance to monitor word and character count to be sure that information is not left out because there is an automatic end to the field. Some online applications will warn you when you are exceeding the limits of the text field (box), but many will not. Be as brief as you can without losing the impact of the narrative. That can be tough, since many nonprofits have board-approved language, but brevity is a virtue online. What works in a 2000-word brochure or five-page hard copy application won’t always work online. Thoughtful editing is a must.

Proofread and update your web site

Many applications will ask you for your URL. Be sure that your website looks and reads professionally, and has accurate hard data available. Be sure that links work, and the language on the web corresponds with the language in your application. Your contact information should be up-to-date, as should board lists if you provide them online. It goes without saying that if you don’t have a website it is definitely time to put one up. Your website should feature your mission statement on the home page, and a brief overview of your current programs, successes, and contact information on successive pages. A Facebook page is nice to have, but websites allow for the inclusion of more informative dialogue, and many reviewers will use the content to verify or expand upon things in your application. Your web site is also a sales tool, so be sure it is performing that function. 

Proofread the application

Most online applications do not allow you to edit a submitted application. Before hitting “submit”, proofread the application and if possible, have someone who did not enter the original information proofread it too. Some online applications do not allow you to save and return to the application later, so allow enough time for the proofreading, and be sure all of the attachments are at hand before starting.

©2012 Rebecca Lee Baisch and Cloudlancer Writing Services

So, What Happens Now?

Many of my nonprofit clients are having minor to major meltdowns since the election. Everyone is asking the same question; where do nonprofits go from here?  Will foundations stop giving out grants because their dividend and interest income is  too low?  Will individual donors quit supporting their favorite cause? Will corporations adjust or eliminate their philanthropic goals?  Will the Feds have more or less money available for grants? Will all Federal money only be given out in block grants? What causes will the government support? Will all the grant money go overseas now? Will states take away sales or other tax exemptions for nonprofits? These are only a few of the questions NPO boards are asking.

I would say we have to wait and see. There is no doubt that this administration is going to try to maximize its cash inflows from the people and companies it defines as “wealthy”. This president is consistent in his message. He truly believes that an economically classless society is the best thing for America and that the government should be the source of, or at least in control of, economic activity. The country re-elected him, so it is logical to assume that he now feels that he has “more freedom” to advance that ideology. Whether you agree or disagree with his vision for America, he will push it as far as he possibly can. If that strategy results in only a minor correction in the economy and doesn’t produce the dire results predicted, it will produce one set of realities, and if the opposite effect occurs, perhaps there will be a course correction at some point in the future. Unfortunately, none of us can accurately predict the future.

The one thing I can say with certainty is it is time to be sure your nonprofit is operating efficiently, and that you need to have a definitive organizational and fundraising plan. You may need to adjust your strategic plan, or develop one if you have been “flying by the seat of your pants”.

Analysis of your costs and effectiveness is the key to survival now. If your nonprofit is spread out over many areas, trying to be all things to all people, it is time to focus on those programs that have a positive return on investment. Let go of those programs that you’ve never quite been able to fund completely. At this point, you still have control over that aspect of your organization. If you wait until the money dries up (if it does), the decisions will be made for you. For those of you in the social impact arena, it might be time to look at some of the crowd-funding options. For those of you that have felt that advertising or marketing was somehow crass or unnecessary, you need to get on the public radar in your field of interest.

You may not be able to control the economic realities facing the country, but you can control your specific organizational plan. If you need help, drop us a line at granthelp@ida.net.  

Think Small to Win Big!

My website, (http://www.cloudlancerwriting.com), gets numerous requests that begin something like this: “We need $250K for our (insert mission here). We would like you to find us a big grant so we can proceed with our goals”.  

Everyone wants to hit the jackpot or win the lottery. Nonprofits, particularly newer ones, see that one “big” grant as their winning ticket to success. 

There are several reasons to “think small”. Successful requests to local agencies build relationships that may lead to larger donors.  Local support shows regional and national donors that your community supports your mission. (After all, if your local community foundation doesn’t support you, why would someone out of your immediate area do so?). Local or smaller grants can be used as matching funds for larger donations.

Receiving smaller but more numerous grants minimizes the risk that losing a funder will close down your program. Ten grants for $2500.00 equal $25,000. Lose one, and you still have 90% of the funding you need. Pinning the success of your program to one grant for $25K means that the program simply doesn’t exist if you don’t receive that one big check.

Many grant applications have a section requesting that you list other funders that support you. Almost all of them have a section that asks how the program will continue if you do not receive their support.  Small grants, particularly if you have a history of receiving them year over year, shows new funders that you are capable of forming and maintaining relationships with other funding sources. In other words, it shows that other donors have confidence in both your nonprofit and your mission. When the time comes to expand the size and scope of your programs, you will have developed a base of support that enhances your credibility with new funders.  

Big isn’t always better. Seek out and win those little grants and the bigger ones will follow.

©2012 Rebecca Lee Baisch   All rights reserved

Avoiding Last-minute Grant Writing

It is human nature to procrastinate, particularly if you don’t want to do something.  In many nonprofit cultures, there seems to be a pattern of waiting until the last possible minute to write grant applications. 

There are many times where assembling the application and writing the narrative DOES come up at the last minute. Perhaps a previous funder sends out an invitation late, or you stumble upon the perfect funding opportunity two days before the application or LOI is due. Those are the acceptable reasons to apply at the last minute.

However, if you have a list of organizations that you apply to on a regular basis, why are you waiting until the last minute? When you do that, it leaves you no time to answer queries from the funder, and it certainly doesn’t leave a window to act upon those unavoidable “rush jobs”.

Even if your organization does not maintain a formal process for keeping track of grant application due dates, you can at least use your browser’s calendar to enter a reminder.  A quick note with the funder's name and a reminder to check on their current grant cycles 90 days out, with a follow-up to write and submit the application or LOI at least 30 days before the due date will significantly reduce your stress level.

There are many advantages to developing the habit of being proactive in your application process. It leaves time for the funder to contact you, and allows for a window of opportunity to address those “new” opportunities that materialize. If the funder does not normally let you know when applications open, you won’t miss an opportunity to apply.  If the funders’ goals have changed, you won’t find yourself having to develop a completely new narrative and possibly even a new program focus in 24 to 36 hours. If you utilize a service such as ours, you won’t be competing for our time with other procrastinators. More importantly, your application will be better crafted and more likely to receive consideration for funding. 

Although I don't have statistics, my “gut feeling” is that bombarding the funder with last minute applications also leaves the impression that perhaps you are not as organized as possible. Someone at the organization does see your application before the applications are formally reviewed. If you are there in advance of the last day rush, it could produce a more favorable view of your organization. I know of at least one foundation that times stamps all the applications when received. Does being early help?  I don’t know, but it sure couldn’t hurt.

Here at Cloudlancer Writing Services, we try to remind you of upcoming grant cycles when possible, but in many cases, we may not have a complete list of your previous donors. Take a few minutes this year and make a note of when you apply to a funder, and their open cycle dates. Enter it in your browser’s calendar and make your life more relaxed next time. 

Strategic Planning - Positioning Your Nonprofit for Growth

Ah, the much-maligned and often discarded strategic plan. Why would I write about that, you ask?

Probably no other topic gets more groans and eye rolling when I propose it to my clients. I get comments like “Total waste of time and money”  “Ineffective gobbledygook” and “too confining”, along with a few less printable comments.  

I get it, I really do. When I was an employee of a nonprofit, the board once decided we would have a retreat and come up with a “plan”. The retreat was held at a board member's mountain cabin, set in a lovely forest area. There were a few glitches.

First, I had to drive 92 miles through an Idaho snowstorm on poorly maintained secondary roads to get there. Not too bad, if you were used to it, and had a four-wheel drive, but I wouldn’t say I arrived in a relaxed and upbeat frame of mind. Second, the format was to have everyone write down their wish list for the agency, and put them in a hat. The moderator (a board member) would pull them out, read them and ask for a show of hands as to whether it should be included in the plan (for real…I couldn’t make this up). The suggestions dealing with budgets and controls didn’t get many votes. The result was that there was a lot of emphasis on the “warm fuzzies”, marketing, getting grants, and events. The results were expanded and put into a nice little report cover containing about three pages, and that was the strategic plan. I don’t think anyone ever looked at it again, and a couple of years later, it was thrown away.

Then there was the client who wanted to hire me to write “a two page executive summary for our strategic plan”. Great, glad to help. When I asked for the plan so I could summarize it, he responded, “Oh we don’t have a plan, we just need to have a summary for a grant”. I pointed out that I couldn’t summarize something that didn’t exist, whereupon he told me “never mind, we can throw something together.” Yikes!

Neither of these scenarios have anything at all in common with an effective strategic plan. First, these should span a minimum of five years, and should be forward-looking, with a specific goal. It should contain financial projections and the SWOT analysis I mentioned in the last post. The plan is constructed to develop methods and measurements to evaluate progress in achieving that goal. Second, there has to be a review of the plan annually. What were the first year goals? Were they accomplished, and if not what is being done to get back on track? Does this review necessitate modifying the five-year plan? If at any point, the plan goal has gone completely off track, should the original the plan be rewritten with more a realistic goal?  Ideally, the plan evolves as each year is completed, and a new five-year plan emerges for the next five-year period almost automatically.

Strategic plans, by their very nature, should not be static. Look at the name. Strategic means have a strategy (goal, plan and method) to get somewhere or accomplish something specific. Imagine what would have happened in WWII at the Normandy landing, if Eisenhower had just had all the generals throw their battle plans in a hat and took the ones with the most votes to implement. I imagine the native tongue of the United States would now be German.

Strategic plans have to begin with the desired end result or goal for that time period, and then develop methods to achieve that goal, include recognition of, and contingency planning for, the inevitable obstacles, and they must be dynamic. They are the road map for your agency. That means that your destination must be defined, and while you may have to take a detour, you still know what your arrival point is going to be, and you still follow the basic direction for getting there. The road is not a concrete channel, and a detour is not a reason to abandon the journey. If you are a group applying for 501(c)(3) status, the strategic plan will make the application much, much easier to complete, and if done well, will probably prevent the dreaded “need more information” letter from the IRS.

Don’t ignore or dismiss the value of the strategic plan. When properly constructed and monitored, it does have value, and may ultimately save you far more time and money than it cost to develop. If you need help feel free to contact me at granthelp@ida.net, or on my Cloudlancer Writing Services Facebook page.  

© 2012 Rebecca Lee Baisch   All rights reserved.

Structuring Overhead As An Allowable Program Expense

Many foundation grant applications state or imply that the grantor will not support administrative costs for the organization. That is why they ask for both an organizational and program budget. If your organizational budget and financial statements show a overhead expense allocation that is 50% of your operating budget it can reflect poorly on your grant request. I often receive program budgets from clients that totally (and unintentionally) understate the actual cost of the program.

Far too many nonprofits lump everything that isn’t a clear direct program cost under organizational overhead, also known as administrative or indirect costs.  For instance, an animal rescue might cite food costs, veterinary care and adoption event costs as the total cost of the program. 

In reality, there are other costs that can be legitimately tied to the program.  For instance, let’s look at heating costs. Let’s say that your animal rescue focuses on dogs. You have a building that is 2000 square feet. One-half of that building is dedicated to kennels, food storage, and bathing facilities for the dogs. Your annual heating cost for the entire building is $2800. One-half of that figure is legitimately a program expense, and should be assigned to the program when applying for a grant. If you didn’t have the space and it wasn’t being directly used by the dogs, your heating costs would be lower.

Salary expenses can be similarly expensed. If you have one paid employee, and that person spends six hours a day typing, filing and answering the phone, and two hours a day cleaning cages and feeding and bathing dogs, the two hours is directly attributable to the program. If you are not using time reporting for the employee, have them fill out a timecard that specifically details the time they spend directly working hands-on with the dogs.

Take a couple of hours and review your budget and financial statements. Identify which expense items might be improperly classified as indirect costs. Take the list to your accountant/tax professional, and determine the best way to allocate these costs to the program.  Remember, accurate recordkeeping is vital to this process. You must be able to document the division of costs for the IRS, as well as for grantors.  You may have to restructure your chart of accounts, or your accountant may be able to do a monthly closing journal entry adjustment to place the costs in the proper area if your records are complete and accurately portray the allocations.

In the beginning, this may all seem rather tedious, but having your costs properly entered will pay off in the form of better grant results, as well as in better financial control of your nonprofit. If you need help with any of the concepts above, please contact me at granthelp@ida.net.

Your Role in the Grant Process

We’ve all heard the phrases, “it takes money to make money”, or “pay to play”.  The nonprofit equivalent of that is that you have to be involved personally, and as an organization, in the process of fundraising. 

Your board needs to be committed to the concept of fundraising. Your ED or CEO must take the lead in promoting good donor relationships, whether directly, by hiring a donor relations manager or by assembling a top fundraising team. These should be “givens”.

Most of all, your organization has to be actively engaged in producing the program outline and financing requirements to approach funding organizations and keep accurate records not just of the funds received, but of your use of those funds.

Large nonprofits generally have a department that does nothing but formulate budgets for programs, tracks the grant for correct utilization of funds and does the final reporting.

Smaller NPOs often find this part of the process just plain boring. Cash and time-strapped nonprofits often hire grant writers and just tell them “Find us the money”. It isn’t that simple.

99.99% of all foundations will require a formal annual report, audited organization financials for the most recently completed year, current 990's, a detailed program budget, a program outline that defines the population demographics or target recipient for the funds, and a detailed final report that specifies exactly how the funds were used within that program. Failure to deliver any of these will doom proposals to failure, and failure to satisfy the final report or diversion of any of the funds for uses beyond those allowed in the grant can result in a request for repayment of the funds.  If you are applying for general operating support or a capital campaign, they may also require a strategic (business) plan and detailed budgets.  Cloudlancer provides assistance in constructing these “must-haves” to fully 50% of our clients.

Don’t be the client who says, “Jeez, I’m not applying to a bank for a loan…why do I need all this stuff?” Think about it - you’re asking someone you may not even know to GIVE you money. Why would you think that they wouldn’t want assurance that your organization will use it wisely? Participate in the process by having all the necessary facts on hand, up-to-date, and in a usable format.

For example, if you run a dog rescue, be prepared to verify your costs and results in detail. Examples of information would be: how many dogs have you rescued, how many have been placed, what were your costs per placement, how many dogs are typically unplaced each month and why, and what are your occupancy, feed and veterinary costs?

Your participation in the grant process is a cost-effective use of your organization's time. If you need more information, Cloudlancer Writing Services is just a click away...email us at granthelp@ida.net.

SWOT’ing Your Nonprofit

Why would you want to SWOT your nonprofit? Because it will help you understand your place in the nonprofit world.

Cloudlancer Writing Services offers writing services to for-profit as well as nonprofit businesses. For-profits absolutely understand the concept of SWOT, since they generally have to submit business plans to lenders. Nonprofits on the other hand, tend to view themselves as somehow above the normal tools used to evaluate a business. I firmly and emphatically disagree with that viewpoint.   

SWOT, or SLOT, used in the context of business planning, is defined as a Strength, Weakness (or alternatively, Liabilities), Opportunity and Threat analysis. Many nonprofits do not include one in their initial strategic plan, but every single nonprofit (and for-profit as well) should produce one on a yearly basis. You may not ever have to submit one to a funder, but at a minimum,  a properly constructed SWOT will keep your organization moving forward and prepared to succeed.

Many businesses, both for-profit and nonprofit, at least give a nod to the Strength and Opportunity components. The Weakness and Threat areas are often minimized or totally ignored in the company planning.

An honest assessment of your organization’s business health and mission success using a SWOT analysis can help you understand why you are not moving forward as quickly as you want to, why your funding requests are ALWAYS turned down, or even what to do to manage explosive growth. 

For example, perhaps your mission statement and mission execution don’t match, confusing funders trying to understand how their funds will be used.  Perhaps there are far too many nonprofits in your area addressing the same mission. Perhaps they are more established, better organized and have greater name recognition. There is only so much money available from funders, and if you don’t stand out, you may not get any of that funding.

Perhaps your nonprofit has always been the only one addressing a specific mission. Success breeds imitators. Are there suddenly several organizations all competing for the same dollars? Annual SWOT reviews should reveal that as a Threat. Did you recently lose a key employee in the fundraising department? Evaluate the impact to your organization by revising your SWOT report. Has your mission evolved out of its original focus area? It’s time to re-assess your presentation to prospective funders by revising your SWOT to deal with current reality.

Your organization may subliminally recognize that something has changed. Putting it down on paper forces you to recognize and deal with problems before they become crises, and allows you to be proactive, instead of reactive to changing circumstances.

If you have questions on preparing your SWOT analysis, give us a shout, and we’ll be happy to help.

Do You Need a Website?

Cloudlancer Writing Services usually sends a prospective client a questionnaire to assess organizational readiness to apply for grants. One of the questions asks whether they have a website, and for some reason, in the last two or three months, many organizations have answered “no” to that question, or indicated they have a simple page with their name and donation contact information only.

I absolutely recommend that your NPO have a well-designed and informative website. There are so many hosting services out there that have DIY templates, there is simply no reason not to have one. On the other hand, a really bad website is undoubtedly worse than no website.

The website should provide information as well as ask for donations. Many grantors will ask for your URL, and they may expect to be able to visit the website and receive information that may not be on your grant application. For that reason alone, you should have a website with the information they may be seeking.

The latest surveys of foundation-based grant funders indicate that approximately 20% have gone to a web-based application format.  That is an increase of 5% in two years. That is both a blessing and a curse. Aside from the Common Grant Application format, there is no standardization of these online application processes. Many of them are severely limited in space to provide your grant narrative, and they often do not have space to list your other funders. Others ask for your top five funders, sometimes with amounts, sometimes without amounts. Most of them do not allow you to send other data, such as expanded program descriptions, or documentation regarding funding. They may not ask for your board of director’s information.

A well-designed nonprofit website will answer many of the questions they may have. Smaller nonprofits with low budgets for web development should still strive to answer at least the five “W” questions; Who, What, When, Where and Why.  The website should provide donor recognition (your new donor may well expect some sort of recognition on your website) opportunities, news of events past and future, and some mention of your most outstanding accomplishments in the past year.

Your website should look and feel professional. What is acceptable on social media pages is often not acceptable in the business world. If you must take a really informal tone, provide a link to your Facebook or other social media page. Typos, poor grammar, slang, and Twitter-style writing does not belong on your website.  I actually looked at a website recently whose landing page started out with “Hey there dude, whazzup?” Somehow, I don’t think the review board of the Carnegie Foundation will be impressed. If you don’t feel that you can present just the right impression, we can help you to achieve that balance between professional and empathetic.

Your website is your organization’s online persona. It’s the first impression many people will have of your organization. Make it a good one.

ASPCA Emergency Funding for Hay Purchases

A grant for nonprofits specializing in equine rescues has just opened at ASPCA.  The website states that they will fund from $5,000 to $10,000 for emergency hay/feed relief, with preference given to organizations in drought-stricken areas.  They may also consider applications for rescues affected by Hurricane Isaac. See the full informaton at:

http://www.aspcapro.org/aspca-equine-fund-hay-bale-out.php

If you need assistance, please don't hesitate to contact Cloudlancer Writing Services at www.cloudlancerwriting.com

How do nonprofit funders assess your financial health?

Here at Cloudlancer Writing, I often counsel nonprofits on positioning themselves for maximum competitiveness when applying for grant funds. Mission is important, the ability to show results is important, program development and documentation is important, but financial accountability and sound management of funds is equally, if not more, important. When you move out into the larger philanthropic world, it increases the need to be as professional as possible. These people do not know you, and they have to have a way to assess your organization. The best prose in the world is not enough to put your organization at the top of the pile when applications are reviewed by national, regional or government agencies.  Your local philanthropist may be able to come to your office and chat with you, but larger organizations typically do not visit every nonprofit that they fund.

Many nonprofits have specific financial methodology for deciding which nonprofits should receive funding.  One example of such a tool can be found at:

 http://nonprofitfinancefund.org/files/images/initiatives/financial-scan-sample-report.pdf. 

This report format, which was developed with considerable collaboration with a major financial institution, is the epitome of the formula-based evaluation and uses the data obtained from your 990. It reads and functions like a loan evaluation form. Other foundations have their own, perhaps less rigid formulas that they have developed over years of experience with the nonprofit sector. The common denominator is that all of them seek to discover whether your nonprofit can survive and accomplish its mission.

As I have often stated, in many ways the criteria by which grant funding is awarded is no different from that used by a bank or loan company to loan funds. The only difference is that your nonprofit doesn’t repay the funds in cash. Rather, the use of the grant funds is justified from the grantor’s standpoint if it is used effectively to advance whatever cause or mission they are supporting. Since these particular dollars will never be repaid, the criteria for disbursing them can be, and often is, even more stringent than a loan application.

No funding agency, whether philanthropic or not, wants to see the dollars they provide squandered. Your nonprofit track record of getting maximum good out of the dollars you have been given is the charitable equivalent of a 900-point credit rating. No matter how great the need, no matter how committed your organization is to its mission, if you can’t prove good stewardship, your application is likely to be rejected.

I do not necessarily subscribe to the idea that all nonprofits must “solve” a problem to be considered for funding. Sometimes, the best that can be achieved is mitigation of the issue at hand. If your nonprofit supports victims of domestic violence for instance, your single organization can’t eliminate all the root causes. Poverty, substance abuse, illiteracy and a myriad of other factors enter into the equation. What funders DO want to see is that you are having a measurable and sustainable impact. Perhaps it’s a program to retrain the people to obtain a better income. Perhaps it’s substance abuse counseling. Perhaps it’s simply a way to be removed from the violent situation. If you can show that the dollars you were granted are providing solid, measurable results, and that you can support your daily operating expenses, that is usually enough to meet the grantors expectations.

To provide that proof, and keep track of your results year-over-year, you will need sound financial reporting, a program that provides for a clear description of the problem you are addressing, and clear result-based reporting. That is what funders are attempting to measure, using not just glowing accolades, but financial evidence that you have a defined mission, that you spend money wisely to gain maximum impact on the problem, and that you have a clear path to sustaining the program even without their specific funding. When applying for funding, don’t start out with a built-in roadblock. No matter how small your nonprofit is, good financial recordkeeping will help to position you for success.

If I Could Assemble the Perfect Board of Directors

Because I deal with numerous small and newer nonprofits, I see many ineffective boards. Not bad boards, in the sense that they are disinterested, or self-serving (those tend to crop up more in long-established organizations), just good people with good intentions and a lack of organization and little to no understanding of what a nonprofit board is supposed to accomplish.

The first board of directors for new NPO’s is typically comprised of people united in their vision for the organization. They took the steps to “make it happen”. They are emotionally and often financially invested in providing goods or services to needy populations of one sort or another. They are the “founders”. That’s a great place to start, but the very closeness they first enjoyed, eventually leads to a sort of organizational paralysis. 

The Board, by definition, is not supposed to perform the daily duties of running the organization. They are supposed to formulate policy, generate the first budgets, write and approve the first strategic plan, and provide ongoing ethical, financial and legal oversight (governance) for the organization. At the outset, the lines between employee and board member are going to be blurred.  Most initial boards do not observe a firm policy for term limits and recruitment of new board members.  They may have such a policy in the bylaws, but in reality, their investment in the organization makes it very difficult to add new blood.

If I could design the perfect first board, I would envision it as having enough members to form committees or at least to have “specialists” in one area or another.

My ideal board would have:

A.  One member with a financial background, to evaluate investment strategies and assess the financial statements with a professional eye. This could be a CPA, a banker, an investment broker or anyone that deals with numbers and finance on a daily basis.

B.  A marketing/public relations/fundraising professional to evaluate fundraising and campaign strategies.  

C.  An attorney, to ensure that the NPO doesn’t run afoul of the myriad regulations governing nonprofits.

D.  One or more business owners or managers, to provide common sense perspectives on the organization.   

E.  The founding members, to keep the passion alive.

If the founders themselves encompass these attributes, fantastic!  If not, I would advise them to recruit members that do, at the outset.   One caveat here…although I recommend having professionals on the board, remember that they can’t benefit monetarily from those skills as contractors to the organization while they are serving on the board. Your financial person can’t be the CPA who performs your audit, for instance.

And, as hard as it may be, plan on adding new people to the board on a regular basis.  That might be every two years, it might be every four years, but recruit, evaluate and add them regularly. Of course, that means that at some point, someone is going to have to “retire”, or you are going to have a 500-member board.  Plan for that in your initial bylaws, and accept that if new members are properly vetted, they will be an asset to the organization.