Understanding how program development increases funding

All nonprofits have goals, or as they are usually stated, missions. Feeding the hungry, providing shelter for victims of domestic violence, supporting veterans, or rescuing animals are all goals, or missions. They are the reason your nonprofit exists.

To support the main mission, action plans, i.e. programs, are developed to reach the main goal.

In addition to solving or alleviating an adverse condition or circumstance, programs also provide funding parameters for supporters. To put it another way, they provide opportunities for people sympathetic to the main goal or mission to collaborate in achieving that goal, without being directly involved in the management and operation of a nonprofit.

Criticism of nonprofit effectiveness is seldom related to mission. Almost without fail, when nonprofits get in trouble with donors or grantors it is related to failure of the program or programs to achieve the mission.

One of the shortcomings of newer nonprofits is failing to communicate how a program advances mission accomplishment.

Interestingly, sometimes that goes back to the mission concept. Vague or overly ambitious missions can make it difficult to design realistic programs that can be developed to deliver the desired results.

Go back and re-read that last sentence, especially this part. " …design realistic programs that can be developed to deliver measurable optimum results." This is often one of the first things I address when working with new clients.

If your program, or programs aren't designed well, they can't possibly develop methods that achieve the best possible outcomes.

To design realistic programs you need to have a realistic program model in relation to your ability to deliver results.

Reality trumps vision

By way of explanation, let's look at the "No Child Left Behind" mission, a product of the George W. Bush presidency resulting in the 2001 legislation of the same name. The goal was to see that every child in the United States receives access to a quality education.

That's a totally realistic mission in terms of the resources available to support it, i.e. the Federal budget.

If that same nationwide mission was to be undertaken by a nonprofit in a town of 400 people in rural America, then the mission is not realistic in terms of scope, and no program could be designed that would achieve it.

Organizations need to take the availability of resources to achieve the mission into account at the time they decide to become a nonprofit. That limiting factor will determine the initial design and development of the programs. Ideally, future planning incorporates an "if-then" component so the program can be expanded as resources become available.

Well-designed programs provide better funding opportunities

Funding, especially from grants, is seldom sustainable from one source, so having a variety of funding opportunities is critical to mission success.

If a program is designed to provide both an immediate benefit and an opportunity for expansion, it can continue to grow as resources become available.

Setting realistic goals that are measurable and achievable allows the nonprofit to show donors that the program does provide tangible benefits at varying levels. When the organization can document positive results, it can attract more funding.

Thus, a neighborhood literacy program for ESL learners can start with a phased in program that first funds community outreach to raise awareness of the mission, then seeks funding for books or electronic readers, then expands to purchase furniture for a rented space, and finally seeks funding for a building to provide a permanent base of operations.

Each of those phases will attract a slightly different donor audience. For instance a corporate donor in the public relations field might fund a PR campaign, a tech company might provide in-kind donations of tablets or e-readers, a furniture company might grant funds to purchase desks and chairs, and finally, major foundations might grant  substantial funds to purchase the building.

Instead, far too many newly formed nonprofits start out with trying to fund the building before they can even prove that the community is deriving a benefit from the mission. All that accomplishes is to drive grantors and major supporters away.

As frustrating as it can be, good program planning pays dividends far beyond the time it takes to do it.

The effect of the ACA (Obamacare) on nonprofit revenues

The government-run health insurance law will suck up a lot of nonprofit support dollars. Regardless of whether you like it, hate it, or just don't know very much about it because of the well-publicized website problems, it seems likely that it will have a lot of impact on the amount of money available to nonprofits from government, corporate, individual and foundation sources.

After earned income, government contracts make up the bulk of nonprofit funding in the United States. It is a commonly held misconception that the government gives away money to nonprofits with no strings attached.

In most cases, nonprofits are funded through government-provided contract income for things like childcare. An article in the New York Times details the general squeeze nonprofits are still feeling after the recession, and the role of government dollars and programs in that picture. After earned income, government funding accounts for three times the income from foundations and forty times the income from corporate giving.

Aside from the costs to get the Affordable Care Act website up and running (estimated at half a trillion dollars to date) there is the cost of providing subsidized healthcare insurance under the current law. Often forgotten in all the hyperbole over deductibles and cancelled policies are the ongoing administrative costs. The money to train and pay the so-called navigators, maintain the website even after it is fixed, the personnel required to route and process applications all comes out of tax dollars, which of course come from each taxpayer. While nonprofits often face scrutiny for their administrative costs, the government doesn't face that constraint.

Healthcare comprises one-sixth of the U.S. economy. While not everyone will get insurance through the government-sanctioned exchanges (if you don't qualify for a subsidy, you still need to get government-compliant insurance from a "private" insurance company), the higher deductibles and in many cases higher premiums will impact both individual and corporate incomes, leaving less money available for them to donate.

If the federal deduction for charitable giving goes away, as it has in some states, that will  further impact how much money is available from donations.

From the government's side, there is a high probability that the actual cost of the subsidies may lower federal and state discretionary spending capability.

So far, the Internal Revenue Service has not issued final guidance on how these higher costs may factor into arriving at adjusted gross income. If the allowable deductible amount for healthcare increases, that could potentially impact the final amount owed on both individual and corporate business income, which effectively reduces taxes paid to the government. If the deductible is not raised, then the additional money has to come out of the operating budgets of each business and individual as a direct cost. That too lowers income, with the same net result.

With more money going out and less coming in, it stands to reason that there could be less money available for nonprofits from all of the traditional sources.

If your organization hasn't factored these uncertainties into your five year plan as yet, it might be time to do so. Although many nonprofits find generating earned income and operating like a business to acquire that income to be distasteful and in direct opposition to their mission, survival may dictate that you adapt to that model.

Need help with planning?  Drop me a line at granthelp@ida.net. 

Make your nonprofit website effective

On any given day, I can go to the web and find dozens of little more or less local nonprofits that most people probably never heard of that are struggling to survive and grow. Most of them will limp along for years but never really have much of an impact because they can't scare up enough funding. Why is that?

In some cases there just isn't much support for their mission in their area. But much more often it's because they don't understand how to appeal to and build a wider donor base. Contrary to many nonprofit expectations, grants aren't usually the only or even the best avenue to success. I look at a lot of nonprofit websites, and there are three things that I find common to many of them.

They don't understand why they have a website

Most of them are all about the nonprofit. There are pages about how they came into being, pages about the board members life, pages about their events, and that's fine, but the most important page is the home or landing page. I certainly don't want to imply that having your financial information, a list of your board members or even a short history of the organization isn't important. Institutional (foundation) donors and major gift prospects expect that, but those pages don't draw many individual donations. Telling the visitor to go  to some other website isn't a very good idea either.  Facebook is great for some things, but most people will find you through a keyword search, and that's probably going to go to your website first. Don't run them off.

The primary purpose of all of those pages is to increase financial support for the mission, impart a sense of credibility and maybe enlist volunteers as well. What people want to know when they donate is:

Who or what am I helping, why do they need help and what are you going to do with my money to make things better?

If your home page doesn't grab the visitor's attention with something relative to their interests in the first 10 to 20 seconds, they are very likely to move on before they ever get a chance to learn about your organization.

Contrast these two opening sentences.

1. The Blank County Animal League came into being in 2005 to fight for the rights of animals.

2. You can stop Blank County from killing 10,000 dogs, 15,000 cats and 8,000 other types of animals every year.

Which one gets your attention and makes you feel like you could make a difference?

They don't provide or predict results soon enough

The second paragraph needs to give at least a cursory look at positive outcomes. Tell them how the donations received to date have made a difference.

"Since 2005, our donors provided the means for the adoption of over 5,000 animals, and free spay and neuter clinics every month for the past two  years." Or, "By supporting our plans for a no-kill shelter you can save the life of a future pet." It depends on how new you are to the scene which will work for you. It's OK to add one to three photos that support your emotional appeal, just don't make the photos the only visitor connection on the home page.

They don't actually ask for money.

Go ahead. Give them a number. Tell them that you are looking for a minimum donation of $10.00 and put a second donate button link right in the paragraph. (Of course you should have one at the top of the page, and even on subsequent pages as well.) If you want monthly recurring donors, tell them that. And make sure that the donate button provides an easy way to give, such as a "text $10.00 to 12345 now" or a PayPal or credit card option for instance. It's fine to ask them to call in a donation, or to give your mailing address, but many smaller donations are spur-of-the-moment decisions. Don't lose the moment.

In summary

If this sounds like you should think of your home page as a sales page for a product, good. That's what it is. Your product is your mission. Sell it effectively.

There are other parts of your website that will, and should give in depth information about your organization. You can devote a whole page to testimonials. Your financial information should be accessible to those that care about it. But if you can't get the casual visitor engaged from the get-go, you may never have the chance to develop a more profitable relationship with those bigger donors. 

Outcome Measurement - How to Do it, and Why

In the past dozen years, the term outcome measurement has become a part of the language of funding. For some reason, nonprofits, particularly local or smaller nonprofits, are having a hard time understanding the difference between documenting outcomes and providing attendance figures. As a grant professional, I see literally dozens of programs that simply don't provide the type of program reporting that grantors expect. I can write the most carefully crafted application in the world, but if your programs don't demonstrate real effectiveness, you are probably not going to be funded.

Outcomes are not measured by how many people you present your program to, they are measured by whether each person improved in some area because they received your services, i.e. the impact of the program. To a large extent, the quality of your outcomes is determined by how carefully you design  your program.

To measure outcomes, you have to have a coherent, measurable goal for your program. For instance, let's say that your nonprofit focuses on improving early childhood learning by getting parents involved. To set up an effective reporting metric, you define the desired end result, and work backwards to define the steps necessary to achieve that goal. For example, if the goal is to teach conversational English, you define what will prove the student learned the language, and what level of proficiency they have attained. Then you develop program steps that produce the desired result.

So, let's apply that to a hypothetical early childhood learning skills program. First you need to define and prove the current state of early childhood learning in your geographic area. Why is your program necessary?  If you don't know what the current state of the problem is, you don't have a baseline from which to measure improvement.

What is the magnitude of the problem? You might use available data, such as government surveys, or maybe you hold a series of meetings with educators, law enforcement, social services workers and other professionals who deal with the effects of poor learning environments. What is the average age of the parents in your target population? What socio-economic conditions seem to produce poor early childhood learning difficulties? What do children entering the school system for the first time lack to make them successful?

 

Don't be lazy here. It isn't enough to say "Everybody knows that poverty causes poor school outcomes." Put a number to it. Say, "Our local research shows that 72% of the children entering first grade in our school system do not know their alphabet, can't count to 100 and don't focus well on tasks. The average age of their parents is 22. 78% of the affected children live in single parent households. 34% of the parents do not have a high school education. 94% of the households receive some type of public assistance." That type of targeted data will require research and documentation of the current problem.

 

What is the goal of the program? Don't say, "we will present our programs to 100 family units annually" That sets your program up to accept attendance as a goal. Say, "We will involve 100 parents of five-year-old children in a comprehensive six-month  program that teaches parents how to teach learning skills to their child. We will assess the current skill levels of each child in the areas of reasoning, self-control,  and problem solving, and measure the improvement in each program area. Our goal is to have every child improve their basic ability to learn. We will follow the children through their first year in school to assess whether the program provided the children with better learning skills and collect data to assess whether parents continue their involvement in the learning process".  Now you have the basis for real measurement of real outcomes

.

To set up measurable goals, you might have program elements that look something like this:

.

1. Parent will spend at least one half-hour hour daily supervising activities that require concentration. (Have the parent keep a log of the time with a description of the activity)

2. Parent will read with their child at least two hours weekly, or if the parent is not reading-proficient, will take their child to the library reading program and stay with them while they participate in the activities. (Have the parent record the times and places where reading is emphasized)

3. Parent will learn techniques to improve the child's ability to sit still and concentrate on a simple task, such as learning to color neatly or count objects. (Measure the length of time the child concentrates now, and evaluate through testing whether those times have improved. Have the parent document the application of the techniques.)

You get the idea. By defining specific "lessons" for the parent, the by-product, i.e. the child's improvement can be measured. By requiring the parent to prove they are actively involved, you minimize the chance that they will just go through the motions, since the child's improvement is a direct result of the parent's involvement.

Each of the theoretical situations above will also require you to develop and document methods to present the initial concepts you are trying to measure. That documentation will provide data that justifies the grantors contribution to your nonprofit. As a by-product, you will find that your costs may actually decrease, since you won't be wasting time and money on unproductive methods.

That's the type of hard data that grantors are looking for you to provide. If your current program doesn't capture this type of data, spending a few hours with your program team and setting up a measurement strategy and implementation schedule will vastly improve your funding success.

If you need help, or would like to have your program grant language reviewed, drop me an email at  granthelp@ida.net. If you have comments or opinions  please enter them in the comment section. 

How to start a successful nonprofit

Thinking of starting a nonprofit?  Good for you!  Successful nonprofits provide goods and services that may be simply unavailable to various target populations in the world of macro solution strategies.

The key word is successful. People don't intentionally start nonprofit organizations intending to fail. Still, many do fail, or they fail to grow enough to actually achieve their mission. Here are some strategies to make sure that your nonprofit is not one of them.

1. Have a plan. Failure to plan is the number one reason all new business ventures fail, and the nonprofit skeleton or framework is the same as it is for any other business. Start with a strategic plan and be honest when you assemble the facts and financial data for the plan. This is the time to exchange the rose-colored glasses for a microscope. Don't gloss over any problems or threats to success. Everything else will depend on how well you do this one step. If you don't know how to gather the data, or don't know what data to include, spend the time and/or money to find someone who does. A strategic plan is more than a template. It is up to you to make it a useful document. Step one of the plan should be step two in this article.

2. Assemble an effective board. The board is responsible for governance and guidance. It is not and should not be the staff that does the day-to-day tasks after the initial formation of the nonprofit. An effective board should be passionate about mission delivery but it should also include people who have some expertise in the nuts and bolts processes of running a nonprofit or business.

3. Formulate a way to meet your financial needs via a funding plan. Know from the beginning that even after you receive your 501(c)(3) determination letter, grant funding is going to be an unlikely source of funding for the first two or three years. You can't help anyone if you can't pay the bills.

4. Hire a qualified executive director/CEO. This should be the only employee that the board directly hires or engages. This person is the general contractor, if you will, for the organization. The ED is both the public face of the organization and the person responsible for the operational success of the mission. Typically, many founders try to be both a board member and the ED. While that may be viable for a few months, it is a conflict of interest emotionally, and it generally results in neither job being done well. Even if the ED is initially a volunteer, have clear performance expectations and communicate them well. 

5. Market your mission. No one is going to support you if they don't know about you. Hold an open house or an event to involve your community in your goals.

6. Do frequent assessments. Your strategic plan should have outlined the steps for success. Where are you in terms of achieving those steps?

   

7. Don't ignore negative trends. It is very tempting to focus only on the good things. Seemingly minor issues can quickly grow into major ones that can destroy your organization. If a problem seems to be present at every board meeting, it is probably is a major issue. No problem should be present for more than two meetings without raising concern. Be proactive in addressing  the issue and expect results, not excuses.

8. Be involved without resorting to daily micro-managing. That might seem to be in direct opposition to number seven, but it really isn't. If you created an effective strategic plan you should have developed job descriptions and goals for your staff that will support the mission. If you review those goals often you will know if something is wrong. Until then, try to let the people you have engaged do their job

.

Following these steps will put your nonprofit on the road to success.  If you have questions, feel free to email me at granthelp@ida.net.  

Non-grant funding opportunities

How would you like this to be YOUR headline?

"The University of South Alabama in Mobile has announced a $50 million gift from local businessman and philanthropist Abraham "Abe" Mitchell in support of its business school and a new scholarship program.

The largest gift in the history of Alabama public higher education brings to $93 million the total given by Mitchell and his family to the university."       http://www.southalabama.edu/publicrelations/pressreleases/2013pr/050313.html

There is a tendency among smaller nonprofits confine their thinking to Facebook donors and grants. In reality, major gifts and bequests should form a large slice of your funding plan.

Landing a gift like this is a matter of relationship building. You can't just get a list of the 50 richest people in your area and send them a generic mailer.

 

One of the small nonprofit shortcomings that I see constantly is a reluctance to get out there and actively form alliances and use the power of face-to-face conversation. In today's wired world this is still a necessary skill to promote awareness not just of your mission, but of your needs. In business it is often referred to as networking.

One of your administrative focuses should be the creation of a major gift strategy. One person should be in charge of prospecting for events attended or sponsored by local philanthropists. If you don't know who they are, go to  number of events, preferably somewhat related to your mission, but at least that attract the so-called "moneyed" crowd.  If there are  local museums, art galleries, zoos or colleges in your area, go to those institutions and look to see who is on their wall of supporters, or search for press releases related to funding they may have received. Check Facebook or Google the supporters and look for press releases or articles that mention where they may be spending their dollars.  Look on the websites of charities that have a related mission to yours.  Many of them have a supporter page. Check the Board of Director lists for local foundations.  The information is publicly available on many nonprofit-related websites that rate foundations or compile information on them.

Once you have a target list of a dozen or so prospects, attend functions they may be at, and have your 15-second elevator/introduction speech ready  (I'm pleased to meet you.  My name is Jane Doe and I represent the charity, XXX, a nonprofit interested in helping Y")  if you are introduced to them.  Don't pounce on them like a starving hyena, or immediately ask for a meeting or donation.  Just make small talk, comment on an exhibit, or even ask for their opinion of something at the event.  People love to talk about themselves and their interests, so keep it on that level at first.  If you make them feel good about themselves, they will feel good about you.

Some nonprofit staff may feel inadequate or unprepared to attend gala events.  First, that is a skill that you learn, but if you really don't feel comfortable in that situation, or feel that you can't present yourself adequately see if a friend or volunteer would go with you to provide moral support. Just circulate, enjoy the event and observe.  You will very quickly learn the ropes and then you can go forward with your relationship building efforts. More informal gatherings such as community breakfasts or picnics are generally something anyone can enjoy attending and feel comfortable in the environment.

There is an old saying that goes "It's not what you know, it's who you know".  This is good advice for nonprofits, so get out there and start finding people that will support and validate your mission. 

Procedures don't exclude passion!

This blog is largely targeted to small nonprofits and people wanting to start nonprofits, but it apparently  struck a nerve with a board member at an established nonprofit, as evidenced by this email excerpt.

"I am so sick of people like you telling nonprofits to operate like businesses that I can't find words to express it. WE ARE NOT BUSINESSES! Furthermore, we don't want to be a business. We exist to help people or support causes and there is no room in that mission for your silly performance evaluations or business plans or any of that stuff.  All that just takes time and money away from our ability to deliver services and adds to our administrative costs. We can only exist if we can express our passion and create that passion in other people."

I appreciate this person's willingness to share that viewpoint. I do respectfully submit that I have never suggested that being more business-like in the procedures of obtaining grants and controlling administrative processes should take precedence over achieving your mission. In fact I addressed this very issue in the post "Structure not Stricture"(http://cloudlancerwriting.blogspot.com/2013/02/structure-without-stricture-winning.html).

Grant applications generally require some proof of impact. Some programs will not produce the desired results, just as some products are not successful in the marketplace. It is up to you to prove they are worth funding, and I'm not sure how you can do that without having any evaluation procedures in place. If the evaluation shows weaknesses, why would a grantor fund it?

I'm not sure why having procedures in place to measure outcomes or prevent waste of grant funds should be diametrically opposed to the passion for the mission. If I was a donor to this person's organization, I would certainly want to know if they met their program goals, or judge for myself whether their programs actually met my personal passion for their cause. Add to that the undeniable fact that more foundation and corporate funders are expecting a higher level of performance (outcome) measurement and better accounting for funding. The need for planning and measuring program impact seems to be something you would want to do.

I certainly understand that helping even a handful of people or animals, cleaning a mile of highway or whatever your mission addresses is preferable to doing nothing. My goal is to help nonprofits attract funding and keep expenses at a realistic level to provide the maximum ability to achieve and expand the mission. I just don't know any way to do that without utilizing some practices that overlap into the world of conventional business. In far too many cases, what I observe is that there is an unwillingness to confront problems, and not having procedures in place allows the organization to ignore warning signs.

Take the strategic plan (which is not a conventional business plan).  Properly constructed this should actually support and expand enthusiasm, not put a damper on it. Good nonprofit strategic plans are for the purpose of focusing efforts on mission accomplishment, not counting pennies. If it exposes a flaw, wouldn't you rather know about it and fix it  before you commit countless hours and dollars to a project doomed to failure?

If this nonprofit is getting maximum impact for the mission, meeting all their goals and are as big as they ever want to be, then by all means they should continue to do what they are doing. I do wonder how they know that they are meeting their goals if they didn't have a way to set that goal in the first place, and I sincerely hope they are not measuring effectiveness by number of people in a program, rather than by how many people are better off in some way because of the program.

Having said that, I see far more organizations that are barely surviving because they can't answer even the most basic questions that grantors ask, and for them I will continue to advocate for having structure within their organizations. There is a reason why the Internal Revenue Service reported that over 10,000 nonprofits simply ceased to exist in 2012. If I can prevent that through assisting nonprofits to survive and prosper, then I've met my mission goals. 

Rebecca Lee Baisch