Tag Archives: non-profit

Three Fresh New Year Tips for Nonprofits

What nonprofits do in these first ten days of the year will leave a lasting taste in the mouths of their supporters. Will it be the feeling of a warm hot toddy on a cool winter’s eve? Or a sip of eggnog that’s been in the fridge a week too long?

Here are three tips — two things you should do plus one idea that might intrigue your supporters, a best practice gleaned from the news publishing industry.

1.  Say thank you, and do so in a way that reflects your brand. By now most nonprofits know they have a brand image, whether they choose to manage it or not. In the midst of the charitable gift acknowledgement letters that are fluttering in was this little gem, a handwritten note from Betty Cooper, development director of the American River Natural History Association, and artwork created by one of ARNHA’s little clients (click images to see full size):

Is it practical for every nonprofit to send out a handwritten note? Of course not. The point is that it is important to capture the feeling of the nonprofit’s mission. Run the organization like the responsible business that it is, but for heaven’s sake don’t sound like an accountant. (Sorry, accountants.)

2.  Remind supporters what THEY accomplished by getting behind the nonprofit’s mission. I gave small amounts to over 20 nonprofits this year (due partly to journalistic curiosity about events like #ArtsDayofGiving) and I subscribe to probably a dozen nonprofit newsletters. I received TWO emails with subject lines that congratulated supporters. My favorite was an email from No Kid Hungry with the subject line, “Look what you helped do in 2013.” I don’t actually donate to No Kid Hungry — I prefer to support local food banks and closets like River City Food Bank — but I thought this was a brilliant piece, complete with video. Listen to the music. It’s anthemic. Listen to the words. They’re hopeful. You end up singing along, “We could do this all night!”

A more basic but still effective approach was taken by Appleseed, a nonprofit network of public justice centers. The subject line of its January 3 email was, “Looking back, looking ahead.” Betsy Cavendish, the president, wrote:

As we start a new year, Appleseed joins millions of Americans in reflecting on the past year and thinking about our potential for 2014. Before I get into that, I first want to thank all our supporters. As you may know, four Appleseed board members offered a $20,000 challenge grant in the waning days of 2013, matching each dollar we raised. I am delighted to report that donors rose to their challenge! 

And now for the look back. My law school classmate Ken Stern wrote a powerful critique of the nonprofit sector last year, taking to task nonprofit organizations whose programs don’t work effectively. I’m glad to say that, as broad as Appleseed’s mission is, we are effective at what we’re doing. We’re not content to simply identify a problem and call it a day: we translate our research into lasting solutions. Here are some of those recent successes from the Appleseed network…

3.  Look ahead. As soon as newspapers and magazines have finished their year-in-review and their best-pictures-of-2013, they’re off to the races hooking readers for the year ahead. City Arts, an arts magazine based in the Pacific Northwest, promoted its January issue with “The Future List: 12 Artists and Innovators Who Will Define 2014.” Why not a list of ideas for solutions, or program improvements, or hopes for 2014? As we start the new year, that’s what we all want, isn’t it? Hope that things will get better? A plan for change that we can support?

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Now THAT’S Followup – Thanks Figgy Pudding!

Screen Shot 2013-06-07 at 3.50.43 PM

In December, just before my father’s health fell apart, I was visiting Seattle and managed to be there for Figgy Pudding, a big caroling contest that benefits a local charity.

Each caroling team has a hashtag. When you vote by text using the hashtag to identify your favorite, it generates $5 for the Pike Market Senior Center.

I just received this text:

Your gift to Figgy Pudding 2012: already provided 23,445 meals at Pike Market Senior Center this year. Thank YOU!! Save the date: Figgy 2013 is Fri, Dec. 6.

#ArtsDayofGiving folks and local Sacramento charities, take note!

If you’re in Seattle the first weekend of December next year, GO! It’s a blast.

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How Should a Nonprofit Board Track Progress?

Since what you report and manage can lead to better performance – and better implementation of a nonprofit’s mission – I’m a fan of periodic housecleaning of Board reports.

Habit creeps up on all of us. In the case of nonprofits, a Board president may ask to see certain reports as part of the Board meeting packet. Time goes by, and another Board president asks for additional information to be reported. Pretty soon, the executive director’s email has six or seven attachments – the things that he or she is used to reporting plus the other wiggly bits that have been added.

What the Board tracks is vital to a nonprofit’s ultimate success – if for no other reason than it educates the Board as to what is most critical to organizational performance.

A nonprofit that decides it’s time for a Board report house-cleaning should consider these questions:

1) What are the best indicators that the nonprofit is on solid footing and making progress on its goals and/or strategic plan?

2) What’s Board level information?

3) What’s it look like? What’s the best way to focus the Board’s attention by appropriately formatting the report or reports?

I’m actually going to address my three questions in reverse order.

What’s it look like

One of the most helpful tools for organizational effectiveness is a Dashboard Indicators report. The term derived from car instrumentation; we rely on our speedometer, gas gauge, etc., to tell us how things are going when we’re driving, right? Dashboard indicators for organizations point us to the information that tells us if something is wrong (or right).

Much of Corporate America has been using some form of a Dashboard Indicators (trademarked name Balanced Scorecard) since Robert Kaplan and David Norton popularized the idea in the early 90s. Although originally developed as a tool for management, many corporate Boards receive and review quarterly versions of these reports.

Below is an example of a county government’s scorecard. Notice that they figured out the  indicators that they believe to be most important. Then they color-coded the indicators as to whether they were on target (green), at risk (yellow) or below target (red).

http://www.kingcounty.gov/environment/wtd/About/Finances/PI/Scorecard/~/media/environment/wtd/About/Finances/Productivity/08BalancedScorecard_700.ashx

Is this a Board-level report? No. The Board needs something more streamlined that speaks to its role and responsibility.

What’s Board level information?

Higher level information, for one thing. Boards shouldn’t see all of the information that management does. It would not only be crazy-making for the Board members but tempt them to step in and manage rather than govern. They should protect the public interest by ensuring that the organization is using its nonprofit resources appropriately and in a way that sustains the mission, identifying risks to the organization’s mission and stability, approving the strategy and evaluating the nonprofit’s work. Not focusing on things like why a mailing cost $1,100 instead of $1,000.

So what are the best indicators?

Kaplan and Norton’s approach used categories to focus attention not just on financials, but the measurable processes and activities that are required to deliver on the customer value proposition. For example, without a reliable and prepared supply of volunteers, many nonprofits couldn’t deliver their programs, so it’s critical to keep an eye on volunteer resources.

Typically dashboard indicators include four categories: financial, customers, operational business processes, and learning and growth (I tend to call this last one “organizational capacity”). Financial is pretty self explanatory. Operational business processes include things the organization must be really good at to deliver its programs while “customers” takes a little bit broader view of the value proposition and includes management of the brand. (Many businesses end up combining these in some fashion because of overlap, or just assigning some indicators to one bucket or another.)  Organizational capacity indicators include the activities that are critical to the organization’s continuity of internal management; it includes indicators or activities related to the technology platform, for example.

I don’t think the buckets are that critical, but they can help nudge management and the Board that there’s more to protecting the mission than the money. A whole system of moving parts – from internal capacities to operations – drives financial performance.

How does that translate to a nonprofit? It depends on the nonprofit and its funding model. An organization that receives government funding to provide a service will have a very different dashboard than one that provides compassionate relief services and is funded largely by individual donations.

I don’t want to complete wimp out on you and not offer some specifics, so here are 10 Board-level indicators that are important to many nonprofits:

1) Reserve operating funds – For many nonprofits, reserves are what allow the organization to smooth out nasty bumps like loss of a grant. This is a link to an example operating reserve policy provided by the Nonprofits Assistance Fund.

2) Gross “profit” % (also called contribution to overhead) – Management certainly needs to look at days of cash on hand and surplus or deficit compared to budget, but I think it’s important for nonprofits to realize they can’t be break even. They have to generate some surplus in order to pay for improvements to plant and technology, for example. A business might look at gross profit (revenue minus operating expense, divided by revenue). So, yes, nonprofits should track this number, expressed as a ratio, in the single digits (the number depends on the budget).

3) Revenue diversification – We’ve all heard stories about nonprofits that lost a big grant on which they depended for 50 or 60% of program revenues. Depending on the nonprofit’s funding model, it should have a target “mix” in mind, e.g. the % from individual donations, the % from grants, and the % from its major fundraising event.

4) Donor growth or average gift growth – A nonprofit may have plenty of donors, but a fairly small average gift size, or it could see its future strength coming from attracting more/new donors. What the right indicator is depends on the nonprofit’s situation, but it needs one or more indicators that reflect its fundraising strategy.

5) Program efficiency – Large funders are becoming savvier shoppers. They want to know that a program is achieving real long-term outcomes and that it is a good or better approach relative to others. Now is the time to start considering how many clients were served for the money (including some allocation of overhad).

6) Client service/satisfaction – The problem with measuring long-term outcomes is, well, they’re long term. Nonprofits have to translate the outcomes they hope to achieve into mid-term and short-term indicators such as the percent of clients completing a program and client satisfaction.

7) Volunteer supply or growth – For nonprofits that depend on volunteers to deliver their programs, tracking volunteer supply vs. budget and volunteer growth (net of attrition) are important indicators.

8) Meeting (big) contract standards – If the nonprofit has government funding for a program, there will be specific standards in the signed scope document.

9) Training completion – Hopefully the nonprofit has a documented process for delivering services, with expectations down to the employee or volunteer level. Ensuring that 100% of employees or volunteers is trained according to the organization’s service standards would be a worthy indicator.

10) Strategic goals or big project milestone tracking – If the organization has an approved strategic direction with specific objectives, or has budgeted for a big capital improvement, it would be appropriate to include high-level milestones in the dashboard indicators report.

Here are some more thoughts from Compasspoint.com’s Board cafe.

Technology to the rescue: business intelligence tools

Believe it or not, dashboards are a baby step (but a really, really important one). If your organization has absorbed the idea of paying attention to a limited number of critical indicators, it may be time to consider tools that make the job easier. Idealware.org has a great page about business intelligence tools you should check out.

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A Nonprofit’s Business Plan for a New Program

engineering photo credit: engineeringgroup-ks.com

Organizational business planning is like carpentry. You’ve got the elevations and floor plans, but you have to build the house, and build it right. (Yesterday’s blog post contains practical tips about organizational business planning.)

Business planning for a new program or service is more like engineering. The problem of how to achieve the desired result could be accomplished several ways, but you have to figure out the optimal approach and then do the calculations to prove that it will work. Practical tips for creating a business plan for a new program is the focus of today’s post.

I recently made two suggestions to a nonprofit that has staked out its intent to develop a new program to address an unfilled community need:

  1. At the idea stage, use a framework for evaluating the program model options, and
  2. Agree on the end-state of the proposal for the pilot that will go to the Board for funding

I’m interested in what program evaluation criteria you’ve found helpful, as well as what you include in a business plan that will be used to propose a new program.

I’m sharing my take in the hopes you will share your experience. And of course I’ll publish comments here on Philanthrophile.

Framework for evaluating program model options:

Based on the program profile:

  1. Not duplicative: To what extent is this program truly needed and different than existing programs that address this need?
  2. Measurability: How likely are we to be able to identify a measurable outcome from this program? (definition = long-term end result) Note: requires a clear theory of change.
  3. Core Capabilities: To what extent is this something that draws upon our current knowledge of the community and operational experience?
  4. Ease of Implementation: How hard or easy will this program be to set up and manage? (The more “moving parts” and new processes, the harder.  Also, the availability of partners/allies is not listed as a separate criteria, but will affect ease of implementation, etc.)
  5. Affordability: How confident are we that we have the financial resources absorb the startup expense without putting our other programs at risk?
  6. Confidence: How confident are we that our estimates of cost are realistic?
  7. Staff-ability: How likely are we to be able to manage this new pilot program without putting our current operation at risk?
  8. Fund-ability: How likely are we to be able to secure seed funding for the pilot program?
  9. Volunteer resources: How likely are we to be able to secure reliable volunteers for this program?
  10. Scalability: If this program is successful, how easy or hard would it be to expand and scale it?
  11. Mission fit: Does well does this fit our general mission and what people expect of us?
  12. Sizzle factor: How potentially exciting is this program to the community and our supporters?

Program Proposal

Once you have a pretty good idea about the program model, it’s important to develop a document that puts the meat on the bones and provides assumptions for the financial pro forma.

Table of Contents

  • Executive summary
    • What is our strategic intent in developing this program? Is this about broadening our response to need, or deepening what we already do?
    • How does this fit within our mission and history?
    • Proposed program profile (elevator speech)
  • Proposed outcomes and theory of change: What are the specific outcomes for which we want to be held accountable? How will our proposed program work to achieve the outcomes we aim to achieve?
  • Target audience profile: what do we know about who they are, how many there are, where they are, and how they are (e.g. status)
  • Operational requirements
    • Human resources
      • Staff including management oversight
      • Volunteer
    • Administrative business processes
    • Physical plant
    • Partnerships
    • Distribution
    • Transportation
    • Technology
    • Quality evaluation (how will we know we are providing service that meets clients’ needs?)
  • Funding targets (what are the top sources of funding dollars that might support this?)
  • Financial pro forma including allocation of indirect costs, with upside and downside scenarios
    • Cost per client
  • Dependencies (are there certain resources – internal or external – that we are dependent upon to implement the pilot successfully, on time?)
  • Milestones and monitoring plan

Share this with friends in the nonprofit sector and invite them to contribute observations from their practical experience. We’ll all benefit!

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Organizational Business Planning for Nonprofits

Nuts and bolts guy

Back in April I wrote about the successful conclusion of a year-long D.I.Y. strategic planning process I facilitated for a small nonprofit.

Toward the end of the retreat that sealed the deal, the incoming chair asked, “How do we make sure that the strategy is implemented? What does the Board need to track?”

Great questions. While it’s important for the Board to track the progress of the strategic plan and key performance indicators through a dashboard (more on that next), it actually isn’t the Board’s job to micromanage the myriad of steps that will go into an implementation plan. That’s what a business plan is for as a tool of the executive director.

The job of the business plan, as I’m defining it here, is to bring the strategic plan to life. How will the executive director, in concert with its partners and allies, build out the strategy? Whereas this particular strategic plan has a five year horizon (five years because the small nonprofit needs running room to reinforce its financial base and fix core programs before it can develop new programs), the organizational business plan will be what the executive director uses to keep on top of the most critical tasks in the 1-3 years ahead.

What did it look like? Nuts and bolts. A project plan, broken into monthly milestones, created in Excel. (Digital project planning software is handy when large teams need to collaborate, but it doesn’t add much value when a small handful of people are performing all of the activities. Larger organizations also tend to include more narrative because they are used as a tool to communicate direction and priorities to the “ground troops,” but in this case the executive director would have been preaching to herself.)

The test of the business plan is this: if all of the steps are implemented on time, will they be sufficient to ensure the successful implementation of the strategic plan? If not – if it doesn’t have sufficiently robust activities to ensure the financial stability of the organization, customer and donor satisfaction, achievement of chosen outcomes and operational stability – then something is missing. It’s back to the drawing board or at least the computer.

As an organizing scheme for the project plan, we used a slightly modified version of the four perspectives typically associated with a strategy map and dashboard: financial, client and donor value proposition, operations and organizational capability. (The strategy map, developed by Robert Kaplan and David Norton, was originally developed for businesses in general and later adapted to nonprofits. Several years back, I led a workshop for nonprofit executive directors under the auspices of the Nonprofit Resource Center to help them devise a strategy map for their own organizations.)

Besides the organizational business plan, this small nonprofit also has work ahead of it to develop a new program. The term for that kind of plan is also “business plan,” but it will look a lot different. A business plan for a new program considers alternatives, creates the case and builds the operational plan for a new program. Then it demonstrates the sustainability of the new program with a financial pro forma that is pressure tested to create best case and worst case scenarios.

Stay tuned for more about how to create a business plan for a new program.

[For another point of view on the definition of a business plan, it’s worth looking at the approached used by Bridgespan, a large consulting firm that specializes in nonprofits. It defines business plans as an opportunity to “connect the dots between mission and programs, to specify the resources that will be required to deliver those programs, and to establish performance measures that allow everyone to understand whether the desired results are being achieved.” As a starting point, Bridgespan recommends looking at the entire portfolio of a nonprofit’s programs and taking stock, asking what audiences it really wants to serve, to achieve what outcomes, and which outcomes go farthest to achieve positive change. (More detail on their approach, which is methodical and thorough, is included in their white paper on the topic.) The DIY strategic planning process we just completed asked those very questions. So what they’re calling a business plan, I’m calling a strategic plan. Potato, po-tah-toh, either approach will take a nonprofit to a stronger, more outcomes-focused place.]

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Greenpeace Gets Brand Tone, Donor Motivations Right

Greenpeace membership renewal

Great example, Greenpeace!

Driving from North Carolina to Washington, D.C. last week, my old colleague and pal Sharon Swanson (producer of the Elizabeth Spencer documentary among other career hats) and I had plenty of time to talk. About street signs like the one posted below, sure, but also about how nonprofits sometime miss the mark with events and promotions that aren’t in keeping with their brands.

herritage

This got in here because it just cracked me up

Then this little blurb caught my eye this morning, thanks to The Nonprofit Times:

Individual donors contributed about 73 percent, or $217.79 billion to nonprofits in 2011, out of a total of nearly $300 billion, according to Giving USA. Knowing your donors’ motivations can help you create more targeted asks and get more contributions to your organization. Eric John Abrahamson, Ph.D., outlined seven types of donors in his book Beyond Charity.

  • Communitarians give out of a sense of belonging to a community, using their gifts to reinforce collective efforts.
  • Devout donors are motivated by faith, adherence to religious teachings, and loyalty to religious institutions.
  • Investors view money as a means to create social change.
  • Socialites participate in philanthropy as a social activity.
  • Altruists see philanthropy as a way to fulfill their life purpose.
  • Repayers give out of a sense of gratitude.
  • Dynasts are born into families with deeply embedded philanthropic traditions.

Exactly. Individual donors need to be described in terms of profiles that reflect their attitudes and motivations. When I was wearing my corporate marketing hat, we called it psychographics.

So the piece at the top of this post caught my eye. I thought this membership renewal piece was downright brilliant. It appeals to the group of people who define themselves as nonconformists and 99%’ers. It is a great execution right down to the creepy charcoal illustrations, the ironic reverse psychology, and even the use of snail mail to reach an audience that uses snail mail rarely. My son will love it.

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How Do Nonprofits Track the Customer Journey?

photo credit: holyoake.org.edu

Integrated marketing and communications is critical to nonprofits, and not just big ones. The smaller a nonprofit’s footprint in the community, the more that it has to consistently beat the drum on a narrow and powerful message. It also has to pay attention — track and measure — both activity and results from all of its external promotional efforts.

Small nonprofits may do the basics like track activity on their Facebook pages through Facebook Insights, or occasionally look at Google Analytics. They may even use a free or low-cost tool like HootSuite to understand activity and sentiment for select keywords across social networks and the organization’s website.

But what I really want is the nonprofit version of the image below:

Google Analytics Customer Journey

The basic idea is that some promotional channels assist a customer in becoming aware of or forming an opinion about an organization, while the customer turns to other channels when (at last) they are ready to act.

(In case you’re wondering, the number assigned to each promotional channel is a ratio. Google says, “In general, ratios less than one mean the channel acts more as a ‘last interaction,’ while ratios greater than one mean that the channel acts more as an ‘assist interaction.'”)

The “customer journey” reflects what many have been suggesting about nonprofit promotional strategy for some time. Potential donors to nonprofits may interact on Facebook, read e-blasts, etc. but not use links in those tools to donate until they are good and ready. Nonprofits rarely understand how all of that promotional “dating” turns into commitment.

The image is the marketing funnel for industries as a whole, created by Google using transactional data from 36,000 Google e-commerce tracking enabled accounts who gave their permission for data to be aggregated. Google also makes available the data for seven specific industries including health and education/government, but, alas, not for the nonprofit sector.

Here’s the health industry “customer journey” so you can see how it differs:

google health customer journey

Still, I think the idea that these affinity-building activities connect somehow to donations is one nonprofits must keep in mind. What channels seem to play a role well in advance of purchase (donations)? What channels come into play when someone is about ready to give? How long does it take from initial exploration or contact to spur a donation?  All communications may play a role and be necessary to build the steady drumbeat necessary to spur contributions.

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