Working your Nonprofit with a Corporate Brain

by

Wendy Leslie

Responsible for the bottom line? What can you do in an economic downturn?

• Just like the corporate world, your nonprofit might feel like it is in an unprecedented fight for survival.

• Disposable income has decreased and even the asset-based funding dollars more typical of foundations have been impacted, or are earmarked for a slower spend.

• You may receive well-meaning advice from your board about cutting expenses 10-15% in every department…before moving too fast to comply, you may want to think about a more considered approach.

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• Put on your corporate hat for a moment – what are for-profit companies doing?

• Can you model their behavior and borrow some success strategies that are effective for your nonprofit?

What do smart companies do?• Smart companies look for every possible way to cut costs, but not necessarily in every

department. Be more strategic than reactive. Keep what is working for you – reduce or eliminate where you can do so without hurting the outcome.

• Smart companies communicate that they are being smart, conserving while still servingcustomer needs. (Think of companies who promote “green” initiatives, Wal-Mart, for instance). Communicate to your donor base; they are more likely to support those nonprofits who demonstrate an understanding of the current necessity to pay attention to spending and operating efficiently. It’s not all about money; look at the mission, the message and the program(s) that reflect them.

• Corporations devote considerable effort to thinking about new ways to conduct business –new suppliers, consolidated shipping, developing collaborative opportunities, expanding where it is most profitable, possibly delaying high-risk programs that may be tied to unforeseen costs, examining responsible choices.

• Some companies generate their most creative ideas in stressful times, often bringing together advisory board members with multiple department heads and front line employees from operations, sales , customer service, shipping, marketing. It is important to mandate the essential brain-storming rule at the outset: No idea is a bad idea! Write down all ideas –that’s the fastest way to get to the most considered and effective strategy.

Be Smart with your own strategy:

• “The worst mistake in strategy – and it’s a particularly bad mistake in a slowed economic downturn – is to compete with your competitors on the same thing. You want to find a different kind of value that you can deliver to a different set of customers. Strategy is fundamentally about how you’re going to deliver unique value.”-Professor Michael Porter of Harvard University, a leading authority on competitive strategy

• Proactively look for ways to differentiate! What do you do, or provide, that your competitors may not offer? Take the time and interest in creating and communicating differentiators. Differentiation is important in any market – in today’s market, it is essential!

How is your performance being judged?

• What is the most important part of your job?

– Mission?

– Program?

– Fundraising?

– New board member generation?

– Operations?

It may depend on….

• Your role in the organization

• Nonprofit’s short term and long term goals

• Your balance sheet

• Timing

• Opportunities

• Projections

• Partnerships

Regardless of your position…

• You can be relatively sure that development (fund raising) is one of the most essential elements.- The mission, program, board of directors, operations, etc. are all essential but the ability to carry out the mission/ program is frequently based on the availability of sufficient funds to accomplish the required tasks.- Regardless of your position, development is an area in which you are typically measured.

• Right now, funds may appear to be tight but don’t panic….and don’t lose site of your long term goals because the short term goals seem so demanding.

In Today’s World:

• Some anticipated funding has been eroded

• Funding resource asset yield may have been diminished

• Some market accounts/resources have been eliminated

• Promises have been made to recipient organizations

• 3- and 5-year plans have been launched, based on funds that may not be forthcoming

• Ramp-up staff has been hired

• Relationships have been forged

• Collaborative efforts have been planned

…and the climate has changed a bit

. . . . . . . . Now what?

Funding is historically generatedfrom three core areas:

• Foundations• Corporations• Individuals

Additional resources that are often overlooked:• Events• Sales• Multi-year commitments• “Other” (Often un-tapped areas that can be developed,

such as collaboration, volunteerism, partnerships)

Where are the problems…and why?• Foundations

- Inundated with more grant proposals- lower returns on asset base- forced to be extremely selective due to more limited funds

• Corporations- Profits have impacted ability to fund as freely- Less discretionary cash

• Individuals- May have fewer resources then in previous years- General fear may paralyze smaller , or single-year, donors (as well as some larger ones)

Additional resources:• Events: They could experience less enthusiasm, fewer attendees• Sales: There may be less “non-essential” personal spending• Multi-year commitments: may see less willingness to commit longer term• “Other:” Those who offer sponsorships, non-cash giving, may pull back from

nervousness.

Think Corporately

• Think long term

• Strengthen leadership message

• Look for ways to cut costs

• Support your staff

• Find ways to keep your name – and mission - in front of existing donors in fresh and imaginative ways

• Create opportunities to get your mission known to new constituencies

• Collaborate with corporations, suppliers, other nonprofits

• Market your mission

• Make it easy for others to support your nonprofit by offering innovative methods for doing so

What can you expect? A few opinions and specific responses:

1. Steven Lawrence, senior director of research at the Foundation Center, explains, “For foundations that determine their annual grants budgets based on a rolling average of their asset values, this growth should help to mediate the impact of possible asset losses in 2008 on their giving in 2009.” >

2. Brian Bonde, ACFRE, president of Children’s Care Hospital Foundation says, “Fundraisers should not move away from long-range strategies and long-term cultivation in order to fulfill annual goals.” >

3. McKinsey Global Survey Results: Economic conditions snapshot, November 2008: “Many executives say their companies are holding their ground, though some are hard hit. Half of all respondents expect their companies’ profits to stay stable or increase this fiscal year….smaller and private companies generally see themselves in a somewhat better position than larger and public ones. >

1. This points to the suggestion that strengthening your foundation appeal may be beneficial. Remember that it may take multi-year submissions for your organization to be recognized by the foundation. Make sure your mission matches their funding criteria and areas of interest.

2. There can be an instinctual temptation to put out the immediate fire – meeting current financial demands. If your mission is sound, compelling and aligns with your organizations short and long term goals, this is no time to change horses. Stay the course.

3. In December 2008, an unusually high number of companies decided to forego an office party in favor of supporting a charity. If your charity missed out, create an opportunity for the employees to party anyway – create a volunteer day and picnic. Submit grant proposals to companies large and small. Increase the number of grant proposals you submit to 2-3 times the norm.

Facts….and specific responses:

Statistic:

1. For 2007, charitable giving in the United States reached a record high of $306.39 billion, up 3.9 percent from 2006, according to the Giving Foundation’s Giving USA 2008.

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2. Foundation grant making, which made up 12.5 percent of total giving, is the fastest growing source of charitable donations. Gifts to foundations have also been growing in recent years, making up 9.1 percent of total giving in 2007, while individual donations and charitable bequests still make up the bulk of total contributions, at 82.3 percent of total gifts. -Association of Fundraising Professionals, Fundraising Statistics

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Action:1. 2008 numbers are not yet available but we are

bound to see an impact from the economy. The alternatives include redoubling your efforts, looking for new resources, foregoing long-term goals, or giving up. Research foundation areas of interest and types of support (if foundation supports capital campaigns, you would most likely not want to submit for program support)

2. Foundations appear to offer greater stability in their resources. An organization called The Foundation Center, www.fdncenter.org offers online access through a variety of packages, often available at no cost through local universities. Search: 95,000 foundations, corporate donors, and grantmaking public charities Over 1.3 million recent grants ,more than 470,000 trustee, officer, and donor names ,over half a million IRS 990s.

Facts….and specific responses:Statistic:

1. In order to retain their nonprofit status, foundations are required to donate 5% of their asset base value. Since they are allowed to include the management costs of charitable grant making within that 5%, some foundations donate less than 5 percent to nonprofit institutions.- Pablo Eisenberg, senior fellow at the Georgetown University Public Policy Institute

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2. Nonprofits rely heavily on volunteers, but most CEOs do a poor job of managing them. As a result, more than one-third of those who volunteer one year do not donate their time the next year—at any nonprofit. That adds up to an estimated $38 billion in lost labor. To remedy this situation, nonprofit leaders must develop a more strategic approach to managing this overlooked and undervalued talent pool. The good news is that new waves of retiring baby boomers and energetic young people are ready to fill the gap.- Stanford Social Innovation Review

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Action:1. Still, that’s 5%, more or less, that is going to be

distributed to nonprofit. That makes a pretty good argument for making sure you have researched the foundations that match your nonprofits initiatives.The Foundation Center website, www.fdncenter.orgoffers tools for improving grant proposals, identifying funding resources, creating initial approach letters, and countless tip that are valuable.

2. Volunteers are one of the best fundraising resources available to you. Labor is free, but in addition, a good experience leads to dollars. Treat your volunteers very, very well. The first time they encounter your organization is extremely important. Make time for them, look them in the eye, and tell them directly how much you appreciate their help, tell them why it matters (Because of what you are doing, right here, today, a child who would otherwise go without a coat waiting for the bus, will now have a brand new coat this winter!). Make sure you have water and/or a snack for them. Say thank you when they leave! Approach companies to offer your volunteer opportunity.

What can your Nonprofit do right away? #1

• Don’t hide! Stay visible in your area of mission, your community, you communications.

• Tighten your belt and let your donor base know that you have, and how you have.

• Collaborate – seek ways to help other nonprofits and/or companies that will save you both on expenses.

• Put nonessential programs on the back burner.

• Strengthen your message, and your case, with an increased sense of purpose, logic and passion.

• Call on your board to re-examine ,and possibly refresh, your strategy.

• Look for ways to become more creative:- Seek non-cash gifts, including services (the annual campaign printer can donate part of the cost ); accept art, vehicles, real-estate; create fund-raising events that offer sponsorship opportunities for the donors of that event.

• Thank people ahead of time for their support in this tougher market, even before you ask for or receive a donation.

• Diversify your thinking – about donations, program, who might fill a need in a variety of areas, what your board can provide personally or through their contacts and associations.

What can your Nonprofit do right away? #2

• Communicate to your donor base whenever possible – stay top-of-mind and assure them of your strength and mission (people are less likely to support a specific nonprofit than a mission that inspires them)

• Encourage greater involvement through more volunteer opportunities – then make them fun and full of sincere on-site as well as follow-up- appreciation. Send thank you notes with photos of volunteer in action. I would often send the volunteers home with photos of themselves individually, and always a group photo. The photos were hung in their offices and often appeared in the company newsletter, making our nonprofit stand out, as well as making it the funding choice for corporate and employee donations.

• Pay special attention to your own staff – they need your leadership and consideration now, more than ever. Find little ways to communicate how special they are.

• Profile existing donors (which donor segments contribute the most) but don’t stop there – increase communication with new donors who fit that profile, as well as with others who fall outside that segment.

• Find reasons to call and/or meet with old and new donors.

• Identify reasons to feel hopeful about your program and the future - and communicate that contagious energy to others who can help you!

• Maximize matching grant opportunities. Educate your donors about the companies who match.

Seek barter options to reduce your cash expenses:

Two standard methods:

1. Trade directly for what you need:This means that you take a look at your expenses and approach a supplier with a trade request. If your nonprofit provides office services for disadvantaged adults, perhaps you trade with the local spring water cooler company, or landscaper, or printer, in exchange for office help for stuffing mailers or bills.

2. You trade through a trade exchange for what you need:There is usually a small fee (10% or so) based on what you acquire. The advantage is that your pool of product and service choices is greater. Key to this relationship is, first, identifying what you need and ensuring that they can provide that for you.For instance, we traded brand new children’s coats in exchange for air travel and hotel when we were expanding to new geographic areas, as well as for advertising and PR in some of the new areas we were approaching.

Remember:• Foundations still need to donate 5% of their asset base – make it easy for them to

want to support your nonprofit. Help them find you, know about you, hear about you, and make sure you are a fit for their area of interest.

• Corporations need, maybe more than ever, increased consumer exposure and sales, enhance public opinion and to create a feel-good atmosphere, both internally and publicly. Create the turn-key method for their volunteer involvement or sponsorship that they can also use for marketing purposes and their own, simultaneous benefit. (nothing wrong with their benefitting, too –mutually benefit represents true, collaborative partnering)

• Individuals, too, suffer from donor fatigue. Appeal to their newly-surfacing inclinations of reduced spending by offering a variety of ways for them to stay involved: multi-year contributions in smaller annual amounts, events where they can see the results of their support first-hand, an ability to contribute non-cash donations, volunteerism, requests for their expertise, or for services they or their contacts could provide.

Keep generating creative ideas, Pg 1:• Present a program to your local radio station, perhaps as a seasonal opportunity – one local

station raised tens of thousands of dollars for our nonprofit each year, and promoted their good-hearted, existing advertisers, gained brand new advertisers, all benefitting the station financially, while generating additional public support and funding for our nonprofit.

• Pull together a list of local corporations. Do you, your staff or your board know anyone there? Find out! Proactively contact the company (either with or without a contact) to suggest an easy volunteer opportunity. Offer to submit a press release about their involvement. We often found that they were so thrilled about this opportunity that they pulled their own PR strings, with the result being that our nonprofit benefitted from the press release about their company’s kind-hearted volunteers.

• We approached the outreach liaison of a local hospital about an on-site delivery day at the hospital. This became an annual event that grew to include the entire hospital staff, the local Rotary Club, and a large local corporation with whom they work closely and numerous local businesses who participate with their support. Now the hospital and largest corporation host an annual breakfast where they jointly invite 50 local businesses to attend the breakfast with the sole purpose of learning about the nonprofit’s upcoming plans and supporting them in their mission.

Keep generating creative ideas, Pg 2:• If you provide a product or service, seek ways to do so publicly. Then invite corporate

volunteers. We held events at The New Jersey State Aquarium, Pittsburgh Children’s Museum, a Seattle Food Bank, Atlanta’s CNN building, The Delaware Natural History Museum, The Please Touch Children’s Museum in Philadelphia – and almost always, with TV, print and radio coverage as a result of being in a public place that cares about exposure.

• What other nonprofits might you help? Donors love collaboration, especially today ,because nonprofits who collaborate stretch the funding dollar and demonstrate that they understand the necessity to do so. - Are you using a truck to ship books or art supplies? Well, call the food bank and offer to stop by the grocery store or restaurant and pick up a delivery to drop off to them.- Can your IT person tweak another nonprofit’s website?- Do you provide clothing – could you send a small excess to a homeless shelter, abuse shelter, women’s dress-for-success interview program?- Is your current art or music offering stunning? Why not share it with a nonprofit who struggles to provide exposure and /or education to others through their own program?

• Keep the list going; ask others for their ideas; have a casual, office-staff brainstorming lunch; Keep generating creative ideas!!!!