On the Brink
Today, in the Chronicle of Philanthropy a report on a study by GuideStar, Oliver Wyman and SeaChange Capital Partners called “the Financial Health of the United States Nonprofit Sector pointed out that half of US charities are on the financial brink. Wish I say this was a surprise. But anyone who works in the sector, particularly as I often do, with small nonprofits, knows that the brink might be an improvement for where many are.
Why is that?
Most people agree that nonprofits serve important roles in our society. Many are doing truly terrific work. And yet, there seems to be a disconnect between the value of what these organizations are doing and what people are willing to pay to ensure the work can be done and done well.
I see, with too many of my clients—not all of whom are small—the challenge of doing good with few resources. And I argue with too many boards that their job is, in large part, to ensure that the organization has the wherewithal to do the work. And no, that doesn’t mean that you—the board—keeps things very lean.
Fundraising is certainly part of the solution. But for small nonprofits, it can only be a very small part. Too many focus their fundraising efforts—and the efforts of any development staff they may have—on getting grants and running events.
Grants can be an important part of your fundraising program. But less than 14% of all charitable giving comes from private foundations. And getting money from them takes time, effort, and a lot of luck.
As with any supporter, you must first identify those who might fund your work; and then you need to get them to know you. More importantly, however, is the fact that many funders want to prescribe what will be funded. And then they want you to quantify, evaluate, report on the outcomes of your work. Of course, they won’t pay for that—it’s just part of the hoops you have to jump through.
As bad as that is, the other issue that most funders won’t give you a grant that is more than 25% of your operating budget. Indeed, most won’t even give you that much. Typically, you are looking at grants of $5,000 or less. While that is not anything to sneeze at, often you cannot effectively do the project and evaluate it for that amount of money.
Events can be even more fraught. They are great for engaging your board, getting PR, making everyone feel good, but often the amount of work takes too much away from other things that would be more cost effective.
Figuring out what would be most cost effective is critical for success. But so many nonprofits—teetering on the edge—don’t have the time or often the know-how to do the kind of planning and research that requires.
One thing a board can do is to make staff development a priority. Insist that development staff get out of the office—to meet with donors, yes, but also with peers, to take trainings, to talk with others who have been where they are.
Another really useful thing can be to pay for coaching. Just as it is in the sports world, fundraising, outreach, marketing skills can be improved. And those improvements can—and will—lead to a championship. Or at the least, a firmer financial footing .
Janet Levine Consulting helps nonprofits to go from mired to inspired--thus no longer being on the brink. Learn more at www.janetlevineconsulting.com. While there, sign up for the newsletter and do contact us for a free, 30-minute consultation.