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261 posts categorized "Nonprofit Management"

Making Philanthropic Investments Last: The Role of Financial Sustainability

October 30, 2014

Headshot_schneider_kidron_300x600Launched in 2010, the Jim Joseph Foundation's Education Initiative has supported the development and expansion of eighteen degree and certificate programs as well as leadership institutes at Hebrew Union College-Jewish Institute of Religion (HUC-JIR), the Jewish Theological Seminary (JTS), and Yeshiva University (YU).

The foundation provided the resources needed for program development, staffing, student tuition assistance, and marketing/recruitment activities. The investment was substantial – each institution received $15 million over a period of up to six years. As part of its independent evaluation of the initiative, American Institutes for Research (AIR) assessed not only how well the three grantees delivered these programs, but how they planned to financially sustain their programs into the future after the foundation's investment wound down.

Financial sustainability requires careful planning, typically using a dynamic document that is reviewed and revisited periodically. Such a document – the financial sustainability plan – describes strategies to contain costs and to cover them through fundraising and program revenues.

Informing Financial Sustainability Plans Through Break-Even Analysis

A common tool in financial planning is break-even analysis, which identifies the circumstances in which costs and revenues are balanced. To help Jim Joseph Foundation Education Initiative grantees, we developed a program-level Break-Even Analysis Calculator, allowing program administrators to project revenues and expenditures by changing variables such as tuition, numbers of students, and staffing levels. [1]. This interactive tool can be used to:

  1. Identify the resources required to implement a program, including personnel, facilities, equipment, and materials, whether paid for directly or contributed in-kind, and subsequently to calculate program costs.
  2. Explore ways to reduce costs.
  3. Identify the effects of different levels of tuition and scholarships.
  4. Calculate fundraising needs and demonstrate to potential funders why their help is needed.

Review of Financial Sustainability Plans

We created benchmarks for reviewing the financial sustainability plans submitted by each institution. The four criteria described below are based on the assumption that financial sustainability is a process, not an end. In other words, although the process aimed at achieving financial sustainability may not yet be completed, the financial sustainability plan contributes to a road map that programs can follow into the future.

1. Key Informational Elements. We saw the individual financial sustainability plans as facilitating communications and planning within each grantee institution. To that end, we expected each plan to articulate the program’s rationale – how does it fit into the vision of the institution in its efforts to support the field of Jewish education? How consistent is the program with the institution's view of current needs and anticipated future trends? Similarly, we expected each plan to identify how long the program should be continued (we do not assume every program will last forever), and we wanted to see a timeline for anticipated fundraising activities. In our feedback to grantees, we recommended that their plans include a detailed budget, budget assumptions, and analysis (e.g., break-even analysis) that spells out the calculations and assumptions on which current decision-making is based.

2. Feasibility. It is critical that a financial sustainability plan is feasible. For example, if the break-even analysis identifies a break-even point but the circumstances under which this is to be achieved are unreal, the analysis serves no purpose. To make the case for the viability of long-term plans, authors should include as many specifics as possible. Projections of philanthropic contributions should include names of funders, projected amounts, and, at the very least, an overview of future fundraising plans. Projections of tuition revenue should include enrollment estimates, market demand assumptions, and description of strategies to align tuition discounts with measurable student needs (rather than blanket across-the-board tuition discounting policies). Finally, plans should include an assessment of organizational capacity (e.g., the availability of qualified staff with relevant expertise), which is key to successful implementation.

3. Need. Higher education institutions sometimes choose to run programs at a loss as a service to the field or as a marquee program that can promote institutional capacity and reputation. But financial sustainability plans highlight the costs of such a strategy, allowing institutional leaders to better judge the level of their investment and the return. To ensure that such decisions are based on valid assumptions and consensus among chief officers in the institution, an effective financial sustainability plan should address the need for the program along multiple dimensions.

4. Commitment. Programs can be sustained over the long term when institutional leadership (president, provost, dean) are committed to the program through the allocation of funds, sharing of infrastructure, and active participation in targeted fundraising efforts. Additionally, financial sustainability planning benefits from use of proven strategies and processes for ongoing review and revision of the financial sustainability plan.

Supporting the Continuation of Higher Education Programs in Jewish Education

HUC-JIR, JTS, and YU developed financial sustainability plans that took into account multiyear projections of costs and revenues. This involved hard work and time — and many of the questions we asked them to address were new to leaders at those institutions who had not often been held accountable to rigorous financial benchmarks. All three grantees were torn between offering their very best to the field of Jewish education and making promises they were likely not going to be able to keep within the limitation of their financial resources. That is understandable.

But spending money and time to ensure the financial health of programs over the long term is something that grantees need to do. Crafting implementation plans that can be sustained over the long run is a new and difficult task with which grantees must begin to grapple. And it is something the Jim Joseph Foundation is committed to in order to make sure its philanthropic investments produce long-term results.

Dr. Mark Schneider is a vice president and an institute fellow at AIR. Dr. Yael Kidron is a principal researcher at AIR.

To Increase Your Organization’s Impact, Work With People Who Reflect Your Values

September 05, 2014

Headshot_carrie_richAs consumers, we constantly make purchasing decisions that express our values. A consumer seeking to live a healthy lifestyle might buy organic produce; a consumer conscious of her carbon footprint might purchase a Prius.

Leading an organization provides similar opportunities to invest in our values, especially when it comes to the colleagues with whom we choose to surround ourselves.

Employees, volunteers, and contractors all play crucial roles in the growth of any organization. Indeed, the people on your extended team are as important — if not more important — than your organization's mission and brand. They are the face of the organization, and ultimately their actions and creativity define your brand and activate your mission.

So how do you ensure your team reflects what your organization is all about? Here are some tips to consider:

Understand where they are coming from. Working with people who reflect and believe in the values of your organization doesn't happen by accident. It requires being clear about who you want to work with and why you want to work with them. And it also requires you to understand what motivates an individual to want to work for your organization. What is it about the organization that resonates with him/her? Why do they think they would be a good fit for your team? How will they provide value to the team? The more carefully you consider these questions as you are interviewing, be it a potential new hire, a contractor, or a volunteer, the more confidence you will have in your final decision.

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Four Key Indicators of Nonprofit Success

September 03, 2014

Headshot_richard_brewsterHave you ever "ghost dialed" someone? You know, when the phone in your purse or pocket accidentally dials a number? Well, that recently happened to me with a board member of a human services nonprofit. We were surprised to be talking to each other but continued. The organization was well known in its community and had been successful, but our conversation ended up being pretty depressing: the nonprofit was in the process of shutting down.

I did some research and discovered that the organization's budget grew from $5 million to $10 million in just five years. Then a crisis came, they lost a major source of revenue, and there followed a painful five-year decline.

Why did this happen? A little more research and some reflection on others' experience suggests that four key conditions need to be met in order to survive a crisis like the loss of a major funder:

1. Sustainability isn't just about dollars. A nonprofit's programs need to be relevant today, not for situations or problems that are five or ten years in the past. The human services group above offered only housing, even as other agencies in the area began to provide services such as day care to low-income people, enabling them to keep their jobs (and pay the rent).

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Most Popular PhilanTopic Posts (August 2014)

September 02, 2014

Don't know what it's like where you are, but here in NYC someone forgot to tell Mother Nature that summer is over. Which is okay, because before it ends we want to make sure everyone has a chance to catch up with all the sizzling content we posted on PhilanTopic in August. Enjoy!

What have you read/watched/listened to lately that made you think, surprised you, or caused you to scratch your head? Share your finds in the comments section below....

The 'Overhead' Pledge

August 21, 2014

Cut_costsI was in a room full of international development professionals at the InsideNGO Annual Conference, and the excitement was palpable. Why? We had all just raised our hands and pledged to fully disclose the true costs of our nonprofit operations to anyone who wanted to see them.

This is a breakthrough for our sector, and affirms that we are willing to transparently and consistently report our costs. What's more, the pledge is based on the understanding that the overhead debate actually undermines nonprofits' ability to deliver transformational results. We are convinced that overhead transparency will lead to more open dialogue, real collaboration with funders, and a greater focus on outcomes and results.

Within the core concept of transparency, however, there are two recommendations we are focusing on right now:

Eliminate functional allocation. This IRS requirement allows organizations to allocate costs rather indiscriminately to programs, fundraising, and general administration categories. While the goal is to shed light on organizational efficiency across the nonprofit sector, the relaxed guidelines allow organizations to manipulate their expenses across categories, often inflating their program costs to appear more efficient. Organizational efficiency is never cut-and-dried, however, and more importantly, the guidelines don't take into account organizational effectiveness.

Eliminate direct and indirect costing on grants. Each funder has its own guidelines around direct and indirect program costs. When funders cap the amount they are willing to pay toward indirect costs, organizations are incentivized to manipulate their numbers in order to recover as much as of their costs as possible, or worse, they cut investments in organizational capacity that can result in them having greater impact.

Failure to eliminate these provisions will only serve to:

  • Starve nonprofit organizations from making key organizational investments that boost their impact and increase their efficiency.
  • Create division within organizations between program staff (perceived as "wanted" costs) and operation staff ("unwanted" costs).
  • Limit consistency and distort real benchmarking across the sector.
  • Increase administrative costs (necessitated by having to manage expense reporting in multiple ways to meet a variety of funder needs).
  • Reduce transparency.
  • Place the focus on administrative costs instead of impact and obscure questions around the real cost of social change.

So that day in D.C., we all raised our hands and pledged to clearly and honestly disclose the full costs of our operations, accompanied by explanations about why our investments were essential to achieving our respective missions.

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9 Reasons to Become Powered by Pro Bono Services

July 08, 2014

Headshot_aaron_hurstWhat would your nonprofit do with an additional 20 percent in its budget? What if you could achieve that by securing professional support from marketing, information technology, human resources, finance, and strategy professionals? Still not convinced pro bono service is the rocket fuel you need to achieve your mission? While there are many ways in which pro bono can positively impact your organization, here are nine reasons guaranteed to change your mind.

1. You need a strong voice. In an increasingly noisy world, it's imperative nonprofits make themselves heard. Pro bono resources can help your organization create key messages and visual identities, brand strategies, attractive and user-friendly websites, compelling print collateral, and more -- all of which are critical if it hopes to develop a clear and powerful voice that engages a broad range of stakeholders and reaches across organizations to create impact.

2. The best nonprofits are doing it. Some will tell you pro bono is only for failing nonprofits that can't afford to pay for services. Gerald Chertavian, founder of Year Up, would say that such people "suffer from a severe lack of imagination." Year Up, as it happens, is one of the most successful nonprofits in the U.S. They've worked with more than six thousand young people nationwide and have sites in eleven cities. They produce very successful outcomes (84 percent of program graduates are in school or working full-time within four months of graduation). They operate with a staff of more than three hundred people and an annual budget of over $40 million and have twice been voted one of the top fifteen nonprofits in the U.S. to work for. And they've been pro bono believers since the beginning. Pro bono support from Alta Communications helped kick off the initial Year Up venture, and over the years Gerald has successfully locked in pro bono support from countless sources, including New Profit Inc. and Monitor Deloitte, whose advice with respect to strategic planning helped shape the organization into the powerhouse it is today.

3. It helps foster talent and leadership. The nonprofit sector is the people sector. Nonprofits succeed when they have great people and great leadership. And that requires investment. You need systems, training, and infrastructure to get board members, employees, and volunteers into the right roles. Pro bono projects can help nonprofits build the necessary structures for talent retention and development, as well as for setting appropriate goals and performance management processes that lead to strategically aligned growth and staff development.

4. It generates significant corporate support. Many companies are much more likely to become large donors if they have employees deeply engaged in your mission. Companies like Deloitte hugely favor their pro bono partners over other grantees when it comes to providing significant financial support.

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Most Popular PhilanTopic Posts (June 2014)

June 30, 2014

Summer -- and the World Cup -- are heating up. Before you head out for that well-deserved vacation, here's another chance to catch up on some of the great content we posted in June....

What have you read/watched/listened to lately that made you think, surprised you, or caused you to scratch your head? Share your finds in the comments section below....

An Organizational Structure That Works for Change

June 16, 2014

Headshot_thomas_somodiMany, if not most, people would argue that the capacity of a nonprofit organization to change is critical to its survival over the long term. To that end, the nonprofit literature is full of theories, methodologies, recommendations, and analyses with respect to how nonprofits should be structured and operated in order to maximize their ability to thrive and drive change.

Yet, even with all the guidance at their disposal, too many nonprofits fail to make an impact or achieve the desired change.

The reality is that if we want to see progress in this area, nonprofit organizations need to rethink their relationship to the dynamics of organizational change, and the best place to start is with the concepts found in Change Science.

Step One – Develop and Communicate a Proper Perspective of Change in the Organization

One of the first things Change Science tells us is that change is continuously occurring all around us. Every time an event is held, a donor is contacted, a donation is processed, a program is launched or altered, something in the organization's calculus has changed. It is critical that everyone in an organization, from the board of directors on down to individuals in frontline staff positions, understands that basic fact.

Step one, then, is for everyone to stop thinking of change as something that happens "out there" and to recognize that the organization already is dealing with a continuous stream of change at every level.

Step Two – Develop an Organization-Wide Understanding of Change-Related Responsibility

So how does an organization manage continuously occurring change? The answer is simple: delegation of responsibility. From the person responsible for reserving event space and inviting potential donors, to individual program managers, to the executive or executives tasked with setting and implementing the organization's strategic direction, responsibility for managing change has to be delegated.

Delegating responsibility for change carries an added benefit: employees who are given responsibility for managing some aspect of change are automatically empowered, and an empowered employee is an engaged and more effective employee. Indeed, what is often lacking in nonprofit organizations is a top-to-bottom recognition of the fact that not only is there a significant amount of change continuously occurring in and around the organization, but that through the delegation of responsibility, individuals within the organization already are managing that change.

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Taking Board Leadership From Good to Great

May 14, 2014

Headshot_kevin_monroeI'm a consultant who spends a lot of time working with nonprofit boards,
and as I ponder the experiences and effectiveness of many of those boards, I can't help but notice the gap that exists between their promise and actual performance. In fact, it brings an old song to mind...

You may say I'm a dreamer,
But I'm not the only one.
I hope someday you'll join us,
And the sector will grow as one.

Okay. I took some liberties with the lyrics. But since this is about board leadership, I thought you'd catch my drift and forgive me.

I'm in this line of work because, as the song goes, I'm a dreamer at heart and truly believe in optimal scenarios, especially as it relates to the millions of do-good organizations around the world and the people who lead them every day.

Imagine how different things would be in communities across the U.S. and around the world if every board member that served a nonprofit or NGO vowed to invest only their best into the organizations they lead and serve. They would read the financials and the body language of frustrated employees. They would hold executive leadership accountable in the boardroom – and in high regard outside it. They would balance criticism with encouragement. There would be fewer dictates and more discussion. Instead of being evaluative of goals, they would be evangelical about missions. What if breaking even and taking chances were equally rewarded? What would happen then?

Imagine.

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Weekend Link Roundup (November 9-10, 2013)

November 10, 2013

Colorful-autumn-leavesOur weekly roundup of new and noteworthy posts from and about the nonprofit sector....

Collaboration

Collaboration is hard, writes Third Foundation founder Jon Huggett on the Markets for Good blog. But your odds of success are greatly improved if you follow these six simple rules:

  1. Share hard goals, not values.
  2. Measure for improving, not proving.
  3. Choose the change, not who is in charge.
  4. Share credit for successful ideas, not put the "genius" on a pedestal.
  5. Spread ideas, not organizations.
  6. Embrace competition, don't discourage it.

Education

Created by the Great Schools Partnership, the Glossary of Education Reform defines and describes widely used school-improvement terms, concepts, and strategies. Useful -- and a sharp presentation.

Health/Healthcare

"Like so many freshly minted doctors, I thought I had all the answers," writes Risa Lavizzo-Mourey, president and CEO of the Robert Wood Johnson Foundation, on LinkedIn. But an indigent female patient, admitted "late on a winter night, homeless and helpless," taught her she didn't. "My medical training never taught me that how and where a patient lives, learns, works, and plays has more to do with his or her health than the treatments we were diligently learning. No one ever suggested that society is just as much our patient as that person waiting for us in the examining room. Our care ended at the front door of the hospital -- and that wasn’t far enough...."

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[Infographic] Executive Director Listening Project

November 02, 2013

In 2013, the D.C.-based Eugene and Agnes E. Meyer Foundation surveyed nearly one hundred executive directors of organizations it supports about the challenges that affect their personal and professional effectiveness. Some of what the foundation learned is illustrated in the handsome infographic below:

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Most Popular PhilanTopic Posts (October 2013)

November 01, 2013

A shutdown of the federal government that lasted sixteen days, the botched rollout of HealthCare.gov, a well-deserved (!) Red Sox win in the World Series -- October was nothing if not eventful. And now that it's history, it's time to look back at the most popular posts on PhilanTopic during the month:

What have you been reading/watching/listening to that PhilanTopic readers should know about? Share your favorites in the comments section....

[Review] 'The Cycle: A Practical Approach to Managing Arts Organizations'

October 28, 2013

Book-cover_The_CycleA spate of negative developments, including the decision of a bankrupt New York City Opera to shut its doors, the ongoing lockout of musicians at the Minnesota Orchestra, and surveys showing a decline in theatre attendance, would seem to spell trouble for nonprofit performing arts organizations.

Don't cue the fat lady just yet, suggests Michael M. Kaiser, president of the John F. Kennedy Center for the Performing Arts, in his new book, The Cycle: A Practical Approach to Managing Arts Organizations (Waltham, MA: Brandeis University Press, 2013). Yes, nonprofit arts organizations face significant challenges — including the aging of their traditional audiences, the impact of disruptive technologies, and the lingering effects of the Great Recession — but by following the principles laid out in his book, any arts organization, regardless of size, target audience, or location, can set in motion "an internal engine that powers consistent success."

Known in some circles as the "turnaround king" for his successful efforts to save or revive financially troubled organizations such as the Kansas City Ballet, Alvin Ailey American Dance Theater, American Ballet Theatre, and the Royal Opera House in London, Kaiser draws on his extensive experience to illustrate in The Cycle how "good art, well marketed" attracts loyal audiences, volunteers, board members, and donors whose support can be reinvested in developing even bolder, more exciting programming, eventually creating a positive feedback loop with a circular momentum of its own.

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A New Kind of Strategy for Nonprofits -- Convene, Reflect, and Take Time to Strategize

October 07, 2013

(Carla Goldstein, JD, is chief external affairs officer at the Omega Institute and co-founder of the Omega Women's Leadership Center.)

Headnote_carla_goldsteinThe top managers of the Legal Aid Society's Juvenile Rights Practice only get to meet once a month, if that. "We needed time away from our hectic court-based environment to think more clearly, without interruption, and in a supportive environment," says Ann Marie Scalia, attorney-in-charge of the Manhattan Juvenile Rights office. Theirs is not a unique story.

In Washington, D.C., GirlTrek, a national nonprofit focused on helping black women and girls improve their health by walking, was at a turning point. The group was growing exponentially but needed time to plan and figure out the most strategic way to scale and launch their big push to get one million black women "walking in our neighborhoods" by 2018.

In New York State's Orange County, the domestic violence prevention organization Safe Homes identified a need to improve their internal communications and supervisory structure and to incorporate self-care into their institutional culture. That might seem like a luxury, but given the high stress levels among staff in an extremely challenging environment, it was critical for Safe Homes.

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Weekend Link Roundup (September 21-22, 2013)

September 22, 2013

Four_seasonsOur weekly roundup of new and noteworthy posts from and about the nonprofit sector....

Corporate Philanthropy

Corporate support can be a key factor in securing your organization's future, but many of you may be lost when it comes to attracting and keeping such support. Not to worry. Guest blogging on Beth Kanter's blog, Simon Manwaring, CEO of We First, shares a seven-step plan designed to help you do just that.

Fundraising

Nonprofits want to be loved, and they especially want to be loved by their donors. How can they make that happen? Start by loving your donors back, writes Jeff Brooks on his Future Fundraising Now blog. "Focus on them. Obsess about them. Seek ways to understand, serve and please them."

Healthcare

On the Collective Impact blog, Christine Kendall, a senior consultant at FSG, argues that, like it or not, the Affordable Care Act, is going "to drastically change healthcare in America as it is rolled out over the next five years." And for organizations in the healthcare space, "[b]eing ahead of the healthcare reform curve means moving from symptoms, diseases, and working in isolation to thinking about health determinants, systems change, and collaboration."

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