Jeremy Gregg

Changing the Way that Charity Changes the World.

Category: Philanthropy (page 1 of 3)

How to Raise $100K+ on North Texas Giving Day (Without Killing your Nonprofit): Case Studies

Oh boy, oh boy, oh boy! It’s that wonderful (and dreaded) time of year: North Texas Giving Day.

(In case you have missed the thousands of
emails, social media posts, texts, and carrier pigeons …
this year’s event will be on 9.19.19)

In 2009, I was privileged to serve as the Vice President of Development for the Center for Nonprofit Management when we supported The Communities Foundation of Texas in launching the first North Texas Giving Day (“NTGD”). Back then, the event was focused on DonorBridge … a site that aimed to educate donors on the impact of their gifts.

NTGD has since grown into one of the largest “single days of giving” in the country. Yet, while NTGD raises significant funds for nonprofits… I believe that it can do so at the cost of long-term financial sustainability for many participating organizations.

This does not have to be the case. It certainly was not the intent of the initiative. However, many of the 2,700+ nonprofits participating in North Texas Giving Day will unfortunately abandon the core principles of long-term donor development and focus on the absolute worst tactics of short-term fundraising:

  • Emphasizing gifts over impact;
  • Treating donors like ATMs, not people;
  • Focusing on one-time gifts over recurring donations (the single best way to raise more money over the long-term);
  • Cannibalizing larger, year-end gifts (particularly if those gifts shift from checks to credit card donations);
  • Blasting their mailing lists so many times that they hemorrhage donors via “unsubscribes,” resulting in a net loss of the long-term value of their donor base.

The latter is the most pernicious aspect of this day and is why I am writing this blog.

NTGD represents a tremendous opportunity for our sector. The energy and enthusiasm behind this campaign could enlarge the philanthropic pie for the 17,000+ nonprofits that call North Texas their home. However, to do so, nonprofits must integrate their NTGD efforts within their annual fundraising efforts … not rely on this single day as a lottery ticket.

To explore some real-world ways to do this, I interviewed two of the most successful fundraisers I know — Erin Hart, the Director of Development for the Cistercian Prep School; and Michael Thomas, the Executive Director for My Possibilities. Both of these amazing leaders have found a way to leverage NTGD to improve their overall sustainability.

Thanks to their leadership, these two organizations thrive throughout the year and crush it on North Texas Giving Day.

Cistercian Prep School’s Results

I am proud to share that my little alma mater (Go Hawks!) was the #1 NTGD recipient for three years in a row and #2 in 2018. While they benefit from being a “closed constituency” group (where their donors and their clients are the same population), they raise a shocking amount of money for a school with only ~350 current students.

Year Online Gift Amount $# of Online Gifts
2013 $267,475 327
2014 $358,154 402
2015 $486,356 583
2016 $628,141 687
2017 $654,781 762
2018 $760,122 800

My Possibilities’ Results

In addition to being one of my favorite places to volunteer, MP runs one of the best NTGD campaigns of any “open constituency” nonprofit (where their donor base is not necessarily the same as their client base). Their results speak for themselves:

  • Participating for 9 years
  • First Year = $16K
  • Last Year = $162K ….. a tenfold increase!
  • CFT awarded MP a marketing award a few years ago; check out their incredibly creative campaign this year!

Tips on Setting Goals

Both leaders emphasized that their success was connected to defined goals that were integrated within their annual development plan. In both cases, the organizations have strong cultures of philanthropy that focus on cultivating long-term relationships with their donors. While each has a strong focus on giving on NTGD, their campaigns are extensions of their ongoing relationships with donors.

Cistercian

Erin said, “As a school, one of our most important metrics is alumni participation. Our highest rate so far has been 42%. We also aim for 100% participation of our current parents. If you work on participation, the money is going to be there.”

(By comparison, many of the top universities in the country struggle to exceed 15% alumni giving.)

My Possibilities

Michael shared that MP has three very defined goals for NTGD. The first is a clear financial target, with the goal to leverage the “overwhelming amount of focus placed on donating in DFW” to raise as much money as possible. Driven by their creative marketing efforts, MP successfully engages its community in an exciting effort to contribute a meaningful portion of the organization’s annual budget.

The additional goals include:

  • Engage the HIPsters (the “Hugely Important People” whom MP serves) and the community to “show that we are a working examples of our vision to include people with disabilities.”
  • Increase followers through our social media channels, in an effort to build the foundation for even more donors in the future.

Key Strategies for Success

Both organizations focused on two central strategies:

  1. Integrating NTGD within a culture of philanthropy.
  2. Engaging key stakeholders in serving as ambassadors for the organization.

Cistercian

Erin shared that Cistercian’s team does “a lot of prep work before the event to ensure that people know about it. We get people involved the summer before and let them organize it. You have to get people connected to you and be passionate about what you are doing; if you don’t have that, NTGD will not solve that.”

Their key strategies include:

  • VOLUNTEER LEADERS: Each alumni class has 1-2 class agents who facilitate communication with their fellow alumni. These agents are supported by class captains who oversee ~ 5 years of classes underneath them. These volunteers lead the charge to secure participation in North Texas Giving Day.
  • CULTURE OF GIVING: “People feel so blessed to be a part of our community. This is not really about development; I don’t think of myself as going after money, I think of myself as allowing people to be a part of this community in a different way.”
  • OWNERSHIP MENTALITY: “We are not a school where five families make it happen. We are a community that everyone takes a part in building. The reason this works is that everyone has to work.”

My Possibilities

  • PRIORITIZE IT: “We treat the day/event with the respect and focus it deserves. If it raises $100k and only costs $5k, why would you give it less attention than a golf tournament that raises $100k and costs $50k?”
  • ASSIGN A LEADER: “Budget expenses specifically for this event and make sure that somebody on staff is ultimately responsible for the day’s performance. If ten people own the event, then nobody owns it.”

Potential Pitfalls

A caveat about the advice below: while these strategies did not work for these organizations, they might work for yours. However, given Cistercian and MP’s success, it is worth strongly considering their direct feedback.

If you already have a series of emails queued up, or a major on-site party planned, there is no need to cancel them… just consider how to adjust these efforts in a way that fosters long-term relationships with your donors.

Cistercian

  • “The worst strategy is to annoy donors with those ‘NTGD is coming‘ emails. If you want to give, you will give; I am not going to harass you.”
  • Donor fatigue is the worst. You don’t want someone to give to you because they want you to shut up; you want them to give because they want to be involved.”

My Possibilities

  • Recruiting retail stores to donate a “percent of sales on NTGD is a huge miss. It’s trying to force a square peg (one that doesn’t yield any profit anyway) into a round hole.”
  • “Hosting on-site events on Giving Day. Nobody is coming. Don’t do it. “

Other Points to Consider

NTGD puts a bright spotlight on our sector. It gets the community excited. And it gets us excited too, which is a wonderful gift in the midst of a challenging fundraising year for many organizations.

However, to harness that enthusiasm effectively, we need to participate with the same care that we would use for any other fundraising event. Most importantly, we need to consider NTGD to be an amazing tool within an overall donor cultivation campaign.

If done well, NTGD can do far more than bring in gifts on one day; it can support:

  • Donor Retention Rate (“What percentage of last year’s donors supported you again this year?”)
  • Donor Return Rate (“What percentage of donor’s from prior years returned as donors this year?”)
  • New Donor Volume (“How many new donors joined us this year?”)
  • Average Gift Amount (ideally broken out by the retained, returned, and new donors)
  • Number of Gifts per Year (since a donor who gives you $50 per month is more valuable than a donor who gives you a single gift of $600)
  • Open/Click-through/Unsubscribe Rate (e.g. are people opening, reading, and clicking on your emails … or unsubscribing?)
  • Social metrics (e.g. are you building your social media following, increasing the number of likes/comments/shares, etc. … and is there crossover between your followers and your donors?)

Whether or not your organization is participating in North Texas Giving Day, focusing on these metrics is the key to successful fundraising every day.

The Outsourced Development Office (Guest blog by Andrew Kramer)

This post was written by our friend, Andrew Kramer


Image by Andrew Kramer

Image by Andrew Kramer

For most nonprofits that have $500,000 or more in revenue, funding must come from a variety of sources – government, foundations, individuals, corporations, events, etc. – and has to be managed, almost full time, by a senior person in the organization.

The trouble with a broad, diversified funding base is that each stream can – and often should – be managed by a specialist. Most large organizations have dedicated employees who focus exclusively on a single area, such as grants, major donors, receipts, etc. Smaller organizations with limited staff and funding usually don’t have the ability to excel at fundraising for each of these streams. And the problem is that there is always, always, a new way to raise money that you should be pursuing.

Good nonprofit managers will follow the 80/20 rule closely with their time – 80% of their time from the 20% of their donors who provide the most money. Unfortunately, when Dr. Pareto invented his rule, he was looking at it the way that too many managers spend their time – 80% of their time on the 20% of donors who take the most time and energy.

Unfortunately, time spent does not equate with dollars raised.

So, instead of spending the majority of their time cultivating foundations – where a nonprofit might have seen a very good return in the past – they spend all of their time on an event that only bring a fraction of the revenue. And in the end, most activities that consume a poorly organized manager’s time will not lead to the two fundamental activities that every fundraiser should pursue:

  1. Ask for money (see attached photo — I see this car a lot, and I love it every time); and
  2. Send a handwritten thank you note.

There is a possibility today, however, for a small nonprofit to maximize its efficiency by outsourcing the development function. In fact, a secret that most managers might not know is that the larger organizations outsource a substantial amount of their fundraising rather than try and do it in house.

Here are just a few of the things that can be outsourced to free up a development manager’s time to focus on cultivating their most valuable donors:

  • Grant writing: most grants are fairly straight forward affairs that use some combination of the same text over and over for each foundation. Outsourcing the ROUTINE asks makes a lot of sense so that the manager can focus his or her time on the non-routine grants that can take up a lot of time (but which, when done correctly, can lead to outsized funding for new programs).
  • Direct mail: plenty of nonprofits outsource their direct mail operations – and there are even some organizations that specialize in direct mail for certain kinds of organizations (food banks, museums, etc.)
  • Online marketing: In the end, online marketing is no different than any other kind of sales/ask, but it is just special enough that it makes sense for people who are experts in online programming to do the work.
  • Events: Throw a contract and you can hit an event planner in Dallas.
  • Major Gifts: In the end, the nonprofit manager has to perform in-person asks for money and resources. But, the reality is that a lot of organizations may never even meet their largest donors – or certainly not each year when they ask for money. Which means, things like invitations to special events, handwritten thank you notes, even the (bi)annual proposal can all be handled by outside experts, freeing the manager up for the tasks where she is really needed (such as phone calls, in person meetings, etc.).
  • Receipts: This critical, but sometimes overlooked, function doesn’t need to be handled in-house. In fact, sending it out might be the best way to ensure accurate, timely acknowledgments of gifts. Unfortunately, it’s too easy to put off writing fresh stories, updating the content, and customizing the letters for larger or more frequent donors.

“But what about the cost?!?”
In reality, that depends on what the nonprofit executive wants done – and more importantly, what the manager isn’t getting done effectively because of his lack of time and expertise. Consultants and service providers can, and do carry some costs. But, because they are specialists, you are getting their experience and value immediately. A good consultant will have great references and can provide a clear action plan tailored to your needs from the beginning.

And, while it is unethical for a consultant or provider to take a percentage of any funds raised, they are just as interested in helping your cause to raise the money it needs to fulfill its mission because it’s how they stay in business.

An executive director or development manager considering hiring new development staff might give serious consideration to farming out their specialized work to multiple contractors instead of hiring a single employee who might only have expertise in one or two specific areas. Instead of spending $50,000 or more on salary, benefits, and payroll taxes, you can spend (perhaps even a small portion of) that to productively hire outsourced experts – giving you access to the highest level of talent without the risk and hassle of hiring an employee.

How to Start a New 501(c)(3) Nonprofit

Image via Creative Commons (Tobias Begemann)

Image via Creative Commons (Tobias Begemann)

Countless times over the past decade or so, I have received the following basic email/phone call/LinkedIn message:

“I recently met someone who wants to start a nonprofit. They are incredibly passionate about their cause and would be great at it, but they need some help with raising money. Could you speak with them and tell them how to get started?”

I almost always accept the call, because there are few people I enjoy meeting more than social entrepreneurs (and yes, I know this is a heavily debated term, but I mean it here simply as someone who wants to start a business whose primary mission is social impact instead of financial return). These are people who care enough about others to pour their time, talent, and treasure into launching a venture dedicated to improving the world. They are, without a doubt, some of the best conversations I have ever had.

And yet, they are also some of the hardest. I have nicknamed myself “The Dream Crusher,” because I am honest with them about my opinions on their ideas. And I am shocked at how few of them have given any thought to the following ….

The most important question to ask:
Why does the world need another nonprofit?

According to the National Center for Charitable Statistics (NCCS), there are more than 1 million public charities in the U.S. alone! There are also another 368,000+ other types of nonprofits, such as chambers of commerce, fraternal organizations and civic leagues.

Whatever your idea is … there are probably hundreds, if not thousands, of other established organizations trying to do the same thing. That doesn’t mean that you don’t have an innovative idea that could do a better job. But, there are some alternate paths to explore before going through the pains (and expense) of launching a new 501(c)(3) nonprofit.

(But, if you are dead set on doing so, check out this informative article, “How do I start a nonprofit organization?,” via GrantSpace.)

So, you wanna start a nonprofit?

First of all, thank you for giving a damn. That’s the common thread amongst the many people with whom I have had the conversations above. They all want to make the world a better place. If we had more people like you … perhaps we wouldn’t need a million nonprofits to meet society’s challenges?

Second, understand that “starting a nonprofit” is NOT your goal. Delivering your mission is the goal (e.g. helping kids who are exiting the foster care system … or supporting veterans returning from war … or whatever it is that drives you to pursue this venture).

And there are many ways to deliver your mission WITHOUT starting a 501(c)(3).

Here are the questions I always ask people like you:

  1. Is there an existing organization with whom you can partner to simply expand their work into a geographic/programmatic area they do not currently address?

For example, you want to open an after-school program in your neighborhood. Could you instead partner with Boys and Girls Club, YMCA, Camp Fire, or another after-school provider to bring their programs to your area? Or maybe you have such programs in your area but they are not delivering the programs the way that you believe they should. Could you explore collaborating to help them improve their work, expand their offerings, etc.

Whether you want to serve kids, seniors, veterans, the homeless, or anyone else … there is almost certainly an established organization dedicated to doing the same thing. In the same way that franchising is often an exponentially easier to open a for-profit business, partnering with one of these providers to raise money to expand their work is a much more more efficient way to meet your mission. Starting a 501(c)(3) nonprofit involves significant expenses — like hiring a CPA to handle your annual tax filings and to conduct an annual independent financial audit; setting up an administrative office to handle payroll, accounting, etc.; launching brand new fundraising efforts that compete with those of existing organizations; etc. — all of which are avoidable by partnering with an existing organization.

NOTE: Almost every serious donor you would approach to fund your new venture will ask you this question. You need a better answer than, “Yeah, but I want to do it my own way.” The only way that I can interpret that response is that you care more about being the one helping people than actually ensuring that people get the help they need.

  1. If the answer to #1 is “no,” is there a way to incubate the new nonprofit as a program of an existing organization so that you can avoid all the administrativia cited above?

Doing so would also leverage some of the existing organization’s financial credibility in terms of administration, which is a major barrier to securing funding.

This doesn’t even have to be a related charity (though it helps). While it would be odd for a new pet shelter to be incubated as a program of a prep school, it would certainly be easier than setting it up as a stand-alone organization. There also are “umbrella” organizations whose broad missions could feasibly encompass the incubation of such ventures, like your local United Way.

It is more complex than scenario #1, because the incubating organization has to setup some internal controls and likely run separate financials for the program, but there are also some practical benefits to this scenario that you don’t receive in the ones below:

  • Administration is already setup and running smoothly — so you don’t need to worry about bookkeeeping, annual tax filings/audits, payroll, liability insurance, etc. This is the greatest advantage.
  • Employees would be a part of a larger workforce, which could result in better health benefits, access to more human resources options, and potentially a better work environment (even if they don’t work in the same office, they might be able to participate in activities organized by employees of the incubating organization).
  • The board for your venture would only need to be an advisory board, and not have to worry about being a governing board with legal and fiscal responsibility for the organization (which can make it easier to recruit high-power advisors, since many wealthy/well-connected people are hesitant to expose themselves to the liability of being a governing board member for a startup charity).

There can be some challenges with fundraising, particularly in the area of foundation grants (e.g. if your program is a strong fit for a grant from a foundation that already donates to your fiscal sponsor, that scenario has to be explained very clearly so that the two requests are not seen as coming from the same organization … which could result in neither getting funded). However, all of this can be cleared up with a simple MOU (“Memorandum of Understanding”), or similar document, that outlines the fiscal arrangement between the organizations.

(There is a really detailed article about fiscal sponsorship here that includes links to the Fiscal Sponsor Directory, “a tool created by the San Francisco Study Center to help connect community projects with fiscal sponsors.” One such foundation that does this is the Edward Charles Foundation.)

  1. If the answer to #2 is “no,” could you set it up as a fund of a community foundation to achieve similar objectives?

This is how I first established Executives In Action, which operated for years as a fund based out of the Communities Foundation of Texas. In North Texas, The Dallas Foundation also has a specific program for this outlined here.

  1. In any of these cases — including proceeding with launching your own 501(c)(3) — focus on collaborations whenever possible.

That helps to leverage the credibility of existing orgs — even if you just use their curriculum or consider them program advisors — to avoid the very valid criticism of, “why do we need another nonprofit?!”

  1. Please, for the love of God, follow Peter Drucker‘s advice: do one thing well. Demonstrate results, prove outcomes, then go to market to raise money based on that successful model.

Too many social entrepreneurs launch with a scattered vision of solving all of the world’s problems. I understand that your dream might be to operate a green homeless shelter that is entirely off the grid and that includes an organic farm in which the residents can secure living wage jobs producing vegan, gluten-free foods while also learning to speak English, manage their addictions, save 50% of their income, and launch their own tech startup.

But start with one of those. Offer an ESL program for the homeless in one of your community’s existing shelters. Prove that you can help them to learn English. Then, help them to use that skill to secure jobs and track how you can help them to improve their self-sufficiency. Then, you can consider adding the financial education component … and once it is successful, then expanding to include the other things … culminating in the grand opening of your great green dream.


Written by Jeremy Gregg, the Founder of Gregg Partners. 

Shifting the Collaboration Paradigm Between Funders and Nonprofits (guest blog for The Miles Foundation)

The Miles Foundation

The Miles Foundation

Below is a copy of my interview with the Miles Foundation, “Shifting the Collaboration Paradigm Between Funders and Nonprofits.” My sincere thanks to Sara Redington, the Director of Communications for the foundation, for her assistance with this post.

This interview was conducted in February 2015 shortly after I presented at the Dallas Contributors’ Network.

You can also download a PDF of the article here.


 

Shifting the Collaboration Paradigm Between Funders and Nonprofits

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Jeremy Gregg. Image via TEDxSMU.

Guest blog post from Jeremy Gregg

Jeremy Gregg is a three-time TEDx speaker, an award-winning communicator, and an experienced leader in both the entrepreneurial and nonprofit arenas. We heard him speak at a local funders’ luncheon earlier this year, and were captured by his frank characterization of the current “dysfunction” present in the philanthropic community. As so many funders (including us) work to collaborate more effectively with our nonprofit partners, we asked Jeremy to dig into this issue and give us tips for improving our partnership model. Below are Jeremy’s thoughts on how funders and nonprofits can better work together so that we can affect change and positively impact the communities we serve.

1.   What is wrong with the current foundation/nonprofit dynamic, in your opinion?

The current dynamic is too centered on “otherness” and overlooks the shared mission that should unite foundations and nonprofits. This does not foster much honest communication between the two, let alone a transparent conversation about common challenges and shared goals.

In a way, there is a systemic flaw in the nonprofit financial model: the source of capital (donors) is almost entirely disconnected from the use of capital (clients). Nonprofits become a link between the two, which creates a scenario in which a nonprofit’s financial stability depends far more on fundraising excellence than on programmatic excellence. As a result, a nonprofit’s long-term goals become more focused on financial sustainability than on systemic change… leaving grantmakers frustrated because many of their foundations were created in order to change broken systems.

So, as it turns out, philanthropists interested in systemic change might need to look first at changing the system of philanthropy itself.

2.     What are some real-world examples of this dysfunction?

The clearest example of this dysfunction is the fear with which nonprofits court foundations for grants. All of the power is on one side of the transaction. When nonprofits seek money from foundations, they often act like the freshman kid trying to ask the homecoming queen to the prom. It’s just silly how imbalanced the conversation is perceived to be.

As a result, nonprofits spend hours reviewing long lists of foundations whom they can solicit for money. They debate whether and how to contact them, afraid to merely pick up the phone and call the foundation lest they be added to “the black list.”

From the foundation side, there is also a powerful conflict at play. Foundations are concerned with sustaining their investments while simultaneously wanting to harness the power of those investments to transform society. As I recently shared with the Dallas Contributors’ Network, I see this dysfunction in several ways:

  • Foundations may not provide general operating grants to support overhead, yet they desire longitudinal outcomes. How can a nonprofit make the investment to measure such impact without unrestricted funding?
  • Foundations may not provide grants to expand fundraising programs, yet they desire for nonprofits to achieve scale. What business – nonprofit or for-profit – can achieve scale without money?
  • Foundations do not provide “risk capital” in the form of unrestricted grants, yet they demand innovation from nonprofits. The ability to innovate is intimately tied to the ability to fail; if nonprofits can only receive funding based on their “best practices,” there will be no innovation.
  • Foundations often do not provide ongoing funding year-after-year in order to avoid creating “dependency,” yet they demand a plan for financial sustainability. This creates a scenario in which nonprofits are almost punished for success; if they increase individual giving, for example, they might lose their foundation funding. A foundation’s decision to make a grant should focus more on what the nonprofit will do with their grant rather than worrying about whether someone else might be able to pay for it, instead.
  • Foundations rarely consider multi-year grants, yet they demand long-term planning from nonprofits. Considering that the average nonprofit has less than 60 days of cash on hand, long-term planning is impossible without some visibility into future cash flow.
  • Foundations often shy away from grant requests for advocacy…yet they desire to create systemic change.

3.     What would the ideal or improved collaboration model look like?

Nonprofits have almost no power to adjust this dynamic. Change can only come from the donor side, and it involves several significant adjustments in their approach to grant-making. However, the fundamental shift is from being a “funder” to being a real “partner.”

What does this look like?

  • Realize that funding is only one tool in your arsenal. You also have knowledge, relationships, influence…invest all of them in your nonprofit partners.
  • Make multi-year financial commitments of unrestricted capital. Or, better, commit to an amount of monthly funding that will not change. This provides the visibility into long-term cash flow that is critical for nonprofits to scale.
  • As a result of these two items above, you should limit your grant portfolio from dozens of grants to a handful of serious partners. Don’t be afraid to go deep instead of broad.
  • Encourage nonprofits to do all of the things that you want your for-profit investments to do: invest in technology, in staff training, in systems that create long-term ROI.
  • Remain focused on the broader goal of systemic change. Challenge and encourage your nonprofit partners to share their best practices with others, to develop meaningful collaborations with others, to advocate for the broader adoption of their solutions at the public level, etc.

Essentially, change the dynamic from one in which nonprofits are the fortunate recipients of your largesse to a system in which you are rolling up your sleeves alongside the nonprofits in order to drive systemic change in the areas that matter to both of you.

4.     What change does that require from both sides?

Both sides need to realize that neither can exist without the other: they are merely different sides of the philanthropic system.

In addition to the changes I mentioned earlier, foundation staff need to focus on becoming experts in the areas in which they want to deliver change. They are not in the weeds every day in their issue areas, which offers them a higher view of what is going on in the field. For example, if the foundation is focused on education, they can see many different approaches, learn what is working and what is not working. And they then need to share that knowledge with their grantees, including helping them to establish the partnerships and to develop the tools that they need to deliver the best results.

For nonprofits, they need to be bold and confident, not timid and apologetic. They don’t need to be rude, but they need to stop acting like the leper who was invited to the ball. They need to realize the tremendous value that they bring to the equation: without them, philanthropists cannot do their job. Nonprofits need to realize that they are worthy of the grants that they seek; indeed, they are doing philanthropists a favor by giving them opportunities to achieve their purpose. What a gift to be able to give someone!

On both sides, there needs to be much more boldness and much less fear. Philanthropists do not need to fear becoming too close to a nonprofit – that should be their ambition, to become so close that they seem like a part of the staff. And nonprofits do not need to fear sharing their honest struggles with their foundation partners.

5.     Where have you seen this model work (i.e., can you provide some examples)?

The best example that I ever saw was at CitySquare (formerly Central Dallas Ministries). The organization has a handful of foundations that make serious, long-term financial commitments to the growth of the organization. These commitments provide the base funding that allow the organization to not only focus on doing its work, but on developing bold plans that can drive systemic change.

But here is why it worked so well: as the model succeeded, the original donors did not step back…they leaned in. Their investments increased because they saw the exponential improvements in the organization’s impact that have come from their unrestricted support.

The organization has a very high-profile leader who serves as its face to the community. This is the case with almost all successful nonprofit organizations: they need that dynamic champion to represent the organization. Yet, behind the scenes, the sincere commitment of the agency’s board members and closest donors are driving much of its success. CitySquare is a very effective model for how philanthropists can partner with nonprofits to maximize long-term impact on the people whom they aim to support.

6.   How can funders and nonprofits take the first step towards building “mission-critical partnerships” together?

In a way, all they need is the ability to speak honestly with each other without the “elephant in the room” of funding.

Think of a human courtship. You begin dating, and you only reveal the best parts of yourself because you want the person to like you. And as you approach marriage, some of those guards begin to fall so that you can sense whether the connection is legitimate. And once the couple is married, hopefully, all of those guards are down…and they can really begin to focus on what they want to achieve together because they can take for granted that they will stay with each other.

That is what we need in the philanthropic world. We need a model for meaningful commitment that focuses on maximizing each side’s impact so that both are fulfilled.

In other words, the model needs to shift from “transactional” (i.e. grants in exchange for reports) to “relational.” Foundation directors need to get to know the heart of the nonprofit’s mission: not just show up for site visits, but really join in the daily effort of changing lives.


Written by Jeremy Gregg, managing director of Gregg Partners. Gregg Partners is a Texas-based fundraising consultancy that specializes in grantwriting for nonprofits.

Nonprofit Dysfunction and the Beloved Community

“Our goal is to create a beloved community and this will require a qualitative change in our souls as well as a quantitative change in our lives.”

~~ Dr. Martin Luther King, Jr. ~~

Yesterday was Martin Luther King, Jr. Day. As the nation reflected on the legacy of MLK, I was reminded of Dr. King’s belief in “the beloved community.”

That concept — which the King Center articulately differentiates from the idea of the Peaceable Kingdom — should be the ultimate Vision Statement for the nonprofit sector. Whether we are in the business of feeding the hungry, healing the sick, educating children, or creating art … the goal of the nonprofit sector is to build The Beloved Community.

And yet, I believe that we face a systemic dysfunction — a structural challenge in the very financial model of philanthropy — that prevents us from doing so. This morning, I am speaking to The Dallas Contributors Network on this very topic of nonprofit dysfunction.

My theory:
The nonprofit sector struggles from a disconnect between the source of capital (donors) and the use of capital (clients); this creates a scenario in which financial stability depends more on fundraising excellence than on programmatic excellence (i.e. the development of the beloved community). As a result, a nonprofit’s long-term goals become more focused on financial sustainability than on systemic change.

To solve this, I believe that nonprofits need to return to their original purpose: to build The Beloved Community. To do this, we need far more than funding for our missions; we need to build movements that shape culture.

More (much more) to come in the future.

UPDATE: After posting this, I found this TED talk from TEDxAtlanta in which Doug Shipman shares “The Secret to Creating the Beloved Community.”

Earlier tonight, I republished on StackStreet an old blog that I wrote a few years ago about the amazing organization “Network for Teaching Entrepreneurship.” As I was doing so, I dropped by NFTE’s Twiter feed . . . and was grateful to discover the list below.

A great list of videos worth watching (and “ideas worth spreading”) from the NFTE Blog | NFTE: “Nine  TED Talks Every Entrepreneur Should Watch”

  1. TEDxNewHaven – Steli Efti – Entrepreneurial Happiness
  2. Secrets of successful entrepreneurs: Prasad Kaipa at TEDxBayArea
  3. 3 pearls of entrepreneurial storytelling: Michael Margolis at TEDxMillRiver
  4. Let’s raise kids to be entrepreneurs: Cameron Herold
  5. Using the Entrepreneurial Mindset to Unlock Youth Potential — TEDxKids@BC – James Sun
  6. The Art Of Entrepreneurship — TEDxFullerton – Frank Peters
  7. The responsible entrepreneur — four game changing archetypes: Carol Sanford at TEDxBerkeley
  8. Challenges for young entrepreneurs: Max Gouchan at TEDxBergen
  9. How the entrepreneurial mindset can change you: Henrik Scheel at TEDxSacramento

I would also add one to the list … featured above, Simon Sinek‘s “How great leaders inspire action.”  If that doesn’t get you pumped up about the possibilities … you are definitely not an entrepreneur!

(Watching Simon’s talk is what inspired me in my own first TEDx talk)

A New Model of Social Enterprise: Master Franchising

IMG_1745-0.JPGAt the Prison Entrepreneurship Program, we just announced one of the most significant milestones in our organization’s recent history … the acquisition of a master franchise for the entire state of Texas by our for-profit subsidiary, the Communitas Auto Group.

(Read more here)

Over the next twenty years, we will develop around 20-30 automotive repair shops under the brand of The Auto-Lab Complete Car Care Centers. These shops will provide hundreds of living wage jobs (many of which will be for graduates of PEP); by 2023, we anticipate they will also grow to provide around $1 million per year in revenue to support PEP’s mission.

Those facts alone are worth celebrating. But there are two aspects of this initiative that get me even more excited… because they are far larger than just PEP.

First, this effort represents a seismic shift in the franchising world. There are fewer than 100 franchise stores that are owned by nonprofits; most are in the food services arena, like Ben & Jerry’s, Nathan’s Famous, Annie’s Pretzels, etc. And in the majority of cases, nonprofits only own a single store.

Through our subsidiary, PEP owns the rights to the entire state of Texas for The Auto-Lab. Within a few years, we will likely own more franchise stores than any other nonprofit in the country.

This will be a game-changer for nonprofits, because we will prove the value that nonprofits can bring to the franchising community as BUSINESS PARTNERS. After all, here are some of the assets that PEP brought to the table that most typical franchisees lack:

  • A robust governing board and advisory board structure that includes 50+ experienced business leaders whose expertise we can tap to guide the venture’s growth;
  • Immediate access to a qualified and motivated workforce of strong potential employees and store managers (i.e. our graduates);
  • Thousands of active relationships with potential customers in multiple cities across Texas (i.e. our volunteers and donors, not to mention our graduates and their families).

The latter is particularly valuable for franchisors. Once we open a store in Houston or Dallas, we will have thousands of people in those markets who already know about PEP and who would be willing to give our store a try. And for a new entrant to the market, that is an invaluable asset to tap.

Further, within each of those three groups above, we have not only potential customers and employees … but potential investors. And more importantly — potential franchisees.

Yes, this venture will provide jobs for our graduates and revenue for PEP.
But the broader impact will be on how we can transform the way
that the franchising community looks at nonprofits.

Thankfully, the remarkable leaders at The Auto-Lab had the vision to see what we could offer. Yet throughout this process of securing a franchise, we encountered a high degree of skepticism from other franchisors about working with a nonprofit (let alone one that worked with felons!). The success of Communitas Auto Group will force other franchisors to take notice … and, we hope, become much more open — indeed, eager! — to engage nonprofits as franchisees.

That is the first reason why I am excited.

But the second makes me even more so.

To fund this initiative, we pioneered a new financial model that we believe could serve as a template for how to finance social enterprises and earned income initiatives owned by nonprofits. Thanks to the guidance of our board and some very wise counsel from one of the preeminent Houston corporate law firms, we have built a model that allows the Communitas Auto Group (“CAG”) to harness the power of private equity while maintaining PEP’s long-term ownership of the venture.

In brief, CAG is incorporated as a for-profit company. As explained in the link at the top, CAG was capitalized with an initial investment from Mike Humphrey of Houston, Texas. Mike is now the majority owner of the venture, but PEP was granted a sizable carried interest in CAG at essentially no cost. There is a mandatory distribution to PEP of $50,000 per year from CAG, and a scheduled buy-back of the equity from the initial investors through the profits generated by the business. This will allow PEP to fully own the company within approximately ten years, if CAG grows in line with our conservative financial models.

Once that occurs, we anticipate that CAG will be contributing approximately $1MM per year in unrestricted revenues back to PEP. That is the equivalent of building a $25-30MM endowment for the organization … only this is one that creates hundreds of jobs along the way for our graduates.

All without relying on philanthropy.

THAT is what is really sexy about all of this. We are blazing a new trail in how mission investors can complement their charitable giving with strategic investments that create both market returns AND social benefits.

And when we can do that … we exponentially multiply the amount of funding that we can access. After all, just look at the world of grant-making foundations. They distribute, on average, 5% of their assets in the form of grants. But the other 95% is held in investments.

By tapping into that 95% … we effectively multiply the base of support available by a factor of 19X.

That’s no different for major donors. However generous they are, the vast majority of major donors have more money in their investment budgets than in their charitable giving budget. By tapping into those far larger pools of capital, we dramatically expand the percentage of “wallet share” that can be tapped by the social sector.

And THAT is something that our team will be very proud to leave as part of our legacy.

Onward!

A big, important question asked by Salah Boukadoum

MLK a threat to justice

“Injustice anywhere is a threat to justice everywhere.” – MLK

My friend Salah Boukadoum is the founder of Soap Hope, an amazing company with an even more amazing mission. In brief, they sell all-natural, organic, high-quality products … and invest 100% of their profits in microloans to impoverished women. Their model — which Salah calls the Good Returns model (click for his TEDxGrandRapids talk on the topic) — can equip any company to generate a sustainable impact on the world at no direct cost to them other than a year of interest.

But that is not why I am writing about Salah. I am writing about him because I was shocked into a stupor by a very poignant question that he asked on Facebook. I post in its entirety below… and welcome your thoughts.

Why, when a skier is lost on the mountain, do we deploy a search party using helicopters and snowmobiles to see if it’s possible to find him and save his life, but we don’t deploy anything for the child whose life is in grave danger in a village in Africa? The skier consciously made the decision to take a dangerous path, but we don’t hold that against him and give up on his life. The child made no decisions, and was just born in a place of grave danger. If we abandoned the skier on the mountain, we would be accused of being heartless and inhuman. But we abandon the child every day.

The reason boils down to who we consider to be in our community. This is the same reason we celebrate when a plant moves from Mexico to Texas, and denounce a plant moving from Texas to Mexico – the job in our community is more important than the job in “their” community. It’s the same reason that a massacre in our country is worthy of a trillion dollar global mission, but a massacre in Syria is not worthy of any action at all. Because “they” are responsible for “their” problems, and “we” are responsible for “ours.” Who counts in the “we” and who in the “they”?

If we are going to express the full potential of humanity, we will need to expand our understanding of our community to include all people, in all places. Because determining the value of a human life on where you happen to be born, or where you happen to be at this moment, is the same as determining the value of human life by rolling dice.

Robert Egger’s advice on how to give a presentation about #nonprofits

Robert Egger

Robert Egger, founder of DC Central Kitchen, founder of CForward

“Just be cool, drop f-bombs & embrace an unwavering faith in the power of #nonprofits to help rebuild the economy & you’re there.”

@RobertEgger

Land of Non — More than Charity

harper in the stream

Things aren’t always what they seem…

Tomorrow, I am giving a presentation at the Nonprofit Summit hosted by the Nonprofit Center of North Central Florida. I am giving a wide-ranging talk that I am calling “The Land of Non: More than Charity.”

(Thanks to my friend Stacy Caldwell for introducing me to this very appropriate term for the ol’ nonprofit sector. See my first blog about it here.)

My talk will cover three basic topics:

  1. YOUR ORG (“your organization”): How and why nonprofits should stop using the language of “begging” when it comes to fundraising, and focus instead on giving a solid investment pitch (i.e. more like what you see on Shark Tank than on the street corner). I’ll also talk about the difference between thinking of donors simply as sources of money rather than ambassadors in your mission.
    1. To illustrate this, I am going to use a version of the Prison Entrepreneurship Program’s “ambassador enrollment presentation” as a case study.
  2. DOT ORG (“the nonprofit sector”): How to reframe our understanding of the nonprofit sector’s role in society by discussing the size, breadth and impact of the nation’s 1.4 million charitable organizations.
  3. OUR ORG (“our sector-wide organizing efforts”): How we can all get involved in changing the dialogue used when discussing the nonprofit sector.
    1. To illustrate this, I am going to highlight the work of Robert Egger and his new lobbying organization, CForward

I have about 45 minutes to cover 45 slides. Some will take 5 seconds, some will take 5 minutes. We’ll see how this works out!

For those who attended the conference and are now finding this blog, you can download the presentation here:
Land of Non – More than Charity – by Jeremy Gregg

Finally, here are the links included in this presentation for “Suggested Reading”:

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