North Texas Nonprofit Resources Blog

I’m a partner with Dallas Social Venture Partners (DSVP), a partnership of professionals and social entrepreneurs who are committed to strengthening our community through the thoughtful application of our collective dollars and business expertise.  One of my roles in DSVP is serving as chair of the Philanthropy Education Committee.  This committee organizes educational events of interest to DSVP partners and others in the nonprofit community.  I want to announce three upcoming events to which you are invited.  All of these events are being offered at no cost.

The 1st event is a book review discussion of Dan Pallotta’s book Uncharitable on Wednesday, May 9th, 6:00-7:30 P.M. in suite 210 of the North Dallas Bank Building, 12900 Preston Road in Dallas.  Uncharitable, published in 2008, was “a passionate, thought-provoking look at the nonprofit section.”  Pallotta founded a now-defunct company that raised hundreds of millions of dollars for charities, but was more or less hounded out of business because of what many considered unorthodox fundraising methods.  A pioneering social entrepreneur and expert in nonprofit sector innovation, Pallotta has been acclaimed by The New York Times, The Economist, and The Stanford Social Innovation Review.  He is the founder of Advertising for Humanity and the Charity Defense Council.  Pallotta is a William J. Clinton distinguished lecturer and a regular contributor to The Harvard Business Review Online, where he writes about transforming the nonprofit paradigm.  Pallotta was the guest speaker at the April DSVP Social Innovation Lunch series.  I will lead this discussion focusing on how some of the ideas discussed in Uncharitable can be applied to philanthropy and fundraising.  The book is available through Amazon.  Please register here

2nd is a talk by fundraising guru Bill Lively on “Fundraising Through Personal Relationships” on Monday, May 21st, 4:30-6:00 P.M. at Communities Foundation of Texas, 5500 Caruth Haven Ln.  Lively has spearheaded campaigns that have raised hundreds of millions of dollars for SMU, the performing arts center, and Super Bowl XLV, and is soon moving to Washington D.C. to lead a major fundraising effort for National Geographic Society.  At this event Lively will offer a deeper understanding of what is needed to most effectively capitalize on personal relationships.  Please register here

3rd is a presentation by George Ellis and Bethany Detrich on creating and expanding your strategic network on Tuesday, June 12th, 6:00-7:30 P.M. in suite 210 of the North Dallas Bank Building, 12900 Preston Road in Dallas.  Ellis is a long-time DSVP partner and has been involved with many organizations in the community, including founding the Entrepreneurs Foundation of North Texas.  He co-authored a book called The Little Green Book of Venture Philanthropy.   Detrich founded a company called Online Sales Productions, now called Leadership Growth Partners, in 1997, and after 20 years in marketing, sales, management, and high performance training, she developed a leadership development program called Grow Leaders Now.   She has been a consultant for many large companies.  Registration for this event will be announced soon.

Recent grants received by our clients include:

$60,000 for a school for severely developmentally disabled children – for a scholarship fund for children from low-income families

$25,000 for an agency providing services to women trying to leave the sex industry – for a new Resource Center

$10,000 for an organization providing temporary housing and support services for women recovering from substance addiction – for general operating expenses

Murray Covens, Principal

murraycovens@northtexasnonprofitresources.org

North Texas Nonprofit Resources

Don’t ask for a specific amount of money.

Don’t have a board of directors that consists of a diverse group of professionals.

Don’t have a current budget in a general accepted format.

Don’t have staff members with appropriate qualifications.

Don’t have measurable objectives.

Don’t collaborate with other organizations.

Don’t have recent, accurate financial statements in a generally accepted format.

Don’t complete a Form 990 for the previous year.

Don’t diversify your funding sources.

Don’t explain how your organization is sustainable.

Don’t give contact information for your organization.

Don’t have current and complete information on your website.

Don’t use clear and concise wording in your proposal.

Don’t adhere to funder’s guidelines.

Don’t require that all board members give dollars to your organization.

Don’t explain why your organization’s services are needed.

Don’t explain how your organization is going to try to resolve the issue you’re trying to address.

Don’t send a thank-you letter for a previous grant received.

Don’t track demographics of your clients – gender, ethnicity, and socio-economic classification.

Don’t have more than three board members.

Don’t ask for funding before the project or program has ended.

Don’t submit your proposal before the deadline.

Don’t submit any required report of spending for a previous grant received.

Recent grants received by our clients include:

$25,000 for a mental health advocacy organization – for general operating expenses

$25,000 for a clinic for low-income, uninsured families – for medical and dental services for children

$20,000 (2 grants of $10,000 each) for a diabetic life skills program for children – for scholarships for children from families that cannot afford the full tuition

$10,000 for an agency serving abused and neglected children – for a program that provides funding for basic needs for at-risk children

$10,000 for an organization providing an array of services to low-income families – for their food pantry

Murray Covens, Principal

murraycovens@northtexasnonprofitresources.org

North Texas Nonprofit Resources

Many funders require that you explain in grant proposals how you measure the success of your nonprofit organization.

Which services are producing adequate results? Which are not? Who is being helped by these services? Who is not? Where are improvements needed? Program evaluations can give good, valid answers to these questions. The key question is, “What does your program intend to accomplish?” The answer should be in your mission statement. An evaluation program will tell you what is actually being accomplished, so you can see how your intentions and performance match up.

Evaluation Methods

Here are some ways to evaluate your organization’s program:

1.  Outcome Monitoring is the regular reporting of program results in ways that can be understood and judged. Outcome monitoring keeps those responsible apprised of performance, allows problems to be detected (and corrected) early, provides proof about program effectiveness, and boosts confidence in the organization’s ability to perform.

Since too much data can hide pertinent information, you should monitor only a few key measures that will focus evaluators’ attention on data relevant to program management. These measures should be easy to interpret and tied to performance expectations.

For example, let’s say your organization is concerned with elementary education, and one of your goals is to improve the ability of children to learn a particular type of information. To measure the outcome of your work, you could give the children a test before they start your program, then administer the same test at the end of the program. Comparing the results of the two tests should help you determine if your program is functioning as it should.

2.  Surveys can help you collect statistically reliable data by asking your clients to rate the services they have received. To obtain quality survey results, you must choose your questions carefully, making sure that each one solicits exactly the type of response that will help you evaluate your program.

3.  Benefit-Cost Analysis attempts to assess service programs by determining whether total welfare has increased because of the program. To perform such an analysis, you need to determine the benefits of the program, place a dollar value on each benefit, calculate the total costs of the program, and compare the benefits and the costs.  Usually, the most difficult aspect of this analysis is placing a dollar value on the benefits. For example, what is the dollar value of saving a human life?

Data Collection Methods

Each organization needs to determine what data collection method serves its needs best. After determining what performance you want to measure, select the easiest, most practical data collection method that will provide the information for your evaluation. One or more of the following may be appropriate for your organization.

1.  Use of Technical Equipment: Data collected directly from a physical device or technical equipment. (Example: computer recordings)

2.  Indirect Unobtrusive Measures: Indicators obtained from records kept for other purposes, or from physical traces left by normal activities. (Example: sales records of “heart healthy” foods sold in the cafeteria.)

3.  Direct Observation: Use by a trained observer of specified formats and codes. (Example: street-corner observations of number of drivers wearing seat belts)

4.  Activity or Participation Log: Brief record completed onsite at frequent intervals by participant or deliverer, using format designed by evaluator. (Examples: participant’s sign-in log, daily record of food eaten)

5.  Organizational Records: Data collection forms routinely kept by an organization for purposes other than for the evaluation. (Examples: patient medical records, time sheets of staff members who record amount of time spent on different activities)

6.  Written Questionnaires: Written survey, usually with structured questions, to obtain data by mail or in-person from providers or recipients. (Examples: number of different activities each participant engaged in during an intervention, provider’s assessment of amount of time they spent on each activity)

7.  Telephone or In-Person Interviews: Procedure in which interviewer asks questions directly to providers or recipients, using either structured or open-ended questions. (Example: interviews with participants in a work-training program concerning training activities and their relevance to job aspirations)

8.  Case Studies: Collection of multiple types of data about a site or example entity, usually by an observer who is on site and uses informal observations and interviews, combined with available data and document review. (Example: case studies of states in their process of implementing a program of systemic change in mathematics education)

Recent grants received by our clients include:

$25,000 for a domestic violence agency – for general operating expenses

$15,000 for an organization providing assistance to seriously ill children and their families – for general operating expenses

$10,000 for an agency providing services for teen mothers – for case management

Murray Covens, Principal

murraycovens@northtexasnonprofitresources.org

North Texas Nonprofit Resources

Although grant applications and procedures are generally self-explanatory, many applicants fail to receive grants simply because they ignore the rules altogether or don’t invest the time and effort to properly and professionally assemble their materials.

Incompatible Match

Although there are numerous grant funding sources available, their common goal is to attract applicants who will develop projects that meet the parameters of a specific interest or social cause endorsed by the funder.  Grant packages are often rejected without review if it’s clearly evident that the applicants are ignorant or indifferent to what those interests or causes are.  For example, a funder that makes grants for senior citizen arts enrichment activities isn’t going to write you a check for your campaign to save lemurs.

Unfocused Concept

If you don’t have a well-defined objective and a detailed breakdown of the steps necessary to achieve it in a timely manner, you might as well be telling prospective funding sources that you want the money “just because.”  Applications are often rejected because the concept is too broad, too narrow, too obscure, or too closely emulates services already being provided within the same community.  If the funder can’t see a substantive and pressing need for a project’s existence, they usually won’t approve the grant.

Insufficient Measurement

When a funder plans to underwrite a new project, it wants a reasonable assurance of its success.  Even though the money isn’t going to be paid back, there still needs to be some sort of validation it was well-spent.  Grant applicants often fall short in this regard by omitting any discussion of a methodology for measuring the results through tools such as surveys, test scores, or comparisons.  For example, an afterschool literacy program is a good idea, but might be rejected if the applicant doesn’t identify how the results will be reflected through reading scores, interviews, or an increased volume of books read.

Unrealistic Expectations

Asking for more money than you really need can be a mistake, especially when the economy is in a belt-tightening mode.  Funders are more likely to reject outright a request for a ridiculously high amount rather than engage in any discussions to whittle it down. Further, if a grant package fails to delineate all of the project’s anticipated expenditures and timelines, and instead proposes a grandiose lump sum and an open-ended calendar for implementation, it may only garner suspicion, not enthusiasm.

Limited Experience

Decision-makers routinely reject grant packages if the applicant seems to lack the required knowledge, skills, and discipline to implement the proposed project.  To that end, a lot of emphasis is often placed on review of bios for key players that will be involved.  Those who have prepared themselves for the upcoming responsibility and put as much care into presenting their credentials as they would for a job resume often have an edge over those who are simply winging it.

Recent grants received by our clients include:

$25,000 for a mental health advocacy agency – for general operating expenses

$20,000 for an organization providing services to abused and neglected children – for a program providing supplies to children who have been removed from homes by Child Protective Services

$10,000 for a clinic providing services to low-income, uninsured families – for general operating expenses

$10,000 for an organization providing support services and temporary housing for women recovering from substance addiction – for general operating expenses

Murray Covens, Principal

murraycovens@northtexasnonprofitresources.org

North Texas Nonprofit Resources

In pursuing general operating support grants, you can improve your chances of success by taking the following actions.

Focus on results.

To persuade a funder to provide operating support, you should explain what they can accomplish with unrestricted funds.  It is not enough to tell funders that your organization will “run more smoothly” with operating support.  Instead, be specific about what the money will accomplish, for example by saying that “client intake time will be reduced from four hours to one hour” or “student retention in programs will increase by 20 percent.”

You should also create an operating plan that covers more than just revenue and expense projections.  The plan should detail short- and long-term measures of success and the steps needed to get there.  This type of document also helps you in discussions with funders that have a business background.  People who have created wealth have often done so in an entrepreneurial way, and they might like to support nonprofit organizations that think and act like them.

Stress the benefits of operating support.

You should tell funders why nonprofit organizations prefer operating support.  Among the reasons they typically offer are:  Such support gives your organization more flexibility to spend money where it is needed most, and it enables you to make your organization stronger by improving governance, administration, or staffing.  It also eases fundraising pressure, which reduces burnout and allows your staff and board to focus on your organization’s mission. Unrestricted support also fosters innovation and risk-taking.

Spell out administrative costs.

You might be able to do a better job of getting at least some operating costs covered by grants, including a portion of administrative and other general costs, in your grant proposals for specific projects.  Nonprofits can be their own worst enemy in the conversation about operating support because they don’t fully account for the cost of running a program in the grants they write.  Too frequently, new program grants end up hollowing out a nonprofit’s capacity because the programs require more money to run than the amount they receive.

Don’t compromise.

Too often nonprofit organizations meekly accept whatever a funder gives them, even if it doesn’t match their needs.  For example, if you determine that it will cost $1,000 per client to accomplish a specific goal, and the funder says that it believes the same result can be obtained with $500 per client, you will often accept the grant and try to figure out a way to retool the program.  Instead, you need to go back and tell the funder you need to adjust your outcomes.

You can challenge the implicit assumption at some funders that people who want to do good for others should be willing to go without reasonable salaries or adequate office space. Accepting the status quo drives skilled staff away and hurts organizations.  This is not about proving sainthood.  The question is – How do you build a nonprofit organization that can consistently provide services?

Seek multiple donors.

Because so many funders want you to show that your organization won’t become totally dependent on general operating support grants, you should pursue unrestricted donations from as many funders as possible.

Be persistent.

Keep applying, even after multiple rejections.  Funders sometimes approve grant requests on your organization’s fifth, sixth, or seventh attempt.

Recent grants received by our clients include:

$45,000 for an agency providing courtroom advocacy for abused and neglected children – for general operating expenses

$40,000 (2 grants of $20,000 each) for an organization providing services to children and adults with developmental disabilities – for general operating expenses

$15,700 for an agency providing an array of services for low-income people – for general operating expenses

$15,000 for a homeless shelter – for expansion of the facility

The topic of our next blog on Tuesday, February 21st, will be “Grant Writing Problems.”

Murray Covens, Principal

murraycovens@northtexasnonprofitresources.org

North Texas Nonprofit Resources

The typical reaction when a nonprofit organization has had a grant request denied is to wonder “Why did they turn us down?”

A more appropriate reaction would be to wonder “Who did they fund instead of us?”

Most funders, especially larger ones, decide in advance of each funding cycle how much they are going to distribute in grants for that cycle.  Most funders receive requests from qualified applicants for far more funding than they have available.  Qualified applicants are usually not “rejected” for funding.  Rather, other qualified applicants are selected instead.

Hypothetically, if your grant request was “denied,” and you were then given the opportunity to review the listing of approved grants by the funder and decide which one should be denied and yours funded instead, which one of the below programs would you choose to not be funded?

- basic needs for abused and neglected children in temporary shelter

- healthcare for low-income, uninsured families who would otherwise receive no basic healthcare

- food for homeless and very low-income families who would otherwise have little or nothing to eat

- mental health services for very low-income individuals with no where else to turn since state funding for such services has been greatly decreased

This is typical of the choice that many funders have to make.  As critical as the needs of your clients might be, there are likely other applicants with clients in equal or greater need.

Your grant request might have been denied because your organization’s mission is not a match for the funder’s focus areas, you requested too much more or less than the funder usually grants, you missed the deadline, you didn’t provide all required documents, you didn’t provide all required information in your proposal, or your proposal was poorly written.  But most grant requests are denied not for any of the above reasons, but because funding is limited and needs are great and there is just not enough funding available to meet all needs.

If a funder made a grant to your organization last year, or maybe for the last two or three years, and this time they do not approve your request, it’s likely not because of anything you did wrong.  It’s likely because the funder decided to spread their funding around and not fund the same organizations as last time.  All funding sources come to an end eventually, which is why you need to constantly be applying to new sources.

Recent grants received by our clients include:

$25,000 for an agency providing wishes for children terminally ill with cancer – for 16 wishes

$25,000 for an organization providing an array of services to the homeless – for mental health services

$20,000 for an agency providing services to abused and neglected children – for a program providing items for basic needs such as hygiene, clothing, etc.

$20,000 for a domestic violence organization – for general operating expenses

$15,000 for a clinic for low-income, uninsured families – for general operating expenses

$15,000 for a homeless shelter – for general operating expenses

The topic of our next blog on Tuesday, February 7th, will be “General Operating Support.”

Murray Covens, Principal

murraycovens@northtexasnonprofitresources.org

North Texas Nonprofit Resources

Expression

Get the Visual Wheels Rolling

Express things comprehensively, but follow a style which brings up vivid imagery for the reader.  Try some creative writing exercises to fire up your creativity.

Be Precise and to the Point

Write to the point and simple.  Do not think that using hard vocabulary will make your proposal more appealing.  This will actually lower the chances of one reading your complete proposal.

Justify Yourself

Every point that you make should have a reason.  It is important to justify whatever you say.  This adds credibility to your proposal.

Vocabulary

Avoid Unnecessary Repetition and Word Clutter

Use different words to make your proposal more interesting and appealing.

Omit Incomprehensible Word Clouts

Do not use a bunch of words to explain what can simply be stated.  This shows that the writer is trying to fill out spaces and makes the reader lose interest.

Cut Down on Fancy Phrases

Watch out for “big” words and cut down on them.

Cut Down the Urge to Use Colloquialisms Excessively

While writing, it is a very strong temptation to express yourself with the new buzz words, slang, and jargon to give your proposal an edge.  While this style may be appealing for some readers, it will turn off even more.

Grammar and Punctuation

Grammar

This is one of the most important factors to improve your writing.  Try to express things comprehensively.

Watch Out for Those Tenses

Do not change tenses within sentences.  Incorrect use of tenses makes a negative impression of the proposal.  Understand and practice the basic rules of grammar to improve on your writing.

Avoid Passive Sentences

Passive sentences are to be avoided.  Passivity makes for fragile, unappealing writing.

Go Slow on Adverbs

Instead of using adverbs for your copy, try to be elaborative by experimenting with different words, phrases and synonyms.

Editing

Good Editing

Like good writing, editing is a skill that cannot be taught.  Practice and time is what makes you good at it.  Editing can make your writing more lively and valuable, and more likely to be read.

Take Your Time

Editing takes time, so do not expect to get done in a short span of time.

Proofread

Reread your article to pick up any mistakes that you might have made.

Draft and Edit

Do not assume the first draft you write will be the final one.  Make it a habit to write at least two to three drafts.  This will help you discover mistakes, and will also help you speed up while writing.

Always Remember the Spell Check

Nothing makes a bad impression more than typos, misspelling errors, and wrong choices of words.  Always give your copy a last spell check to avoid the bad taste.

Recent grants received by our clients include:

$30,000 and $10,000 for a film festival – for after school movies for kids and for an awards program

$15,000 for an agency providing services to the homeless – for their mental health program

$10,000 for a domestic violence organization – for their emergency care program

$10,000 for an organization providing services to abused and neglected children – for general operating expenses

The topic of our next blog on Tuesday, January 24th, will be “Don’t Take it Personally When Your Grant Request is Denied.”

Murray Covens, Principal

murraycovens@northtexasnonprofitresources.org

North Texas Nonprofit Resources

A good nonprofit board of directors doesn’t just happen.  It must be worked on.  If you want to have an effective board of directors for your nonprofit organization, you should take these factors into consideration.

Size

The number of board members should be not to big, not too small, but just right.  What is “just right?”  That depends partially on the functions of the board.  Larger boards, composed of 15 or more members, are useful when fundraising (or donating) is one of the main functions of the board, and/or many subcommittees will be necessary for the board to fulfill all its roles.  Smaller boards can operate more informally and possibly make decisions more quickly.  A small dysfunctional board, however, can be harder pressed to be decisive than a well-run large board.

Diversity

A diverse group of people is more likely to consider various perspectives on a problem or opportunity, and more likely to come up with creative solutions.  Ethnic diversity is critical – the board of directors should look as much like the client population or the population of the surrounding area as possible.  Diversity of expertise is also important.  For example, you don’t want everyone on your free clinic’s board of directors to be a doctor.  Nurses, social workers, accountants, and lay people can all strengthen the board.  Here are some common types of knowledge and abilities you should look for from different board candidates:

• Expertise in the subject matter relevant to your nonprofit organization
• A solid financial background
• Experience in fundraising, or the ability to tap into high-dollar donors
• Knowledge of program evaluation

Finding Candidates

The executive director, other key staff, and members of the current board should get together to identify people who can strengthen the board.  To save time for more pressing board matters at regular meetings, a subcommittee responsible for board recruitment can be formed.  Of course, the entire board votes on new members, but the subcommittee can make a list of potential candidates, approach them, interview them, and present their findings to the board.

Interview for Fit

Once potential board members have been identified and approached, the next step is to interview them.  You should look for explicit assurance regarding the amount of time they are willing and able to commit, an understanding of and commitment to the mission of your organization, the ability to feel comfortable speaking up and the ability to listen to other’s opinions, and the capacity to disagree with a board decision but to support the decision and organization once the vote has been cast.

Recent grants received by our clients include:

$200,000 for a private school – for general operating funds

$25,000 for an afterschool program – for a new bus

$20,000 for an organization dedicated to improving English literacy – for their family literacy program

$20,000 for a domestic violence organization – for their emergency shelter program

$20,000 for an agency that provides micro loans to small business – for general operating funds

$15,000 for a program that provides temporary housing and support services for women recovering from substance addiction – for general operating funds

$15,000 for an organization providing services to abused and neglected children – for supplies for children who have been removed from their homes because of abuse

The topic of our next blog on Tuesday, January 10th, will be “How to Improve Your Grant Writing Skills.”

Murray Covens, Principal

murraycovens@northtexasnonprofitresources.org

North Texas Nonprofit Resources

Most donor newsletters suffer from at least one of the following flaws.  Many suffer from all seven.

Flaw #1
Your newsletter fails the “you test.”  A good donor newsletter is friendly, even intimate, in tone.  If you instead use an institutional voice, you distance yourself from your readers.

Flaw #2
Your newsletter skimps on emotional triggers.  You know that charity starts when you move a heart.  In a donor newsletter, tugging the heartstrings is a full-time job.

Flaw #3
You claim it’s a newsletter (i.e., a bearer of news), but it’s really just an excuse to say hi. Here’s a clue – You devote your front page to a ponderous letter “from the desk of” an ED or board chair.  A newsletter with no news value is a waste of time and money.  And donors are quite demanding – they want very specific kinds of news. Their interest in your organization can quickly wane if you fail to deliver.

Flaw #4
Your newsletter is not “donor-centered.”  It does not make the donor feel needed or wanted.  Donors don’t give to your organization.  They give through your organization, in an effort to change the world.  You have to give the donor credit as well as thanks.

Flaw #5
Your newsletter is not set up for rapid skimming and browsing.  On the contrary, you assume people will read long articles.  The harsh truth is that most of your audience won’t have time to give your newsletter more than a glance.  If you bury important information in long articles, most people will miss it.

Flaw #6
Your newsletter depends too much on statistics (leave those for grant proposals), and too little on anecdotes, to make your case.

And Flaw #7 – The Most Important
Your newsletter has weak or dysfunctional headlines.  Headlines have a function – to summarize the key points of the story.  Most donor newsletters fail at that task.

When people first encounter a publication, they browse, deciding what, if anything, is worth their time.  They do not dive right in.  They look at all the stuff that’s easiest to spot and read.  Pictures.  Bigger, bolder type.  Headlines and photos (or illustrations) are the most important, since they visually dominate a page.  Also important – subheads, lead paragraphs, captions, pull quotes, and bullet lists.  Not so important – the articles beneath the headlines.

Being the third or subsequent paragraph in an article is lonely.  Few people visit.  Readers don’t have the time. Or their interest remains un-aroused.

Novice writers labor for hours to get a newsletter article “word perfect.”  Then they toss off a headline in a couple of minutes.  You would be far better off if you reversed that habit.  Spend hours writing a great headline (and subhead, if appropriate).  Spend a few minutes writing the article.

Recent grants received by our clients include:

Three grants totaling $55,500 for a domestic violence organization – for general operating expenses

$25,000 for another domestic violence organization – for their emergency shelter program

$20,000 for a mental health advocacy agency – for a program that teaches youth how to avoid victimization

$20,000 for an organization that provides services to women who have been recently incarcerated – for general operating expenses

The topic of our next blog on Tuesday, December 13th, will be “How to Have an Excellent Board.”

Murray Covens, Principal

murraycovens@northtexasnonprofitresources.org

North Texas Nonprofit Resources

Cash revenue streams for nonprofit organizations include, among others:

• Individuals (this represents 75% of charitable giving in the U.S.)
• Foundation and corporate grants
• Government grants (federal, state, and local)
• Community/civic groups
• Churches
• United Way
• Fundraising events
• Fees for service (from clients)
• Government contracts
• Insurance reimbursement (for healthcare services)
• Membership fees

Just because your organization has gotten by for many years with limited revenue streams, or even a limited number of donors, does not mean it will continue forever.

Consider the example of “Happy Days Center for the Disabled,” a fictitious nonprofit organization similar to countless real nonprofit organizations.  Happy Days has been in business for 30 years and has received most of its support from a state grant.  Unfortunately, the state cut its budget in half last year, and now Happy Days must also cut its budget in half since it has no other source of revenue or fundraising.  Had the organization had the foresight to do fundraising many years ago while times were better, there might be funding from any number of possible sources, and cutting programs might not be an issue right now.

We received a phone call awhile back from an organization in Dallas with a $9 million annual budget, and $8 million of the budget had been provided annually from one very generous donor for many years.  And that donor had just given the organization one year’s notice that they were completely stopping their funding.  Not long ago there was a local newspaper story about a small nonprofit organization in Dallas that had been totally funded by one donor for several years, and that donor had just pulled their funding without advance notice.

You have to constantly be seeking new revenue streams in case other types of funding dry up.  You can’t just rest on your laurels.

An important source of potential new revenues for many organizations is the people you serve – your clients.  For a long time many nonprofit organizations proudly proclaimed that their services were provided free of charge to everyone who qualified to receive services.  But the world has changed and other revenue streams have been reduced, and everyone receiving services should pay what they can possibly afford – even as little as $1 per service if that’s all they can pay, as is done at one local nonprofit organization.  If your organization charges a fee, it should be less than a for-profit business would charge for the same or a similar service.

Rather than charge a fee, some nonprofits have “voluntary” donations, meaning you suggest that a client can help you provide services by giving a donation.  One way to do this is to post a fee schedule that provides information such as how much your service actually costs to provide, and inviting users to donate an amount of their choosing.  There is some evidence that people, even when financially challenged, like to donate something rather than just receive a “handout.”  Whether you invite donations from clients will depend greatly on the nature of your organization and the service you provide.  A soup kitchen that provides food to the homeless is not a very appropriate place to ask for donations.

Recent grants received by our clients include:

$20,000 for an agency that provides temporary housing and support services for women in recovery from alcoholism and drug addiction – for general operating expenses

$10,000 for an organization that provides health and dental services for low-income, uninsured families – for general operating expenses

$10,000 for an agency that provides mental health services – for a program for seriously mentally ill children

The topic of our next blog on Tuesday, November 29th, will be “Why People Ignore Your Newsletter.”

Murray Covens, Principal

murraycovens@northtexasnonprofitresources.org

North Texas Nonprofit Resources