Sometimes you come across an old article that still has great relevance and value.
I want to share the main messages from 'Creating High Impact Non-Profits' published in the Stamford Innovation Review in 2007 because they resonate strongly with what funders increasingly want to see from the non-profit community in Australia.
The article reports on a study that identified the six practices that underpin extraordinary impact within the non-profit community, and six myths that don't actually have anything to do with a non-profit's impact at all. The six practices are these:
1. Serve and Advocate (or, Advocate and Serve)
The article explains that, "High-impact organizations may start out providing great programs, but they eventually realize that they cannot achieve large-scale social change through service delivery alone. So they add policy advocacy to acquire government resources and to change legislation. Other nonprofits start out by doing advocacy and later add grassroots programs to supercharge their strategy.
Ultimately, all high-impact organizations bridge the divide between service and advocacy. They become good at both. And the more they serve and advocate, the more they achieve impact. A nonprofit’s grassroots work helps inform its policy advocacy, making legislation more relevant. And advocacy at the national level can help a nonprofit replicate its model, gain credibility, and acquire funding for expansion".
I emphasise the difference between 'charity' (the relief of suffering) and 'philanthropy' (a focus on addressing root causes), in my What Funders Want Masterclass. Funders increasingly want to see non-profits (or alliances of non-profits working together) serving community needs and advocating for the policy and legal changes that are needed to address the issues and problems that generate the community needs in the first place.
2. Make Markets Work
The article then gives examples of high-impact nonprofits that have learned that tapping into the power of self-interest and the laws of economics can be far more effective than appealing to pure altruism. As the author explains, "No longer content to rely on traditional notions of charity, or to see business as an enemy, these nonprofits find ways to work with markets and help companies “do good while doing well.” They influence business practices, build corporate partnerships, and develop earnedincome ventures to achieve social change on a grander scale".
A point that I make to many of the non-profits that I am working with is that social enterprise needs to be considered as part of the funding mix because traditional philanthropic funders want to see how the non-profit is going to sustain itself long into the future beyond that individual's gift. Building alliances with businesses to deliver services and provide scale and/or forming new social ventures are some of the activities that impress sophisticated funders.
3. Inspire Evangelists
"High-impact nonprofits build strong communities of supporters who help them achieve their larger goals. They value volunteers, donors, and advisers not only for their time, money, and guidance, but also for their evangelism. To inspire supporters’ commitment, these nonprofits create emotional experiences that help connect supporters to the group’s mission and core values. These experiences convert outsiders to evangelists, who in turn recruit others in viral marketing at its finest. High-impact nonprofits then nurture and sustain these communities of supporters over time, recognizing that they are not just means, but ends in themselves."
One particular Australian non profit leader that I have worked with comes to mind here. He built and grew a whole organisation around inspiring volunteers and actively encouraging evangelism. He was quite rare in his foresight. He offered interesting 'core work' to volunteers and built a powerful national network of motivated foot soldiers. The impact on the visibility of the organisation was staggering and it experienced phenomenal growth as a result.
4. Nurture Nonprofit Networks
"Although most nonprofits pay lip service to collaboration, many of them really see other groups as competition for scarce resources. But high impact organizations help their peers succeed, building networks of nonprofit allies and devoting remarkable time and energy to advancing their fields. They freely share wealth, expertise, talent, and power with other nonprofits not because they are saints, but because it’s in their self-interest to do so."
While funders know that collaboration amongst non-profits can be challenging to pull off, it is deeply appealing to them because of the opportunities for shared resources and enhanced impact. I once received multiple funding proposals from different non-profits for essentially the same project. I was staggered that non of the leaders, who knew each other well, had gotten together to plan a collaborative approach. My feedback to them all was this: "Here is some investment to go away and and develop a collaborative strategy and proposal that plays to all your strengths."
5. Master the Art of Adaptation
"High-impact nonprofits are exceptionally adaptive, modifying their tactics as needed to increase their success. They have responded to changing circumstances with one innovation after another. Along the way, they’ve made mistakes and have even produced some flops. But unlike many nonprofits, they have also mastered the ability to listen, learn, and modify their approach on the basis of external cues. Adaptability has allowed them to sustain their impact."
This point is important for funders and non-profits. Good strategy and delivering outcomes go hand in hand, and funders increasing want to interrogate your strategic assessments and conclusions. However, a good strategy can quickly become a terrible one if it does not evolve with the changing environment, especially when policy change outcomes are sought.
6. Share Leadership
"The leaders of [the 12 organizations studied] all exhibit charisma, but they don’t have oversized egos. They know that they must share power in order to be stronger forces for good. They distribute leadership within their organizations and throughout their external nonprofit networks, empowering others to lead. Leaders of high-impact nonprofits cultivate a strong second-in-command, build enduring executive teams with long tenure, and develop large and powerful boards."
I am on the board of a non-profit that is deploying this 'shared leadership' approach and I can see the value of it first hand. This organisation has built a strong leadership group and it now has two powerful and visible leaders supporting an excellent team to deliver astonishing outcomes. Power sharing is used as a tactic to deliver outcomes. The organisation often gives away great ideas and policy outcome 'wins' to other individuals and groups in order to advance their longer term agenda.
If you are leading an organisation that has implemented these practices, or if your non-profit is on a journey to transform itself in this direction, do get in touch. I am building a database of Australian Higher Impact Non-Profits.
"Non-profits now compete as social enterprises in a dynamic marketplace that rewards measurable social impact", David Knowles, Managing Director, JBWere Philanthropic Services
I recently discovered a JBWere paper on the Emerging Themes in Non-Profit Leadership in Australia. I have summarised the key messages which echo some of what I run through in my What Funders Want Masterclass.
David explains that Australia is in the midst of a paradigm shift in the non-profit sector and what was fixed in terms of the roles of the different players (non-profits, funders, government, business) is now fluid. This paradigm shift relates to the way in which the concept of the 'social enterprise' is reshaping how the players think and operate within the traditional non-profit sector. What is underpinning this move is an ever increasing desire for, and focus on, social impact.
Drawing on my experience as a funder advisor, I endorse David's observations. When funders assess non-profits they are increasingly asking a number of stratgic questions about the causes in which non-profits operate, their purpose and internal capacity, and most importantly, their impact. I have summarised David's points about these issues below:
'Social enterprise' is the new mentality
- "Funders and supporters have high expectations and favour organisations that can present a strong business case for support". Funders and supporters also increasingly expect non-profits to operate in a business-like manner (disciplined, sustainable, commercial, professional, enterprising), although David explains that funders aren't yet ready to accept that a business like approach requires business like investment.
- Non-profits are concerned that movements towards social enterprise models may take them away from their true purpose. David's point, and I agree, is that they need not be worried. There is a big difference between method and mission. Methods need to evolve and if a non-profit's mission is the right one for its cause, this need not change.
Measuring impact is the name of the game
David states that "it is no longer enough to rely on the importance of your cause when seeking support" and I concur. Articulating a clear mission is as critical as it has always been. What has changed is that funders equally expect evidence of a non-profit's effectiveness. "Being able to clearly articulate what your organisation does and how well it is doing it is a vital step in securing funding".
"Smart non-profits are seeing impact measurement as a chance to not only prove themselves worthy of funding; they are using the information to attract talented employees, volunteers and board members".
The diagram to the right nicely summarises what's needed of non profit leaders to attract support of all kinds, although obviously each circle contains a great deal of strategic thinking by a non-profit's leadership team.
The best regulator is a self-regulator
Whilst I strongly believe that the non-profit sector needs a regulator, such as the Australian Charities and Non-profit Commission (ACNC), I also believe that non-profits should not wait until they are regulated to demonstrate their accountability and good governance.
As David argues, "if you do the right thing and can demonstrate it, you create a competitive advantage". "The best non-profits are making regulating and governing themselves not just a core principal, but an effective way to secure the trust and confidence of current supporters."
The non-profit funding game has changed forever...
David suggests that the non-profit sector should embrace the change by:
- Adopting a performance-based social enterprise mentality, without compromising their mission or values;
- Measuring what they do, to prove the impact they have, and to improve what they do;
- Elevating governance to the strategic level, to make best practice a core strength and a source of competitive advantage.
In my role as a funder advisor, I am most excited when I come across organisations that are undertaking these vital steps. They make the process of giving easier and more rewarding. My clients can clearly see the difference they are making and this matters so much to them. Do your donors understand your impact?
In my What Funders Want Masterclass, I explain what funders want from non-profits when they are deciding whether to make a gift and after they have made their investment. In short, funders want to understand your thinking about how your organisation will achieve its mission and how your will know you have been successful. Creating/reviewing and sharing your strategic plan and using tools such as Theory of Change to express your journey to your mission and social impact, and to measure your progress, are critical activities. Join my newsletter list and I will stay in touch with the dates of my next What Funders Want Masterclass in a city near you.
Read the JBWere paper here: Non Profit Leadership Emerging Themes 2014
Image credit: Harold de Smet, Flickr Creative Commons
The field of philanthropy is more strategic and focused on impact than it has ever been with donors increasingly demanding clear strategies for change and evidence of impact from grantees. At the same time, non-profits of all sizes and types are failing to demonstrate their impact - the very thing that donors want above all else.
The field of philanthropy (or major gift giving) is changing. Donors are becoming more strategic, interconnected and they are becoming experts in philanthropy for the greatest impact.
‘Strategic ‘and ‘high impact’ philanthropy is results and impact oriented. It involves (1) setting clear, measurable goals, (2) developing sound, evidence-based strategies for achieving them, (3) measuring progress along the way to achieving them, and (4) determining whether interventions are actually successful in reaching their goals.
#NextGenDonors is a 2012 study into the next generation generation of philanthropic leaders in the US. With unprecedented wealth, these donors hold the future of philanthropy in their hands.
This is their stand out message: “its all about impact, first and foremost”. #NextGenDonors want impact they can see, and they want to know that their own involvement has or will contribute to that impact. This focus translates into 5 common components of philanthropic strategy:
- Donors are increasingly conducting due diligence before deciding who to support
- They set their own philanthropic goals and ideal solutions first and then they search for potential recipients who fit their agendas
- They preference efforts to address root causes and attempt systemic solutions
- They want information about an organisation's proven effectiveness or measurable impact before deciding whether to support it
- They give and receive recommendations about who to fund
A trend in Australia is the growing interconnectedness of philanthropic communities and this is linked to the growth in ‘strategic’ and ‘high impact’ philanthropy.
In every sector where there are multiple major donors gifting, there is a high chance they will be connected. Facilitated by a growing number of issue based philanthropy networks, donors are coming together locally, nationally and internationally to share their experiences and compare the results of their funding. They are also sharing their knowledge, pooling their resources and creating top level change strategies in the areas where they have common interests.
All of this means that major donors are increasingly subject experts in their fields of giving and in the mechanics of how to make change happen. This has major implications for those seeking funding.
As part of their due diligence, donors want to understand the overall impact that grantees want to have on the world and the specific changes they are seeking to bring about to achieve this overall impact. They then want see evidence that their activities are the right ones to bring about the changes they are seeking, and they want to see performance measures and impact reports.
The problem is, charities and non-profits aren’t giving funders what they want
In 2010, New Philanthropy Capital analyzed the annual reports of all the major charities in the UK. They found that while charities are great at taking about their vision and their activities, they are failing to talk in enough detail about the problems and needs they are seeking to address, the performance of their activities and their actual outcomes and impacts.
This means that charities and non-profits are struggling to communicate what’s most important to funders. This study didn’t explore the annual reports of Australian charities, but I have examined a significant number and I endorse this conclusion.
Are you involved with fundraising for major gifts?
Could it be that your organization isn’t giving major donors all that they want?
I have a solution.
My What Funders Want Masterclass will help you attract and retain major donors. I provide rare insights from the perspective of a donor advisor who has worked with funders in most sectors.