Dear Nonprofiteer, What else did you learn from the Nonprofit Quarterly reader survey?

Dear Nonprofiteer:

What else did you learn from this spring’s Nonprofit Quarterly reader survey?

Signed, Eager for Insight

Dear Eager:

In the area of “Finances,” readers of the Nonprofit Quarterly placed “The organization needs to diversify revenue” at the top of their list of concerns, noting also that “The organization needs to do revenue planning, business planning [as well as] fundraising planning” and that “The organization needs more general operating funds.”

What do these three responses have in common? Well, at least the first and the third confirm what every nonprofit executive knows (but which remains news to their volunteer Boards): that relying on grant funding, which rarely includes general operating support, is unwise. That relying on government funding is unwise. That the only way to assure a steady stream of revenue is to have a functioning individual-giving program, which will be by definition diverse because it includes so many individuals.

The Nonprofiteer is a bit concerned about the “revenue planning, business planning” reply because it smacks of a fantasy that nonprofits can somehow earn their way out of the need for fundraising. The only meaningful kind of revenue planning for social-service nonprofits is fundraising planning–everything else is simply a matter of taking money from poor people as a punishment for their poverty.

And while GM and Toyota are frantically scrambling to deal with the consequences of “business planning” that didn’t anticipate an eventual increase in the price of gasoline, could we please suspend the otherwise-obligatory nod to the superior planning and market-awareness skills of the for-profit sector?

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3 Responses to “Dear Nonprofiteer, What else did you learn from the Nonprofit Quarterly reader survey?”

  1. Jeane Goforth Says:

    I haven’t had time to read your blog–our most reliable source for no-nonsense non-profit advice–for a few months. We’ve been teaching free music lessons to 500 inner city children in 7 locations, with 15 hour days hauling instruments in and out of our cars. You can’t believe how many people told us we couldn’t do this. Why not? Because we didn’t have a business plan or much of any plan. It doesn’t take a plan to teach these kids. It takes action. The result? We’ve discovered many, many talented children without the means or opportunity to pursue music and will continue to find ways to serve them. We’ve garnered respect and appreciation from the communities we served and 6 locations for the fall–some of which will pay on some level.

    We’re very new at this whole non-profit thing. As outsiders (recently called ‘renegades’ and ‘wildcats’ by some respected local experts), we don’t like a lot of the conventional wisdom. As we struggle through an expected low in funds, everyone keeps asking if we’ve applied for grants. Well, we’ve read a ton of grant applications and aren’t convinced most are worth our time or the required contortions of our organization. Individual donations look like our best option over the long run.

    We are searching for the best way to convey the power of what we are doing to donors and find ourselves up against many barriers: suburban fear of the city, city leaders leery of one more empty promise, BMW drivers claiming economic hardship when the violin we just lent out cost less than their last tank of gas. We get discouraged, but all it takes is the face of one disadvantaged child absorbed for hours in learning and making music to encourage us to persist.

    Keep telling us the truth about this non-profit industry. We’re listening.

  2. cfctreasures Says:

    The Combined Federal Campaign (CFC) is the Federal government’s workplace giving program, and it is the largest and most successful workplace giving program in the world. Through it, Federal public servants have donated more than $1.2 billion of unrestricted funds to thousands of local, national and international non-profits over the past five years.

    CFC Fundraising Benefits
    The CFC is first and foremost a vehicle for non-profit fundraising, and there are many benefits to including it as one of the tools in your non-profit’s “Development Toolbox.” These benefits include:
    ● Generates a reliable, twelve month income stream.
    ● Revenues are unrestricted.
    ● More leverage than any other means of fund-raising.
    ● Less risk than any other means of fund-raising.
    ● Has an “open admissions” program, 94% of the charities are accepted (and the 6% who are not accepted usually did not follow the application instructions).

    If you would like to learn more about how to add the CFC as one of the tools in your fundraising toolbox, please go to http://www.cfcfundraising.com and request the CFC Special Report.

    Thanks,
    Bill Huddleston, CFC Expert
    Blog: http://www.cfctreasures.wordpress.com

  3. Cause & Effect Inc. Says:

    Dear Nonprofiteer,

    I have to say that I respectfully disagree with your statement that “the only way to assure a steady stream of revenue is to have a functioning individual-giving program, which will be by definition diverse because it includes so many individuals.”

    If you look at the full cohort of nonprofit funding in the US, individual giving represents about 16% of total nonprofit revenues.

    The study by The Bridgespan group called “How Nonprofits Get Really Big” http://www.ssireview.org/images/articles/2007SP_feature_fosterfine.pdf
    questions the mythology that diversifying your revenue base is a strategy to success. In their study looking at the 144 US nonprofits founded after 1970 (out of 200,000) that got really big (achieving $50 million or more in revenues) and found that they did it by raising the bulk of their funding from a single funding source.

    In my 30 plus years of experience working in and with nonprofits, I’ve found that there is no inherently sustainable source of income (and that includes endowment revenues) and that no one type of revenue is inherently better than any other. Your revenue strategy should be strategic for your nonprofit, in alignment with your mission, and your goals for making impact in your community.

    Best, Gayle L. Gifford, ACFRE, President Cause & Effect Inc. http://www.ceffect.com

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