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Crowdfunding Backlash: Reading Rainbow

So, did you hear LeVar Burton raised a whole bunch of money on Kickstarter last week to relaunch Reading Rainbow?

The original goal was to raise $1 million in just over a month, with donations used to expand the Reading Rainbow app Burton has already developed (he bought the rights in 2009) into a web-based destination. In less than a day, the project reached its initial goal amount. The campaign has raised more than $3.2 million and climbing.

If you’re famous and can leverage nostalgia, crowdfunding can be very lucrative, but not without some criticism. The Veronica Mars Kickstarter Campaign raised $5.7 million for a movie based on the television show, and Zach Braff built upon affinity for his first film with a $3.1 million campaign to finance his new film. Both efforts were roundly denounced in the media, with Kickstarter’s founders forced to go on record with their reasoning.

Which brings us to Reading Rainbow. Despite a tremendous outpouring of support from donors and largely positive media notices, there was this from The Washington Post’s Caitlin Dewey:

Crowdfunding is theoretically supposed to bolster charities, start-ups, independent artists, small-business owners  and other projects that actually need the financial support of the masses to succeed. It’s not supposed to be co-opted by companies with profit motives and private investors of their own…”

As someone who has dedicated his life to helping nonprofits, a part of me understands this criticism. But I’ve come to accept that the world is changing, that technology has created a way to connect people with projects they want to see happen, and they aren’t digging up 990s on Guidestar to make their decisions. More than 72,000 people have supported the Reading Rainbow project, and despite sour grapes from the traditional press, folks are wearing their support like a badge of honor on social media.

Rather than see this as a challenge to the charitable sector, I suggest nonprofits study it and look to replicate it themselves. So what are the ingredients to a really good Kickstarter campaign?

  • Name Recognition: Millions have been generated for Reading Rainbow because many remember it as children.  If your nonprofit doesn’t evoke similar nostalgia or recognition, try securing a spokesperson who does. Bringing a recognizable face to your crowdfunding project helps it get early traction and shares on social media.
  • Marketing: A common mistake is to launch a crowdfunding campaign too early, assuming the site itself will market your campaign. In reality, a crowdfunding campaign is just like any other fundraising campaign – it needs a solid marketing plan to support it. Social and traditional media coupled with person-to-person outreach lights the spark of awareness that helps get the campaign off the ground, and can give it a boost if it lags.
  • Personal Requests: The dream of every fundraiser is that their message will hit a tipping point, and the dollars will start pouring in from people who are completely new to the organization. But the reality is that a base of support is needed first, and that is most likely to come from friends of friends. Your organization’s stakeholders have to be willing to leverage their networks to get that first 10-25% of support. 
  • Rewards: Those who support a crowdfunded campaign are typically different than your annual fund donors. They are more likely to skew younger, are impulsive in their investment, and are definitely wooed by perks. LeVar Burton offered donors of $10,000 or more the opportunity to wear his famous Star Trek visor (so far no takers), but that benefit has been reported by nearly every reporter who has covered the story. What can your organization offer that might get you some ink?

In the future, we are likely to support artists, writers, directors, musicians and yes, corporations by voting with our credit cards at the R&D stage, mitigating the risk of new ventures. For now, the morality police are keeping the space clear for the little guys – don’t let this opportunity pass you by!

Cultivation: Step Two to Stronger Grant Submissions

In the second entry in the firm’s five part series on creating stronger grant submissions, Next Stage Consulting explores the do’s and don’ts of grantmaker cultivation, investigating what works and what doesn’t, and how to walk the fine line between forthright and pushy.

No Matter What, Don’t Break Her Heart

“Am I on a blind date?”

The thought occurred to me as I was handed a glass of wine by the daughter of a trustee of my organization’s largest foundation donor. Perhaps it was in the way she handed it to me, or the way her family was watching us out of the corner of their eyes, but it suddenly occurred to me that I was sweating profusely.

I had accepted the invitation to the private party with excitement – a chance to spend time at an intimate party seemed like a great opportunity for donor cultivation.  I had come to know the family fairly well and I truly enjoyed their company. This was also a chance to meet other members of the extended family, who I learned had their own donor advised funds as well. I’d arrived fashionably late only to find myself the lone non-family member . It wasn’t long until my Spidey sense began to tingle.

On the surface, it made good sense. I was single at the time, and the young lady was perfectly lovely. But rather than “just go with it,” the advice I received from my colleagues later on, I felt the weight of an ethical quandary – what if this turns into something romantic only to end sourly? Am I risking my organization’s relationship with this very important donor? Further, what if I am completely reading this the wrong way and I end up offending her?

The stress was too much to bear – I politely thanked my hosts and exited stage right at the first available moment, very likely offending everyone in the process anyway.

“I Just Sent Grant Requests to 27 Foundations”

One of the biggest misconceptions about grant development is that it is all about writing grant proposals, developing tomes of wordy material and sending it off to people you’ve never met who will pass judgment on the merits of your mission. The fact is, sending in the grant proposal or application is typically the last step in a much longer process that begins with identification and leads to cultivation. If you fill out grant applications and send them in unannounced to a laundry list of potential donors, success is very unlikely.

Unlike communication, which is typically one-way directional, cultivation is two-way directional. Sending newsletters and other material to a prospective donor is not cultivation – it’s communication. For real cultivation to take place, two or more people need to be speaking to each other either by phone, written communication via mail or e-mail, or face-to-face.

The tricky part of grantmaker cultivation is that each funder has different rules of engagement. Some do not want you to contact them at all, while others require a letter of inquiry be submitted before first voice contact.  Some will follow you on your social media and save every newsletter you send, while others throw away any correspondence that appears to be marketing in nature. Some want to be very hands on, while others prefer to be slightly aloof.

In this way, it is hard to create hard and fast rules. Still, after years of doing this work, it is clear there are some unwritten rules of the road that are universal in nature.

The Do’s and Don’ts of Grantmaker Cultivation

  • DO follow the rules on the grantmaker’s website regarding the process for communication and requests. If it states that you shouldn’t call or contact staff, be sure to follow that advice!
  • DON’T miss an opportunity to leverage a personal relationship with a stakeholder or gatekeeper, even if the public communication discourages direct contact. But before you do anything, do some digging to make sure that it won’t damage your relationship with the staff of the funder.
  • DO invite the staff and trustees of prospective grant sources to tour your facility, meet your staff and volunteers, and learn more about the impact of your organization’s mission.
  • DON’T put a grantmaker who doesn’t know you on a mailing list to receive every invitation and piece of marketing material you will produce in the next year – it is more likely to injure than help your potential relationship.
  • DO attend public seminars hosted by grantmakers to provide insight into the application process, but be sure to sit near the front of the room so when it is over you are close enough to be first in line to ask follow-up questions.
  • DON’T raise your hand and ask very technical questions that apply only to your organization in a room full of your peers – it wastes everyone’s time, and makes a poor impression on the staff of the grantmaker.
  • DO remain vigilant in your pursuit of a meeting or phone discussion, particularly with the staff of a grantmaking institution. These are often extremely busy people who need to be reminded several times, and may even acknowledge your persistence positively.
  • DON’T make a nuisance of yourself, hectoring the staff of a grantmaker where the mission isn’t a very good fit anyways. It is a fine line, and while it is important to push, tact is incredibly important.
  • DO engage gatekeepers and decision makers should you see them informally out in the world. They are people, just like you, and a friendly hello with a brief conversation to follow is acceptable.
  • DON’T stalk someone, follow them to the parking garage, or otherwise create an awkward scenario where you ask repeatedly for a determination on your recent grant submission. This may seem obvious, but I’ve heard some real horror stories.
  • DO accept invitations to meet informally with the staff and trustees of grantmakers, have a glass of wine (one glass only!) and engage in conversation about topics that have nothing to do with your organization. Relationships with grantmakers are not much different than other types of donors – they are people and they have lives. Be more than a walking grant proposal.
  • DON’T break anyone’s heart, or otherwise compromise your organization’s current or prospective relationship with a grantmaker. Your organization is likely to exist for a long time after you are no longer around, and job one is to leave it stronger than it was when you started.

At some point, I’ll share my tips for sitting shiva with the trustees of your other most important foundation grantmaker. But for now, please check out #GrantChat on Twitter at Noon EST on Tuesday April 29, when I will serve as guest for a lively discussion of this very topic of grantmaker cultivation!

Yikes! Falling Behind on Social Media…

Neglecting the organization’s social media when times get busy is one of the classic mistakes made by so many nonprofits – consistent messaging is the goal. And yet here I am, having given that advice before, now a full month behind on my own firm’s blog posts. Shame on me.

“Oh, but I have really good excuses!” Of course I do. Doesn’t everyone? My excuses are that I have been very successful of late in new business development, securing several new clients over the past month. I also went on vacation, hosted guests for a weekend, and generally have been a very busy guy about town.

At this point, the classic Price Is Right “fail sound” should chime, and I should be escorted off the stage. There are no good excuses, only determination to ensure it doesn’t happen again. I’ve blogged previously about the importance of time management as an accountability tool. I’m currently working with a client on setting up a metric-based fund development platform, and I have been reminded of the importance of public accountability.

Over the next few weeks, I look forward to writing about the following subjects:

  • April 21 – The Downside of Social Media – Have you heard about the woman in Cleveland who ran an online job board and was publicly humiliated when a nasty e-mail she wrote a job seeker went viral? I look forward to exploring the darker side of social media in a post focused on ways to ensure you don’t make front page news just because you were having a bad day.
  • April 28 – Cultivating Gatekeepers and Decision-makers – In part two of a five part series, we’ll explore the important role cultivation plays in grant seeking.  This post will be well timed, as I am pleased to serve as Guest for the April 29 #GrantChat Tweetup focused on this very topic. Hope to see you on Twitter at noon EST that day.
  • May 5 – Making BIG Topics Local – A U.N. Science Panel just published a pretty dire report on the state of global climate change, with in-depth recommendations regarding action steps that need to be taken immediately. So, how do nonprofits in your town take a pressing global need like this and make it stick?

There, I just staked myself out and created public accountability. Have a great week everybody!

Too Risk-Adverse To Fail (Nonprofit Edition)

by Josh Jacobson

“Eight out of 10 businesses fail. Are you sure you want to do this?”

Not exactly the sort of thing you want to hear when you’re contemplating launching a new business.  Now almost three months into my own new consulting venture (76 days to be exact, but who’s counting?), the knowledge that it is far more likely that Next Stage Consulting will fail than succeed is actually a tremendous motivator.  I’m a guy who likes to know my odds, long as they may be.

upsideAs a rule, no one sets out to fail, but a new book suggests that falling on your face may not be as bad as one might think. In her book, The Up Side of Down: Why Failing Well is the Key to Success, author Megan McArdle suggests that failing, and even being encouraged to fail, is a critical component of future success.  In fact, McArdle suggests that what sets America apart is an underlying tolerance for failure, with a lenient bankruptcy policy that allows for forgiveness and growth.

For everyone but the nonprofit sector, that is.  In a country that prizes entrepreneurs as champions of innovation and change that in turn drives our economy, Americans are reluctant to give the same leeway to community-serving nonprofits.

If “failure is how businesses learn,” as McArdle suggests, what does it mean that we refuse to let our social good organizations take similar risks?

A few causes of risk-aversion are below, and thankfully, the news isn’t all bad:

  • Over-Reliance on Government Support
    As noted seven years ago in a study by the Stanford Social Innovation Review, “government is by far the most important source of funding for the high-growth nonprofits in our study.” The Urban Institute reported that “in 2009, governments contracted with human service nonprofits for over $100-billion worth of contracts and grants. For organizations with government contracts and grants, government funding amounts to 65 percent of total revenue.”

While there is no doubt that government sources of support are critical to sustainability for many nonprofits, the increased accountability standards and outcome measurements expected post-Recession effectively overwhelm nonprofits, swallowing up the time and energy of leaders.  It is a system badly in needed of reform.

There are some signs that governments are thinking outside the box.  Depending on whom you ask, Social Impact Bonds may be some of the most important/exciting/unexpected tools created to inspire new ways of tackling social issues. By encouraging private investment, Social Impact Bonds create a market where one did not exist previously and keeps the focus where it should be – on rewarding positive outcomes.

  • Vilification of Overhead
    By now, I hope you’ve had a chance to watch Dan Pallotta’s game-changing TED talk about the double standard that penalizes nonprofits for how much they spend on supposedly non-mission serving expenses. The dreaded 15% overhead ratio expectation, which states that no more than 15% of a nonprofit’s budget should be spent on administrative costs, is a huge drag.  It is an expectation utterly unique in the business world – no other industry is held to such a standard, laughable in for-profit enterprise, and hardly the expectation of our own government.  And yet it is something that continually comes up in conversation with would-be donors to local nonprofit clients, as if such costs were evil and to be largely avoided.

Thankfully, there is a move afoot to refocus donors on demonstrated success over fiscal conservatism.  In an unprecedented move, the leadership of Guidestar, Charity Navigator and the Better Business Bureau released a joint statement in 2013 denouncing the overhead ratio as imprecise and inaccurate.  Further, the trio acknowledged that “organizations that build robust infrastructure—which includes sturdy information technology systems, financial systems, skills training, fundraising processes, and other essential overhead—are more likely to succeed than those that do not.”

I mean, duh, right? But the fact remains that as long as organizations feel squeezed by their donors to demonstrate extreme frugality, the likelihood of nonprofits embracing risk-taking opportunities remains low.  Accountability standards like these were meant to protect us from fraud, but have also taken all the wind out of the sails of social entrepreneurs.

  • Reluctant Volunteer Boards
    I am personally a big fan of local leaders who believe so strongly in a nonprofit’s mission that they are willing to take on a role that pays nothing and yet is likely to take up a big chunk of their time.  As a board member of the Charlotte Chapter of the Association of Fundraising Professionals, I know from experience.  Volunteer board members are mostly deserving our praise.

Note that I said mostly.  That’s because the system of serving as a board member for a nonprofit is wholly different from serving in the same role for a for-profit corporation.  Without a profit motive, nonprofit board members are identified based on their own passion and interest in the cause.  And that isn’t always so reliable.  “Let’s all remember that we already have full-time jobs,” is typically not the preface to a board member signing-up for risk-taking opportunities.

For some volunteer leaders, it is enough to simply steward the nonprofit to ensure no crises arise on their watch.  When it comes time to consider high-risk, high-reward opportunities to advance mission, some board members use a different set of priorities in assessment than the population that organization is called to serve.  Not all, but some. Thankfully, board training has never been more plentiful, and offerings like the Arts & Science Council’s Cultural Leadership Training Program are helping nonprofits secure volunteer leaders who understand their roles well.

McArdle suggests that the key failing well is to recognize mistakes early enough to allow one to channel setbacks into future success.  But if we never let our nonprofits have that same opportunity, we’re apt to see the entire system fail as organizations cling to doing things the way they’ve always done them.  

Three Questions to Consider This Week:

  1. What do you consider your biggest professional failure?  What did you learn from it?
  2. If you’re a manager, do you encourage your employees to take risks?  If so, how do you handle potential failures?
  3. What is the one thing you wish your organization or department would try that leadership has been reluctant to embrace?  How might you mitigate the negative impacts of failing?

Image credits: Featured Image (123RF – tomwang), Book (goodreads.com)

The Oscars: Storytelling Wins Every Time

by Josh Jacobson
The 86th Academy Awards are this coming Sunday, and my wife and I simply ran out of time.

Each year since the Academy of Motion Picture Arts and Sciences expanded the roster of Best Picture nominees from five to 10 in 2009, we make our best effort to see all of the nominated films before the Oscars broadcast. Since most of these films come out in the November/December time frame, it means regular trips to the movie theater each winter.

Some years we do better than others, depending on what is nominated. This year, of the nine nominated films, we saw seven, missing just two of the indies – Nebraska and Philomena – which we hope to catch as soon as they are released on-demand.

It was a tremendous year for the cinema! Some truly amazing films with incredible performances. And if you’ve kept up with this blog, you know that I tend to find allusions to nonprofit management and messaging strategy in the strangest of places, and the nominated films are no different:

  • Her (Starring: Joaquin Phoenix, Amy Adams and Scarlett Johansson)Her

This was likely my favorite nominated film (along with Gravity). It was such an inventive concept, and acted very well by the leads. Her tells the story of a man who develops affection for his female operating system. The film explores themes of loneliness and the social anxiety experienced by those in the throes of heartbreak.

Since the film is set in the future, we are treated to a unique glimpse of a digital world that may await us. For example, the lead character works at a company that composes love letters for couples. Because in the future, we outsource the writing of our love letters to someone who can do it more artfully than we would do it ourselves. And according to the film, it is a poet-customer relationship that may last for many years.

As someone who makes his livelihood from utilizing the written word to encourage action – to make someone feel something enough to make a donation or embark on a new strategy – the idea of outsourcing the creation of poetry that expresses a love between two people is an amazing concept. What a commentary on modern communication!

The world is changing – the advent of the Internet is seeing to that. Consider 5-6 years ago, when people were frightened to use their credit card on the Internet. Now? Most people have overcome that barrier. What other barriers will we break down? To experience something that moves us, which makes us feel something? For nonprofits, messaging and storytelling must go hand-in-hand. It may just be our secret weapon in a hyper-connected world in search of meaning and purpose.

  • Captain Phillips (Starring: Tom Hanks and Barkhad Abdi)Captain Phillips

Who doesn’t love a good Tom Hanks movie? He is such an everyman, equally capable with comedy and drama. And yet, with Captain Phillips, we get a nuanced performance unlike anything else he had done since Apollo 13. This is Hanks in his all-business mode, and it was truly a gripping performance.

Early in the movie, we are presented with evidence that Hanks’ character is a bit of a stickler for process and procedure, and from the looks his crew give each other, we can guess what they say about him when his back is turned. He chides crew members for not locking doors and securing outside areas, and though they roll their eyes as he requests their immediate action, it turns out to be wildly prescient. Not long into the trip, their ship is boarded by Somali pirates.

If you know the story of Captain Richard Phillips and the 2009 hijacking by Somali pirates of the US-flagged MV Maersk Alabama, then you knew Hanks’ advice to his crew was just foreshadowing. But hearing it, and seeing their reactions, I couldn’t help but feel for him. It isn’t easy being the taskmaster, to be the one who takes ownership and manages people.

This is particularly true for nonprofit managers, who may find themselves being asked to undertake a near-impossible task with too few resources, too little time, and under-trained (even unmotivated) personnel. As a consultant, I am often seated across from very well-meaning managers who need their staff members to operate independently, to “own their roles,” but find they must micro-manage to ensure quality outcomes. Folks who leave the nonprofit sector are typically just plain exhausted and pine for a better-resourced workplace.

Hanks’ character is shown wearily preparing for the trip, later ordering security precautions and practice drills. I empathized with his prioritization of process, even as it makes him less popular in the eyes of his crew because of it.

  • 12 Years a Slave (Starring: Chiwetel Ejiofor, Michael Fassbender, Lupita Nyong’o)12 Years

Not long into this heartbreaking film, I found myself near tears – a state I would stay in for nearly two hours. My heart was in my throat the entire time, not realizing how rigidly I was grasping my wife’s arm. From the minute Ejiofor’s character finds himself kidnapped until he is once again reunited with his family, I was just devastated.

To call this the best film about the subject of slavery doesn’t do enough to capture its importance – it’s true, it depicts slavery in a more shockingly realistic way than any film I’ve ever seen. But what sets 12 Years a Slave apart is how very intimate it is. We are meant to experience the film through the eyes of Ejiofor, ripped from his family and forced into a nightmarish scenario. You see what he sees, and you feel what he feels.

Nonprofits, particularly human services organizations, take notice – how do you tell your story in such a way that the audience is transported? In making the story more palatable for our audiences, do nonprofits also sanitize the case for support and miss the chance to connect emotionally? I think so, and can point at this film as a prime example of what everyday Americans are capable of experiencing, willingly, with the desire to better understand.

And the winner is? Really anyone who saw these films and the others nominated, as well as many that the Academy did not nominate. Movies can uniquely reflect our current condition as humans, holding up a mirror that allows us to learn and grow. Popcorn anyone?

Three Questions to Consider This Week:

  1. What would the movie of your nonprofit attempt to communicate? How would you position the story arc?
  2. For many nonprofits, video is a relatively new medium. How does your organization embrace video to tell your nonprofit’s compelling story?
  3. If you received an Oscar for your role in making your nonprofit a success, who would you thank in your acceptance speech?

Image Credit: Featured Image (Wikipedia), Movie Posters (itsjustmovies.com)

“They Have a Basketball Court?” – Red Ventures & How Data Can Transform Nonprofits

By Josh Jacobson

Though it has been in business since 2000, I hadn’t heard of Red Ventures until just a few years ago.  And even then, what I knew was somewhat fuzzy.

Most folks talk about the amazing headquarters located in Fort Mill, South Carolina – a striking 150,000 sq. ft. campus complete with a full-length basketball court and its own on-site restaurant, perfect for a beer on Friday company-endorsed happy hours.  People I know who have been there talk about the stunning array of flat screens everywhere you look, with real-time streaming data concerning client activity.

If that sounds a bit like the playground-style offices of tech start-ups of Silicon Valley in the 1990s, you probably aren’t far off.  It is clear Red Ventures has defined its brand and created a work culture with a great deal of intention – to attract talent, project success, and increase client acquisition.  I can only assume this, but it would certainly make sense – Red Ventures is in the business of demand generation and sales conversion.

I say I’m a bit fuzzy about what they do because it is largely a big secret.  The company doesn’t say much about the clients it serves, but the word on the street is that they are involved with many Fortune 500 companies, with a defined focus on home services, energy, media, telecomm and insurance.  If their building is the first thing people mention, their process is typically the second thing, and little is known about it either.  Their website provides a fairly high-level explanation of the typical sales funnel.  But what they do is different. Or so I’ve heard.  “They will go head-to-head with the sales department of a reluctant client prospect and beat their numbers by a multiple factor,” a colleague told me once. “They’ve got it figured out.”

So, what is “it” exactly?  And how can nonprofit organizations learn from what this company does?  While much of it remains a mystery, two differentiating factors are clearly evident:

  • People – The Right People in the Right RolesInterview
    Red Ventures is a growing company – a really growing company.  Earlier this month, they held an interview day with the intent to add 200 additional employees in 2014.  And that’s on top of its nearly 2,000 current employees.  If you go to their website, the front page is basically a giant classified ad with various positions that need to be filled yesterday.

If you’re an employee at Red Ventures, it means you made it through what is called by Business Insider one of the top-20 most difficult interview processes in corporate America.  I’ve heard it said that, despite the need for so many new employees, the company hires a staggeringly low number of the people who interview.  It seems they know what they are looking for, and don’t accept “close enough.”

From the comments on various employment seeking websites like Glassdoor.com, it appears the company is looking for characteristics and traits that don’t show up on someone’s resume.  “Tell me a joke,” a recruiter asked an applicant for a sales position, for example.  Applicants who don’t get invited back note feeling disoriented and perplexed by the experience, and angry that the interview didn’t follow a predictable format.  Perhaps that’s the whole point.

While nonprofits may not be able to offer the salary or perks afforded employees at Red Ventures (though I hear the YMCA has a great basketball court), they can certainly learn from this process.  The company wants people who can think on their feet, who have a task-oriented skill set matched with a capacity for critical thinking.  They are looking for people who will thrive in the workplace environment they have created.  Like everything about Red Ventures, it’s all very intentional.

For under-resourced nonprofits, the need to find dynamic development staff members who can get results is even more critical.  I’ve argued in the past that there are typically two types of development professionals – those who crave getting out of the office and engaging in donor interaction, and those who prefer to develop messaging strategies and computer-based awareness from within their offices.  Few are experts at both.  At Red Ventures, there are entire departments constructed of both types of people.

While they are both important needs for a nonprofit, too often they are traits (left-brain oriented and right-brain oriented) expected to be found in just one person – the Director of Development – who typically has too little time and too many distractions to do any of it effectively.  Now, I’m not saying organizations should go out and hire additional development staff – I mean, they are likely needed, but most nonprofits don’t have the budget to do that.  But what I am saying is that you should have a good idea of the type of person who will be effective given your organization’s culture, and find the right person to match your strategies – not the other way around.

  • Data – At the Heart of Every Decision & StrategySpreadsheets
    When I close my eyes and imagine meetings at Red Ventures, I picture employees with their sleeves rolled up, pouring over spreadsheets and having heated (though still professional) discussions about data analysis.  Because they are passionate and it’s how they are wired. “But what does it mean? And how can we use it?”

In truth, I’m a pretty big data wonk.  Or at least I aspire to be.  Where most people see the increasing loss of privacy as we opt-in to social media and search engine tracking, I admit that I get pretty excited. The idea that we could model preferences and behavior, and apply that understanding on a large scale?  Yea, that’s pretty game changing stuff.

Red Ventures puts it so well on their website, I won’t even try to paraphrase: “Data drives our decisions – and we build tools that give us unique, actionable insights. We scrutinize response, conversion and economics at every level to continuously boost ROI.”

Put a bit less techie, the company seeks to understand a client’s customer base and what motivates it to act, refines sales strategies through real-time analysis, and once the company is satisfied it has a sales systems that works, it models the current customer base and seeks other people with the same characteristics.  But that doesn’t happen just once – it is a system that continues to inform itself with fresh data, modifying tactics as new variables become known.

Re-reading that last paragraph, I get goosebumps.  Why can’t nonprofits do this too?  It’s a question that has led to some really interesting discussion with Chris Meade, CEO of Catapault InfoSolutions, who has thought a lot about the subject.  In fact, much of this post is informed by his ideas.

A primary challenge is simply the lack of data collected by most nonprofits.  A large percentage of donor databases in the Carolinas are tracking just one thing – financial transactions.  So if we want to understand how an individual became a donor, like who referred them initially or what the person read that motivated them to act, many donor databases don’t shed much light on the subject.

That shouldn’t be a surprise.  What nonprofit has a Chief Information Officer or prioritizes data accumulation for both programming and marketing?  Whereas Red Ventures understands the importance data holds for making decisions, nonprofits typically relegate data management to the most junior person on the development team.  That person is rarely invited to the table or present in the meeting, and so that important data goes un-captured.  A centerpiece of my Data Flow presentation is the need to elevate the process to encourage a “culture of data.”

The other big barrier for nonprofits is a financial one – though data is cheaper to purchase than ever before, it is still more expensive than most nonprofits can afford.  And because many nonprofits have a basic misunderstanding of how direct marketing leads to donor dollars, the ROI on any activity is calculated on a one-to-one basis. “We tried direct mail once, but the response rate was poor so we didn’t do it again.”

After retention (a topic for another day), donor acquisition is the most important metric any nonprofit should track.  And to dispel a popular myth, your board of directors is an important part of lead generation, but should not be your only source of prospects. Through donor modeling and message testing, segmented outreach can be very effective at motivating people who don’t know you to become educated, encouraging those who know you to give charitably and driving people who already give to give more.

Did I really just spend 1,500 words saying that successful fundraising comes down to talented people using data to inform strategies that move people to act?  Yep, I sure did.  And while that may seem a fairly obvious thing, so simple it isn’t worth spending so many words to say it, I can promise you it is a fundraising success model too few nonprofits understand or resource effectively.

Three Questions to Consider This Week:

  1. What are three traits you believe are necessary for an employee to be successful at your nonprofit?  How do you interview applicants to determine the right fit?
  2. Left-brained or right-brained – so which one are you? How do you compensate for the “other half” to ensure you cover all the bases?
  3. How does data inform your organization’s fundraising strategies?  If you could collect one additional piece of data about everyone in your database, what would it be? How would you use it?

Image Credits: Featured Image (Red Ventures Website), Interview (123RF – vgstudio), Spreadsheet (123RF – David Hilcher)

Yeah, Yeah, Yeah: The Beatles and Youth Marketing for Nonprofits

by Josh Jacobson
For real fans, February 9 is one of many dates in the history of Beatles that is etched into memory.  As you have no doubt heard at some point this past weekend, it was this day in 1964, fifty years ago, that the Beatles played the Ed Sullivan show.  The world would never be the same.

For me, it is one of several dates to celebrate (or mourn) related to my favorite band. There’s January 30, the date of the band’s final live performance in 1969 on the rooftop of the Apple building in London.  Or June 1, the date Sgt. Pepper’s Lonely Hearts Club Band was released in 1967 to an unsuspecting world audience.  And of course, December 8, the day John Lennon was murdered in 1980 outside the Dakota building on the Upper East Side of Manhattan.  That most of these events took place before I was born (I was too young to remember Lennon’s death) is besides the point – as a fan, I have committed them to memory.

StrawberryFieldsOne date that has a direct impact on my life is November 29, the evening in 2001 that George Harrison died.  I know this because it was a Thursday, and I had only just arrived at LaGuardia Airport for a vacation in NYC.  The following day, my friends and I happened upon a memorial for Harrison at Strawberry Fields, a section of Central Park devoted to celebrating Lennon, the other departed Beatle.  We spent three hours there singing and clapping along with more than 200 people as musicians played the entire catalog.  Leaving the area, exhausted and emotionally drained, I declared my love of NYC to the universe and vowed to relocate there as soon as I could.  And four months later, I did.

But back in 1964, when the Beatles arrived in America, no one knew the impact the band would have on generations of music fans, much less one very enthusiastic future consultant to nonprofits. The signs were certainly there – 300 screaming fans met the band at the airport, most of them children and teenagers who had been clued in to what was happening across the Atlantic by savvy radio DJs.  The Ed Sullivan appearance served to add gasoline to a fire that had been growing steadily for almost a year.

That night, 73 million people tuned in to hear the Beatles warble through songs that were all but drowned out by screaming fans in the studio.  It was the largest television event up to that point, constituting an incredible 45% of American households with televisions.

Looking back now, it may be easy to dismiss the achievement.  The show was certainly aided by the absence of competition, in the days when network television was the only option.  Popular music was largely homogeneous in the suburbs – it would be at least another decade before sub-genres like Rap, Alternative and Heavy Metal would fracture popular music, creating niches that informed the culture and style of devotees.

No, in 1964 the world was somewhat simpler, and reaching the lion’s share of teenagers in America was a fairly straight-forward equation.

Youth Marketing: A Missed Opportunity

teenagers“So, how is your nonprofit working to engage the youth market?”

Try asking that question of most nonprofit Executive Directors and watch the blank expressions.  This is an industry that is only just recently waking up to the opportunity of the Millennial generation, and “getting younger” largely means attracting the buy-in of people under 40 years old.

“The youth market? Are you kidding? Who has time for that?”

I’ll tell you who has time for that – any company that understands the importance of the youth’s influence on the spending of family members, and the vital role branding plays during these formative years.  Billions (and billions!) of dollars are spent annually by marketers attempting to influence the youth market, particularly the teen market.   Companies like Microsoft, Coca Cola and Toyota realize that “getting to them early” is critical to building affinity that can last a lifetime.

I find even large, established nonprofit organizations have fairly half-baked teen marketing plans, too often dependent on relationships with school districts.  Because of course, the best way to build brand affinity with teenagers is through school-based activities where participation is required (he said sarcastically).  Even the most well-known participatory organizations like the Boy Scouts tend to lose market share as children age into their teen years.

Marketing to teenagers certainly isn’t easy, but is it a potential blue ocean for nonprofits?  I think so, and consider it one of the myths of fundraising worth exposing.

Myth: Marketing to Youth Yields Poor ROI for NonprofitsBookCover

While unlikely to be a major tent pole strategy for most nonprofits (particularly small shops), a youth marketing plan should be an essential component of any development effort for a number of reasons:

  • Homogenous Population – Quick, what was your high school like?  I bet mine was fairly similar, as most are throughout the country over the past several decades.  Sure, popular culture is more fragmented than it was when the Beatles arrived in 1964, but teenage populations present a fairly clear blueprint – trends are defined by a handful of individuals within a much larger group of peers who seek to emulate their choices.

If only adult populations were so easy to understand! Identifying individuals to serve on your board of directors would be a much easier proposition without political affiliations, socio-economic disparities and career choices clouding the picture.  But not unlike your organization’s young donor society, the key to successful youth marketing is encouraging those who set trends to engage with your brand, and that isn’t going to happen without some groundwork.

  • Gatekeeper Relationships – Brand marketers target the youth for a very good reason – they drive sales.  While they may not have much disposable income themselves, youth are gatekeepers to their parents who buy their children the products they desire (or demand, depending on the teenager).

The pathway for nonprofits has been forged by participatory organizations like Girl Scouts.  Every winter, without fail, I would purchase ten boxes of Girl Scout cookies from the CFO of a past organization where I worked.  I did this because I felt it would somehow help me should I ever request a grant budget at the 11th hour.  Silly, sure, but such social pressure at work drives nonprofit revenue as effectively as any United Way workplace giving campaign.

One organization in Charlotte recently worked with, Hands On Charlotte, has seen a spike in recent years of interest in volunteerism by teenagers who must fulfill a set number of hours of community service in order the graduate.  A parent called them recently looking for opportunities that could be easily squeezed into an already busy social schedule.  She was very willing to pay a fee in order to make it possible for her teenager to accrue those hours – something around which your nonprofit might consider building a revenue strategy.

  • Lifelong Affinity –The things we love as children are likely to stay with us the rest of our lives.  Coca Cola knows that, which is why they seek to win teen preference in the lunch line of high schools across the country.  I am a Beatles fan because I stumbled on my parent’s collection of scratched-up albums when I was 12 or 13, and discovered them as if they were a secret known only to me.

At a party this past weekend at the home of a friend and colleague, I had a great conversation with a gentleman who was raised in the area.  In high school, he volunteered at the Carolina Raptor Center and developed a strong affection for their birds and the organization as a whole.  Now an adult and a banker in Charlotte, he returns with friends and relatives, and because of the lifespan of some raptors, can even visit some of the birds he helped as a teenager.  When the Center engaged that teenager as a boy, it is unlikely that donor cultivation was top of mind, but perhaps it should have been.

Engaging the youth market is a bit like establishing a planned giving strategy – another activity most nonprofits put off.  Nonprofits in need of near-term revenue are unlikely to prioritize teen engagement unless it can impact this year’s bottom line.  And so they miss opportunities to foster those relationships and find themselves forever in the hamster wheel.  But for the savvy nonprofit, it can be a differentiating strategy that has a lasting impact long after the end of the current fiscal year.

Three Questions to Consider this Week:

  1. How, if at all, do you currently engage the youth market? Are there opportunities to leverage latent connectivity to encourage deeper affinity?
  2. How can youth serve as a bridge to their 30-something and 40-something parents for your nonprofit, either as charitable donors or purchasers?  How does social media factor in to that engagement?
  3. How are the children of your staff and board encouraged to engage with your nonprofit?  Are they potential gatekeepers to their peers?

Image Credits: Featured Image (Alan Levine), Harrison Memorial (NYC Gov Parks), Teens (123RF – vlue)

What Can Bill Gates Teach Us in the Carolinas About Philanthropy?

By Josh Jacobson

The Next Stage Consulting blog is committed to covering topics related to life in the Carolinas.  So, what can a billionaire like Bill Gates teach us about what is happening in our own backyards?

First, a refresher on Bill Gates – most likely know him as the founder of Microsoft, the maker of Windows and the Office suite of software products that dominate the business landscape. But if you haven’t been paying attention, you may not know that he and his wife Melinda are the world’s leading philanthropists, having pledged to give away the vast majority of their estimated $78+ billion fortune to charity.

It is an amazing commitment, and one that has inspired more than 100 billionaires to make a similar commitment of donating more than half of their fortunes.  The Giving Pledge now counts high-profile billionaires like financier Warren Buffett, former New York City Mayor Michael Bloomberg, and recently Virgin Group-founder Richard Branson.

Since 2000, the Bill and Melinda Gates Foundation has done some extraordinary things, including the near-eradication of polio from poverty-stricken countries across the world.  In fact, much of the foundation’s work has been on the global stage, so it shouldn’t be surprising that the Gates Foundation’s recent annual report focuses on debunking three myths that block progress for the poor throughout the world.

Reading through the 2014 Gates Letter, written by Bill Gates himself, I couldn’t help but draw connections to life in the Carolinas:

MYTH #1: POOR COUNTRIES ARE DOOMED TO STAY POOR
This is a pervasive sentiment for many, that these countries are beyond saving and are systemically damaged.  The letter does a good job of demonstrating that this isn’t true.  Over the last couple generations, global poverty has changed measurably, with the disparity between rich and poor greatly narrowed.  In fact, “there is a class of nations in the middle that barely existed 50 years ago, and it includes more than half of the world’s population.”  Mr. Gates is so confident as to declare that by 2035, “there will be almost no poor countries left in the world.”

The larger point is a good one – real change takes time. It takes a commitment that benchmarks not on a 90-day, annual or even multi-year continuum, but on a decades-long one.  It also requires a right-sized measuring stick.  Goals should be set that are meaningful to the communities served, not as compared to western world assumptions about what should be possible based on personal experiences.

There is much wisdom here that can be applied to the challenges facing our own Carolina communities.  Quick fixes are not likely work. Philanthropists and giving entities are too often interested in narrowly-defined annual returns on investment, wanting to be able prove statistically that their giving has made a difference.  That in turn forces nonprofit organizations to develop evaluation criteria to ensure continued support.

As much as I feel passionately that this is wrongheaded, it is hard to beat up on what few sources of charitable support do exist.  For too many, there is likely an assumption that poverty in our own cities and towns is a given, a fact to accept rather than fight.  For leaders across the Carolinas, it may be useful to debunk this myth for their own communities – how important have public, private and nonprofit interventions been to improving life in the Carolinas?

MYTH #2: FOREIGN AID IS A BIG WASTE
The second myth debunked by Mr. Gates is tied directly to the first – if you think that change is impossible or unlikely, you are also apt to believe spending money on it is a waste of resources that could be put to a better purpose.  The existence of corruption in those countries makes it easy to dismiss efforts – “I mean, how much of foreign aid is really getting to the people it is meant to serve anyways?”

As a fundraiser for much of my professional life, I have encountered this argument time and again – “But what will my small contribution mean in the grand scheme of things?” The problem is that we tend to see things compartmentalized rather than as a big picture.

This is particular true as it relates to compensation of nonprofit employees, which garners more headlines than it deserves.  By focusing on perceived wasteful spending, it becomes easier to throw one’s hands in the air and declare it all a “big waste.” The tendency to view nonprofits and NGOs in the same negative light as “bloated government” has been a slowly developing trend that threatens to undermine the entire sector.

As Next Stage Consulting tells its clients, the key to sustainability is to demonstrate ROI.  But if we’re only measuring in annual increments, as noted in the previous section, are nonprofits actually their own worst enemies?  More should be done by nonprofits to educate stakeholders on the true cost of progress, particularly those who have the capacity to make the biggest impact.

MYTH #3: SAVING LIVES LEADS TO OVERPOPULATION
Admittedly, this myth is less directly applied to life in the Carolinas.  Most folks reading this are unlikely to fear that large scale interventions in poverty-stricken areas of the Carolinas will lead to a scarcity of resources.

But Mr. Gates makes a great case for the damage misinformation can do. This myth only exists because of scientific theories that were misheard, misinterpreted and accepted as fact. Saving lives has not led to overpopulation – in fact, the reverse has been true.  Education leads to more sustainable infrastructures and social progress.

Searching for connection to the Carolinas, the key may be the important role education plays in fighting social causes.  And not just the education of those directly impacted by poverty, but those community leaders called upon by society to do something about it.

CALL TO ACTION
So what can Bill Gates teach us in the Carolinas? Certainly more than one might think, but nothing more so than the commitment to improving the world through making a charitable commitment.  The message of the Gates Foundation is simple – we can all do more to make the world a better place.  And while his foundation’s focus may be on the global stage, consider making yours in neighborhoods across the Carolinas, where progress is indeed measurable and donations most definitely meaningful.

Photo Credit: Featured Image (Modified – Sebastian Derungs, World Economic Forum)

Prospecting: Step One to Stronger Grant Submissions

The lure of grantsmanship is the intoxicating concept that your nonprofit can secure outsized investment by simply applying for it. Too many think of it like submitting a credit card application; based solely on the merits of your organization’s mission and impact, the grantmaking source will prioritize your project and reward it with a big check with many zeroes.

The fact is, this isn’t how it works. Grantmaking sources receive hundreds, if not thousands of submissions every year. The movement toward online submission processes has made it relatively easy for 501c3 organizations to submit applications and grantmakers are deluged with requests, many of which do not match giving guidelines. The likelihood that your proposal is carefully reviewed is relatively low given the number of applications that must be processed.

So what does this mean? Should you give up on the hope for grant funding? Of course not. But it does mean that you should do your homework and focus your energy on sources that are more likely to fund you. In Next Stage Consulting’s first installment in its five-part series, I’ll talk about prospecting for grantmaking sources.

Identifying Sources
It is an oft-asked question – “isn’t there a website where one can seek grant opportunities?”

The answer is “yes and no.” There are certainly websites, but they are rarely free. Some of the best sources are The Foundation Center and FoundationSearch, both of which offer access to searchable foundation profiles for a fee. My personal favorite is FoundationSearch, which is run by Metasoft, a Canadian company that operates as a for-profit business. The Foundation Center has a very good product as well, Foundation Directory Online, but I’ve found Metasoft does a good job of staying one step ahead of the competition.

In some communities, you may find that your local library provides access to foundation software. For example, the Charlotte Mecklenburg Library provides access to The Foundation Center at its Main Library branch and six satellite branches.

These are fairly comprehensive resources, but you might find that not all corporate sources of support are profiled. Some companies may have a community relations team that provides gifts and sponsorships, but do not operate under a 501c3. Still other foundations operate under the umbrella of your local community foundation, and do not report directly to the IRS.

To identify these and other sources, search engines like Google can be the best bet. Search for queries using your mission focus, geographic region and words like “gift,” “grant,” “allocation” and “award.” You may also want to look at the websites of organization similar to yours and seek out online annual reports that might give you an idea of sources you have not yet uncovered. If you are familiar with the IRS form 990, set up a free login with Guidestar.

Types of Sources
Grantmakers are likely to fall into one of three categories:

  • Corporate Foundations/Corporate Outreach – Some companies develop a separate 501c3 foundation to operate as a channel for grant making. These are typically large companies that want to separate gift making from sponsorships, where they are likely to receive sponsor recognition in return. Most companies do not have a foundation, though they may also allocate gifts to support causes. Corporate foundations will often have a designated contact along with a board of directors. Companies without a foundation will designate a Director of Corporate Communications, External Relations, or Corporate Outreach to be the initial contact. In both cases, internal contacts at high levels of the company have the ability to introduce projects for support, and overlap with sponsorship efforts are common.
  • Process Foundations – Foundations where the founder is no longer the sole decision maker are more likely to operate with a very defined process. A gatekeeper is apt to be defined (either an Executive Director or Foundation Director), and the foundation’s board of directors are each involved in determining which organizations receive support. These foundations are attractive because they seem to be cut-and-dry regarding the application process. However, many factors contribute to whether your organization will receive support, and relationships are key to success.
  • Family Foundations – Though they are formed as 501c3 entities, soliciting family foundations is often akin to soliciting an individual – there is typically no defined process for applying for support, and the decision is made by a single or handful of individuals who are related. Relationships are the single most important factor to receiving support, either through direct interaction with foundation directors or gatekeepers connected to decision makers.

Determining Likelihood of Support
Like most forms of fundraising, successful grant seeking typically boils down to three motivations:

  • Mission-Suitability – This seems obvious, but grant makers usually tell you what they want to support. This information can be found online, but you might have to look of the foundation’s Form 990 to figure out where they tend to allocate funding. However, not all missions are created equal. Knowing that a foundation supports education programming is useful, but it is also important to figure out whether there is a preference for direct service or systemic change, or if there is a geographic focus to grantmaking. Even when an organization’s mission is very appropriate, the foundation may already be supporting an organization with a similar profile, and may choose not to duplicate support.
  • New/Latent Relationships – As indicated throughout this post, relationships are singularly important – an organization must understand the importance outreach plays in securing grant support. These may be relationship that already exist, as in a board member who is friendly with a member of the foundation’s staff or board. Or is may be a relationship that does not yet exist, and requires intentional outreach by your organization’s leadership to establish connection. The first stop is typically a program officer or lead contact – it is perfectly acceptable to seek a meeting to discuss programming. Board members may also be successful at connecting with other decision-makers, particularly important in influencing corporate giving.
  • Self Interest – It may be not be obvious, but self interest is a very important factor. For family foundations, recognition opportunities play prominently, particularly in capital asks. In corporate giving, while it may not be considered pure sponsorship, the recognition plan for a charitable gift should be described in detail.

What Next?
In the next installment, Josh will review the process of cultivating gatekeepers and decision makers. To make sure you don’t miss it, subscribe to the blog!