Trust…And Watch The Money Jar

Last week I came across another case of starvation-by-withholding. Organizational starvation, that is, with the board of trustees as the withholding body.

We see these occasionally, especially in groups that are going through very hard financial times. “How can I be sure this group is going to make it?” wonder board members in their heart of hearts – with the corollary question popping up: “How can I ask my friends to invest in this group when I might have to turn around and tell them it’s gone belly-up…only a few months after I assured them they were putting their money into a going concern?”

So there you have it, in a nutshell – board member hesitation leads to holding back on personal outreach…which leads to less income coming in…which leads to further robbing Peter to pay Paul (grabbing any available cash to pay essential bills, like payroll or the electric bill, even if the monies were part of a restricted donation)…which then leads to even greater board member reluctance given that now they’re wondering if the programs they’re fundraising for, will actually happen in the way they’re assuring potential donor prospects they will.

Groups can start at any point in this cycle, it’s not just triggered by a moment of board hesitation – but you can see how it becomes a vicious self-fulfilling prophecy.

And down we go, with acrimony.

Well now I guess you’re wondering how to short-circuit this spiral.

And the answer is – trust and watch the money jar – in other words, trust the intent, with very very close monitoring, side-by-side, of execution.

In practical terms, this means a small board-staff committee that looks at weekly spending-and-forecasting – what’s coming in, what’s a realistic judgment of what’s going to come in, and what’s gone out and is going to go out when. There’s been loads written in the past 3 years about managing through financial crisis, so I’m not going to go into that.

But the meta picture – the re-positioning so that the senior staff and the board feel they’re on the same side of the table – is the essential, “soft” part of the equation…without that, it just won’t work.

For fundraising to take place successfully, there must be confidence in the future. Trust in the staff, trust in the organizational competence to carry out the plan, and trust that the scenarios being developed are implementable.

Otherwise donors will vote with their feet for the nonprofit down the block, even if it’s not as astute and its strategies aren’t as impactful. And so too with board members – their silence when you ask them who they know who could donate in this time of greatest need, will be an eloquent testament to their lack of faith.

Addressing this crisis of confidence head-on, by creating a “case for the future” with financial and programmatic scenarios that are realistic and achievable, that match, and that contain the fierce vision and urgency of mission, is a key first step towards survival.

And most fundamentally, board and staff leadership together must buy into this case, must believe…

How Much Do You Tell?

We’re working with a nonprofit this summer whose fundraising has an edge of urgency – their cash reserve was small to non-existent at the start of the recession, and by now they’re running a little below empty.

As in – for the first time last month, they couldn’t make payroll.

While they were able to right themselves once a long-committed grant check was cut and deposited, we’re taking a two-pronged approach with them –

• cash flow, cash flow, cash flow and
• shaking the dollars out of the trees

It’s the leaf-dislodging part that I’m thinking about here.

In a case like this, how much do you tell long-time fans, even long-time donors, so there are “no surprises” – but also no alarm bells about the organization’s viability?

In other words, what’s the right balance between transparency and vision?

Between urgency and investment?

Between plugging an unpluggable hole, and giving a “good news” gift?

What’s the “spin”?

With each Cause Effective client we’ve worked on this problem with recently – and believe me, in the last couple of years we’ve become old hands at navigating this – we’ve taken the approach of creating a financial plan that shows how the nonprofit intends to survive…with a hole in the plan, of course, where you’re hoping the donor in front of you will fit in.

In other words, having the solution lined up so you can ask someone to become one of your key steps to solvency – instead of serving as a handhold standing in the way of your organization’s slide towards utter disaster.

You can then combine this financial plan with a compelling vision of programmatic impact, with the ultimate goal of winning the donor’s heart. But if their mind is telling them “this ship is going down…” – well, they’ll hesitate on the way to the bank.

Ya need to have a plan. A feasible plan. A plan the donor can believe in.

What’s the goal?

Paul Connolly’s recent Stanford Social Innovation Review article questioning the long-term net gain from fundraising capacity-building made me think about the difference (in the area of fundraising) between consulting and capacity-building.

It’s a distinction Cause Effective makes when we’re talking to a potential client or funder about our work – “We’re not the kind of fundraising consultants who come in and do your work, becoming staff in all but name.” Like consultants who come in to run your capital campaign, or specialized grantwriters – experts who comes in to take care of that function for you.

There’s a time and a place for that – just like there’s a time and place for hiring evaluation specialists to conduct longitudinal outcome studies. But their work doesn’t leave you stronger internally when they’re done – it just leaves you needing to hire for that function when you need it again.

The other kind of “capacity-building that isn’t” is the feasibility study/plan – when you hire someone to create a framework for you. That’s essential before you begin a new endeavor (like identifying and reaching new donors), but the roadmap alone doesn’t give you the skills or organizational habits needed to carry out the plan (let alone to continue those practices once the plan’s milestones have been reached).

Plans-gathering-dust-on-the-shelf is a long-noted consulting phenomenon, one that’s just as prevalent in fundraising as in strategic planning – and perhaps even more so in fundraising if the plan doesn’t take into account psychological roadblocks to implementation which are just as real as gaps in knowledge.

(In other words, activating a board to routinely cultivate donors at program events is just as important as having the right campaign materials.)

Paul’s finding that there’s relatively little long-term gain from funding fundraising capacity-building refers, I hope, to those options – and not to capacity-building that truly targets transforming organizational culture as well as executing actions.

Food as Glue

Well, no, I’m not actually suggesting that we eat glue – or that we serve it to our board members, no matter how many occasions arise in which we wish they’d just glue their mouths shut.

Because those times – when board members go on and on asking minutia-oriented questions in lands they have no business being (“Why are we paying 10 cents a copy when the place down the road from my office charges 7 cents a sheet?”)…or when they pipe in helpfully with the wrong piece of information to a local reporter (“We’ve had a really hard year – we almost closed our doors!”)…or when they feel compelled to clarify something to a potential donor (“No, all board members don’t give, because some of us are on other boards”) – those are fixable with enough attention on our part to educating board members as to our priorities and how the facts – and the total picture – fits in to those priorities.

But I am positing the power of breaking bread together. The social glue that binds when times get tough and the work gets really hard.

One of our client’s boards does a summer board meeting over dinner and drinks at a local restaurant. I’m sure the annual budget review goes down a little easier after a couple of bottles of wine…. No of course I’m not proposing a drunken “what the heck” attitude toward nonprofit finances – but I am suggesting that if board members are given a chance to enjoy each others’ company, that puts a little “social lubricant” in the bank for the hard issue-wrestling that surely lies ahead.

And don’t forget the power of spouse-wooing. Again, not literally, but hosting a picnic where spouses have a chance to get involved and reinforce their sense being “in the family” will surely come in handy when you’re asking your board members to give up yet another evening to make phone calls or plan the annual soiree, a few months down the road.

Push and pull. Modern life is like that – so let’s use the informality of the summer to build in the conviviality factor in our organizations.