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The New Thinking in Non-Profit Revenue

Most small to mid-sized non-profits have important, high-potential programs and wonderful people, but the vast majority are in moderate to severe financial distress. The reason for this is clear: the tools and strategies they use haven’t changed in decades. They long ago lost their effectiveness.

Is your organization starving financially? If you look to ideas like development, strategic planning, capital campaignsauctionsappeal letters and the like, your odds of getting off your bread-and-water diet are very low. These tools date from the 1970s. And they never were that great to begin with.

And don’t look to conferences and professional orgs in the space for transformational ideas. Even the fundraising “experts” are recycling the same old stuff.

The data proves it’s all just not working.

How many stories do you hear of non-profits that are growing in leaps and bounds, year over year, using these tools?

But things are starting to change. There’s positively disruptive thinking out there. A new mindset and a very specific set of practices that, together, are rebooting non-profit revenue practices – and transforming entire organizations into scalable high-performers. Together they are creating 10 percent, 20 percent, 50 percent – and even 10 percent growth rates, year after year.

These practices aren’t specific to the non-profit sector. The concepts are actually quite common among all high-performing organizations, no matter what their mission, purpose or sector.

And that’s the key. For far too long, the non-profit sector has insulated itself from the best performance and growth thinking. But when non-profits start looking outside their space, a whole new world of opportunity – packed with the latest tools and strategies for performance and growth – opens up.

Here are some specifics. These are all battle-proven ideas that the most innovative, highest-performing non-profits are using.

  1. Change the model. Discard fundraising and development all together. We prefer Investments and Partnerships. People give small gifts – but make much larger investments. If you have a business plan (not a strategic plan) and the ability to show your performance and the return on the money people give, you will find that people are ready to give you much larger investments.

This is a huge paradigm shift by itself. It requires transparency, robust measurement, and accountability that the very best 501C3s practice every day.

2. Ignore overhead. If you consider fundraising staff “overhead” or even measure that number at all, you’ve already lost. In the best orgs, there is no such thing as overhead – all your people should be essential to delivering your programs and services. Invest heavily in the right people, and make sure there are plenty in marketing, communication and revenue to meet even ambitious goals.

3. Hire fundraisers on talent, not experience.Proven fundraising pros are quickly scooped up by the hospitals and universities – the 800-pound gorillas of the non-profit sector. The most successful types can make even more money in the private sector.

If smaller orgs hire on experience, they are stuck with the leftovers. So there’s a lot of recycling going on. (The average tenure of a typical development staffer – 18 months.) We prefer to start with charismatic people with great energy, communication and relationship skills, and then we give them intensive training and ongoing guidance. We’ve found people for 30-40k a year that quickly became million-dollar rainmakers for their orgs.

4. Build Relationships With Investors. Launch a continuous process of identifying, engaging, soliciting and reporting to increasing numbers of investors in every non-profit capital market: individuals, foundations, corporations, government agencies. And launch aggressive earned income efforts, from licensing campaigns to fee-for-service. Here’s where real expertise is essential. Not many can play the whole keyboard. So find some folks that have actually done it before, in multiple domains. We know a few

5. Reward results generously. Allnon-profit staff should be paid highly competitive salaries. Martyrdom is not a wise retention strategy. This is especially true of your rainmakers. Those great people we hire at low salaries? Because they raise a ton of money, they get big raises. Fast. And they stay on staff, happy drivers of the transformation we need. Got an org culture that only gives COLA? Adios amigos. Figure out how to raise the large investments, and then drive a good chunk of that revenue back into your people.

6. Measure what’s important.At the head of the list is the #1 driver of revenue performance: the number of face-to-face meetings with current and prospective investors. Our successful clients measure it every two weeks with focus, discipline, and enthusiasm. Read “The 4 Disciplines of Execution” for a great primer on the subject.

7. Create team play. The Board and the ED have specific roles and activity requirements. All strategies and results are shared with staff with perfect transparency. Investments & Partnership people suffocate in a silo.

8. Don’t try to raise money. Yes, this is correct. If you try to raise money, you will likely tank. If you try to become the highest performing, most effective organization in the world, people will come flocking to support you. Focus on performance, not money – and then, when you do put in place an effective investment and partnership operation, it can take you to the moon. And from there, you can save the world.

These are a few of the headlines. Again, the best mindset is shared by the highest performing organizations out there, whatever their tax status. To paraphrase Elon Musk: “There aren’t really any businesses. There are just groups of people trying to get things done.”

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