Which of the following most closely matches the content of your board’s income discussions?
a. Let’s have a garage sale.
b. Let’s get a grant.
c. Let’s find wealthy people so staff can ask them to donate.
d. Let’s engage people so they want to join this effort.
Schemes, approaches, and techniques such as these are both good news and bad news. What’s the good news? Your board wants to ensure the nonprofit has adequate financial resources. The bad? Unless the board consistently focuses on “d,” their tools aren’t sharp enough to achieve the goal. What’s worse? They might be unaware that their advice might be hurting the effort.
You can wring your hands and complain. Or you can acknowledge this common predicament and embrace it as an opportunity. As Kathy Kingston writes in A Higher Bid: How to Transform Special Event Fundraising with Strategic Auctions, “Board members are eager to help the nonprofit they support but most of them don’t feel comfortable raising money…. they often feel totally unequipped, and skeptical about their ability to do this.” What if you looked at unhelpful advice as a disguised request for help?
New board members begin by suggesting garage sales. Over time, with preparation, support, and education, this is the best move to partnering to build strategic relationships. Getting them and keeping them in the strategic relationships mode requires your leadership. Along the way, you need to think, plan, and gently (and sometimes not so gently) move them to your mutually desired destination. That is, making sure the organization has sustainable income.
How can you create this kind of magic on your board? First, recognize your power. You don’t have to accept what you have. Second, appreciate that you do know a lot about obtaining income. Third, decide that income education belongs on every board’s agenda. Fourth, acknowledge that growing income heroes is developmental. That is, anticipate that individual members will go through stages, sometimes getting it, occasionally forgetting, before they habitually choose strategic relationship building.
As boards grow, they go through these four stages:
- I heard it on the grapevine.
- Let’s do what they did.
- Good with most income streams, confused about individual donations.
- Long-term relationship focused.
Read further to understand these stages and how to help your board grow.
The “I Heard It on the Grapevine” Board
When your board members advise you to do what they’ve done as kids and what they see about town, they’re in the “I heard it on the grapevine” stage. Their income suggestions point to short-term transaction solutions. In essence, they want to sell something and use the profit to sustain the organization.
We should not be surprised by these suggestions. People learn about nonprofit income from what they experience and see. Your rummage-sale-car-wash-candy-bar-advising board members glance around and see these activities.
What’s invisible from the outside of these transactions is that they won’t provide long-term sustainability. They fund projects. They often have nothing to do with the nonprofit’s mission. They have to repeat them frequently. Over time the returns shrink. When you develop a new, wildly successful idea, expect everyone from the Little League to the PTA to copy it. Transactions require large outlays of energy. They offer minimal residual benefits, like ongoing friendships. Some detract from your efforts. “I helped already,” announces your potential donor, tossing your annual appeal letter in the trash. “After all, I drove across town to their car wash.”
What does this board need? To understand the seven nonprofit income streams. Board members need to understand the steps to take to tap these streams. They will also benefit from learning about how successful nonprofits that serve mission similar to yours obtain income.
The “Let’s Do What They Did” Board
This board understands that car washes, raffles, and garage sales will not fly them first class to sustainable income. By focusing on nonprofits board members admire and read about, they’ve at least arrived on the right street. They understand more about nonprofit income streams. However, the complexity of choices leaves them unsure about where to focus efforts.
How did they get here? You provided them with information that led them away from transitional sales to the seven nonprofit income streams. They’ve begun to tune into successful nonprofits’ media announcements. They hear public broadcasting stations’ announcements about foundation support. They read articles publicizing special events. They notice that a corporation gives money to a nonprofit if they buy a certain kind of yogurt. This is good. Foundation grant, special events, and corporate gifts provide nonprofits with opportunities to create income.
Unfortunately, these streams have the shortest runways. Most nonprofits, if they are not already maximizing these funds, are pretty close to it. Let’s face it. Big picture, for most nonprofits: corporate gifts, foundation grants, and special event revenue won’t provide adequate ongoing resources to move the sustainability needle. These streams don’t keep the needle stuck in the highly renewable income zone.
What does this board need? To understand the relative sizes of the seven income streams. Board members need to figure out ways to use highly publicized streams as tools to support sustainable income. Encourage special-event focused boards to see a clear picture of the costs of special events. Include staff and volunteer time. Help them to see that special events brilliance comes from using them as tools to develop individual donors. Show them how grants can be used for one-time expenses that propel the organization toward sustainability, such as supporting growth of mission revenue. Stimulate their thinking about how each corporate gift can be honed to provide money now and build new relationships for more money tomorrow. And, board members need to know that their organization’s most likely source of sustainability will come from one or all three of these streams:
- mission earned revenue
- individual donations
- government funds
The “Good with Most Income, Confused by Individual Donations” Board
This board is wise. You gave board members a good understanding of income streams and the relative importance of each. Their organization grows income in six of the seven income streams.
But when it comes to individual donations, they’re confused. They understand that donations result from asking individuals for money. They grasp that people with means are the mostly likely source. What they can’t quite imagine is exactly how these gifts materialize. Even if they’ve experienced this major gift process themselves, they may still not perceive what’s necessary. Why? Good development, aka moves management, appears seamless to donors.
These board members are on the right street. They’re at a good house. They correctly identified individual donations as a desirable income stream with a long runway.
What do these board members need? To better understand philanthropy. Their source, which they might not see, is at hand. It’s you. As a nonprofit leader, you know how to garner individual donations and volunteer support. While there’s still much to learn, you understand that you don’t “get” donors. You help donors decide how to achieve their goals in ways that mesh with the organization’s goals. This soft skill with soft edges is unlike the hard-sell skills many board members know from business successes. Boards often have expertise in one-time transactions, trading favors, and peer pressure. Loyal donors —the kind that give ongoing donations year-after-year —don’t give because of pressure. How can you tell if you have a loyal donor or a pressured donor? The later stops giving when the pressure stops.
Encourage these board members to remember their giving experiences. Help them apply the lessons from these events to others. Ask them to imagine what’s going on inside potential donors’ heads. Share stories from donors. Invite them to listen to donor testimonials. Ask them to help you find ways to help donors experience the same mixture of emotion and logic.
Most importantly, help your board members understand that while they know a lot, so do you. One of the unique hallmarks of nonprofit leadership is helping people to give of their own resources, including money and talent. Your board needs to learn of your wisdom here. By taking your counsel, you can both work together to motivate donors to give generously. Your willingness to lead stems from your confidence.
The “Long-term-relationship-focused” Board
This is the board of every nonprofit leader’s dreams. Board members work with staff to identify potential income streams. Once identified, they partner to find the best ways to reach people. Everyone works to create decades-long trusting relationships based on the donor’s best interest, not tricks, coercion, or one-time wins. Learning continues as long as you both work together. Your board becomes your income heroes.
The challenge with this board, of course, is keeping board members in this sweet spot. Most of the time, even Superman hung out as Clark Kent. Under stress, i.e., a difficult budget year or a donor that seems fickle, people begin to look longingly at quick money and harp on what the community “should” do for the organization. To prepare for the inevitable ups and downs, continue to educate your board on the tried and true value of strategic relationships.
What do these board members need? To be affirmed and to trust the process. While keeping their eye on the short-term, they need to keep working on the big picture.
Helping your board members to become income heroes begins with education, continues with education, and revolves around education —both for you and your board members. Part of this education will be for you to recognize how much you already know about income development. The good news is that your board members want to help. The great news? You can help them be income heroes.