How to Make Your Nonprofit 'Investable'

Hi, welcome back everybody. It's another episode of the nonprofit show. Our guest today, Carol Wick, thinks that we can make ourselves become more attractive to philanthropic investors and doing by doing uh some work and some heavy lifting. And she's going to share with us how we can become a smart investment. And that means maybe saying goodbye to fundraising. Carol, that's a great concept, isn't it? >> It is. It is. It's worked for me for 40 years in the nonprofit sector. >> Well, we have a lot to learn from you and we're really excited to have you here. As I mentioned, Carol Wick is the president of Charity and we're going to really dig into For some, it's going to be a new concept and we're very, very excited about that. We have amazing support day in and day out from our presenting sponsors and they include Bloomerang, American Nonprofit Academy, Staffing Boutique, Your Part-Time Controller, Third Sector Company, JMT Consulting, and Intuit QuickBooks. I'm Julia Campbell, CEO of the American Nonprofit Academy, and I am just delighted to welcome Carol Wick. Um Carol, talk to us about Charity. It's first of all, great, great branded name. >> Thank you. Yeah, it's a combination of share and charity. We started Charity 10 years ago and we've worked in 37 different countries across the globe with everything from government entities to the the UN uh and nonprofits, helping them achieve sustainable revenue streams and be able to achieve their missions. And our sweet spot is really helping organizations scale. So, that is our focus and we I think we have a fairly unique way of doing that that is so effective that our clients on average see a 200% increase in revenue within 24 months when they follow our model. >> Amazing. I I love that um you're doing this work and you've tested it across the globe in different cultures and different um ecosystems, if you will. And to me, that is what's so magical about your concept here because you've tested it and it seems to be working and it's not just like I hear a lot of times people say, "Well, that doesn't work in the South or that doesn't work in the East or that doesn't work in Asia" or whatever. And uh so this is going to be really a fun fun conversation. And we are just delighted to to have you with us. Let's talk about one of your first tenants and I'm I think some people might be shocked by this, but it's really the concept that problems with nonprofits and untraditional fundraising is because they have a poor infrastructure. Wow, what does that mean and what would that look like? >> Yeah, and you know, it's interesting because I think a lot of nonprofits separate out fundraising as this separate little department over here that goes out and raises money and it's a part of uh from operations or administration even. And they don't understand that if you don't have a really strong operating system that focuses on integrating what you're doing on a day-to-day basis, the outcomes that you're producing, and how you're driving revenue, organizations stumble. And that, you know, really when we started doing the the research and the and the work around this, we found out that about 75% of nonprofits do not have a strategic plan. They're really just doing day-to-day. And when you don't have a plan guiding your work, how is somebody supposed to really understand and be passionate about your work um enough to that they're going to make those transformational size gifts, the ones that that help keep you sustainable. >> Right. I I know this isn't really what we're going to be talking about today, but I got to back the bus up and say, why do you think that people don't have strategic plans? Is it just too cumbersome? They don't understand how to do it? There's been too much change? All of the above? Because Carol, that's a a frightening [clears throat] number. >> It it really is and I think the the number one reason is that many nonprofits, they're started when someone has pretty faced a personal challenge or someone they care about has faced a challenge and they just start doing the work. And it evolves and it grows, but they don't necessarily take the time to work on the business. They're so busy working in the business and it they might pull together, you know, have a one-day board retreat, pull together a plan, but it's not really an operating plan. It's not a business plan that's driving the day-to-day operations and that they're using every day. And so it sits on a shelf and that doesn't do any good. They might pull it out once a year for a review, but really um I think it's just really a matter of people are very busy and overwhelmed with providing services that they don't really think about how important it is to know where you're headed and how you're going to get there and have that plan in writing and not just in somebody's head. >> Right. And you know, that can be frightening for some organizations cuz that makes you really stop and think about things and it takes you out of the ego, I think, in some ways. Um but wow, I really am shocked by your number. I'm not surprised, um, but I'm shocked. And so, let's talk about the reality of not having that plan. Because when we think about modern philanthropic investors, I kind of believe they want some more information. They you know, they want a business plan. What do you think? >> Well, we're seeing a real shift in the way that donors are investing and choosing organizations that they invest in. And this is coming, I think, for two reasons. One, when we had the pandemic and the traditional fundraisers shut down, we had to start engaging with our donors in a different way. >> Yeah. >> The second reason is the generational wealth transfer. So, newer, uh, philanthropists, the younger generation that's now handling the literally trillions of dollars in wealth that's being transferred, really view philanthropy and donating in a very different way. So, the traditional methods that we've taught fundraisers for, you know, decades, aren't working anymore. And they are very transactional, they're very seasonal, and they're based on, you know, either an annual fund or a major gift. But, donors these days don't see it that way. They're looking for five distinct things. Um, they're really wanting to know, what are you going to do? How are you going to prove that what you're doing works? >> Yeah. >> How much is it going to cost? Do you have a team to pull it off? And finally, who else is on in on board? Well, how are you going to make this thing sustainable? And so, I think we've always, um, you know, when I started out in fundraising years ago, we were taught about how to do your pitch and how to do your elevator speech. And, >> Right. >> you know, uh, really talking to donors and making their heart sing. Well, that's part of it. You can't ever lose that piece of it, but now they're much more savvy and they're they're acting like business investors and they expect that of the nonprofits. And so those that can answer those questions are much more successful than those that are still surviving day-to-day and trying to pull on the heartstrings. >> Man, I am so glad that you brought this up because you are just saying so many things that um I've really been feeling and sensing in in the marketplace. And and sadly, I've not been hearing enough people repeat this or to to to notice the same things that I'm noticing. And I agree with you, Carol, that if we lose sight of this next generation of uh philanthropists, there going to be nonprofits that are just decimated and they won't know why, right? They'll be like, "What happened? We've we've always been doing it this way." And um so I love that you've clued us into this because I think it's really really powerful stuff. Let's talk about this five factors framework that you and his have come up with. What does this look like and and why should we be thinking about this? >> So these are the five elements that donors don't necessarily tell you that they're looking for, but this is what their financial advisors are telling them to look for. And if you look at Rockefeller Philanthropic Advisors, which is where MacKenzie Scott started out, um and then you review like what Pivot is doing, these are the five elements that they look for to feel confident. And I will tell you, boards look for this, too. So whenever we hear that boards are not invested in an organization or they're not opening doors, it's because you don't have these five elements in place. So again, it's, you know, do you have a business plan? Does it tell where you're going and is it something that's functional and it you're driving your business forward with this business plan? Do you know how much it's going to cost? Which means that you have to have a multi-year budget. You can't just budget in June for your July end because donors want to know if you say that, you know, over the next 3 years we're going to do the following, they want to know exactly how much that's going to cost. And if you haven't thought through that and thought through things like salary increases and operational expenses that moving forward, then you're not running a smart business. Um the next thing that they want to know is, you know, do you have the right team? And that is your your board and that is your um your staff. Um They want to know that you also are producing outcomes. And I think for me personally, this this is the most ethical responsibility that nonprofits have. For years and years we've reported outcomes. And I always tell people that outcomes are things that you can count on your fingers. It's the bed nights or the pounds of food you you've provided or the number of counseling hours. Um but what donors these days want is they want to know what happened because you provided those counseling hours. What happened because you provided those pounds of food. They do not want to just know that you were busy, which is what outputs tell them. And then finally, again, they're wanting to know what your what your revenue strategy is, especially in this day and age when we no longer have the ability to be dependent on government funding. We have to be able to show that we've got earned revenue strategy, program operations, fees that are coming in, uh and I'm and a diverse revenue mix that will lead to sustainability long term. >> Yeah. You know, I find that this is absolutely fascinating and I've got to ask you about the fear factor of this because for a lot of organizations, no matter their size, these things are going to be these out these five pieces, they they might not like what they find if they have to report it out. And I'm wondering how we do that. Like do we acknowledge to the donors, yeah, this is a problem and we we don't know how to solve it or we haven't I mean, where's the nuance in that? >> Well, and that you know, I I have a a former client that um had to come to a realization that we're providing a service and it's actually hurting kids and we're losing money at it. And so they decided, even though they had been at they were 100 years old, that they were going to make a shift. And I think that that's really the challenge. That is the the the scary part. But I know a lot of organizations that provide services and don't really know whether or not those services are helping or hurting. They just do it because they always have provided that service. And it is a scary thing. It's also a scary thing to start to drill down into understanding the cost of doing business. You know, what is the gap between the grant that we've written for this service and what it's really costing us to provide this service and are we losing money? Especially if you're getting again government funding for you know, Medicare or Medicaid, it's probably not covering 100% of the service. So, are you willing to provide that service? What is that gap? How do you need to make that up? Um you know, we talk about nonprofits aren't businesses, but they are. They are businesses, you know, our one of our favorite sayings is nonprofit is a tax status, not a goal. >> Right. >> We really have to start really drilling down into the financials and into the outcomes so that we know that we're providing a cost-effective service that truly makes a difference or otherwise it's it's just you know, we we shouldn't be in business. >> Right. So, Carol, this is like an off-the-wall question, but I and I loved your comments. I think they're really spot on, but I'm wondering why the nonprofit sector doesn't seem to have embraced or understand this, but yet we have this whole other super powerful and emerging philanthropic investor who does get it or who that's what they're thinking. Why are we so far apart, do you think, in in in where this lands? >> I think that traditionally funders have accepted outputs. >> Mhm. >> Especially government funders have accepted outputs and now that government funding is no longer stable, they're you know, we're starting to ask about outcomes and that's part of it. So, it's just been historically what has been accepted as a and we've called it an outcome even though it's not. We've called it out you know, impact, but it's not. >> Mhm. >> I think the other thing is that um measurement evaluation is an expense that a lot of organizations don't have the internal institutional knowledge to do nor do they have the time to do it. And um I'm I'm I'm an odd duck in that I'm a bit of a researcher and I published a lot of research. We do a lot of economic impact analysis on work that nonprofits are doing. And it's not cheap, but it is so critically expensive important and when when you go to a donor and you start having a conversation about your outcomes, you will see their eyes light up. I mean, it is transformational. And the higher the gift amount is that you're trying to get to, the more critical outcomes become. And we can quit fooling ourselves that outputs mean anything other than you're busy. >> I love it. I think you're right. And I think it's um it's a very interesting time because it when I look across, you know, our nation and I see people being organizations being successful, they've leaned into this they're early adopters basically of understanding this issue. Um I don't know what you see, but it seems to me like there's a pretty substantial gap in between those organizations that get it and they're understanding how to, you know, report back versus people that are like, we're going to just tug at the heartstrings. Is that just me or do you see that as well? >> No, I I there's there is really a divergence in the type of organizations that we're seeing become successful and and those that are still they're falling further and further behind. And you know, I like to to say that there's there's two types of donors. There's present focused donors and there's future focused donors. Present focused donors is who probably the vast majority of nonprofits appeal to. And that's people who are wanting to meet an urgent current need. It's a one-and-done. I'm going to get you that backpack. I'm going to, you know, make buy whatever it is that you need and then I'm I'm done. But those are small gifts and that's a lot of times what fuels that that annual fund, which I don't even like to talk about an annual fund anymore. Um the other donors, the future focused donors, are the ones that are saying, "Where are you going? Is it something that I care about? What is the societal change that you will make if I walk this journey with you?" And those donors are going to make investments. They're the ones are going to be your multi-year givers. And if we're not talking to both of those donors, we're really missing an opportunity. If we're just dividing them by the amount of money that they can give and saying these are major donors and these are annual fund donors by amount, we are we're really communicating wrong because there are so many people who might be present focused donors that could become an investor. But if we aren't offering them that opportunity based on how we're communicating and the information that we're providing them, then we'll never know. Um and some of these younger donors are coming in at at you know, the first gift is an investment size gift. >> Yeah. >> They're not giving the traditional test gift and then moving in. >> Right. Right. It's I think it's also interesting too, Carol, because your your comments are I think spot-on that I I keep coming back to, you know, the nonprofit if they don't understand why they should be operating this way. It goes back to your very first your very first comment with us on the nonprofit show is that, you know, this is basically an underpinning of operations and that if you don't understand this, um no matter how good your ask is or your pool of donors, um ultimately it's not sustainable. And it's a very interesting way to be looking at all this. Um we don't have a lot of time left, but I want to lean in to this notion that dovetails to all of our conversation today about planning without financial planning and how that often times seems to be two different things. I have sat on many a board that comes up with a a board retreat mandate to do the strategic planning with no with none of the staff involved, right? Like like none of the staff is there and none of the money people are there, right? And so talk to us like what you're seeing and how we should be thinking about this. >> Well, I'm going to say two things about strategic planning. You know, if you're just doing it in a room with your board, you've really missed the boat because a strategic planning process should be your cultivation process for your next comprehensive campaign. You should be going out and if you serve people who are unhoused, you should be going out on the street and interviewing them and saying, "What is it that we could be providing you?" >> Right. >> And then you should be having those meetings with either prospective donors or current donors and asking them what they think about what you're planning on doing. So really making it a very participatory process, but um the other part of this is if you don't lean into how much it's going to cost to execute on that plan and build out that three-year budget, a three-year org chart, and a three-year budget, then what's the point? It's just a bunch of words on a page. Once we know how much it's going to cost and we actually have a free download you can get off of our site with a um a nonprofit um multi-year budget spreadsheet. But once you get that three-year budget in place, you can add all three of those together and then all of a sudden you have a comprehensive campaign goal. Now you're going out and you're having those conversations with donors both in the present the present-focused and future-focused and you're raising money for that strategic plan. So everything is geared around where the organization is headed, how much it's going to cost, making sure that you're building in things like staff livable wages, um increases in benefits, or that one thing that no one ever funds is depreciation. I know I've been guilty of that many times. But making sure you're do you're thinking all of those things and those numbers sometimes scare boards. Um when you start bringing those numbers together, um but that also then sets us back and allows us to step back and say not only you know, can we do this much work in this period of time, but can we afford to do this much work in this period of time? So it really sets realistic expectations that we're not burning out staff or getting ourselves into some sort of financial trouble as we start to drive toward the future. And that's part of again, sustainability. That's part of your infrastructure. >> Right. Well, and I think, you know, it's otherwise you're just like working to to feed the checkbook, right? I mean, it's it it's a it's a horrible way to uh run a business. And I think you also in the case of uh your donors relationships, you think about solutions or programs according to what you think you can fundraise. Like, you know, I think we can run this great after-school program because Mrs. Smith loves this idea and we can probably get, you know, 1.2 million dollars a year from her. And it just seems like it's um you know, a bad way to go. >> And that chasing those dollars and and not staying again true to your outcomes. >> Yeah. >> You know, what is the change in the world that we are trying to produce? And that's where every strategic plan should start. Is the why your organization exists. How you're going to solve that problem is the second question you answer. And I think there's a lot of organizations that haven't answered their why. They just have been doing what so long. And they know how much that costs to do, you know, the actual operations, that they haven't really stepped back and saying, "If we're trying to solve this problem, are we really solving it? Are the programs moving the needle in that direction? Um, you know, and and um does this make sense?" And again, that's a scary question for a lot of people who don't want to stop doing the work, but >> Yeah. >> I think we owe it to the people that we're asking to trust us that we're going to help do what we say we're going to do. >> Right. >> Well, it evolves uh ego, passion, compassion, all these different things that make us so uh unique in the nonprofit sector, but yet at the end of the day, it's our Achilles' heel. >> Yeah. >> It's really interesting. Yeah, it's really an interesting thing. Well, I have really enjoyed uh this conversation, Carol. It's it's been fascinating to learn from you and um get your perspective. You said so many things that link beautifully together. Um and I think it's a really important time to be rethinking how we move forward, especially with so much change going on. And also, let's be blunt, an aging leadership workforce where now is the time when when we have this fascinating influx of young donors, and yet we have an age an umbrella of an aging C-suite um that you know, I could this is not meeting up. So, um talk to us about your new book before we let you go. I really want to know more about that. >> Yeah, I um I just published my my new my first book in May. It's called Nonprofit Inc, uh Scaling with Purpose. And it is a guidebook, uh literally on how to build all of those five elements. It's filled with charts and quizzes and uh, forms and everything you need to build the five factors inside of your organization. Um, it's available on Amazon or on with Routledge Press. And actually, I think Routledge right now is is selling it for 30% off. So, you can get a quick discount, but um, it's meant to be really a a guidebook for you and a resource to be able to build these elements in-house. And a lot of the concepts that I talked about are are in the book. And um, yeah, happy to uh, chat with anybody who's interested, but it's a lot of my 40 years of knowledge and 3 years of hard work have gone into this. >> I love it. Well, we we are very very fortunate that you would come on the nonprofit show and and talk to us about it and share, um, you know, with our audience about this process. I think it's an exciting time. I know that a lot of the things that we've talked about are frightening and and disruptive, if you will, but I think that this is when we have these tumults, you know, this is the time when we really can become stronger and more sustainable and um, it's exciting to look forward. And you made a really interesting comment in the early part of the show about how often we just keep doing things because that's the way we've always done them. And uh, time to shake things up and and look at a new way. Um, especially as you come to us at this point in the year, and we talked about this, um, there are a lot of decisions that are being made now moving forward to the end of the year, right? And so, starting that that that uh, planning and understanding how to look towards a different future in the new year, which is right around the corner. >> [laughter] >> As frightening as that is, I think it's a really valuable conversation. Been really really interesting to uh, talk with our guest today, Carol Wick. She's the president of Sharity. You can go to sharityglobal.com and learn about Sharity's work. Learn more about Carol's new book and and get it a different viewpoint that I think you'll find dare I say, if you can set your ego and maybe your fear aside, you'll be like, "Yeah, this is this is a good way to go." Not easy, but super effective, don't you think? >> Yeah, it is. And and you know, as I mentioned, it takes time and it takes a lot of work. It's not something that's just a simple take a class and implement it. No, it really does take several months worth of work, but what we've seen is those clients who have implemented and put these factors in play have just taken off and it's just it's become my my life's passion is helping nonprofits scale. >> Yeah, good for you. Well, we need more people like you in our sector and helping us to understand what's going on. This is a time of tremendous change. That's been one of the threads throughout our conversation today and and so again, you know, my personal belief is opportunity is found during chaos and and these times of change, but it's like you said, it's not easy and you got to you got to, you know, human up as they say and look in the mirror and and make some tough choices, but really a lot of fun having this conversation with you. Thank you so much, Carol. >> Thank you so much. It was really a pleasure to be here today. >> It's been lovely. Hey, you know, we get to have these amazing conversations like we've had with Carol Wick today of Sharity because we have amazing partners and what's really important is that and I don't say this often enough, but these folks don't exert any editorial control on who and how we talk about the nonprofit sector, which is pretty powerful. And our partners include Bloomerang, American Nonprofit Academy, Staffing Boutique, Your Part-Time Controller, Third Sector Company, JMT Consulting, and Intuit QuickBooks. These are the folks that join us day in and day out. As we leave everybody today with with the nonprofit show, we want to leave with this message. And it means something different to me, Carol, after talking to you today. But, the the message goes like this, to stay well so you can do well. We'll see you at >> [music]