The Center for Nonprofit Leadership has developed a series of seven tips that you can use in a variety of ways: as a focus for a board discussion, a topic for a staff or board committee meeting or an article in your newsletter. Please note that if you reprint any of the tips, you must include the appropriate acknowledgment and email us for permission at firstname.lastname@example.org.
The tips topics include:
Tip No. 1
Often misunderstood, endowments are always fodder for a good story. The Chronicle of Philanthropy (August 4-5, 2005) included a special insert that focused on endowments and the Grassroots Fundraising Journal (July/August 2005) featured a lead story on “The Value of a Nest Egg: Starting an Endowment.”
People usually associate endowments with big, well-established nonprofits. And while it’s true that universities and hospitals typically have endowments, smaller organizations should consider endowments as part of a financial strategy.
An endowment is an organization’s savings account. But unlike a rainy day account or reserve, an endowment is a permanent savings account where only a small percentage, usually 5 percent, is used for an organization’s annual needs. When financial times are good, an endowment increases; when times are bad, the principal decreases. Typically, however, organizations still only tap up to 5 percent a year.
Creating an endowment is a board decision. The board needs to agree on the permanence of the organization. That might sound strange, but some organizations may, if they are successful, cease to exist. (Examples include environmental groups, advocacy organizations and even some educational groups.) The board must also decide what the endowment income will be used for and what the ideal size for the endowment should be.
An organization considering an endowment should already have in place a strong individual donor program with an active stewardship program for those donors. Fundraising from your individual donors should be growing, both in the amount raised and in the number of donors.
Endowments are not expensive or hard to start. They can give an organization long-term stability and provide new sources of revenue. But endowments can also bring criticism; some still have the archaic notion that nonprofits should operate on a shoestring.
There is one caveat to starting an endowment fund: Endowment money is some of the hardest money to raise. But if you have decided that your organization is ready for an endowment campaign, forge ahead.
Tip No. 2
Many boards think of strategic planning as medicine. They know it’s good for them but they don’t want to take it. The process is laden with negative images of long, tedious meetings where discussions over a single word can go on for hours.
Does strategic planning have to be this way? Absolutely not!
While the process will inevitably include challenging moments, tough decisions and lengthy discussions, the strategic planning process can be the most creative, energizing and thoughtful experience for a board and result in a fundamental tool that will guide an organization to a successful future.
So how does a board go about beginning a strategic planning process? Here are 10 tips:
Create a strategic planning process that works for your organization. Hire a consultant full time or use a facilitator at key stages. Do it on your own with some support from a capacity-building resource. Take nine months or finish it all in 10 weeks.
But do it…and use it.
Remember, though, that the process is as important as the plan.
With a successful strategic planning process that includes board, staff and stakeholders, your organization will flourish.
Tip No. 3
The work of the board gets done in committees. Today the trend is to have fewer standing committees and to create committees as needed. Each committee should have an end in sight with specific tasks outlined in a timetable to reach that end.
To ensure that your board committees are working effectively, keep the following recommendations in mind:
Tip No. 4
A recent study by Philanthropy Journal found that almost two in three nonprofits say that recruiting and keeping donors is their greatest challenge. A challenge? Yes. But insurmountable? No.
When your organization invests time in maintaining a relationship with donors beyond the ask and the thank-you, your organization has invested wisely. Organizations should consider a policy to communicate with supporters periodically…and NOT ask for money! Some experts believe that it is important to touch base with your supporters six times a year. That number might not work for your organization. No problem. Start smaller.
Many large organizations have a donor relations person who does just this. And many executive directors do this instinctively. But for those of us who don’t fall into either of those categories and who want a specific way to keep that donor contact, here’s a method.
Create a donor outreach plan that spells out what to do, how and when to do it and who should do it. This formalized approach has distinct advantages: It eliminates any unintentional slip-ups, it elevates the importance of the outreach and it puts in place a procedure that the organization can rely on no matter who is in charge.
Research indicates that there is a 1-3 ratio between the cost of keeping a donor and the cost of converting a non-donor. So for every $1.00 that you spend on getting a repeat gift from a former contributor, it costs $3.00 to acquire a first-time contributor. And that doesn’t take into account the cost of time.
It makes good sense to do everything possible to retain existing contributors. But what can you do, write or say to donors beyond the: we would greatly appreciate your support mantra? Plenty. Use the collective imagination of the executive director, staff and board and develop a plan.
Here’s a systematic, three-tiered approach that you might consider:
So who manages all this nurturing? This job would be ideal for those board members who hate to ask for money. It is important work that can lead to more money for the organization. This task could also be led by the fundraising committee or even the marketing committee.
With an intentional approach to reach out to donors and to keep them engaged, the organization shows both gratitude and pride in the organization and its accomplishments.
Tip No. 5
A mission statement and a vision statement are distinctly different. And a nonprofit organization needs both.
A mission statement describes what an organization does right now. In two to three sentences, the mission describes the essence of an organization and its purpose.
A vision statement articulates the future of an organization. This statement should be a rich, meaningful, detailed description of what an organization hopes to become.
The two statements differ:
For example, a food bank’s mission might be to feed the hungry on Long Island. Its vision, however, could then be to end hunger on Long Island.
A mission statement helps in the day-to-day life of an organization. It guides decisions, upcoming programs and short-term goals. It is the yellow brick road.
A vision statement is Oz. This statement motivates the organization, the board and the staff while keeping the nonprofit from getting into ruts and stagnating. As a description of where the organization wants to be in the future, the vision statement is a liberating force that allows the mission to adapt.
Remember: the yellow brick road is sometimes straight but frequently has twists and turns. But you need to stay on it to get to Oz.
Tip No. 6
A useful and important tool for nonprofit organizations is the board handbook. New board members should receive a handbook on their first “official” day of service.
One format for a board handbook is a three-ring binder. This format allows for an organization’s growth and change. If your board members are technologically comfortable, you may want to create a zip file with individual documents. Prepare something that works for your board.
Here is a typical list of items to consider including in your board manual:
Tip No. 7
When Merrill Lynch ordered 50,000 of its employees to attend a re-education camp on email training a few years ago, communication flags went up all over the country. Fortune described the perils of email (the corporate equivalent of DNA evidence) in a feature story (February 3, 2003). And we have all heard about the recent travails of email as evidence.
The nonprofit may not have as much to worry about as the corporate world when it comes to email, but the potential for serious problems still exists, perhaps not at the lawsuit level, but certainly at the communication level.
Here’s a quick guide to help ensure effective emails:
A final caveat: Make sure your reader wants those jokes before you send them!