What's Your Non-Profit's Bottom Line?

From Guest Blogger Nick Cooney. Nick is the author of "Change Of Heart: What Psychology Can Teach Us About Spreading Social Change" (www.ChangeOfHeartBook.com), and the founder and director of The Humane League, an animal advocacy organization based in Philadelphia, PA.

Is your non-profit succeeding in its mission? How can you tell?

Large for–profit corporations spend millions of dollars each year gathering data to compare the success of different approaches in advertising, audience targeting and product offerings. The success (or failure) of each is measured by the impact it has on the company's bottom line. Imagine what would happen to businesses if, instead of using a bottom line to analyze their success, they used the type of information commonly cited by non-profits:  anecdotal evidence, raw output and how much they cared.

Dear Pepsi Shareholders,    

This has been a very successful year for us indeed! We know Pepsi is the best cola out there, and we are 100% committed to getting the whole world to realize it too! Our achievements this year included a $50,000 awareness-raising advertising campaign on buses, billboards, and in magazines. These eye-opening ads highlighted our higher sugar content (yum!), attractive bottle design, and our Pepsi Generation credibility. We also launched "PepsiKids2.0," an online social forum where youth can get together and let each other know why they're committed to drinking Pepsi. Enclosed is a picture of Bobby Withers, an 8 year-old boy that had been drinking Coca-Cola his whole life. Now, he and his mom are buying a 12 pack of Pepsi each week! With your support, Pepsi is helping to create the world we all wish to see: a world where everyone drinks Pepsi.

As laughable as such a letter would sound coming from a large corporation, for many non-profits this type of analysis represents the farthest they’ve gone in measuring their impact. And it's not just small non-profits that have failed to take a bottom-line approach to their work. A study of one hundred and fifty-five major foundations (each with over one hundred million dollars in assets) found that only eight percent could describe the specific types of information or data that led them to believe they were likely to achieve some of their goals. The study, conducted by the Center for Effective Philanthropy, found that instead of hard data most foundations used anecdotal evidence to demonstrate the effectiveness of their programs. Only thirty-nine percent used any tools or indicators whatsoever in assessing even a portion of their work, with even less (twenty-six percent) using indicators or tools to assess all of their work.

Anecdotes and reports of our non-profit's raw output can’t give us clear insight into how much good we've done. Even worse, they provide no guidance on how to be more successful in the future.  Setting a bottom line enables us to quantify the amount of good we’re doing now and compare it to the amount of good we could be doing by using other methods, messages, or strategies. Without a bottom line (and gathering data to see the impacts our different decisions have on that bottom line), we'll be relying on assumptions and guesswork when assessing our accomplishments and deciding what to do next.

What exactly is the bottom line for non-profit organizations? Generally speaking, it is the amount of good that we have created in the world. Our bottom line should be the number of people (or animals, or portions of the environment) whose lives we've impacted.

A sound bottom line for a family planning organization would be the number of unwanted pregnancies they had prevented that year. "This year our non-profit reduced the teen pregnancy rate at Northeast High School by 10%." A follow-up question would be, "Which one of our programs contributed the most to that drop: distributing free condoms; in-class presentations about the importance of contraception; or hanging posters around the school encouraging students to make all sex safe sex.

A sound bottom line for an environmental organization would be the amount of harm they've prevented from happening to the environment. "This year our non-profit prevented 100 tons of greenhouse gas emissions; how can we increase that amount next year?" Follow up questions would be "Which of our programs contributed most to those greenhouse gas emissions: encouraging the public to carpool to work, or encouraging home owners to reduce their electric use? And how much money did we spend per ton of greenhouse gas emissions savings with each of those two programs?"

The Jameel Poverty Action Lab at the Massachusetts Institute of Technology has applied a bottom-line focus to analyzing poverty-reduction and public health efforts around the world. Founded by M.I.T. economist Esther Duflo, J-PAL’s mission is to conduct randomized trials of aid projects to see which are successful and which aren’t. Much like clinical drug testing, J-PAL researchers create both a test group for a particular project and a control group and then analyze what impact the project had. 

For example, in trying to prevent the spread of malaria is it more effective to give away bed nets (which protect people from malaria-carrying mosquitoes) or to sell them at a low price under the assumption that a person is more likely to use a net if they had to purchase it themselves? To find out researchers divided a segment of Kenya’s population into two groups, giving away free nets to the first group and selling the nets at low cost to the second group. Researchers then tracked how many of the nets were put to use and how they impacted the spread of malaria in each of the two groups. The result:  free nets did more to combat the spread of malaria than low-cost nets, at least in Kenya.

J-PAL’s scientific analysis on the effectiveness of different aid programs should serve as a model for advocacy organizations. Any non-profit serious about creating change should be collecting data on how effective their programs are (and whether they’re effective at all), and basing all decisions around their bottom line. Heartwarming anecdotes and emotional appeals are perfect when soliciting donations, but a by-the-numbers analysis is what's needed to make sure we're putting those donations to good use.

For more on the role that research can play in helping non-profits succeed, visit www.ChangeOfHeartBook.com.

The Importance of a Good Success Story

From Guest Blogger Christina Delzingaro. Christina has over 20 years of success as an entrepreneurial non-profit executive. A graduate of Randolph-Macon Woman’s College and of Averett University, Christina has her undergraduate degree in developmental economics and a Masters of Business Administration. After many years as Executive Director for a regional non-profit, Christina created Sage Strategies, a management consulting firm (www.SageStrategies.org). The firm specializes in strategic planning, board development, financial management, program planning and evaluation and grants management. As Principal, Christina takes the lead in Sage Strategies’ projects for small to mid-sized non-profits.

An old non-profit. Slogging along. Doing good work for children. But doing it the same way for the past 30 years. Operating from a perspective of poverty, tragedy and crisis. The loss of major funding brought them to a real place of poverty and crisis. The Board had a decision to make -- close the doors, or do things differently. They chose change.

The first step was to hire an Executive Director with the ability to make the programming changes necessary to address the needs of children and families -- the changes funders and long-frustrated community partners had been asking for. The goals were to improve outcomes for children, increase funding and increase community awareness. They asked me to help.

In order to become relevant, the organization had to change its context: its reason for being, its image, its story. They needed to move from being problem-focused to solution-focused. Mostly, they needed to stop being such a downer -- the pity party had to end. Everyone wants to be part of success 0 we're drawn to what is positive. We had to create a success story. Here's a quick look at six months of strategic, happy, thinking:

The old mission statement:
"We recruit, train and support volunteer host home families to shelter abused, neglected and at-risk children and youth."

The old mission statement describes what the organization does day today - recruiting and training volunteers to act as host families. But to what purpose?

The new vision/mission statement:
"We envision a Commonwealth in which all children and youth have the opportunity to experience the lifelong benefits of a safe, nurturing family. Children and youth deserve families in which they:

• are safe from harm,
• feel valued and worthy of love,
• are free to heal and grow,
• can learn to love and to trust others, and
• have the opportunity to build lasting relationships with adults.

Our mission is to improve the lives of at-risk children and youth, by providing a network of volunteer host families."

Wordy, and still a work in progress, but it shifts the focus from the tools used to do the work to the organization's core purpose. From process to outcome. And from problem to solution.

The old outcome measures:

• # families recruited
• # families certified and active
• # speaking engagements
• # newspaper articles
• # brochures distributed
• % placements made within 24 hours

Under the old mission, the organization's measures of success were focused on the size of its volunteer corps, not on how services created change for children. And so staff spent time in a flurry of activities (and a lot of counting). They also collected stories of children served as a way to measure impact. The stories told of abused children being taken in the middle of the night to stay for a few days with loving host home families. But few of the stories had endings. Because of the way programming was provided, the organization only had access to the children during the 1 to 21 days of their stay with the host family.

The new outcome measures:

Volunteer Families' Vision for Children & Youth	Indicators
... are safe from harm	- No reports of abuse or neglect - Parenting Stress Index
... feel valued and worthy of love	- Rosenberg Self-Esteem Scale
... are free to heal and grow	- Casey Life Skills - Service Plan Goals
... can learn to love and trust to others	- Multidimensional Scale of Perceived Social Support
... and have the opportunity to build lasting relationships with adults	- Family Reunification

The new mission and changes to the program design provided a basis for more meaningful measures of program impact. One of the most significant changes in the programming was to provide more respite services, in order to reach children and families before abuse or neglect occurred. The second change was to extend the program to include on-going case management and family reunification services.

Now staff spend time assessing the strengths and needs of children and families, linking them to host families who are best situated to provide the specific supports needed, and measuring the changes services are making over time. With this information, we will be able to create a story arc that leads to family reunification and stability. A happy ending.

The old name: Volunteer Emergency Families for Children
The new name: Volunteer Families

Working with a great branding firm, Birch Studio, we quickly saw that the easiest way to remove the sense of crisis from the organization was to remove the word "Emergency" from the name.

The old logo:
The new logo:

The creative team at Birch Studio chose to spotlight the relationship between a child and caretaker. This focus on individual relationships side-steps the issue of visually defining a family while tying into the tagline, "Give your heart to a child." The sketchy quality of the logo has an informal and approachable feel. The open circle shape is a complete arrangement that feels inclusive but not stifling.  The adult's arms partially encircle the child's, signifying protection and security. The adult shares their heart with a child; the heart is open showing the possibility of new relationships.

The old Case Statement:
"Each year, thousands of children are abused, neglected or at-risk of abuse or neglect. We provide the safe haven children need to protect them from further damage inflicted by living in an existing or potentially hostile environment. Once a child is placed in the safety and security of a host family home, they may begin their journey toward a future free from brutality."
 
The new story:
"When crisis strikes, many of us rely on relatives, church or friends for support. But for some parents, there isn't a safety net. And for others, the safety net is extremely fragile, with parents often depending upon elderly grandparents or distant relatives to care for their children.

"Volunteer Families is here to help. Our statewide network of volunteer host homes expands the community safety net. Volunteer Families gives parents the time they need to address the issues that created the family instability, and provides a safe and nurturing temporary home for their children.

"For biological and adoptive families, we are a safe alternative to child welfare custody, significantly reducing the number of children entering the child welfare system. Volunteer Families can provide an overwhelmed and resource limited parent with a safe, temporary home for their children, without threat of losing custody. For foster parents, respite services can reduce family stress and increase the stability of placement for foster children."

The new story is one of success. It includes the elements that Douglas Gould & Company and The Topos Partnership identified in a recent study as being critical to telling stories in ways that "generate interest, excitement and a sense that progress is possible."

Volunteer Families is only three months into its new identity. There is still a lot of work to do. We don't know what the final result of the changes will be. But the sense of excitement and progress is felt throughout the organization. New partners have come to the table. New services are being provided. A funding partner recently cited Volunteer Families as a model for strategic change. The grant that was lost was restored -- at three times the previous level. The story is not over.

Trash Your Management Style

As regular readers of this blog probably know, I do a lot of Interim Executive Director jobs. Basically, an organization that is in a transition period between chief executives brings a consultant, such as myself, in as a temporary leader to help them through tough period, be it a merger, or a financial crisis, or just a pause to strategize between EDs.

Recently I was having a meeting with the board leadership of an organization that is considering hiring an Interim ED, and one of the questions they asked me was, "What is your management style?"

That's a typical and harmless enough interview question, but I always wonder how other people answer it. Do the micro-managers actually admit to enjoying looking over the shoulders of their staff as they work? Do the hands-off people really sit there and say, "I just trust that staff is performing"? I've seen many "experts" give the advice that you should answer this question to match the company's style (if they're command and control, you be too).

But my answer is usually more zen-like: my style is to have no style. Or, rather, the manner in which I prefer to manage is a far distant runner-up to the manner in which the employee needs to be managed.

For an example, let's take two of the senior managers who reported to me in my last interim assignment. Both highly intelligent and extremely capable, creative, and motivated. But very different people with very different needs.

One was new to her position and was still very fresh out of college. While she was full of great ideas and eager to implement them, she was also uncertain in some situations and in need of a mentor. She felt best knowing that we had a set weekly meeting where she could go over her plan for the week and get any input she needed. Of course, if she had questions in between, she'd also be welcome to pop into my office and go over any pending issues, and I'd also casually check in with her as we went about our week.

On the other end of the spectrum was the manager who'd been in her job for about a decade. Still loving her job and always excited about new ways to improve services, but very comfortable in how to go about it. For her, having a regular meeting scheduled (yet another meeting!) with no set agenda other than "what are you up to this week?" would be an unpleasant distraction. As long as she know she could come to me with questions or issues as they came up, that was enough.

Of course, some people prefer to be left alone, but really need supervision... but I'll save those stories for another posting. The idea is that the best "management style" is to be able to put your own preferences aside and find the best approach for any individual employee and situation.

At least, that's been my experience. How about you?

Simple Answer: Boredom and Burnout

I was just checking Twitter, and saw a question from @GailPerrync: "In general, only 1 in 10 donors keep on giving indefinitely. Why?"

Well, I'm sure Gail has her own well-researched reasons why, but the answer that popped right into my head was, "Boredom & burnout; not being shown how their $$ led to progress."

Think of it, year after year, you've been giving a particular nonprofit. And, year after year, their appeal letters have been pretty much the same. The children are still hungry, the water is still filthy, and they're still asking you for another $50. When does it get better?

It's been said a thousand times before, by many more famous nonprofit consultants than myself, but donors prefer to invest in success than to be guilted into giving, yet again.

Do the appeals your organization is sending out make these mistakes? Or are you first explaining what progress you made since your last ask, the results that money led to, and what exactly you'll be doing with the next donation? Did you remember to thank the donor, and let them know how instrumental they are in your continued success?

Or did you just tell them how awful everything has gotten, and expect them to still be paying attention?

Join the conversation over on Twitter - I'm there as NonprofitKenG.

Managing Expectations Begins with Your Members and Clients

From Guest Blogger: William Biggs. William is Communications Officer for Safe Haven, Inc., in Thomasville, Georgia, a free-lance communications and strategy consultant, and in his spare time, a part-time graduate student. View William's LinkedIn profile, or email him at william AT safehaveninc DOT org.

The first opportunity to perform a task does not always succeed. When it does, the next opportunity should become easier and hopefully more successful. Funding requests work the same way. This opportunity arrived at my request with deadline approaching. I have always enjoyed writing and most of my prior writing was for either personal relationships or financial analysis.

In this case, the task required a major re-write to provide the HIV humanitarian organization the best chance to receive crucial yearlong funding. Delivering food and humanitarian care for people affected by HIV and AIDS in South Georgia is important. It is clear this population needs quality, nutritious food and the donor was willing to provide it - for the right project.

The non-profit's executive director was certain the project needed $27,000 and was reluctant to push for more. The project's purpose, scope and numbers show much more is needed - $77,000 to be exact. The shocked director asked how she would justify such a request.

Seventy-seven thousand dollars ensures the project's success but chance of funding decreases as amounts increase. A lesser amount would probably receive funding but unless the amount is sufficient, the project has a 100% chance of falling short. We decided the donor may not provide the requested amount but we went with it because it was the smallest amount that could succeed.

Our write-up considered all the parties: the donor, the target population and us. Your organization is probably very similar. Both of us want the job and must balance, and manage capacities and capabilities - on paper and when the project is won.

Celebrate when the check arrives because the work begins when you deposit the check. In this case, the check did arrive - at 100% of request.

Your organization has the money, the staff and a plan. What could go wrong?

The funding win places you as an incumbent and incumbents usually win. The donor has not called, written nor even hinted of any concern so there cannot be much need for concern, right?

Our organization learned the hard way after we won a $100,000 grant the next year for a new project from the same donor. We followed the agreement exactly as the donor required, tracked successes and challenges and reported to the donor. One success should lead to another and we applied to repeat the successful program.

Here is a recap of my conversation with the director:

"What do you mean we were denied?"

"We were denied."

"Wow. That hurts."

"We provided everything the donor required. What do we do?"

It turns out it is what we did not do. We did not anticipate and we did not exceed.

We made the mistake but prevented its transition into failure. New procedures communicate meaningful and tangible expectations and results to donors and members. This is work but it is worthwhile.

How we turned lessons learned into results:

• Each member relationship starts with a two-party agreement
• We value member input and seek their input twice monthly
• Simple and thorough documentation validates mutual needs and successes
• Revised the information cycle to begin and end with our members

Every relationship is a cycle and each stakeholder needs at least one more stakeholder to survive and succeed. Our members are our end-users just as your members are your end-users. Without their input, a great project may receive funding one year but maybe not the following year. Ask your members how they define success before you begin your next project.

Copyright 2010 William Biggs