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Fantastic Resource for New Fundraisers

I think a new website, created by The Bridgespand Group, is such a great resource it’s worth its own blog post.  But I don’t think that because of its intended purpose: is designed to help philanthropists make better decisions and get better results from their giving. This website is part of Bridgespan’s Give Smart philanthropy initiative, which also includes the book Give Smart: Philanthropy that Gets Results by Thomas J. Tierney and Joel L. Fleishman (Public Affairs, 2011).

Instead, I think it’s a fantastic resource for new founders to learn about philanthropists — how they think, what motivates them, etc.  Fundraising is one of the toughest areas to efficiently improve because opportunities to learn directly from philanthropists are limited.  Yet, it’s one of the areas in most need of efficient improvement because prospect meetings are high-stakes for new organizations.

The video library with dozens of interviews gives an inside perspective among philanthropists.  And better understanding motivations, priorities, etc. is key to raising money.


Who is Validating You?

If I created a list of the five most important things for a young, nonprofiit startup founder, this would be tied for #1:

Third-party validators.

And let me put an even finer point on it: Third-party validators with access to philanthropists.

This was the make or break for my organization in the earliest days.  We were extremely fortunate to have the confidence of one of the best social entrepreneurs around, Alan Khazei — co-founder and former CEO of City Year and Be The Change.  He was so fired up about what we were doing that he was willing to make introductions to potential funders.

Very importantly, he also did more than just make intros — he consistently helped us in a ton of ways.  To potential funders, this says: someone I trust is keeping an eye on things and that’s important because I don’t have time.

And it paid off.  Just a few months into the startup period, Alan helped us secure two meetings with two incredible leaders and philanthropists.  We didn’t have a big strategic plan or every question answered.  We had a clear need and a clear way to pilot our solution.  A few weeks later we had $5k and then a little bit after that we had a 1:1 challenge grant for $50,000.

After the second meeting, Josh (who gave the challenge grant) told Alan specifically that he didn’t have time to work with us on a regular basis and asked Alan if he did.  Alan said yes, joined our board, stayed involved (still is), and Josh issued the challenge grant.  We matched it 82 days later.

In a video interview, Josh describes similar situations.  He says:

A social entrepreneur is doing a startup, and unless you have the time to do due diligence yourself or unless you have someone else who’s going to be involved to watch over it for you, don’t donate.

You can watch the entire video and others on a great site, (scroll down to the video titled: “No foundation, no staff: Josh Bekenstein leverages knowledge from trusted philanthropists and experts”)

That leaves the question — who is the third-party validator who can open philanthropic doors?  It’s hard.  For my organization, we’re trying to build a grassroots movement to make national service programs like AmeriCorps a political priority.  So Alan, as a key stakeholder of AmeriCorps, made a lot of sense.  And many others have followed his lead in helping us.  And that has been invaluable.

Trusted relationships are the most important currency.  And Alan (and many, many others) gave us a lot of their “relationship capital.”

Unsolicited advice for young nonprofit founders: find the people who care about your success, have access to philanthropists, and earn their trust…quickly.

A big, but unspoken, irony of social innovation

Social innovation in the nonprofit sector has gotten a ton of attention lately — new approaches to tackle persistent social challenges.  A big irony, however, is that a concept designed to help a lot of people through bold leadership is very limiting in who is able to actually lead.

If you’re a young leader with a new approach, resources are scarce.  And if you’re someone from a low income background who can’t borrow money from parents to pay rent, don’t have a well-connected network, or have massive student debt, how can you ever be expected to launch a new idea?

When I was starting my organization, I knew that I could fall back on family if things truly fell apart. I never wanted that to happen and didn’t work any less urgently, but I knew I wouldn’t “go hungry.” In fact at one point during the worst of the recession, I had to take a loan from a family member to keep my organization alive.  It sucked and it felt demoralizing, but I had a backstop.

Seth Godin, who I cite frequently, calls this the “privilege of risk” — and that’s something that many young leaders with important ideas and perspectives don’t have.

That’s a big problem on my levels:

1) The nonprofit sector is not cultivating diverse leadership that reflects the communities where new approaches are often needed most.

2) Many young leaders are systematically held back from putting their ideas and experiences into action.

3) We’re selling communities and the country short of breakthrough ideas.

Great innovations often come from employees at bigger companies.  They’re on the front lines of a particular field, they see an opportunity unmet, and they create a new company to seize it.

But young, energetic, talented leaders who come from the front lines of vulnerable communities and who have the perspective to create breakthrough services, too often don’t have the “privilege of risk.”

A few ideas on how we can change that:

1) Dramatically increase organizations like Echoing Green that seed new social change ventures with capital and support.

2) More foundations could create pools of money designed for first-time social entrepreneurs.  So many foundations require some inside connection, a track record, and a bigger budget.  Parameters have purpose and foundations need a focus — I totally get that.  But big foundations that can afford risk should take more risk on diverse, young leaders.

3) Big nonprofits could incubate new ideas that fit their mission — an office, advisers, a little seed capital, and a support network go a long way.

In Hollywood, it’s expected that only 1 of 5 movies will do well; in tech startups, angel investors know there’s a small chance of success (1 in 20? probably less).

It’s okay to take risks on movies and tech, but risk capital to tackle pressing social challenges from leaders who might be the best equipped — but least resourced — is too often neglected.  And it’s not for a lack of money in philanthropy — there’s plenty.

We need to keep innovating in our communities, but need to be sure all the right people have the opportunity to lead.

Inspirational Fundraising Success Story

If you’re an unproven leader trying to raise money and you hear about already successful people struggling as well, you might react: “If they are having trouble, how will I do it?”  That’s true.  But I actually think it’s a bit liberating to hear these stories.

I think it’s a reminder that raising money for leaders of all levels is really hard; that even proven people are told no and have to show grit; in other words, you’re not alone and it’s not just you — it’s a grind for everyone.

Just read one inspirational example of two proven Hollywood writers/directors — struggling, being told no, but staying true to their vision and eventually finding success.

(Hat tip to Ted’s Take for highlighting this great story)

Write Hundreds of Letters: Is there a Better Way? (Free book to best suggestion)

When I started my organization, I wrote hundreds of letters to people who I thought would be interested in donating and had the means for bigger checks ($5k+). The list included donors from GWU (where I went to school), City Year (the AmeriCorps program I served in), and Pittsburgh (where I from).  Basically, any group of people where I could make a personal connection and/or who is likely to already like our product (selling nuts to squirrels).

I recently read Wendy Kopp’s first book. When she was launching Teach For America, she wrote hundreds of letters to corporate leaders about the idea of a national teacher corps.

Michael Brown and Alan Khazei, two of City Year’s founders, did the same with finance professionals in the Boston area. Alan discusses this in his book, Big Citizenship.

And I remember reading that Billy Shore, founder and CEO of Share Our Strength, wrote 1000 letters to chefs when he was launching. And then did it again.

In each of these cases, initially getting one or two replies (three if you’re REALLY lucky), is a huge success.

A lot of people would hear this and say: “There’s gotta be a better way.” or “Cold calling is a bad idea.” Indeed, it’s tedious, monotonous, and a meager 1% response rate is considered a success. That begs the question:

When you’re 21 years old, with limited experience, a limited network, and an unproven idea that requires some early seed money, is there a better way?

My short answer: No. I think this is a necessary and even important grind that aspiring social innovators must pursue. Let me explain:

1) As I talked about in my last post and will talk about more, the seed funding ecoystem for nonprofits is barely existent. Writing hundreds of letters is one of the few options you have.

2) The research in determining recipients is a critical exercise to build a pool of prospects. If you’re lucky enough to have a couple early funders to get you going, they will want to see others investing before they keep writing checks. You’re going to need a handful of others that will give you $1k-$10k early on. They have to be found and pitched and closed.

3) The monotony and even pain of this process is a good indicator if you have the discipline to purse your idea and the gall to ask strangers for money. I always find it a bit uncomfortable, but if you can’t get over it, think hard about moving forward. It’s only harder in person.

Important: the follow-up to the letters is just as important as the letter itself. If you aren’t going to follow-up with a call, email, or another letter, then don’t write the first. I can almost guarantee no one will reply to your first letter. But don’t despair. Send a fax, write them a message on Facebook, take out a Google alert on their name and go to a conference where they’re speaking and introduce yourself.  Whatever it takes.

With that said, this should not be your only approach. Find one of two well connected people who can make personal introductions to potential donors, go to conferences and meet people directly, etc. ServeNext, my organization, doesn’t go far if we only relied on one of these approaches. It took these and others.

As for the free book, the ones referenced above are must-reads for any aspiring social entpreneur. I have an extra copy of Big Citizenship. I’ll send it to the person who leaves the best comment about other ideas to get fundraising off the ground OR who best challenges mine.

This is only the blog’s 5th post, so competition shouldn’t be too steep if you chime in…

What Moneyball and Facebook’s IPO Should Remind Philanthropy (and a Fear)

Moneyball successfully challenged 150 years of how business is done on the diamond. Facebook’s IPO shows the value of young people leading major innovation.

My fear is that both are seen as once in a generation breakthroughs and that each relied on a 1 in a million leader with superhuman insight.

That would be wrong. Both stories are actually quite common.

The same youthful intelligence, audacious leadership, and impact is happening everyday across the nonprofit sector from a new generation of leaders. On a smaller scale, but it’s happening — and that’s my point:

The difference is not in the quality of the idea or abilities of the leader. The difference is between the funding ecosystem in the for-profit and nonprofit sectors — exacerbated when young and unproven.

If the latter was supported with more money, more risk, and more attention, we’d be celebrating far more social change breakthroughs by a generation uniquely positioned to create them.

With increasing inequality over the last few decades, the irony is that it’s far riskier not to support new ideas from young leaders with fresh perspectives. The real risk is using these challenging times as a reason to doubt the relevance of new approaches and to continue placing just the same safe bets (or less bets).

(Not to belabor the point but something like 1 out of 5 movies make a majority of Hollywood’s profits and many lose money. Studios have to take five swings to hit one out of the park (pun intended). What would our communities look like if philanthropy had a similar approach?)

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