Ten Things You Need To Know To Raise Capital For Your Nonprofit (Repost)

BY FC Expert Blogger Alice KorngoldToday

This blog is written by a member of our expert blogging community and expresses that expert’s views alone.
Alice’s tips on raising capital for your enterprise–and the best and worst funding experiences from her two decades of working with boards.

Girl Scouts selling cookies

For most nonprofit organizations, financial success depends on building a board of directors that is generous in helping to contribute and raise the “venture capital” to launch the enterprise, and strategic in working with the CEO to help establish and achieve a financially sustainable revenue model. It’s nearly impossible for a CEO to maximize an organization’s financial potential without a highly effective board. And where there’s no money, there’s no mission.

Worst story ever: no venture capital from the board

A client of mine accompanied his board chair in recruiting high-level business leaders for a new social enterprise for which my client was the founding CEO. Since the organization was starting from scratch, the CEO expected the chair and board to be engaged in developing some of the “venture capital.” To the CEO’s great surprise, the board chair told each and every one of the new board recruits that they’d never have to give or raise a dime.

In the meantime, the CEO was raising start-up capital by himself from foundations, and developing a longer-term sustainable revenue model through a fees-for-services approach. The CEO soon learned that his board chair’s commitment to new board members was only one of many misunderstandings on her part that made her counter-productive as the CEO’s partner. Not only did the organization struggle to find the necessary capital to launch the enterprise, but the board chair also created a highly contentious board environment that distracted the board from any productive discussion or activity.

Best story ever: saved by the “deus ex machina”

That very chairman vanished from town 18 months after the nonprofit’s start when her company relocated her. She simply disappeared one day without a word. True story. What makes this the “best story” is that the chairman’s disappearance gave the CEO, the board, and the organization a chance for a fresh start.

There were no suitable board chair candidates within the board, however, and not one single board member attending to the leadership vacuum. So the CEO went outside of the board to recruit an outstanding corporate leader to serve as chair. As the new chair, he partnered with the CEO to rebuild and develop the board, raise the necessary capital for the initial three years, build a long-term sustainable revenue model, and lead the organization to tremendous success.

The situation reminded me of the theatrical device known as “deus ex machina” (literally “god out of the machine”), whereby an intractable problem is solved by the sudden appearance or disappearance of a key character. I’ve actually seen the deus ex machina save two boards in the past two decades by vanishing their respective board leaders; don’t count on it happening much more often than that.

Ten lessons for raising capital

Here are ten lessons for raising initial capital and maximizing longer-term revenue opportunities for a nonprofit enterprise:

  1. Make sure your organization has a generous and strategic board chair and a high functioning board–in addition to an outstanding CEO–in order to maximize the potential in raising “venture capital” and building a longer term sustainable financial model.
  2. Conduct a thorough needs assessment of the community you seek to serve including studying existing organizations, to determine how your enterprise will provide unique and compelling value and achieve high-impact results. Update this process on an iterative basis, partially via #5 below.
  3. Establish a clear mission (the compelling value your nonprofit will provide), the vision (your organization’s greater potential), and the strategy–otherwise known as a business plan (including the revenue model to achieve success).
  4. Recruit board members from diverse backgrounds and perspectives, including people with experience and expertise in the organization’s field of work. The richness in your board’s composition will amplify the board discussions of mission, vision, strategy, and the revenue model, and the enterprise’s credibility and reputation among funders, investors, and the community.
  5. Establish metrics to measure and track your progress and impact from Day One; use the information for iterative planning in addition to engaging your board in ongoing planning and financial support.
  6. Ensure excellence at all levels in the organization; strive for every client and constituent to have a positive and fruitful experience with the people on your team.
  7. Begin building a cash reserve from the very first year, accumulating it to at least six months of annual operating expenses within a few years. This will give you a margin of comfort as well as funds to make strategic shifts as needed.
  8. Develop in-kind contributions (such as donated space, equipment, and furniture) and pro-bono services (in areas of expertise such as pricing strategy, legal, audit, IT, web design, public relations, and social media).
  9. Remember that your organization’s mission is meaningful to various funders (individuals and institutions) for very different reasons. Research ahead, and most importantly, listen carefully to each donor prospect to understand what will be personally compelling to each; that is the key to raising capital from each potential source for the purpose and in the manner in which that person or institution wants to provide support.
  10. Build a culture and spirit of generosity and appreciation in the boardroom; this is where board leaders can have a great deal of influence and where board composition is a key factor.

There are individual and institutional donors who seek to invest in a better world. You want to reach and engage with the ones who will find meaning in the work your organization does.

If your board members are personally and enthusiastically engaged in generating support from friends, employers, and institutions where they have relationships, and if your board members are demonstrating their own generosity to the organization, your organization will maximize its revenue potential and achieve its greater vision.

Read more about Getting Funded

Alice Korngold is the author of Leveraging Good Will: Strengthening Nonprofits by Engaging Businesses. She has been consulting to global corporations on CSR, and training and placing business executives on nonprofit boards for 20 years.

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3D Printer

I’ve watched this over four times…and it still makes my pea brain hurt. Amazing technology.

What do you think are some of biggest implications or uses for this technology?

How the Evolution of PR Mingles With Content Marketing (Repost)

This is a guest blog post by Rebecca Lieb, a digital marketing consultant specializing in content marketing and SEO as well as a sought-after speaker, writer, and author. Her next book, Content Marketing, will be published by Pearson in September.

Public relations just plain doesn’t work the way it used to.

In a way, PR is one of the original forms of content marketing. Public relations professionals do plenty of things, of course: publicity, reputation management, and media relations, to name but a few. But the heart and soul of PR has always been planting stories in the media: in newspapers, magazines, on television and radio. With the exception of “the exclusive,” the primary tool in the arsenal for planting stories has traditionally been the press release, a brief, persuasive, one or two page document intended to persuade its journalist recipients that a certain topic is worth their time, attention, and coverage.

But press releases don’t work that way anymore. They’re no longer a private, one-to-one communications channel (once upon a time, releases were mailed, and later faxed, to newsrooms). In today’s age, press releases are distributed via wire services — wire services that are immediately picked up by all the major news services including Google, Yahoo, AOL News, and Bing. In other words, the second a press release is actually released, the PR practitioner has broken his or her own story. It’s hard to persuade people in the news business to pick up “news” once the story is already “out there.”

So while PR practitioners were once exclusively in the business of influencing the media (and they still are), they (like all other content marketers) are themselves the media. Moreover, they interface and target a media landscape that’s grown far beyond traditional press and broadcasts outlets.

That’s a real game changer.

Yet, fundamentals remain the same. PR professionals are good at helping to shape and to spread stories, and content marketing is, as we’ve seen, very much about stories. In a digital landscape, this necessitates not only finding and shaping stories, but also determining how they are told, through which channels, and to whom.

Enter the Optimized Press Release 

An effective press release isn’t dead in the context of content marketing. Instead, it’s optimized for a variety of different target audiences as well as for search engines. Given that once a release crosses the wire, it’s “out there” for anyone to find (not just journalists), keyword research has become an essential component of optimizing press releases for search. Once you decide on two or three relevant search terms, these terms should be incorporated into the headline and opening paragraph of the release. It’s become increasingly important for press releases to contain links to video, photos, executive bios, a company or product web site — anything that will expand upon and enrich the story.

Find the Influencers (Not Necessarily the Journalists)

End-users, potential buyers, or clients can now be the target of your press release. In bygone days, that target was limited to the press. Where PR pros used to jealously maintain, guard, and update media lists, their who’s-covering-what-beat Rolodex of who to reach out to place stories, the challenge now is to target influencers. Influencers can be bloggers or others with a significant social media following who are talking online about the issues, products, or services that fit with whatever a PR professional is working to publicize. And unlike the mainstream media, these essential targets are not necessarily versed or experienced in dealing with PR pros.

This lays out a new set of challenges:

  • Identifying the influencers
  • Building relationships with them
  • Finding the online communities where relevant discussions occur
  • Creating awareness and enough enthusiasm to encourage these people and groups to discuss the product/service/story.

How are you adapting to the changing nature of public relations?

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Salt ShakerIn some form or fashion we’ve heard the saying:

“You are the salt of the earth. But if the salt loses its salty taste, it cannot be made salty again. It is good for nothing, except to be thrown out and walked on.”

One source said that in Roman times, salt was a highly valued commodity used for trading. To say a soldier was not worth his salt was the same as saying he wasn’t worth his salary; he was absolutely worthless.

As you’re creating, conversing or cherishing, how do you add flavor? How do you uniquely add value to the relationship?

Take Away: Challenge yourself to add salt – flavor, value to conversations today.

10 Management Secrets That Will Guarantee Business Failure (Repost)

1. Make sure you hire from the bottom of the barrel – Bad employees are great! They will all but guarantee you a life full of drama. Why be on easy street when you can have a work force run amuck with whiners, thieves, liars and con-artists? Besides, who wants to spend the time and money necessary to do extensive interviews, skill tests, background checks and character assessments?

2. Over promise and under deliver – Tell people what you think they want to hear. It’s a lot more expedient than radical honesty. The fun thing is there is absolutely no limit on the amount of promises you can make. If somebody complains about the last promise you made then make him or her a new one. The fact is people want to be lied to. This “walk your talk” integrity stuff is strictly for amateurs.

3. Keep your business plans to yourself – All this talk about sharing your vision, mission and goals is pure bologna. People like to be kept in the dark. Besides, if mushrooms can thrive in that environment why can’t your employees?

4. Control as much as you can – Spending your time trying to empower other people is just so exhausting. Better off engaging in control and manipulation so that they don’t dare think for themselves. If they try to revolt, then bring in the heavy artillery.

5. Give them all 2s – Everybody knows that the way to motivate people is to scare the “you know what” out of them. One of the best ways of doing that is to give them poor performance evaluations. They will be fearful for their jobs and be motivated to work like crazy just to survive. In fact, it’s probably a good idea to give them disciplinary notices on a regular basis whether they deserve them or not.

6. Create internal competition – Ever see rats climb all over each other in order to get at a piece of cheese? Don’t think this doesn’t work with your employees too. Make it very clear there can only be one good employee every month. This is a particularly appropriate strategy in the sales area. Make sure only one person in your sales organization gets that trip to Hawaii every year. The less in the way of best practices they share with each other, the better your odds of motivating them out of a scarcity mentality.

7. Bag the meetings – This business about holding team meetings is highly overrated. Besides, it just takes people away from doing their jobs. The last thing you want to do is give people another excuse not to do their work.

8. Work ‘em ‘til they drop – Squeeze every ounce out of your employees every chance you get. Never mind that you have to pay them overtime or that they may burn out and make tons of mistakes. There’s plenty more bodies where they came from.

9. Ignore today’s compliance obligations – There are so many personnel law obligations that trying to reach the “Golden Shores of Compliance” is a futile effort at best. Better off letting your exposures run rampant and deal with them in the courtroom. Besides, we just love our lawyers.

10. Train solely from within – Or, forget training altogether! Better off recycling ignorance than employing profound knowledge – which can only be gathered from outside of a system.

11. Forget your commitments – This bonus secret is a real powerful one and brings us full circle. Besides, your workforce probably isn’t very committed to you. They say they want to work for you for years and then they quit after only a couple of months. What’s up with that?

These secrets will all but guarantee your business failure. One last note: Just make sure you bleed the company to a point of extinction before you employ these powerful secrets.

NOTE: If management failure is not your bag, then take full advantage of the HR That Works website!

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Marketing Lessons From Borders’ Bankruptcy (Repost)

Michigan-based book retailer, Borders is filing for Bankruptcy and closing its doors. Borders had been looking for a buyer for the company with no success, and it had been unable to keep up with its costs and its larger rivals, Amazon and Barnes and Noble. So what happened to Borders? How should marketers adapt to avoid similar problems?

Borders fell victim to the trapping of four key problems that ultimately caused the long and slow death of its business.

4 Marketing Lessons from Borders’ Mistakes

1. Failure to Pivot During Technology Disruption – Technology, by its nature, is disruptive. It causes changes to markets that impact the business strategy for all companies in a given market. In the book-selling business, this disruptive technology was the shift from printed to electronic books. Amazon was the first in the industry to make the shift to ebooks, followed by Barnes and Noble. This left Borders lagging behind in a position where it was too late to shift to ebooks and own a viable ecosystem for distributing them. Earlier this year, Amazon announced that ebooks, once thought of as a fad only to be used by technology geeks, now outsold printed books. Industries change (just ask the music industry!). Ultimately, Borders failed to change its business strategy quickly enough to follow and succeed in an adapting market.

Marketing Takeaway: Social media, DVRs, search engines, caller ID, and many other technologies are fundamentally changing the way companies market. Don’t continue to rely on cold-calling, TV advertisements, and the Yellow Pages; this is the equivalent of what Borders did. Instead, be like Amazon and use disruptive technology to your advantage by starting a business blog, becoming active in social media, and focusing on paid and organic search engine marketing.

2. Inability to Control Costs – Failing to control costs is a quick death nail for any business. For Borders, its inability to control costs stemmed from its failure to adapt its business strategy. Amazon and Barnes and Noble were able to reduce their costs with electronic books and more online sales. Borders stuck to its model of retail sales, and therefore failed.

Marketing Takeaway: Technology disruption like social media and search engine marketing often result in changes in cost. Not to say that these new marketing tactics are free. Instead, they offer a lower cost and more effective alternative to traditional marketing when executed correctly. As a marketer, it is your job to continue to test new marketing opportunities for your business in a constant quest to lower your cost-per-lead.

3. Not Being a Student of History – Borders wasn’t the first company to fall victim to technology innovation. In fact, these types of shifts have existed since the dawn of modern civilization. However, where Borders failed was in paying attention to and examining how disruption affected other industries. Look at all the change that, even in recent years, happened in the music industry. Borders should have been a better student of history in an effort to better set its strategy.

Marketing Takeaway: Block off a couple of hours each day to really examine the disruption that is happening in other markets like music and publishing. What mistakes are being made? Why are the companies that are winning actually winning? Understanding the traits that make a successful business thrive during technology disruption will help to guide adjustments to your marketing strategy.

4. Not Leading the Disruption – First mover advantage does exist during periods of technology disruption. As the smaller player in the industry, Borders had an even more compelling reason to lead the disruption and transition to ebooks before Amazon and Barnes and Noble could take hold of them. Once its competitors got ahead, the smaller Borders didn’t have the resources needed to make a serious dent in the developing ebook market.

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Temptation v. Core Values

The Survivor by Stan Rose
The Survivor by Stan Rose

The story is reported where a young man who, while of great significance, was in the midst of a very difficult season in his life. It was as if he was living in a desert all alone.

When it seemed that things could not get any worse, a former friend, now perhaps the one who hated him the most, came on the scene. Everything the young man believed in, worked for…the very things that defined him, the antagonist hated and tried to destroy. On this occasion however, as opposed to the words hate and threats normally filled his mouth, there seemed to be nothing but kind words are helping hand. But with each offer of help, there were strings attached. Simple at first, but they became progressively more costly.

First, he offered a simple meal. Simple provisions – after all the young man was quite hungry. Knowing that the intentions were not simple or sincere, the young man declined but instead held fast to what he knew to be true.

Next he was offered protection, safety, and security, all in exchange for simply coming to work for him. “It will be a great job” was the offer. The young man would be the “Poster Boy” of all of his adversary’s work and efforts. He simply had bend “a little” and take the offer. Realizing again the offer was filled with lies, he again declined. In stead, recounting what he knew was true and right.

Finally, becoming more desperate and angry the enemy said that he he’d share everything and give him all the power and control he could want, if he would just be his Executive Vice President and help to advance the ideas that were so contradictory to who he was. That was enough. With the final effort, strength and resolve that was remaining, he restated his commitment to his principles and told him to leave and that he should leave now.

Later the man was restored and encouraged by his friends, and he did make it out of the desert experience, it was not the last difficulty he would encounter or the last interaction with former friend.

As I thought through the story it caused me to consider the offers I receive that ensure my own provisions, protection and power. I’m certain that when I become “fuzzy” on who I am and what I believe (and even why I believe it) the offers and temptations to “bend a little” can seem very appealing.

Take Away: A few questions to consider

  • What are the core values that define who you are?
  • Do you really know what they are?
  • How do those values define and draw the line as to what you are willing to do (for your family, your career, your customers, etc.) in order to gain provisions, protection or power?
  • When you start to lose site of those values, how do you get back on track?
  • When those values are challenged, how do you know they are right? What gives them weight or authority in your life? Why?