Starting a Charity? Fund Development Planning, Strategic Plan

In the last post we had an overview of some of the major ingredients of a Fund Development Plan. How let's delve further into each of the ccmpontnes. And the first component of a Fund Development Plan is the organization's Strategic Plan. This may seem counter-intuitive, to include elements of a strategic plan in this fund development plan, but it is necessary to understand that without first having a strategic plan, a fund development plan is of little use. The new charity needs to have a firm grasp on the strategic elements before trying to raise any money in support of their effort.

Strategic planning is, admittedly, a difficult and time-consuming first step, which may, at first, seem repugnant to a Board that urgently needs to raise cash today to cover past debt and bring fiscal stability to the organization. The intuitive thing to do would be to immediately go out and try to raise the funding so urgently needed.

However, as we shall see throughout this process, fundraising is, at times, very counter-intuitive. And at this stage, the first step is just that. When we are beginning to be serous about our fundraising effort, discipline and hard work on the strategic plan is the only way that the organization can so position itself that it will attract any significant contributions.

The strategic plan is a detailed description of the social aims the nonprofit organization wishes to achieve and the strategies and tactics it will employ to accomplish those goals. Without that, the donating public may come to see the organization as just another directionless nonprofit in an over-crowded, under-funded philanthropic marketplace. The consequences of not completing the step of strategic planning will be financial disaster and, eventually, the closing of the organization.

The ability of any charitable organization to accomplish its mission is predicated on several vital ingredients:

• the original vision and values of its founder
  
• the ongoing, evolving vision and values of its Board of Directors
  
• the specifically named social aims the organization desires to achieve
  
• the needs of the community the organization seeks to address
  
• the surrounding circumstances that affect mission accomplishment
  
• the way the organization states its mission
  
• the outputs that will be necessary to measure the success of missional strategies
  
• the outcomes that will measure and define progress toward the stated social aims
  

Initially, in a new nonprofit organization, these elements are often given verbally and in a somewhat fragmented form as occasion demands. Moving through the steps of founding a nonprofit organization the vision and values of both founder and Board of Directors often develop in response to external problems or opportunities, and are articulated only as need arises.

The strategic plan, however, brings these elements into focus, and forces us to write them down. This codification process allows us to objectify them, examine them, sharpen them and prepare them to be used in both program and fundraising efforts.

Not only that, but these elements also provide the basis by which the Board of Directors will devise specific programmatic strategies to accomplish the organization’s mission, as well as the policies and procedures used throughout the organization’s management practices, financial records and reporting, and its fundraising efforts. These are the strategies that, in the Board’s best judgment, will take the organization from where it is today and permit it to accomplish its mission and achieve its social aims.

Strategies for a new charity might include such steps as providing educational seminars or workshops for given program constituents; they might also include direct help to constituents who need specific types of services.

These strategies will comprise the programmatic efforts of the organization, but will also reach into the management and financial arenas and the fundraising efforts of the organization. What strategies will we use to see that we are well and carefully managed? What strategies will we use to assure financial stability and transparency throughout our existence? What strategies will we employ in fundraising? These are a few of the questions the strategic plan must answer.

One of the chief reasons it is necessary for a nonprofit organization to have a written strategic plan is that this plan forms the basis for writing a “Case for Support” for the organization’s work. That is, it translates rather directly into the set of reasons why donors should give the organization any money. Donors are concerned to know that their gifts will be used for what the organization advocates or for its services and in its work, and they desire a high degree of transparency in organizational reporting. Donors can and often do ask strategic questions to which we need to have ready answers before they ask.

For example, if we are going to offer educational programs with a certain kind of content, we then say to our donors that when they give to our organization they are providing necessary education to the community’s members.

When we say that there is a community need, this translates into a case for support that tells donors they are able to ameliorate community need through their gifts. When we say that we value knowledge and education for our program constituency, we can say to donors that their contributions are used to promote the values of knowledge and education, and that through their gifts, members of the community are better able to cope with situations they face on a daily basis. The strategic plan translates, through the Case for Support, into ways that Donors are making their community better by way of their gifts.

Always the Case for Support is expressed not in terms of what our organization does, but in terms of what the donors can accomplish through our work when they give to our organization. It is the donor’s perspective, needs, wants and values that are uppermost in our minds, not the needs of the organization.

One of the aspects of strategic planning that we will want to include in our Strategic Plan that powerfully affects our fundraising capability, is our commitment to investing in our fundraising process and in the acquisition and continual enhancement of fundraising infrastructure.

The purpose of this commitment is to ensure our ability to raise the money we must have in order to provide high quality service to members of our community. We acknowledge that without such a commitment, and without such increasingly enhanced fundraising capability, we will be unable to serve the community and thus fulfill our responsibility as a public trust residing in our state.

Therefore, we will represent our continuing needs for enhanced fundraising and fundraising infrastructure in both our Strategic Plan and our future budget projections, so that we have firmly before us the cost of ensuring our organization’s financial stability and missional capability.

We'll deal with the Case for Support aspect of our Fund Development Plan next.

Starting a Charity? Fund Development Planning

We have been exploring the area of the nonprofit board's work and responsibilities, its interactions and performance evaluation. This has been good preparation for a new nonprofit organization's first steps in fundraising, since the foundation for asking the public for financial support starts at the top of the leadership pyramid of the new charity. Let's turn now from governance and get right to the heart of the fundraising process, which is the creation og a fund development plan.

We're going to be talking about a Fund Development Plan that the founder, board and executive director can use as a guide to having a more intentional, reasoned and systematic approach to raising voluntary contributions from the public in support of our new charity’s mission.

It may well have been hoped by the organization’s leadership that this plan would consist of a simple timetable by which a consultant or staff would be approaching specifically named donors for contributions. And, in fact, the Fund Development Plan will include these kinds of specifics when we're done. But there is a great deal more involved in the planning process than that.

The very first steps that must be taken by the new charity start-up, if it expects to raise voluntarily contributed funds on a consistent basis for the fulfillment of its mission, are the following:

1. Strategic Plan -- The organization must develop for itself a written strategic plan that sets forth clearly and completely the direction that our new charity is going to move in the next 5 to 7 years. This plan will contain not only a description of the organization’s direction, but a series of specific strategies by which it will accomplish the social aims it sets out to achieve, accompanied in each instance by the series of tactics that are intended to be employed as staff and volunteers pursue each strategy.

2. Selection of Project -- Only when that basic groundwork is complete can the organization move on to the next step, which is to select one or more projects around which to mount specific fundraising efforts. The reasoning behind this and the procedure to follow is further discussed in the section below on “Projects”

3. Case for Support -- When the strategic plan has been completed, the next step will be to develop a written document called a "case for support," which comprises the reasons why anyone should or would give money to our organization. This is discussed more completely in section we will see later on the “Case for Support.”

4. Pool of Prospects -- Upon completion of the selection of project(s), the next step will be to look at developing a pool of prospective donors, delineated by type, such as individuals, foundations, corporate grants, corporate sponsorships and government grants or contracts. This strategy is also further explained in its own section.

5. Enlistment of Volunteers for Cultivation and Solicitation -- At the point where a substantial pool of prospects has been identified, the next step will be to create a plan, policy and procedures whereby volunteers, especially the Board of Directors, will become involved and invested in the fundraising process.

Volunteers are vitally and strategically necessary to the fundraising effort for three compelling reasons:
1. Existing staff, particularly in a brand new nonprofit organization, cannot carry the fundraising load alone, and it is unreasonable and unproductive to expect that they should do this. THere are too many other issues and concerns that need attention on a daily basis.

2. Volunteers have networks of relationships with friends, colleagues and associates throughout the community. These have been developed and cultivated over many years. These relationships are key to identifying, cultivating and soliciting prospective donors whose contributions are so urgently needed. If the organization is deprived of the ability to use these relationships, there is, quite literally, no hope of mounting a successful fundraising effort that will supply enough revenue to effectively carry out the organization’s mission long term.

3. Volunteers are much more effective than staff in cultivating and soliciting the people they know. With a little training and coaching, most if not all the Board of Directors can be effectively brought into the fundraising effort.

6. Cultivation and Solicitation -- It is at this point that cultivation and solicitation of specific donor prospects can be discussed and decided. This is the step that will match specific strategies of approach with each donor prospect and give each strategy a person who is responsible and a timeline or schedule on which the approach will be made. This is further discussed under the section on “Cultivation and Solicitation.”

7. Thanks and Recognition -- Finally, but no less important than the strategic plan and the case for support, considerable thought must be given to deciding and codifying a system for giving donors appropriate and abundant thanks and recognition.

Particularly as we are engaging the Baby Boomers and Gen X cohorts, this step can be delayed or omitted only at great peril to the organization’s fundraising efforts. The reason for this is that research demonstrates that, even more than their “Ike Generation” forbears, the Baby Boomer and Gen X cohorts desire and need thanks and recognition for their philanthropy as a prelude to their next gift. This work is further delineated in the section below on “Giving Thanks and Recognition.”

Having prefaced our plan with this summary of its content, let us move on, in the next post, to setting forth the contents of each step of the plan.

Starting a Charity? Board Performance Evaluation, cont'd

So now we come to this aspect of our thread on board performance: What are appropriate elements of measurement for a board's work? What kinds of ingredients should we put into a job description and performance standards that can helpfully and effectively be used in board performance evaluation?

First, I would say that any board performance measurement vehicle needs to comprise two distinct parts: The job description and standards of performance for the board as a group; then also the standards of performance for each member of the board.

For the performance evaluation of the board as a group, we might delineate the following areas of performance to be measures:
1. Strategic planning on a regular basis to reaffirm the social aims desired by the board for the institution and to update and provide mid-course corrections for the strategies that the board believes will bring about those social aims. This is also a good time to make sure that the policies the board has set are really achieving the results they thought would happen.

2. Management of the executive director – a regular procedure should be developed for the performance evaluation of the executive.

3. Program overview -- the board should be kept abreast of happenings locally and nationally, and within the organization to make sure that the strategies delineated in the strategic plan are actually working the way the board hoped they would. Otherwise mid-course corrections should be programmed into the board’s strategic planning review process. Staff should be providing regular reports on the agency’s programs and on local and national trends in the field of service.

4. Financial overview – the board should be reviewing the financial condition of the organization at least quarterly to ensure proper financial management. Staff should be providing regular reports to the board.

With regard to performance evaluation of individual board members, I think there would be at least the following specific areas:
1. How much money has the board member given personally or been able to raise from others?

2. Attendance at board and committee meetings should be well above 50%.

3. The extent to which the board member has advocated for and publicly supported the organization throughout the geographic area in which the charity is situated. board members should be attending gatherings of other organizations in order to promote their nonprofit in the most appropriate ways.

4. Each board member attending board training sessions. These sessions should be a regular part of board meetings and should be programmed by the executive working with the board president. Topics might range from the latest strategic planning techniques to program developments, to fundraising techniques and strategies, to government and policy concerns in the field of service. Training sessions should be short but packed with information the board members need to know to do their work effectively.

Starting a Charity? Board Performance Evaluation, cont'd

At the end of last week, we were discussing the question of why board members would resist the use of performance standards and performance evaluation. We brought up the subject of Eric Berne’s mid-1960s book “The Games People Play,” and were suggesting the one of the reasons board members of nonprofits can and do play games is that through those types of interpersonal transactions they can and do derive personal psychological aggrandizement, or achieve advantages over other members through a series of “adult-to-child” or “child-to-adult” transactions during the process of the board’s conduct of its business. But what, exactly, does such a transaction look like?

You may remember that one of the “games” Berne identified was called “Now I’ve got you!” (Actually, Berne called this game “Now I’ve Got You, You Son Of a Bitch!” and gave it the acronym NIGYYSOB. But we’ll shorten to NIGY, for now.) In this game the object is to embarrass the other person by catching him/her out. The person playing the game sets up the other person for a fall or an indiscretion, then springs the trap and catches the other person as he/she stumbles.

In the board room, Harry might set up the situation with Phyllis by suggesting that “the auction this year really needs to have travel packages.” And Phyllis might reply, “But those are so mundane, I don’t like them and many of my friends don’t like them. Let’s just skip that for this time.” To which Harry replies, “I’ll bet you didn’t know that a recent survey by the American Travel Agents Group found that 85% of people who go to charity auctions think travel packages are the best items offered.” So this makes Phyllis and her friends look either stupid or uninformed. Harry’s inner parent is satisfied that he has “one-upped” Phyllis, and Phyllis’ inner child responds with frustration and rage.

The psycho-dynamics are never directly addressed, never said out lout, and may not develop to a conscious level. But they are operating all the same. The gain Harry has experienced comes at the expense of Phyllis and thus is, so to say, “ill gotten.” That is to say, the gain for one person happens at the expense of another person. For more on this, I recommend you get Berne’s book.

The significance of this for setting standards of board and individual performance in preparation for regular (annual) performance evaluation is this: If the board members are playing transactional games with one another, they are not going to be sanguine about the presence of objective standards by which their conduct and their contribution to the organization’s governance and mission might be judged. They are going to want to continue to get away with their various games, instead.

So, for example, if they’re involved in micro-management, and thus putting aside and procrastinating on their strategic planning responsibilities, they are going to want to continue their micro-management games because this is where they’re getting their inner personal fulfillment – in the illicitly gotten personal gains of game playing. They are not going to want to be held accountable as “adult-to-adult” for having done a good job in strategic planning, because they haven’t found out how to play their games in that kind of arena, so it will seem foreign to them.

Performance standards, and the application of those standards during performance evaluation, will have the effect of breaking through the games board members play, and getting to the heart of the real reason these board members have been assembled: nonprofit governance.

Starting a Charity? Board Performance Evaluation

Having done that little diversion on the games board members often play, we come back to our consideration of why performance standards, and performance evaluation procedures are a good thing for nonprofit boards. And we said in a previous post that there is sometimes a fear, both among board members and among nonprofit executive staff, that a board that uses such standards of performance might get a reputation around town for being “tough.”

As for getting a tough reputation around town, that’s not likely to be problematic. Most people appreciate when they know there are two qualities to doing a job they're being asked to do as volunteers: One is the yardstick by which they know when they will succeed, and the other is the "light at the end of the tunnel" by which they know when they have successfully completed the job they were asked to do.

Consequently, if a nonprofit gets a reputation in town for evaluating the performance of its board fairly, on a regular basis, and with lots of recognition for good performance, then people of merit, people with money and connections, are going to flock to get on that nonprofit's board. This is a good reputation to have among the community's leaders.

So this means that a nonprofit organization that has thoughtfully conceived and well-written standards of performance is going to attract capable, giving, connected leadership more easily than a charity that doesn't use such measurement. In today's overcrowded philanthropic marketplace, having this ability to measure board performance and reward members can distinguish nonprofits and give them a leadership advantage that puts them ahead of the pack. That alone should serve to motivate both boards and their executives of organizations that don't have performance standards for their boards to start immediately to devise them.

One could think about it this way: Suppose we eavesdrop on three company executives having lunch together in a local restaurant. Besides reviewing the local economy and playing a quick round of one-upmanship, they're getting into the subject of corporate giving. Harry, Mary and Joe have all been asked for contributions to several local charities, and they're getting together, among other reasons, to chat a bit about what they're going to do. Joe might say he's tired of giving to the particular charity that asked him; he might complain that several people from that charity approach him many different times a year for small amounts, and he wishes they could get their act together and consolidate their "ask," which would make it a lot easier for him to justify the contribution to his board or financial committee or management team. And, besides, aren't there other charities in town to give to?

Then Mary pipes up to say that she has just been asked to sit on the board of one of the community's nonprofits, and she knows that this brings with it a commitment to raise or give $10,000 each year she is on the board. She also tells Harry and Joe that this board has pretty high performance standards, and that they are all very enthusiastic and committed people. She cites various other community leaders who are part of this group, and says that despite the requirement, she feels honored to be part of that board. She also gets around, in the discussion, to asking both Harry and Joe for a contribution that can be logged against her quota! Smart woman!

And then Harry chimes in with a comment about how if there were any board on which he would serve it would be that one on which Mary is about to be installed, because not only are the "movers and shakers" all over there, but he would feel much more comfortable being a part of something where the leadership was excited and enthusiastic about doing something really significant for the community. He cites the fact that this board does have performance standards as a reason he would seek membership on that board.

So you see, in this little example, how word spreads, how one comment spurs another, and eventually the positive word gets around that happy, productive people on a board that does performance evaluation according to specific standards of performance, are not only doing a good job, but are part of an organization seen throughout the community as effective, progressive and a true community asset.

Starting a Charity? Beware of Games Board Members Can Play, Pt 1 of 2

When we first started this thread, we asked the question “Why is it that we are reluctant to provide our nonprofit governance boards with standards of performance and regular performance review?” We have said that human nature is such that board members actually benefit from performance evaluation -- this is a way they achieve for themselves the various internal rewards of philanthropy.

What are those?
1. Approbation of peers
2. Internal satisfaction
3. Meaning in life
4. Oraise and thanks from peer and co-workers

These are the intangible, but nevertheless real, rewards that economists just don't seem to understand (that's why we have the strange term "non-profits" to describe our kind of organization), but which do operate in the marketplace where philanthropy is concerned.

Well, something else we know about human nature is that humans sometimes like to involve themselves in a bit of what can only be called “game playing” behavior.

Some of our readers may hark back, as I do, to the mid 1960s when a fellow named Eric Berne came out with a book called “The Games People Play.” His book was a popularized version of what at that time was called “transactional analysis.” This theory of human behavior was developed as a way to explain the interactive behavior of humans as a series of “transactions” between our inherent “parent,” our “child” and our “adult.”

If you're about to start up a new voluntary organization, or if you're the founder/executive of a relatively new charity, I suggest you look up this book and read it. The newest edition is even better than the original! It has vital information you need to know before you spend another moment with your board of directors, because it will inform and enlarge your entire view of what goes on in board meetings.

You might also remember that for a variety of reasons our inner child and parent tend to skew a transaction in such a way as to rather illicitly derive or force some reward for themselves out of the interchange at the expense of the other person, whereas our adult tends to deal straight-up, without such manipulations that favor self at the expense of the other.

In my practice, I have seen numerous nonprofit boards where both board members and staff would be horrified at the thought of performance standards for the board because they were involved in a series of games from which the members of these boards were deriving “illicit” personal aggrandizement – of a purely psychological nature, please understand – from the various transactions that go on in the course of doing a board’s business.

Would Board members of a nonprofit organization really do that? Would they really have their own agenda that would override consideration of the agenda the Board is supposed to be working on?

Sure they would... and do! Regularly. Yes, even these stalwart pillars, these leaders of the community, business owners, institutional heads, self-giving volunteers who are brought together to govern a public trust (which is what a nonprofit is). They can and do bring their own agendas into the meeting and press those agendas, in some cases, to the exclusion of all else.

And your reaction may be "But wait a minute, John, I've been to lots of Board meetings and the people on those boards are quite serious and down to earth and ready to help. After all they're volunteering their time to help the nonprofit. How can you say that?"

This isn't something they necessarily do consciously. Most of them don't come into the meeting and purposively give the charity's agenda short shrift. They are intelligent, for the most part well-educated, frequently very dedicated people. They don't really set out to sabotage the work at hand. If you asked any person around the table, they would stoutly deny that there's anything untoward going on in their heads. But here's how it works.

What are the sub-conscious questions any person in any group of people is asking, first and foremost? First, "What do I think of myself in this group, how do I see myself, what is my image of myself in this context? Each person around the table has a set of self images upon which they draw, depending on the group they're in, the role they have to play, and what they want from the group.

Second, every Board member around the table is also very interested in "What is the image that the other person (each other person at the table) has of me? How do they see me? What do they want/need from me?"

Third, every Board member at the table is also asking "What is my image of that person – what do I think of them? What do I know about them? What do I think they want of me, what do I think I can give to them?"

Fourth, again, every Board member is sub-consciously going to go to the next level, which is "How can I either alter that person's perception of me, or confirm that perception? What do I need to do or say to bring my images of myself, my image of what that other person thinks of me, and what I think about that other person into some kind of harmony that I can accept?" And this goes on around the table ad infinitum throughout the Board meeting.

This internal assessment and adjustment mechanism goes on at a subliminal level or a more conscious level depending on many factors in the particular Board member's life at that moment. Lots of factors influence that. But it is operating nonetheless.

Into this arena, then, the individual board member’s “child” or “adult” find it easy to interject itself in a variety of ways that are designed to bring to that person ill-gotten psychological gains at the expense of others in the group or at the expense of the nonprofit and its mission. Resisting that temptation takes a powerful conscious ability to deal consistently with others on an “adult-to-adult” level of transaction. And this is the thing that Berne pointed to in his book.

Let’s see how this might work in our next post.

Starting a Charity? Standards of Performance for your Board

Continuing on this thread, one of the other things we know about human nature, and particularly the executives and staff of nonprofit organizations, is that they are deathly afraid of anything that might affront or challenge the board or a board member. It's kind of ironic in a way, but when the charity is being founded, the founder/executive is afraid to offend these specially selected people because she/he needs them to be board members and get the charity off to a good start, but later, when the board becomes a self-perpetuating board, the executive and staff are afraid to offend board members because they might take things in hand and make drastic changes in the organization if their whims and fancies are not granted immunity from questioning. Like firing the executive?

Why is this? Well, probably for fear of losing their jobs, or losing the board member with all that influence and potential money, if such there be. And for fear of getting a reputation as the only charity in town that evaluates the performance of its board.

But let's examine this fear a little more deeply. Fear of losing a job suggests that the nonprofit organization is somehow the last bastion of the old fiefdom system, where the executive and staff are working for the knights and royalty of the realm and are little less than indentured servants. Such an attitude further suggests that some board members are acting in the manner of tyrants – unable or unwilling to take responsibility for holding up their end of the workload at the charity. Of course, in some charities, this is really the case.

However, the nonprofit organization is a public trust. The board of directors is appointed or elected on behalf of the whole society (even though the board may be self-perpetuating and all may be personal friends of the founder/executive) for the purpose of providing governance for the nonprofit on behalf of the whole community. They have a specific charge to perform, and they are accountable to stakeholders, public, state and Congress. Granted, there is as yet no formal method by which they are regularly and public held to account, but it's coming, and performance standards are a way for each charity to hold its board accountable for performing their responsibilities justly, wisely and with prudence.

What is the Board's job? They are in charge of steering the nonprofit in the right strategic direction in order to accomplish some specific social aims that this board, through its state registration, formative charter and by-laws, has told the society this charity will accomplish. Then they're job is to do the strategic planning, hire the executive, and make sure that program and finances are going in the right direction. No one else can do that. The executive can't do that; the staff can't do that; and outside people or agencies can't do that.

So the only people who can perform that task are the board members. So why shouldn't there be specific performance standards in place that measure how well the board is doing its job? That, as we said above, is the way to help human beings really do a good job, have a wonderful feeling of success, and feel proud of their organization.

The mere fact that it might have been the executive or staff person who came up with the suggestion of performance standards, and may have created the first draft of those metrics, should in no way be held against them. They're trying to facilitate a process that is vitally important to the board's work. Board members should, rather, be grateful that they have an executive and staff smart enough and creative enough to come up with this governance tool that will aid them in their work. There should be no question of fear in this, whatsoever.

More tomorrow.