Eric Phelps Debunks Nonprofit Myths

Eric Phelps Debunks Nonprofit Myths

By Eric Phelps

There are a number of organizational beliefs that, despite their hindrance to growth, continue to have a strong hold on nonprofits. They include ongoing “magical thinking” about fundraising, misconceptions about nonprofit finances, and just plain-old bad business. But in order to address them, we have to know the nature of the water we are swimming in and imagine new ways of working. Here are some of the most stubborn and ineffective beliefs pervasive in nonprofit culture.

The Belief: Fundraising is a Matter of Math – I’ve lost count of the number of times I’ve heard this suggestion from a board member or nonprofit staffer: “We need to raise a million dollars. All we need to do is sell 1,000 (bricks, plaques, stained-glass windows) for $1,000.00 each!”

·     Why It’s a Faulty Thought – First of all, that is a very labor-intensive way to raise money, but secondly – this is not the way the real world of capacity, passion, and interest work. Thirdly, fundraising is relational, not transactional… you are not likely to suddenly generate $1,000 brick contributions from zero engagement.

·     New Possibilities – The “Fundraising Pyramid” of Major Donors, Major Supporters, Annual Campaign, and small contributions is a much more successful model – it shows the various levels of support possible based on actual prospects. It also turns out to be a formula that you can use to make good estimates about how many of each level donor will be needed to achieve your overall goal. For a truly improved model, check out Deb Polivy’s Donor Lifecycle Map.

The Belief: “We should just apply to ______ Foundation. They have a lot of money, and you can apply on line.” (Yes – people still say this). In a recent workshop with 100 fundraising professionals, I did an informal poll about this very statement and at least 75 hands went up saying their BOARD CHAIR has proposed this.

·     Why This is Magical Thinking – Just because a philanthropist or foundation has capacity, it does NOT mean that their giving is aligned with your organizational mission. Even if it turns out that you are highly aligned with a particular foundation, business or other prospect, you will not be able to achieve your fundraising goals from one source. Nor should you. In addition, by thinking of a prospect through this lens, you overlook the wide array of lesser-known philanthropists that may be highly aligned and interested in your mission.

·     New Possibilities – Conduct prospect based on your organizational focus, geography, organizational connections and programs. Since foundation giving only makes up 12% of all contributions (and often comes with restrictions), change your focus to expanding your individual support across a broad base.

The Belief: Our Organization Needs to be more “Business-like.” This misconception is often purported most strongly by board members, but also comes from funders and senior staff who have adopted this faulty myth.

·     Why This MBA Mentality is Not Useful – First of all, it perpetuates a false bias that businesses are “better” than nonprofits. As it turns out many “businesses-like” organizations fail, become irrelevant, have challenges scaling, and focus on the wrong things (just like nonprofits). Add that they are sometimes bastions of greed, pollute the environment, foster a culture of deceit (Enron – a #1 rated stock for five years) and often do not support employee growth and leadership development. Why in the WORLD should nonprofits adopt these traits? In Jim Collins book “Good to Great” his team looked far and wide to find even 25 companies that demonstrated truly outstanding and sustained business excellence. In his companion piece, he says “Nonprofits should not become more like businesses because most companies are not even that good.” And if you instead mean that they should be more efficient, lower their overhead, and do more with less – let me remind you that I don’t know of too many for-profit business that overhead of 10% and hundreds of people willing to work for the for free! (We call them volunteers).

·     A New Possibility – Nonprofit leaders DO need to improve their performance, but not in being “business-like.” Instead, they can (and should) increase their leadership skills (especially staff development – identified as one of the top reasons people choose the third sector), soft skills (interpersonal, emotional intelligence), time management, and project implementation. Organizations should spend MORE on overhead (not less), invest in staff development, upgrade their old computers, and implement excellent business ideas such as 20% time, Fed Ex Days, and some of the out-of-the box approaches that are utilize by the most innovative companies (See Robert Sutton’s “Weird Ideas That Work” for inspiration).

The Belief: Nobody Cares About Our Cause and That’s Not Fair. Some associated ideas include “We don’t know anyone who will support us,” “People don’t care about (homeless, foster, poor, black, etc.) children,” “All of the money goes to largest organizations,” and – my personal favorite – “We’ve tried everything and have gotten nowhere.”

·     Why This Eeyeore Philosophy Is Lame and Depressing – As Henry Ford said, “Whether you believe you or believe you can’t – you’re absolutely right.” By setting up a scarcity mindset from the outset, you determine the course of your organization because – let’s face it – nobody wants to support a group that believes it’s already defeated. And yes, it’s not fair that some organizations disproportionately have market share, that’s not the game you are playing. They were once small too, and have built their organizations by believing in their mission and enrolling others in their work.

·     A New Possibility – Believe that you CAN fulfill your mission that people DO care about your organization, and that you are organizing people to make change in the world. Know that some organizations are designed to be small, and should not strive to be bigger. The Lake Warner and Mill River Committee just raised $500,000 to fix the dam on the North Hadley Pond, built in 1919. It took four years and the group faced several setbacks – but their perseverance is leading to preservation of a recreational site that’s been in existence for 350 years. Not going to make national headlines and not likely to matter to the people in any other community, but it makes a lot of difference to people in Hadley. As for “trying everything” – let’s just say that you have probably tried the usual things and now you have the opportunity to attempt the unusual, and impossible.

Eric Phelps is a Principal in RAINMAKER Consulting, Eric brings more than 30 years of experience in nonprofit management, encompassing executive leadership, fundraising, human resources, program development, conference planning and strategic oversight. Prior to joining RAINMAKER, Eric served as Vice President of Development for VentureWell, a national nonprofit supporting university inventors and innovators throughout the country. During his tenure Eric was part of a team that increased annual revenue from $4 million to $10 million. Eric collaborated with the senior leadership more than $30 million, including new funding from the National Science Foundation, Bill & Melinda Gates Foundation, Intel Foundation and USAID. Prior to VentureWell, Eric Phelps was Director of the Grinspoon Institute for Jewish Philanthropy (JCamp 180), a program of the Harold Grinspoon Foundation in Western Massachusetts. Eric has also served as Executive Director of the New Art Center, Executive Director of VSA arts of Georgia and Development Director of IMAGE Film & Video Center. Eric has consulted with numerous nonprofits in organizational development, board development, fundraising strategy and strategic planning. Eric Phelps is the author of “If Money Can Fix it (It’s Not The Problem)” due to be published in spring of 2017. Eric Phelps holds a BA in Psychology from the University of Massachusetts and a degree in American Sign Language from Georgia Perimeter College. Eric enjoys writing music, reading, cycling and spending time with his family. Known for his extraordinary results, kindness and creative wit, Eric puts the “zing!” in fundraising!