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How to Move Your Nonprofit Board from Fundraising to Financing

Change Fear to Confidence

By

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Nonprofit boards of directors are notoriously fundraising averse.

There are often countless excuses nonprofit staff and their board members give about why some board members should be excused from fundraising. Some of the most popular excuses include:

  • “We want client representation on our board, but our clients don’t have money.”
  • “Some board members aren’t good at fundraising.”
  • “We want board members with program expertise to focus on mission, not money.”
  • “Some board members are uncomfortable with asking for money.”

Fundraising is hard, I get it.

But it is absolutely critical that the entire board of a nonprofit understand how fundamental money is to the work -- without it, nothing else matters. And you simply cannot understand something that you only observe from afar.

Which is why I strongly believe that every single board member should fully understand and contribute to how money flows to the organization. The board cannot argue that money is the purview of only the staff; money HAS to be part of the board’s job. Until the entire board really participates in making the financial engine run, they will be unable to have substantive conversations about how to raise or spend that money.

I know that this is a fairly controversial view, but perhaps it would be less controversial if we moved away from fundraising for nonprofits and worked to finance nonprofits instead. Just changing the terms can make a huge difference for a board.

We have to recognize that fundraising is a broken model. Most nonprofits chase low-return fundraising efforts that keep them from achieving financial sustainability. Instead nonprofits and their boards must together create and execute on an overall strategic financial model for the impact they want to achieve.

And in so doing, perhaps we will find that nonprofit boards become much more effective, willing, and confident contributors to financially sustainable nonprofits.

A financing approach that effectively involves the entire board looks like this:

Connect Mission and Money
The financial woes of a nonprofit often stem from a misalignment of mission and money. A nonprofit board that creates a financial engine that is fully connected to and supportive of the mission (instead of detracting or isolated from it) will enjoy financial sustainability. Nonprofits must make money one of the goals of their strategic plan and make sure that all elements of a nonprofit’s operations and its board are fully integrated and moving forward together.

Create a Financing Plan
Once money and mission are connected, a nonprofit’s board and staff must create a comprehensive strategy for bringing enough, and the right kind of money in the door to achieve their strategic goals. Money must be understood and used as a tool, instead of feared or ignored.

A financing plan integrates all activities that bring money in the door (individual donors, foundation grants, earned income, government contracts) and funds both the short and long term goals, as well as the programs and infrastructure of the organization.

Find Money to Build
In such a stark economic environment those nonprofits that don’t have adequate infrastructure simply will not survive, let alone be able to address the social problem they were organized to solve.

Nonprofit boards and staffs must become savvy about capacity capital and start raising the money they need to build the organization their mission requires. Capacity capital is a one-time infusion of significant money to strengthen or grow the organization so that it can create more impact. A nonprofit will only get better at delivering impact if it has an effective organization behind its work.

Get EVERY Board Member Involved
I am not suggesting that we force every board member to ask individuals for money. Far from it. Rather, I’m arguing that nonprofits start getting really strategic about tapping into each individual board member’s strengths in order to make a sustainable financial engine a reality for their nonprofit.

There are countless ways that board members can contribute to a financial engine without asking for money. Start thinking much bigger and connect each individual board member’s skills to your financial strategy.

Once a nonprofit is truly financing its work, it becomes obvious that the entire board must fully embrace that financial engine. Money can no longer be a side activity conducted by those board members who “like” or are “good at” fundraising. To lead a truly effective organization, the entire board must understand and fully participate in the overall financial strategy for bringing a nonprofit’s mission to life.

Nell Edgington has devoted herself to helping nonprofits develop sustainable financing. She is an author and frequent speaker. See her bio page for information about her latest series of ebooks. They are a roadmap to involving your board in financing, not fundraising.

 

 

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