Judy Alnes, Executive Director of MAP for Nonprofits, is on a roll about the importance of innovation.  In her article for MCF’s Winter 2010 Giving Quarterly, she outlines what might come next for the nonprofit sector, finishing with a call for innovation:

1. “Scrub-Down” Won’t Be Enough
2. We Aren’t Going Back From Where We Came
3. Strategic Investments Aren’t Optional
4. We Must Do a Better Job Measuring and Taking the Positive Results to Scale
5. We Have to Innovate and Be Bold

Judy was also our guest blogger this week at Balancing the Mission Checkbook, and her post Ready, Set, Innovate provides a number of resources to help nonprofits embrace the discipline of innovation.

Thinking Differently

To help nonprofits think outside the box, we are offering a workshop Financial Planning in Uncertain Times.  This training is built around our scenario planning tools, which any nonprofit can use to think through how different circumstances – such as changes in the state budget or foundation grants – impact your programs and other operations.

For nonprofits interested in assessing new revenue streams, you can listen to a recording of the webinar Alternative Revenue Strategies and download the Revenue Matrix.

What other tools do you need to think differently? Tell us in the comments and we’ll do our best to find existing resources or develop new materials to meet these needs.

C is for Collaborate, Good for You and Me?

Another hot topic is collaboration, especially as nonprofits try to find new ways to deliver services with fewer resources.  Around Thanksgiving I wrote a blog post What I’m Thankful For – Strategic Collaboration that highlighted some examples of successful collaborations. 

So what does it take to have a successful collaboration? Here are some resources that help make these partnerships work for everyone.

Administrative Alliances

The Nonprofit Times recently published an article, Secret Sauce Of Backroom Collaborations, that identifies three common factors in successful administrative collaborations:

• Standardization: The reason why many nonprofit back room operations are not standardized is because they tend to be put together in support of programs and services that are not standardized. Each has different terms referring to essentially the same thing.

• Replicability: Without an overarching agreement about the service models using the administrative services, it is unlikely that two or more back rooms will have enough in common to maintain replicable processes.

• Scale: Low volumes of transactions will not support the added administrative effort needed to make an alliance work… This “administrative alliance tax” is the reason why small organizations might be better off co-locating rather than trying to build administrative alliances.

Strengthen Your Collaborations

As the Nonprofit Times article mentions, working collaboratively can be hard:

The staff time required to make them happen is almost always “extra” time, over and above the normal demands of day-to-day operations. That means collaboration time is often of a lower priority, squeezed out in favor of more pressing business.

When partners don’t work well together, the goal is muddy, and responsibilities aren’t clear, collaboration can be far more effort than it is worth

The webinar Collaboration: Construction, Repair and Maintenance was designed to help nonprofits consider the pros and cons of collaborating during tough economic times and asses whether collaboration is the right strategy to reach your goal, and how to build a strong foundation.  Listen to the recording to learn more about how to build trust, lead successfully, and make collaborative decisions.

Case Studies

• Nonprofit Collaboration Case Studies: The Charity Lawyer presents four case studies, complete with what worked, what did not, and lessons learned.

• Looking for an example of a successful backroom collaboration?  Check out the MACC CommonWealth.

• Nonprofit Collaboration Database: The Lodestar Foundation, which awards the Collaboration Prize, has created a database of collaborations.  You can search by type of partnership, geographic area, service area, and even challenges faced.

Other Resources

• Mergers – Due Diligence Items: After a conversation with La Piana Consulting, Nonprofit Law Blog outlines the most important things to think through before any merger.

• From the Answer Desk: What do I need to know about collaboration and other kinds of strategic alliances? The librarians at the Foundation Center in Cleveland explain different kinds of collaborations and round up some useful tools.

I think it’s interesting, and timely, that in the last few weeks both my original and adopted hometowns blew me away by their community and collaborative spirit.

Partnerships That Produce Results

First, Buffalo, NY took full advantage of Extreme Makeover: Home Edition coming to town, using the opportunity to transform an entire neighborhood and illustrate the importance of green building practices, such as deconstruction.

Then Minnesotans donated more than $14 million dollars to 3,141 nonprofit organizations in 24 hours, setting a national record. That is certainly above average.

Wow.

Neither effort would have been possible without significant community support – in the form of 5,000 volunteers and 38,778 donors, respectively – as well as the work of countless organizations behind the the scenes and some public-private partnerships.

There is no reaction except to be humbled. But there are lessons that we can learn for projects large and small.

Let’s Collaborate

Right now, everyone who wants to improve the nonprofit sector is emphasizing collaboration.  Certainly in some instances the results are impressive.  But successful partnerships take a lot of work and trust.

There is no one size fits all model. Collaborations range from joining forces on a project to combining backroom operations to a full merger.  Advantages include increasing impact or taking advantage of unique skill sets, such as in these examples, and minimizing costs.  Challenges include letting go of control, managing the needs of diverse stakeholders, and confusion around roles and responsibilities.

GiveMN as an Example

The GiveMN Give to the Max Day effort was incredibly successful in promoting individual giving, engaging new donors, increasing online donations, and getting significant amounts of cash into the hands of nonprofit organizations.

However, there was also confusion around some details, especially the matching funds. Regardless of how the uncertainty happened, it underscores the importance of clear communications among stakeholders – in this case that includes the 3,141 nonprofits, 38,778 donors, and the project partners.  Everyone needs to be on the same page about project goals and outcomes.

Beyond illustrating the widespread community support for Minnesota’s nonprofit sector, GiveMN also shows that nonprofits and their supporters can effectively use social media and other online tools to leverage their networks to take action.  There was an earned media blitz from the partners, but organizations and individuals took advantage of email, facebook, and twitter to get the word out.  The very nature of social media is collaborative.

What are your stories of collaboration? What lessons have you learned from those experiences?

Case Studies

• Nonprofit Collaboration Case Studies
• Where Can I Find Case Studies of Nonprofit Collaborations, Mergers, and Other Strategic Alliances?
• Joining Forces in the Back Office – Lodestar Foundation Resources
• Interview: Collaboration Prize Co-Winners
• What happens when two competitors combine forces
• By sharing expertise, agencies are able to improve operations, save money and help more clients

Tools and Resources

• What do I need to know about collaboration and other kinds of strategic alliances?
• Nonprofit Mergers and Acquisitions: More Than a Tool for Tough Times
• Project ReDesign and Merge Minnesota

Scenario Planning

The McKinsey Quarterly recently wrote an article about the advantages (and some potential pitfalls) of scenario planning.  At Nonprofits Assistance Fund, we love scenario planning for the reasons laid out in McKinsey Quarterly:

Scenarios are a powerful tool in the strategist’s armory. They are particularly useful in developing strategies to navigate the kinds of extreme events we have recently seen in the world economy. Scenarios enable the strategist to steer a course between the false certainty of a single forecast and the confused paralysis that often strike in troubled times.

What’s in your Planning Toolbox?

Here are some resources that can help you craft your own scenarios.

• Scenario Planning tools:
  • Scenario Planning Example
  • Scenario Planning Worksheet: A blank template for you to use
• Cash flow template
• Contingency and Scenario Planning – What’s the Difference and How Do Nonprofits Get Started?
• Focus on the Destination, Not the Route (Budget)!

You can also read Kate’s post on this topic, What H1N1 Taught Me About Contingency Planning.

A few weeks ago, Blue Avocado published a great post about the value of Dashboard reports:

Imagine getting a dashboard like this at every board meeting. With a glance, board members could see how the organization is doing and start asking the important questions. The board would also be able to discuss what indicators should be added to the dashboard and which might not be necessary…

It’s hard to imagine driving a car without quick, ongoing access to a speedometer, fuel gauge, or gear position. An organizational Dashboard can be the same, fast way to check in on basics . . . so you can pay more attention to where you’re going.

It was a timely article, because we had just revamped our own dashboards.  We wanted to make sure we were giving the board and staff the most useful metrics about our finances, programs, and other work.  The end result is more useful dashboard for board and staff, but just was useful was a by-product of the process.  It forced all of us to take a step back and consider what information we’re sharing and why.

As the Blue Avocado article states, it doesn’t tell us where we’re going, but it provides critical information that allows us to focus on our work and the road ahead.  A tool that helps you cut through the noise and focus is a great asset.

For more on dashboards, read What Gauges Belong on Your Dashboard? or Seth Godin’s post, Dashboards.

Overhead

There is an interesting debate swirling about nonprofit overhead expenses.  Are they an investment in infrastructure,  money that could be better spent on programs, or something in between? Do donors care?  Should they?  This is Kate’s take:

Here’s my soapbox

I agree that it’s wise to “Do the same due diligence on your donations that you would your investments or your business.” But when I review an investment opportunity, I review based on the expected criteria for a successful business – profitability, market share, and returns. I don’t review their overhead and management costs. So why would overhead be the criteria for a charity?

…Do some due diligence on charities before you donate, just as you would for an investment or business opportunity. Pay especially close attention to how successful the nonprofit has been at achieving its mission. Do they provide information about how effective their programs are and what impact they have on the people and communities that they serve? Do they have a way to measure and communicate progress and/or success?

Join the conversation at Balancing the Mission Checkbook, facebook, or follow the example of Rich Cowles from Charities Review Council and blog about your position.

Late July Harvest

Mergers

• Joining Forces in the Back Office – Lodestar Foundation Resources
• Nonprofit mergers: Putting the best foot forward

IRS Updates

• IRS Releases Final Regulations for Returns of Small Groups
• IRS Training Materials – Governance

Other Resources

• Workshop Resources, Questions and Answers
• Nonprofit Leadership 601: New to Running a Nonprofit: Here’s an Overabundance of Resources
• Turning Crisis Into Opportunity: A Conversation With Two Nonprofit Sector Leaders

Crowdsourcing: What’s Working, What’s Not

A few weeks ago, Kate issued a call for “stories of change and transformation” and in the comments we talked a little bit about how we could leverage the power of our online community and crowd source this. I’ve had a few conversations about tools and tags, but before we jump into tactics, I wanted to ask:

• Is this happening elsewhere?
• Is anyone interested is collaborating on this kind of project?

Let me know in the comments.

This week’s topic was New Ways for Arts Organizations to Finance Their Operations.  There was an interesting conversation about the ideas of mergers and new ways to raise revenue.

Generating Revenue

Clara Miller: Starting up and growing a new line of business requires investment all its own, and may take years to actually contribute net revenue to operations. And earned revenue is the lion’s share of most arts orgs’ revenue now.  I have seen a variety of creative approaches to wringing more net revenue out of the current business platform:

Examples cited by Clara Miller and Holly Sidford:

• “Meet the artist” salons and other forms of patron engagement
• Deploying artists into the community in various venues (hospitals, schools, etc.)
• Partnerships with business, universities, etc
• 2 for 1 tickets
• Pay-as-you-can admissions
• Free outdoor events with a pass-the-hat request for donations
• Special deals for members and subscribers (perks like free parking, better seats, meet the artists opportunities, free admission to other events)

What ideas is your organization trying to boost revenue?

Mergers and Strategic Collaborations

Clara Miller: From a purely practical perspective, sharing performance space or tech equipment, for example, can be challenging because the nights when ticket sales are highest tend to be the same, and times when rehearsal is needed is similarly clustered. I think that “neutral” platforms–those run commercially, sometimes as cooperatives themselves–are worth looking into because they are already scaled, and actually large enough to benefit from economies of scale–two (or even 12) small arts organizations may get some scale economics, but internal complexity will be problematic in reaching true economies, and will require new skill sets and systems to be built.

Holly Sidford: Arts groups ought to look for opportunities to economize on shared services with non-arts organizations as well as arts groups…it may be more difficult for two arts groups in a given discipline to combine forces than for arts groups to collaborate across discipline lines (dance and theater, for example, or music and dance), or to combine with educational, social service or even health organizations.

An example from the discussion:

The Great Lakes Music Festival, the Eisenhower Dance Ensemble and the Detroit Chamber Winds & Strings, share physical space, marketing staff, and development staff, and accounting among other numerous functions.

More resources and ideas about nonprofit collaborations:

• Fieldstone Alliance’s Tools You Can Use: Engagement Strategies: Making the Most of Working Together

• Foundation Center’s From the Answer Desk: What do I need to know about collaboration and other kinds of strategic alliances?

Other Artful Resources

• Arts in Crisis: A Kennedy Center Initiative

• Springboard for the Arts – check out their delicious account for great resources, and an example of how an organization can aggregate and share information

• smArts & Culture (If you’re on twitter, follow Maryann)

Nonprofit Harvest

• White House Officials Discuss Plans for Social-Innovation Office

• More ways to track stimulus spending in Minnesota and around the country

Inspired by Nonprofit Leadership 601, I’m going to keep an eye out for innovative and interesting examples of how nonprofits are collaborating during this challenging economic time.  Taking a note from Heather, I’ll also tag those stories npoeconomy.

• Now That’s What I Call Collaboration…

Another Collaborative Framework

In his post, Social Movement Innovation Andrew Wolk asks how nonprofits can work together to maximize impact.

What are the unique roles of a direct service organization, an advocacy organization, a coalition, or the government? How do they all fit together to ensure lasting social impact?  What are the connections in education, for example, among Teach for America, Alliance for Excellent Education, the National Alliance for Public Charter Schools, and the U.S. Department of Education?  Each organization is  concerned with its own sustainability and impact, but shouldn’t they also consider their role in a collective purpose: better education?

How Liquid is Your Cash?

From Balancing the Mission Checkbook, an important reminder that Cash is Cash, Sometimes:

Beyond verifying an accurate number, though, it’s important to have a solid grasp of all the strings and restrictions that might hinder your ability to use that cash when you need it. Some restrictions are external, such as temporarily restricted grants. Other strings on cash result from internal decisions related to investment decisions, reserve policies, or overly-complex designations and conditions.

To help organizations get a better handle on how accessible their cash really is, Nonprofits Assistance Fund has created the Cash and Investment Analysis worksheet.

I would also suggest reading a related post, It’s 10 am, do you know where your cash is?

 This Week’s Harvest

Updates on the Stimulus and the Proposed Deduction Changes

• Sources of Information Regarding Stimulus Funds: National Council of Nonprofits Special Report #4

• More information on federal stimulus in Minnesota from Minnesota Budget Bites

• Information about the Proposed Changes in Charitable Deductions: National Council of Nonprofits Special Report #5

• Obama’s Charitable-Giving Plan: What It Means for Nonprofit Groups Live Discussion Transcript from the Chronicle of Philanthropy

Other Developments

• L3C – Developments & Resources from Nonprofit Law Blog

• What I Learned From the IRS, Part 1 from Not-For Profit Accounting

• Art as collateral from the Artful Manager

• The Critical Alignment of Mission, Money and Competence blog post and discussion on Social Velocity