Rather than dwell on the series of year-end reports issued in the last few days (see below) , I’d like to take this moment to share a story.

How to Win at Life

Recently, the work of an individual near and dear to Nonprofits Assistance Fund attracted the attention of the Star Tribune. My colleague’s husband is a substitute teacher who has really connected with his students – so they started a facebook group dedicated to him called Mr. Brackett wins at life.

So what’s the takeaway, other than being two degrees away from a celebrity?

How to Win at Nonprofit Life

Mr. Brackett has found the sweet spot where skills meet community needs.  In nonprofit speak, he’s focused on mission – how he can help educate and positively impact the lives of his students. He knows his core competencies, his assets, and he’s getting results in and out of the classroom.  Every nonprofit convening I have attended, and probably half the blogs and other updates I’ve penned this year, have echoed these same ideas. In a time when we cannot do more with less, the best way for nonprofits to make a meaningful impact is to focus on our mission and core competencies. And deliver those with excellence.

Another takeaway is the value in letting those you serve share their experiences. The success of GiveMN is another example of nonprofits and their constituents being really proactive communicators. As we think about how to deliver services in an era of diminishing resources and high needs, the ability to effectively demonstrate your impact will crucial.

Season’s Greetings

From everyone at Nonprofits Assistance Fund, we wish a safe and happy holiday season to all nonprofiteers and the communities you serve.  See you in the new year!

(In the meantime, here are some pictures from our holiday party and the final nonprofit harvest of 2009.)

Year-End Harvest

In January, we’ll unpack some of the readings below, but if you want to get a jump start over the holidays I bring you year-end readings.

Minnesota’s Nonprofit Sector

• MCN has just released their 2009 Nonprofit Economy report, as well as an updated Current Conditions report.   (You can also hear our own Michael Anderson’s reaction in the video clip.)
• Star Tribune Nonprofit 100
• Trouble Ahead for Minnesota Nonprofits
• Nonprofits still feeling the crunch in Minnesota — bigger needs and smaller revenues

General Nonprofit News

• Nonprofit Policy Trends under President Obama
• Nonprofit Fiscal Rules for the “New Normal”
• Hear Ye, Hear Ye – Overhead is Dead

IRS Updates

• IRS Issues Exempt Organization Agenda for 2009-2010
• 2010 IRS Mileage Rates and Other IRS News
• Form 990 Videos: Understanding the Changes

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

I was amazed at the breadth of experience in the room. We have a vibrant nonprofit community.  Many of these organizations are pursuing entrepreneurial earned income strategies.  The purpose of this network is to to support and strengthen social enterprise in Minnesota, and provide a space to facilitate dialogue.

These notes are the participants’ thoughts on how organizations can foster a culture of entrepreneurship. Please share your own ideas and any reactions in the comments section.

Top 10 Ways to Foster a Culture of Entrepreneurship

Jim Thalhuber of Goodwill/Easter Seals hosted the first Network on Fostering a Culture of Entrepreneurship.  He shared his Top 10 Ways Nonprofits Can Build and Nurture a Culture of Social Enterprise:

10. They keep their board on board

• Set up an enterprise committee
• Don’t let board members “turn off their business brain”

9.  They keep their employees engaged

• Be transparent
• Engage as many different people and voices in the process as possible
• Generate buy-in by discussing
  • What is going on
  • Why it’s happening
  • The desired outcomes
  • How it will impact everyone’s job

8. They are brutally candid

• Assess the marketplace
  • What is unique about your organization?
  • What are your skills? What are your core competencies?
  • Don’t confuse the way things actually are with the way you would like them to be
• Cannot have tunnel vision

7.  They push the envelope

6.  They focus, focus, focus on what the customer needs

• 3 most dangerous words:  “I like that”
  • Doesn’t matter what you like
  • What does the customer like? What does the customer want?
• Remember the double bottom line
  • The customer’s needs are more important than what you want, but less important than your mission
    • Be mindful of this tension
    • Know your organization’s priorities to help make decisions when they are in conflict
  • A successful social enterprise is where the customer’s desires and the organization’s mission come together

5.  They don’t assume anything

• Research
• Make fact-based decisions

4.  They are keen on their core values

• Core values – what you do when no one is looking
• Social enterprise is a means to an end – to achieve your mission
• You don’t want the tail to wag the dog

3.  They are clear about their core competencies

• What does the market value in your organization?
  • How can you leverage that?
  • Where is there room for innovation?
• Avoid everything else

2.  They are persistent

• Social enterprise is a long-term strategic decision

1. They learn how to dance

• Be flexible
• Have a plan – but don’t be wedded to it

Other Thoughts

Why is internal culture important?

• Internal culture eats change for breakfast
• Takes time and commitment,  keep at it

It’s ok for nonprofits to talk about profit

• Some people are nervous to say the word “profit” or “sales” (the “p” word)
• Profit is good
• The real issue is what you do with the profit
• It’s ok to adopt from for-profit businesses
  • Use what works: business models, terminology, best practices
  • Nonprofits have a double bottom line, so not everything will be applicable
• Helpful framework: I operate a small business within a nonprofit environment

Perceptions

• Is a social enterprise marginalized if it’s one part of a larger nonprofit?
  • Important to engage your colleagues
  • Social enterprise helps support the mission & core services
• Perception that nonprofits can’t run themselves
• Must be good at the business you are doing

Dealing with Risk

• There is risk involved – but you have to leap/seize the moment
• What is the culture of your organization?
  • Is it risk adverse? If you are focused on stability and providing services, a risky venture will not work.
  • Having cash reserves increases your ability to take risks
• The value of a needs assessment
  • Although it can’t guarantee success, it can help mitigate risk
  • Balance risk with market need
  • Consider the opportunity cost
  • Assess what you can afford
    • Can you afford to take the risk?
    • Can you afford not to?
    • Can you afford to wait?
• Don’t put all of your eggs in one basket

Defining Success

• Do what it takes to be successful – to generate earned income for your organization
  • Don’t be married to a particular idea
  • Narrow it down to what is successful
    • Grow deeper, not wider
    • This may mean eliminating programs, rather than adding
    • Keep the focus on your mission and core competencies

Getting the Right Board

• Having the right board might be the most important factor in a successful nonprofit social enterprise
• Look outside the organization and your traditional constituencies
• Ideally you want a balance between “business” and “nonprofit”
• Try to recruit successful small business entrepreneurs
  • Running a successful small business takes a different set of skills than working at a large corporation
  • They have been there, done that (including failed)
  • They are probably connected with other successful entrepreneurs
  • They could serve in an advisory capacity or be elected to the board

Running a Social Enterprise

• You cannot run a social enterprise like you run a nonprofit
• You must generate a profit
  • Time costs money
  • What is the true cost of your social enterprise?
  • What are the true costs of your programs?
  • How much income do you need to generate from this venture?
  • This will help you set a realistic price point

Working with the Government

•  MCN’s Nonprofit Day at the Capitol is February 5th
• The Property Tax Exemption question will impact nonprofits whether or not they own land
• There are huge budget cuts coming – social enterprise can help mitigate reductions
  • Contact your representatives and let them know your thoughts
  • The State House and the State Senate both have websites devoted to the budget deficit

At this time of year, there are many blog posts on resolutions (mine, Kate’s) and strategies about how to achieve our goals.  PhilanTopic has one that stood out, More Good Advice for Nonprofits.

I suggest you read the entire post, but my favorite suggestion is:

2. Grow your mission. Many nonprofit organizations that were founded between 1929 and 1935 are still in existence. Focus your attention on growing your mission. If you focus on excellence, money will follow. If you focus on money, excellence never happens. As in the best of times, let your mission dictate management decisions.

Grow as in nurture, not grow as in expand.  At a time when we are all fighting the urge to do more with less, let your mission and core competencies be your guide.

Outlook for 2009

This week, the Chronicle of Philanthropy hosted an online discussion, Outlook for 2009: What the Recession Will Mean for Your Organization.

This was a particularly useful and timely discussion.  In the risk of overdoing it, the topic of mission creep came up here as well:

What would be the top five things you would recommend in either assessment/ evaluation or strategic implementation for 2009?

The response?

1. Making sure mission and program [and budget] are aligned. If not, why not?

2. Make sure that core competencies of the org – including staff, facilities, etc are aligned with #1. In good times, orgs sometimes add all sorts of people and programs, and suddenly find that there is an imbalance between what is being done with core mission. Has you mission in fact changed? Ask the hard questions.

If I seem preoccupied with mission creep, it is because we see how it impacts organizations.  An expanded mission may not create a stronger organization. Often it dilutes the services, goals, and focus — which we cannot afford right now.

Check out the rest of the transcript for more information on how the recession may impact your organization’s bottom line.

Giving in Minnesota

For local organizations looking for additional insights, MCF has released its 2009 Outlook Report, which projects foundation and corporate giving for the year.  According to their findings, we should anticipate a decrease in overall giving as compared to 2008:

Overall, grantmakers anticipate giving will drop about four percent in 2009, as compared to 2008. For grantmakers in the sample who give $10 million or more annually, giving is expected to decrease only 1 to 2 percent.

MCF President Bill King also issues a reminder: “This is, of course, a snapshot in time. The giving picture may change with the economy throughout the year.”

• Read the press release

•  2009 Outlook Report

The upcoming Giving Forum will include additional analysis and recommendations.

This Week’s Harvest

• Climate Change on SSIR (Hat tip: Rosetta Thurman)

• Briefing on the Economy and Charitable Giving: December 2008 from the Center on Philanthropy at Indiana University

• Fiscal Sponsors Directory:  Connecting Community Projects with Fiscal Sponsors (Hat tip: PhilanTopic)

• How Small Foundations Can Protect Themselves From a Madoff-Style Scandal

• NEA study: Theaters vulnerable during recession

• Go back to basics: Refresh yourself on your core mission and make sure your organization is only serving that basic principal. If you have to trim, always trim back to your mission.

It resonated because we talk a lot about the dangers of mission creep.  We see many nonprofits that have drifted from their core mission, usually with negative results. During these challenging times, it is especially important to be rooted in your mission.  Our resource article, Managing and Adapting in a Time of Uncertainty, refers to the mission as an organization’s cornerstone:

Step Two: Mission is the Cornerstone

• Spend time discussing your mission and connecting with stakeholders.
• Engage the board and staff in a discussion about the organization’s mission.
  • Ask what has changed in your area or field.
  • Review your mission. Does it still respond to today’s needs and environment?
  • Evaluate each activity or program as it relates to and contributes to the mission.
  • Evaluate the impact and quality of the programs and services you offer:
    • What do you do best?
    • Which programs are of unique value to the community?

The next step is setting priorities and making choices. Essentially, “If you have to trim, always trim back to your mission.”  Here is a chart that we created to help assess your programs and make the tough, but necessary, choices.

Step four is about strategies, with four basic categories:

• Do the same work with less
• Do the same with new funding
• Do less of the work
• Do the work differently

A lot of these suggestions have been made elsewhere (such as CNM’s blog), but I think calling them out is worthwhile.

Do the work differently
Many effective changes start with a new idea or approach.

• Reconsider how programs are delivered.
• Creatively redesign the use of people, resources, and technology.
• Outsource some administrative work.
• Share space, staff, or other overhead costs.
• Develop new revenue sources from contracts or earned income ventures.
• Initiate earned income ventures that fit with your organization’s mission.
• Collaborate with other organizations on programs.
• Ask allied organizations to take over programs that are a low-priority fit with your mission.
• Consider mergers.

These a few examples of what innovation could look like, although there are many others.  What stands out is the idea of boiling your organization down to its essence.  To use a cooking metaphor, creating a reduction.  There may be less volume, but what remains is potent.

(PS. Hat tip, Leatherstocking AEA’s post Ideas from Others: Middle Tennessee Nonprofits.)