Best practices for social change and environmental action

Archive for the ‘Finance’ Category

Getting the board to talk math

In Finance, Fund raising, Money management, Nonprofit management on June 25, 2012 at 6:37 pm

It’s a rare board member who can really get into a nonprofit’s operating numbers. Yet, every board has to know where the money comes from…and how it’s used.  Moreover,  it’s essential that the board understand – at strategic, tactical, and priority levels – what the organization needs to meet its goals and live up to its mission.

The trouble, of course, is that such discussions can devolve into dreary dog and pony shows.  How much more effective would it all be if you could flip the model to get the board talking, taking notes, and running some numbers themselves?

Fund raising guru Gail Perry, author of Fired Up Fundraising: Turn Board Passion into Action and the excellent Fired-Up Fundraising blog has some good thoughts on that.  It essentially comes down to asking three questions:

  • Where does our money go?
  • Why does it cost so much?
  • What do we need to invest right now?

She gives some excellent real life examples in her article over at the Guidestar site: What’s the Math? Three Questions Your Board Members Really Need to Know. (The article is reprinted from the blog.)

It seems so simple…at first…but it really made me think.

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The colors of money in social enterprise

In Finance, Fund raising, Grant writing, Money management, Nonprofit funding, Nonprofit management on April 18, 2011 at 5:24 pm

What should take priority in a social enterprise model: finances or impact? If some themes of the recent Skoll World Forum on Social Entrepreneurship are any indication, there’s probably no single “right” answer.

Idealists will lean naturally toward outcomes. Pragmatists will likely note that you put those outcomes at risk without a solid financial foundation. The rest of us naturally ask why we have to choose; money and impact are equally important.

There’s a lively follow-up discussion of the topic underway right now over at the Social Edge global online community sponsored by the forum’s organizer, The Skoll Foundation.

A consensus seems to be taking shape about the gap between the different lines of thinking. Smart social investors see the impressive results achieved by social entrepreneurs working worldwide and in multiple key sectors. Yet, they cannot really figure how to get a “market rate return” from investing in those enterprises while enabling the organizations to achieve the optimal social impacts.

Perhaps the key question is how foundations, funds and other “impact investors” can help social enterprises build financially stable and sustainable business models that actually strengthen their missions. How can they close the gap between the need for financial return and the mandate for maximum impact?

Root Capital founder Willy Foote offered a clearheaded approach in his Skoll Forum presentation about the “colors of money” … which he succinctly summarizes here:

Colors of money. We’re sure to be hearing that a lot as the social enterprise sector gets ever more dynamic.

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