Early Birds

Effective communication is best illustrated by the playful idiom: “It is the early bird that gets the worm”. However, I am equally confident that few know the full expression goes on to say: “But, it’s the second mouse that gets the cheese.” I find this expression, in its entirety, especially instructive when I think about what separates non-profit organizations from for-profit corporations.

The latter (corporations) a strong argument might make, are always scouting for and investing in new, fresh, innovative. They understand they must always differentiate if they are to remain competitive. The latter, (non-profits) on the other hand, rarely invest in innovation and, in my experience, are too busy delivering goods and services to those in need to be actively scouting for what is new or fresh, almost never asking themselves: how do we remain competitive and relevant?

In that Trident True coaches and consults to both types of organization I will instruct that this particular entry is devoted to supporting a new mental model for non-profits, with specific emphasis and counsel on the issue of the deployment of limited resources. Resources that include work, wisdom and wealth.

Most NPO’s could write the book on the lean startup (Sorry, author Eric Reis beat you to it!). Moreover, it is estimated at least 60-70% have an annual operating budget of less than $500,000. In other words, of the 1.6 million NPO’s somewhere around 950,000-1.1 million operate on a shoe-string. Yet most prevail, although few progress. (National Center for Charitable Statistics)

It seems common they simply wash, rinse and repeat their annual budget, thoughtlessly considering the expenses and income from the prior year, leaving little left over to reinvest in their … wait for it … Yes, mouse trap! Even if their trap hasn’t caught a mouse in ages. Sadly, not only are they NOT the early bird but they’re also not leaving with the cheese. Why?

The major obstacle that occurs to me is their tolerance to risk, by design many are led by individuals who are simply risk-intolerant. Conversely, for-profits are often risk-inclined. And for good reason. Leaders, including handsomely rewarded executives and trustees, not to mention their share-holders, have expectations that this year will do better than last year.  It better, or heads and salaries will roll!

Worse still is the fact that a surprising number of NPO’s have endowments, money reserved for rainy days, built up over the years often as a result of a major campaign or a solid planned-giving program. However, every day that ends in a Y seems to be a rainy day for some of those in positions of leadership. Not often heard are the words: “Why put my head out further, or my hand, if there is a cache of resources able to balance the budget at the end of the fiscal year?” Rare, brave (foolish?) souls have dared to say that out loud! But, trust me, many have thought about it! Counter intuitively, the charitable sector culture not only supports it but encourages it.

Not surprisingly this mental model, a tendency to imagine scarcity rather than abundance, has failed time and time again. Quite frankly, the sophisticated donor community is tired of this approach and many have begun to expect their beloved charities to function more like a business, than a … charity case. Increasingly many have begun to devote resources to side hustles, programs and projects that generate fees for services. Moving the risk dial slowly and steadily from adverse to inclined- and finding themselves rewarded for their efforts!

I would offer the following great reads (see below) if this is an area of interest, and emphatically encourage all readers to be advised this is a well-discussed topic in the nonprofit sector and for good reason. Furthermore, I warmly ask you, or your organization’s leadership, if disinclined, to query yourself: Why not? (Taking into account that some charities, given their mission, simply can not i.e. many on the front lines of health services fields).

Once you’ve pondered that question, or if you need support unpacking it, consider the highly regarded resources listed below. And, in advance, I would remind the ambitious non-profit executive that the robust reasons to consider diversifying revenue streams includes:

• Potential for financial stability
• Improved organization sustainability
• Increased programmatic flexibility
• Reducing dependency on fickle or cyclical external funding
• Diminishing donor fatigue or patron attrition

As mentioned above, there have been countless studies, papers and articles on this subject. Some of my favorite include:

• “The Importance of Diversifying Revenue” by the Nonprofit Finance Fund
• “Earned Income Strategies for Nonprofits” by the National Council of Nonprofits.
• “The Lean Nonprofit: How to Use Data to Fuel Your Earned Income Strategy” By the Nonprofit Quarterly.
• “Creating a SustainableNonprofit: The Case for Generating Earned Income” By the Urban Institute.
• Case Studies of Successful Nonprofit Earned Income Models; check out YWCA, Habitat for Humanity or Goodwill Industries.
• “Nonprofit Sustainability: Making Strategic Decisions for Financial Viability” By Jeanne Bell.

In summary, I’ll leave you all with this final question to ruminate over, preferably in an Adirondack chair overlooking the … Adirondacks!

If you could enjoy a wheel of cheese every day, name your favorite?

Some of my go-to’s include: Nutty Parmigianna, Maytag Bleu, Buffalo Mozzarella, or soft, buttery Brie. Just saying.

Pro-Tip: Be the second mouse, not the trap!