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Entrepreneurship in Society, >> Jeanan Yasiri Moe: This is
the University of Wisconsin a coSchool of Human Ecology.ough
I'm Jeanan Yasiri Moe.
to extend thanks to our partners As we begin today, I would like
UW Office of Corporate for supporting this course, the
Engineering for their technical support, and financial support
that's provided through the Ewing Marion Kauffman which is
committed to advancing academic education in entrepreneurship.
Additionally, we'd like to thank
Public Television and their University Place crew for taping
today's lecture.
special guest today, Dennis IJohnson, vice-president ofr
advisory services with Forward
Forward Community Investments provides its clients with
guidance and resources that help
sustainable statewide non-profit to build a strong, secure and
Dennis has been with Forward community.
from the University of Nebraska sincLincoln and did hisd MBA
undergraduate here at UW. So he is a Badger.
He brings to his role strong
executives on organizational skills in working with nonprofit
facilitation as well as budget development planning and
and human resource functions. pToday, Dennis is going to be
discussing building capacity is building success in nonprofit
social venture enterprises. Please join me in welcoming
Dennis Johnson. [APPLAUSE]
Dennis Johnson: Well, thanks, Jeanan.
I appreciate the opportunity to be here and talk a little bit
about what Forward Community
helping to build the capacity of Investment does and how we are
Wisconsin. nonprofits across the state of
a show of hands, are you How many of you, just maybe with
development financial familinstitutions?unity
Anybody?
Okay, maybe. No.
there. Someone's got a little bit
So we are chartered by the US Treasury, and our initial
charter was around providing
So if there's anybody here in the business school or pursuing.
any of those types of programs, really what our aim is to
provide access to capital for nonprofits that cannot find
conventional financing. Either the rates are not
attractive, the terms are not attractive, or, quite honestly,
in the economic environment in
many nonprofits can't go to a whicconventional financialday,
institution and get credit. Just as many small businesses
can't get credit today, but it's
nonprofits. eSo we've been around for aboutr
20 years. We started in 1994.
We have lent close to $30 million in our history.
We are based here in Madison, but we are a statewide
organization. Up on the overhead screen here
are just kind of the lines of business that we serve.
We're divided into four different areas.
One is advisory services which, as Jeanan had mentioned, I'm
responsible for.
opportunities similar to this, That includes learning
with nonprofit executive but most often we work closely
help build their capacity around directors and board members to
We also do some one-on-one nonprofit finance.
finance, that's included in advisory services, and a couple
of other initiatives. Because we are a community
development financial institution, we are required to
raise capital to lend.
institutions, will ask us and wonder, well, where do you get
your money from to lend out to
And so our money comes typically nonprofits?
themselves. fBecause we lend to low tos
moderate income serving population nonprofits, they get
CRA credit with their investments with us.
We also have many socially
looking for a more local or rregional type of investment.e
You may have heard of the Calvert Fund which is a national
mutual fund company that invests
investments, and oftentimes you can send your money into them,
and you don't really know where it's going.
And so as a CDFI, investments that come to us are being lent
here in the local community.
here in Madison and across the So we've done local projects
almost 20 years. state for the last, like I said,
lending services. Talking aWe do loans.about our
We do lines of credit.
We do pre-development loans. We do loans for working capital.
activities in our lending department are things that,
again, traditional lenders would
We'll look at subordinate positions in a third or a fourth
position. We'll go up to a 95% loan to
value.
that are more creative than many So we're really doing things
institutions. And then the last bullet here is
around our research initiatives.
have been doing a statewide Wnonprofit economic impacts,
survey. And we're going to talk a little
bit about that here in a few
that we're seeing there, but minutes, just some of the trends
research initiatives. So, here's our mission and our
vision. Our mission is to transport
communities by building capacity
through leveraging lower cost and capital, expert advisoryons
services, and timely resources. And our vision is a strong,
secure, and sustainable nonprofit community across
Wisconsin.
the capacity of nonprofits and So, again, we're here to build
successful in achieving their mission, and that's our mission.
Just some goals for today.
before we got going about some I was talking with Jeanan here
you've heard this semester or of tmaybe are coming. that
I guess there's one coming after
think is interesting. meBut I want to provide some I
context first on what I think the Wisconsin nonprofit
community looks like. So I'm going to reference back
to the survey that we completed last fall, provide a little
information around what the landscape looks like today for
the nonprofit community, and
you understand some of the then I want to jump into helping
seeing. I understand that one of the
readings from today might tie closely to that, and that was
not planned.
on deck as far as the pre-reading, but I think it will
merge nicely there. And then I'm going to jump into
really what is capacity and what
What's the difference, why is it is capacity building.
how can we explore some effective practices in building
capacity. And then, lastly, share some
ways that our institution is
capacity building. helping organizations with their
today. So that's kind of a road map for
And I think oftentimes when you think of nonprofits, people have
a misperception, perhaps, of
they are. The university, obviously, is a
nonprofit organization, a very
There are healthcare large nonprofit organization.
organizations. institutions that are nonprofit
pantry. There's community development
facilities. There's community centers.
And I think oftentimes
full value and the recognition nonprofits don't maybe get their
a couple of things. In Wisconsin, they are the fifth
largest employer. Almost 250,000 people across the
state of Wisconsin work for a nonprofit.
In rural parts of the state,
working with clients, many times which is oftentimes where we're
those particular communities. tUp until recently, I would say
nonprofits have been quite a
uncertain economic conditions and things that are happening
across the state and across the country given our certain
uneconomic opportunities that I think it's not quite as stable
as it used to be but if you look
stable employer. at historically they are a
really one that really gets back And the last point here is
to help build the sector is that to our mission in really trying
organizations that are doing the I think oftentimes the
communities is really critical heavy lifting in these
residents and the individuals living in those communities.
So it's really critical those services they provide, whether
that's a community center and maybe it's for at-risk youth,
maybe it's for the elderly, they're really oftentimes
serving populations in our
really paying attention closely cto, we may not realize who'st
helping to bring those services to the community and making sure
that it's supportive. So, one of the things that we
talked about recently is, I did a learning session in Wisconsin
Rapids yesterday and we talked
normal. And here's a picture of our
economic outlook update from
And really fully appreciating the demands on Wisconsin's
nonprofit community have
last few years. Nonprofits can really no longer
work on the models that they
I think that's really a large part of setting the stage for
today is there's two things that
One is economic and the other is are really going on.
we're going to jump into here in there are trends changing, that
creating nonprofits to get a little bit, that really are
more effective, to really be stronger, to get better, to be
and make sure that they are really serving the individuals
and the organizations that they have sought to achieve when they
got that nonprofit status.
fall, a couple of interesting statistics that I wanted tot
share is that, again, we focus
So many of the questions are on the nonprofit finance area.
budgeting, what kind of reserves focused around cash flow,
directly to whether or not that organization is going to be able
to continue to sustain itself through these uncertain economic
times.
that came out of this survey So a couple of quick statistics
The one being 51% of the from last fall.
than three months cash on hand nonprofits surveyed have less
You can probably imagine if you look at yourselves and think
what do I have in my savings
through the month to make sure I account, how am I getting
whatever is going on. pOrganizations, nonprofitsor
included, just like any small business have to really pay
close attention to the cash they
make payroll and pay their fixed have on hand so that they can
month. and their variable expenses each
really quite startling to us So this particular statistic is
nonprofits that we surveyed across the entire state, which
we put out about 6,000
we use other organizations like noJeanan's group here at thed,
university and other partners around the state to try and get
the word out. More than half of them have less
than three month's cash on hand,
startling statistic. which is really, I think, a
funding decreases in their last 46% of thofiscal year.government
I think that's one thing that we
the new, read about, that our pgovernment funding is shiftingn
radically and quickly and that
in a tailspin and trying to orfigure out, okay, if I'm notof
getting as much funding from
programming, how am I going to government to run my
programming or how am I going to continue to either do the
that we're fiscally responsible. do it differently to make sure
were more financially secure and One other thing, nonprofits that
pursue long-term strategies for capable wesuccess.likely to
And that's really where we kind of are going to today and around
capacity building is that we're really trying to help build
nonprofits to be stronger, to be
for some strategies that maybe more effective, and really look
prevalent in the industry. have not historically been
for-profit sector, which is where I spent the majority of my
earlier career, it's always about making a dollar for
whether it's a publicly traded
owned company, it's the bottom company or it's an independently
have always been really focused on their mission, which they
need to be, but in today's world
they are having to shift and those lines are blurring and
generate revenue to sustain look ftheir programming.ays to
And then the last point from the
financially secure a nonprofit survey here is the more
likelihood of success. was in its future, the greater
sector in general as well in And I think that speaks to the
were about the type of that the more confident they
more likelihood they were going programto be successful.ing, the
And that's one of the gains that
work that we do is that we seorganizations that areding
financially secure and that are confident tend to have greater
outcomes. So here's two slides, I think,
that cover a couple of things here that are interesting.
The first one, capacity building
preparing for challenges and is about strengthening and
It looks at how prepared they are for change, on the left-hand
of the screen you see here, and on the right-hand side, how
solid of a grasp on the environment do they have.
And we looked at them and cut the data in three different
ways. If they were having some type of
chronic financial problems, if
that they were vulnerable, or if they were healthy but they felt
financially healthy. they really felt that they were
financially confident feel more prepared than vulnerable or
struggling nonprofits.
but I think this confidence is That might be intuitive, again,
reserves but appears to reflect dnonprofit leadership as well,h
which is going to be, again, one
to come to as it relates to the ofcapacity building is that itng
really comes down to leadership in the organization.
And that's not just in the
board of directors that are ogoverning these organizations.e
The other slide here that also
confidence in their service approach and concerns about how
to react to things that were
Again, we cut the data and happening.
were having some chronic looked at whether or not they
healthy but vulnerable, or were fithey financially healthy.ey
And here you can see that financially healthy nonprofits
are more confident about the
about the potential changes. services and less concerned
reactions, the difference between struggling nonprofitsd
and those that were vulnerable
So, again, you may look at these was less extreme.
more confident, those that felt that they were in a financially
healthy space, they agreed they were more confident in their
service approach. Those that were having financial
problems were certainly more
So hopefully that gives you a little bit of context about some
things that are happening in
The next section here is really what I want to talk a little bit
about a consulting firm in
national study around the convergence of some trends thate
are happening in the sector.
to why organizations need to be Adoing things differently ands
also why they're exploring
entrepreneurship opportunities. So this came from La Piana
Consulting. They developed this monograph,
again it's called convergence,
several key trends and, really, their interrelationship between
the two.
here that you're seeing on the So that's kind of the diagram
relevant to nonprofits as they screen which are especially
The idea behind this thought look towards the future.
across the nonprofit sector and pito have these ideas informn
ongoing planning and strategy development given this new
economic reality. Now, this study came out, I
believe, in early 2010, so it's about a year and a half,
18 months ago.
key trends converging to reshape But the research identified five
While each dynamic has profound implications for how nonprofits
will do business in the future, it's really the convergence of
those five that are going to
So I'm not sure, I think you can transform the sector.
here, but they range from these pdemographic shifts that arel
redefining participation in the sector to technological advances
that abound in the sector,
work to be organized in new and ndifferent ways, interest inow
civic engagement and
rise, and sector boundaries are voluntcertainly blurring. on the
So each of the five major trends
nonprofit sector operates. is changing the way that
examples. I'lFor example, nonprofitse of
increasingly develop profit generating enterprises.
Corporations are becoming increasingly active in the
social sphere, and out of this
organizational forms are mutual crossing over, new
And I think that may tie to, emerging.
you're reading about today for perhaps, one of the pieces that
In the past, those seeking to create social impact were
primarily driven by a single
The future will bring a wider array of structural options and
a greater willingness to
demand for accountability and compelling measures of socialn
value.
been around mission. So historically, nonprofits it's
organizations, it's been around Historicprofit.or-profit
And now we're starting to see those two kind of merging and
blurring some.
what do we really want to So the driaccomplish?on can be,
And I think you're seeing more
to take a mission related forapproach to their businessng
model, and you're seeing more nonprofits that are really
trying to find ways to generate revenue.
Successful organizations, obviously, will quickly move
beyond those traditional
goals are attempted and think again creatively about those
structural forms. So if we take a look at each of
these five particular trends, the first one, again, these
demographic shifts are really redefining participation.
This probably is not a surprise to anyone.
There's some data up here that
in the United States in 2010 and shows the age of the population
in 2030, and I think we've been hearing for some time around, oh
my gosh, the baby boomers are retiring, they're retiring, how
are you going to replace all of these workers in the workforce?
And really there's a couple of
on there. dObviously, younger generations
comprise and increasing percentage of the workforce, and
they bring with them new values and expectations around work,
around activism, and around the use of technology.
The dynamic may challenge the ability of nonprofit
organizations to attract and
generation to find meaningful provideparticipation.his new
Younger people have different expectations in what they want
out of their jobs and out of
In addition to the management challenges presented by a new
set of workforce values and expectations, the current
leadership of the sector, of the
faced with this inevitable task noof succession planning.ly
And I think one of the things that is really kind of emerging
here is this idea of shared leadership models, and they're
newer, I think more progressive,
involved, how can we take more how can we get everyone
in which we're doing and the of a team approach to the work
and that's really very different decisions that are being made,
hierarchical management tleadership models.d
So the challenge is not so much the whole changing of the guard
that was feared.
everyone was thinking all these baby boomers are going to leave
the workforce, but I think that really has not played out as
much, and part of that is economy.
I think many of them have decided to wait, perhaps stall
their retirement. So we have this new challenge,
maybe not so much that there's
knowledge and skill set in the this exodus of all of this
younger people who bring a workplace, but now we have
different knowledge and we have a more mature work base that is
not quite ready to leave the
So a couple other things on the demographic shifts.
A couple things here. What we would call a responsive
nonprofit, those that are more
be ahead of the trends, in this particular context a responsiveo
nonprofit is really diverse and intergenerational.
Its leaders have market awareness and respond
strategically.
infrastructure includes those systems of shared leadership
that I was just talking about.
advances abound. The second trend, technological
challenged nonprofits to embrace The rise of social media has
communicating and really new ways of connecting and
greater transparency with their demconstituents and theirs,
stakeholders. With the plethora of new
technology tools comes the need to improve both organizational
ability to choose among them and
I was chatting with Jeanan which ones to use.
One of the things that we have before we got started.
with other groups is this idea included in this presentation
Is it something that's passing that is social media a fad.
whether or not I would play that in the way, and I contemplated
to really think about the today, and audience.nking I have
Most of you, I'm assuming, are
and are probably all over the significasocial media.than I am
And so I don't think it really
say that social media is not a serves the greatest purpose to
that and realize that by fad because you probably know
and all the other technologies Facebook and Twitter and YouTube
But as an example of this technology advances abound, one
of them is that there's a tendency for the eager nonprofit
to jump into social media to
wide web identity. create a single organization
struggled a little bit in Ourgaining some space in thatas
Facebook, that Twitter, that
things we have struggled with is social media, and one of the
nonprofits have really wanted to that I think historically
They wanted to present have one voice.
one tenor, and when you look at thsocial media and if you have,
multiple people in an organization that are trying to
manage that social media, it's
one tone and one tenor when you dhave multiple people that ared
trying to have in impact, whether that's Twitter, whether
that's blogging and whatnot.
effective in adopting new technology understand that it's
today social media culture, people want authenticity.
They don't want an overly marketed message.
They want it to feel like it's
They want to hear real stories natural and that it's authentic.
nonprofit's activities. They want the opportunity to be
more than the passive audience
limited to writing a check. mThey want to be on the inside.s
They want to co-create the
be continuous, it must be personalized, it must come fromt
multiple sources. And all of these trends pose
cultural challenges for many
Again, if you think of the nonprofit leaders.
many nonprofits have leaders demographics and, historically,
for a long period of time, there that have been in those seats
cultural challenges there. are some demographic and some
technology strategically as part Successful nonprofits will use
plan, not just because it's a novel and because it's a tool
for advancing the mission, not
They want to be clear on their an end in and of itself.
consider a new kind of ROI. goalRather than return on, and
investment, we're taking that as
getting to understand and know return on insights and really
organization. wA responsive nonprofit ist
experimenting in this context for technological advances with
new tools strategically, crowd
using social media and web 2.0 sourcing ideas and content,
friend raising, which I think is tools for fund raising and
right now here in Madison a big treactually. happening
And, obviously, capitalizing the
I would imagine you're all using opportunities for virtual work.
Blackboard, and so I think this idea of how we work in a virtual
space and really in this global economy has changed
significantly, and that's one of
nonprofits have really kept up those trends that I don't think
The third one around networks enabling work to be organized in
new ways. Working with and through
networks is not necessarily new.
networks includes coalitions in Ththe nonprofit sector. of
It might be alliances, it might be partnerships, some type of
learning communities, and various other collections of
individuals and organizations working towards a common goal.
However, with the advent of these new technologies and new
norms for working collaboratively, the potential
impact of networks is increasing
There's a piece in the La Piana convergence study that came from
the Monitor Institute, and it refers to these new ways of
applying network theory and technology to traditional work
as working wikily.
with wikis. And observe that allows for far
deeper and more meaningful
previously possible. collaboration that was
organization to learn from and It's now just as easy for an
located across the globe as it collaborate with an individual
town. And so I think those types ofs
technologies are really helping to network and bring people
together. Again, a responsive nonprofit in
the context of networks is
They're regularly working with really nurturing those networks.
individuals. geographically dispersed
organizations and other networks They are working with dispersed
transparent with their to accomplish goals, to be
competitors, and striving for that systemic impact as much as
organizational success. So, I think the thing on the
bottom of this particular slide is pretty key in that formal
organizations are no longer the only way to get things done.
The fourth trend, and I stole this picture from your website,
I don't know if you recognize it
the bottom, is around civic engagement and volunteerism is
rising. I think one of the things, as we
look at this particular trend,
community organizer to the is the election of a former
States serves as a vindication highest office in the United
inspiration for increased civic of the noengagement.tor and an
Yet, much of this energy has
sector led by the Obama Administration rather than,
perhaps, by the nonprofits. Excuse me, together with the
rise of opportunities for direct
activism and virtual engagement through online
nonprofits in a precarious volunteering, this puts
meet rising expectations and position demanding that they
added value. also continue to prove their
anticipate and unprecedented So, in coming years, we
also this new generation of younger professionals who were
raised with community service.
hands, how many of you are So maybe just by a show of
providing some type of community volunteering somewhere today or
I think that's just a trend that service?
back to the demographic shifts. cYou have a younger generationts
who, I don't want to say that's an expectation, but it is a part
of their DNA in growing up today
And we have a retired workforce that's coming into the
population and trying to
they have perhaps been giving continue toover time.thing that
So it really presents this
sector, but only if the sector tremendous opportunity for the
engage both of those parties and really learns to successfully
work closely together. figure out a way to help them
opportunities for direct Together with the rise of
activism and virtual engagement through online
nonprofits in, again, a precarious situation demanding
that they meet rising expectations and prove their
added values. So, on the fifth one, I think
we're on the fifth one now, is
are blurring. So I think this kind of gets,s
again, to perhaps one of the
today, but this idea that the arsector, blind, competitiver
environment is emerging when
are starting to compete with Wall Street investment houses
It's really interesting, local United Ways.
that are for donor-directed funds and a growing emphasis on
corporate social responsibility really means that the social
virtue is no longer perceived as
brand. exclusive to that nonprofit
companies that are trying to There are many for-profit
entrepreneurship and other means leverage through social
imitate and use some of the thsuccess that the nonprofits
sectors had for a long time in
So, meanwhile, as donor demands for accountability and evidence
of the impact intensify,
that unique role for nonprofits are now all of the sudden coming
under fire, and they're really
So, the idea of cross-sector at risk.
organizational forms, whether that's an LC3 or some of the
other forms that were on the
corporations, are you familiar front slide here, certified B
They're corporations that are really trying to advance social
issues and mission related work but still also have some type of
a profit model. C4s are on there as well.
I think these trends will seriously challenge nonprofits
to maintain their tenuous hold
just become under-capitalized competitors in this increasingly
blended economy.
boundaries creates opportunities The blurring of the sector
private, and corporate nonprofit for a growing number of public,
and innovation. cI think that's really kind ofng
the beauty of what's coming out of this is that you've got that
for-profit model, you have this nonprofit mission model, and
they're coming together, and, yes, it might be a little bit
contentious at times because
different ways, but it really is they're coming at it from two
I believe, and I think that's a helpinreal positive thing.rlds,
Some organizations are taking things a step further and really
becoming those kind of hybrid organizations where they're
operating simultaneously in multiple sectors.
So you may have a for-profit
nonprofit business entity within corporation that also has a
nonprofit business entity that that, and you may have a
company to generate some is now starting a for-profit
So everything is really kind of getting blurred as we would say.
In the context of this fifth
really actively considering trimplementing and/or funding is
those alternate organizational
partnerships, and ways to make structures, cross-sector
organizations and those it markets work for the
So, there are three priorities supports.
out of the convergence monogram. for the future that kind of came
I talked a little bit about this One was around leadership.
really will be essential to the sector's ability to successfully
navigate the trends described in
the changes these trends bring the convergence monograph, and
of concepts of nonprofit about will call for a rethinking
More than a response to generational shifts, though, is
who is doing the leading. This will require that
nonprofits really look at their organizations that will be led
into the future.
new and emerging tools as well And at any given time, dozens of
but are not yet widely adopted as many more that are not so new
engagement, for fund raising, for friend raising, for again
working wikily, engaging in managing and dispersing in a
mobile workforce. So just about everything else
and organization might want or
mission is certainly possible. need to do to advance on its
jump on the technology It is tempting, somewhat, to
I mentioned earlier that we're bandwagon.
dabbling lightly, in Facebook and trying to figure out how we
can better use that, but I think
particularly, have to be careful organizations, nonprofits
following whatever the in that they're not just
time and making sure that tthey're really leveraginghe
themselves for that because the sheer number of new technologies
entering the marketplace from one month to the next really
presents some major strategic challenges to nonprofit leaders,
and really understanding the
tools and technologies with the greatest potential for positive
impact within the context of
critical and crucial to them. tThis shifting environmently
creates numerous opportunities
talked a little bit about that for nonprofits to partner, we
ways, and at the same time it also brings new competitives
challenges, often with those
same leaders. Being able to recognize when to
collaborate, when to compete, I think that's going to be one of
those key trends from a leadership context.
This will also require that nonprofits know what they
uniquely bring to the table.
strengths? What are their competitive
they can really offer? What are their advantages that
have a realistic and objective And, quite honestly, that they
proposition, which I think understanding of their own value
really struggled with. sometimes some nonprofits have
for change? We're transition now into the
capacity building context.
change, the things that are going on in the environment, or
whether that's kind this idea of
convergence. these five trends from
improvement and in building the capacity of their organizations.
So that's one of the ways in
Forward Community Investments wreally works with nonprofitst
around the state to help them build their capacity.
And we talk about capacity
vernacular is not really well understood, quite honestly, even
within our own industry, much less outside of our industry.
So I wanted to just kind of maybe go through and give you a
couple of definitions here. The first one, is I think, from
the Knight Foundation and from
practitioners in the capacity building arena, but there's a
couple of key words here. One obviously is mission.
We are mission-focused
So, around what is capacity? organizations.
nonprofits to fulfill their mission in an effective manner.
Effective being the key word
definition as well. In that capacity is this widek
range of capabilities,
effective. knowledge, and resources to be
wondering, capacity building in Sthe for-profit sector is
probably organizational effectiveness.
That's probably the similar to
So, what is capacity building? them.
nonprofit to the next level of Whatever is needed to bring a
financial, or organizational operational, programmatic,
effectively and efficiently matfulfill its mission.re
This is a definition from the National Council of Nonprofits,
but, again, a couple of key words there.
Next level, you're trying to
of continuous improvement. help move them along this cycle
particular definition that I The other thing here in this
just one area that they're would point out is that it's not
It's looking at it from a holistic viewpoint.
So whether that's operational,
whether that's financial, which wheis our core competency, orly,
whether it's organization maturity, it's really looking at
this holistic approach and
pieces of the organization fit trying to determine how these
And then, obviously, the other together.
mission again. word that is bold there is
mission in our sector. Mission driven, it's all about
Investments offers to help The tools that Forward Community
particular definitions and are support this work reflect these
So, why build capacity? reWe've been talking about thes.
trends, we've been talking about
economic times, but competition thobviously is greater.ain
Whether it's competition from the nonprofit down the street
who's maybe providing similar services, whether it's
competition from the for-profit sector and that they're starting
to really look at more mission
certainly is more competition racross organizations.e
And quite honestly, there's more
Funders have less valued competition for funding today.
years ago and so they don't have endowments than they had a few
actually donate or grant to theparticular organizations. to
Government, obviously, is changing as well.
So they're really competing for more than just financial
resources.
talent in getting strong They're also competing for
members and whatnot. leaders, getting strong board
increasingly complex There's also this idea of this
feeds back into those five environments, which I think
Things are getting certainly trends again.
sector. mChange is becoming the norm.t
Nonprofits really have to learn to be more responsive and have a
higher level of capacity to respond to changes that are
happening, particularly when
they are. And then the last one here,s
escalating scrutiny in a demand for effectiveness and
efficiency, I think, whether
that's funders, whether that's that's government, whether
heightened scrutiny around what are your programmatic outcomes?
How are you achieving the mission that you set out to
achieve?
here, the note here from Venture The definition on the bottom
about nonprofits really have an obligation to seek new and ever
more effective ways of making tangible progress towards their
mission which requires building organizational capacity.
So, our model at Forward
building the capacity really Community Investments around
cycle of assessment and lbenchmarking, again we have aof
tool that we use with organizations that looks at nine
elements of organizational
to show you here in just a effectiveness, which I'm going
So they assess at a point in minute.
nine elements. time of where they are on these
that particular exercise and Then they take the results from
Like most things in life, if you they work on an action plan.
anything with them, then they hadon't really matter much.do
So it's really making sure that you're implementing the
activities from your action planning.
A couple other things in the
this is a continuous cycle and a upper left-hand corner here is
The organizations that we work continuous process.
capacity, we typically work with with to help build their
So we assess, we help them do ttheir benchmark, we help theme.
design their action plan, and then we follow up with them on a
quarterly basis by providing
accountability coaching to them to really help make sure that
they're living out and agreeing and doing the things that they
said they were going to do in their action plan.
And then, ultimately, we go back
they've had gains over that anparticular period of time.re
So the nine elements I was just mentioning here.
Here are the nine elements that we have designed in our
particular tool, and our tool was an adaptation of McKenzie's
tool. There are some really wonderful
capacity building assessment
designed with some influence tools out there, but ours was
describe it as comprehensive yet from McKenzie's tools, so we
Sometimes organizations look at it and go, oh my gosh, how are
we going to do all this work? But really it is pretty
manageable. But it all starts, again, with
mission, vision, and strategy on
That's really driving all of the the top of this diagram here.
doing and really is the tfoundation of the work withins
the nonprofit organization. Then it's looking at their
service delivery, and impact. Do they have a logic model in
place?
How are they communicating their Are they measuring their impact?
But really making sure that they impact?
impact in place. have strong service delivery and
sides of this diagram by And that's surrounded on both
Again, whether that's leadership leadership.
leadership on their board, within the organization or
capital component and making that's that kind of human
are coming together through the stalent of the organization.s
It's not to say that the five elements on the bottom are not
as critical as the others.
today for organizations to Clearly, financial is critical
they're kind of more sustain themselves, but really
up these other elements of the foundational and pillars holding
So management and development of organizations.
relationships, which again gets to that kind of blurring in
those trends and who are you
competitor, whether that's working with, whether that's a
organization, whether that's a another collaborative
government agency. for-profit, whether that's a
again understanding their cash Financial and legal management,
concepts, legal management flow, budgeting, those types of
those concepts. Operations and infrastructure,
really looking at the facility
that they have technology plans oin place and that they're ablee
to keep up in some of those trends that we talked about.
And then resource and revenue development is really what has
historically been known as fund raising.
So what kind of plans do they have in place to really generate
sustainable revenue models for
So, a couple of factors to their organization?
going through effective capacity consider when organizations are
The first one here talks about building.
Many funders appreciate organizations that are
intentionally building their
So we encourage organizations that are going into this type of
work to share their efforts with
build closer relationships with their funderthem.that they can
The other piece that I think
with at Forward Community oftInvestments is that we userk
capacity building to help inform
are doing. other types of work that they
model enhancement, if they're looking at some type of strategy
development, looking at their organization to see where they
have current strength, where
can help inform those other types of strategic conversations
that they're happening. I mentioned earlier that
eventually you want to repeat the assessment and the
benchmarking and the action planning processes.
You would not necessarily measure did they have the same
score, the same results in one
obviously external factors can particular area because
the change in some of those elements over a particular time
period. But really looking more at how
did they impact their action
to reassess from the prior plan when they were going back
A few factors here that challenge capacity building
progress. These are probably not much
different than they are in any
But a lack of readiness to other sector.
change. Some organizations that we work
with, that kind of inertia, we've always done it this way,
they're just not ready to change
Changes in leadership or an aabsence of leadership are both.
two significant concerns that really have challenged the
capacity building progress. If there's not a director in
place, if there's not a strong
difficult to impact that without board in place, it's really
Lack of time, many of the organizations we work with say
we just don't have the time to
But it's like anything else, if you really want to impact the
results that you're having, you have to put some effort in.
The severity of the organizational need, we have
some organizations that come to us and we would describe them as
kind of being on death's door.
beginning where we talked about Ghow much cash did they have on
hand, we have gotten calls from around the state from
organizations saying we can't meet payroll in two or three
weeks, what can we do?
trying to go on a capacity That's not the time to start
They really have other more critical issues to take care of.
And then those organizations
results obviously challenges that fail to act on their
So here's some factors that contributed to gains.
Kind of the opposite of what we just saw on the other slide
there as it relates to what challenged them.
Having a competent and highly skilled board.
Having strong executive leadership in place.
Using the tools as instructed.
follow the process and not be We encojumping around. really
Making sure that they're
Assembling a team. following through.
a team orientation to organizational effectiveness and
that it's not just leadership,
be some combination of both. it's not just board, it should
specific action steps is really And theclear as well.ls with
And having a clear understanding
The action planning piece, it's based on the assessment, based
on the capacity building
We really encourage to focus on causes, not necessarily, again,
the particular ratings in those nine elements, but really to
identify priority areas and high
some leverage that you can try leverage areas where there is
call quick hits. and make some quick, what we
and resources that are available But also, determining actions
the action planning piece as you have to be realistic with
Good action planning practices, a couple of best practices here
that we encourage organizations work to reach consensus but be
rigorous. Again, when we're facilitating
these conversations with
capacity, oftentimes it can be nonprofits around building their
confrontational, but we really divisive and a little bit
consensus but we want them to be encourage them to work toward
So we try and kind of draw that out when we're working with
them. It's key to identify key
partners that would contribute
Whether those are funders, to the success.
stakeholders, you definitely whether those are other
partners involved in the action wantplanning as well becauseour
oftentimes they're the ones who are going to help you achieve
your action plan. The third one here is kind of
the opposite of that inertia
incorporating a range of new comment earlier, but really
plan. acYou want to make sure thathe
you're not just doing things the
them. There's some saying around the
definition of insanity is continuing to do the same thing
and expecting different results.
organizations that we work with and they think that they're
going to raise more money or
more clients, and they're not broareally doing anythingserve
differently than they've
So you kind of scratch your head historically done.
to work? and go, well, how's that going
having new ideas and new actions So it's really thinking about
And then sharing the results and resources into the plan.
staff leaders, is another one of with your full board, with your
encourage is really making sure that there's good communication
across the organization with the
So here's a few things to avoid in the action planning process.
Relying on a few individuals to complete it.
You lose that team wisdom, that team buy-in.
If you try to work on too many
efforts. issues, it can dilute the
to prioritize, you may end up working on symptoms rather than
root causes.
that you're taking the time to So you really want to make sure
activities that you want in your prioritize the right types of
A few more here. action plan.
want to use and not looking Relying on rfurther. you always
You might miss important
resources that you always use and not looking beyond those
ones to try and find something
Assuming you can or should do it new again.
This is probably one of the biggest ones that we tend to see
with clients we work with is
with 10 different things in it. And if you have too many things
that you're focusing on, it's really difficult to try and make
sure that you're going to achieve those particular gains.
And then as we close here,
capacity building. preparing your organization for
repositioning the organization Part of this is really
organization and really helping athem understand the tools,
understand the process, having
We encourage organizations to consider a formal board
resolution regarding the
It's, again, a great way to have participation.
the full board by having that that leveresolution.ment from
And, obviously, specifically
organization that were just on a outlining the benefits to the
So we have a few recommended couple of these other slides.
Making sure the materials are shared ahead of time, discussing
the capacity building at all of the board meetings.
We kind of work through that
our clients but also trying to with our quarterly coaching with
that's going to champion this particular process and reallyr
help to develop their capacity
organization. So, I think that is the end.
Thank you, Dennis.
A lot of fabulous information, [APPLAUSE]
a lot of questions from folks. and I know that it will pique
students so that they can wave And I always look out to the
mic over to them as they do have their hands, and I can turn the
I want to almost go back, just questions.
to go back to the first part of your presentation where you were
really presenting a pretty
we have talked about this before alarming statistic, and I know
organizations have less than that more than half of nonprofit
And that, just to clarify, it may mean that they know that
there are other funding sources coming in but they only have
three months of cash on hand. Would that be accurate?
That would be if they know
funding coming in. that there's other sources of
really finding themselves where Ithey don't have the revenuere
coming in, and that's why they've been depleting reserves
over time.
had more cash on hand, and now So maybe they have historically
The other thing that we've seen over the last couple of years
with the Economic Stimulus Act, there were many nonprofits that
received ERRA money, the
Reinvestment Act, and those organizations they got an influx
of capital to really help strengthen and improve their
organization and perhaps deliver
ultimately, if they didn't different programming, but,
sustain those enhanced business models, now that the money is
gone they're really kind of struggling to continue with that
impact. >> I appreciate that further
clarification and your emphasis that, yeah, as long as they know
that there is more money coming in but they've been depleting
resources to date.
mentioned, fewer government And, ofsources. as you
Not sure if you have an answer
you were talking about that to aspect, are we seeing any as
particular sector of the
than others? nonprofit sector more impacted
are more aligned with Fenvironmental causes or youthat
development or health.
others? >> Health and human services, I
think, is disproportionately
shifts with government funding. Many of them have long time been
subsidized. Again, many of the clients that
we work with, if you look at the
oftentimes those organizations granularity of their funding,
from government contracts. have 90% of their funding coming
being reduced by say 20%-30%, Ifthat can have a significantis
impact on that organization in
One of the areas of building delivering their programming.
revenue sources can involve how an organization really does
business. And I know I shared with you the
example that the students were
advance of your coming, it was a involved in reviewing, just in
know intimately, but it was a ststory of a local nonprofit,to
actually serves statewide and beyond, called ABC for Health.
A nonprofit that actually created a for-profit subsidiary,
if you will, out of a point of
they created that will intelligence and a product that
nonprofit. eventually sustain the
that? HCan you speak to that at all?e
I can speak to it a little
Setting up a formal, separate legal entity is probably not
quite the trend that we're
that we work with. seeing with the organizations
nonprofit organizations really I think what we are seeing is
going how do we develop ralternative means of resourced
developing, fee for service?
organizations that 5-10 years ago in the nonprofit sector
would have said, well, we gather
donations, maybe some type of corporate giving, or through the
community foundations, but we haven't really ever had to
generate our own revenue
And I think that's one trend streams.
the nonprofit sector. Many organizations are havingg
to look at what type of work do we do, and how can we generate
revenue for ourselves whether they're providing some type of
consulting services, I know I worked with a recent statewide
coalition.
build the capacity of their 80 They're working on trying to
So we taught them how to use our members across the state.
They're actually using our tools tools.
members, but they're also tgaining a little bit of feeir
income from that service that they're providing to their
members.
seeing as much formalized creating a separate legal entity
as much as it's happening organically within the
organization and going we've got
programming to try and generate to come some revenue.different
One other question and it kind of goes back to a concept
that this group explored very early in the semester and it has
to do with creating social
We actually had an attorney that ventures.
developing nonprofit is well-versed in designing and
about what that requires. orgaDoes Forward Communitytalk
Investments provide counsel in
You were talking about the that at all?
exist out there. different kinds of models that
Are you providing advice on that B corps and 501(c)(3)s.
people? or >> We don't give out legalto
advice. We're not attorneys.
So I would just disclaims ourselves right there.
But we do help on the business
develop those proformas. modeling side in helping to
a new venture, we do help build Ithe business model piece fromg
that nonprofit finance aspect.
That really is. And I think that what Melissa
provided us was really good food
the answer to develop another for thoughnonprofit.may not be
Melissa Scholz? >> Yeah.
She does great work.
shared that information with us. >> She does and she certainly
you mentioned, and I am happy to One of the other concepts that
who wants to tell me that they hand off the mic to anybody else
you, has to do with the concept want to aof merging.on, thank
And you talked about
important. collaboration really being
about why that's so important Cthat nonprofit organizationse
start thinking about
And we would refer to that is strategic restructuring,
actually, in the industry.
and acquisitions in the business But essentially, it's mergers
It is an emerging trend. world, per se.
I would say, that somehow comes Wethrough our organization inek,
talking with an organization
night we're merging with so and that says our so.rd decided last
Or we're struggling and we're not sure that we're sustainable,
can you help us figure this out?
strategic restructuring, it's Sall the way from maybe on thef
lower end of, I don't want to say engagement, but on the lower
end of maybe it's shared
Maybe we're going to do something together.
We're going to test this out. Some organizations we worked
with that may have been co-location.
Maybe we're going to reside in
some economies of scale for the the same organization.and create
So they're going to share some
share some space. In the middle of the matrix or
the continuum of strategic
shared administration. restructuring lies setting up
organizations that maybe they have a full finance department
and they might have another member organization that maybe
they need help with their finance.
So they contractually provide support and services to that
other organization. It could also be setting up a
management support organization.
about MSOs in any of your work I don't know if you've talked
But setting up a management support organization or maybe
it's one entity that provides support to 10-15 nonprofits
around human resources, could be
technology. aroAnd then on the opposite,und
the far end of that continuum of
is truly a merger. scale of strategic restructuring
La Piana into Madison about a year ago and did some strategic
restructuring workshops.
work. They are actually training us
and a cohort of consultants around the state to better
understand their model of moving
of strategic restructure because organizations through some type
trends that are changing, we with the economy, with the
industry. anticipate >> Thanks.ion in the
Hi. Thank you for being here, first
of all. My question is, what kinds of
difficulties or challenges do you foresee coming out of the
convergence of the nonprofit, for-profit, and government
sectors?
I would say probably cultural. >> Great question.
for-profit, and, again, I can speak because I've sat there for
15 years, it's about revenue. It's about making money.
It's about generating more
product or whatever it is. customers or selling more
that's, and I'm just throwing that out as a Wall Street
kind of analogy, it's about shareholder value.
And I think in the nonprofit
away from there that it's about smission, it's about how do wer
help people, it's how do we combat homelessness or poverty
or the elderly or the at-risk,
culturally, how do we make more and profit, per se.ear,
And I think there's this
going to probably happen there. cuI know it's happening there.'s
We see it with some of the
is that there's skepticism, I think, on part of the nonprofith
sector of really is the for-profit sector doing this
because they want to or is it a way for them to perhaps be
perceived doing better good for the world and that only helps
them sell more of their product?
conflict is really probably the And sbiggest challenge.tural
Thanks. >> You're welcome.
Thank you.
So, thanks for being here. >> Hi.
So, my question is, I have two My name is Darian.
with existing nonprofits or do parts kind of, do you only work
Do you guys give grants to get you help nonprofits get started?
And then, also, being a consulting type of company, are?
you charging for your services
nonprofit is already been or is it lsuccessful?n after the
Sure. I'll try and remember all three
of those questions maybe. I'll start with the last
question. We are fee-for-service.
So we are a nonprofit.
My line of business is we have a We're a 501(c)(3) ourselves.
charge, basically, an hourly fee-for-service model so we
our project tool kits when we banticipate how much time it'sto
going to take to do particular
And then we calculate our program costs by using and
allocation of administration and
So we are a fee-for-service. overhead.
to us by local funders in their Many of oucommunities.e referred
So maybe they have an endowment with the local community
foundation, maybe they're getting funded there, and so
oftentimes it's the funder who's
cost to do our work because they willing to help subsidize the
want that to stop. see the value and they don't
investment and perhaps in an So they're willing to make that
already granting. And your first questions was?
I think you kind of just
It's do you work with nonprofits answered it.
Oh, the start-ups. that are starting?
questions from start-ups. It's kind of interesting.
You asked the question about
So on one end of the spectrum we're seeing consolidation, but
yet, I got a call, actually,
We're thinking of starting a this morning from someone.
I think that's just part of the entrepreneurial spirit of this
sector. But I think it's also a little
bit dangerous in that there are so many wonderful nonprofits
that are struggling so to have
space and competing for those resources, I think we encourage
people that call us and say we're thinking of starting a
nonprofit is to really try and
model, who are your competitors, dig into what's your business
really get them to go out and look and find who is because I
think oftentimes the idea might be good but there might be a way
to do it in collaboration with
Thank you. another organization.
questions. >> Dennis, I've got two final
Do you have internships for One'students?ick.
We do have internships for
looking for two interns for the studesummer right now.tually
So if anybody wants to chat with
That's excellent. And I'm just going to conclude
with this question because it's kind of a segue into something
that we'll be talking about in
You mentioned leadership and I about an hour from now.
or the skill set that you referenced that leaders ared
going to need, in the future, if
lead successful social ventures. not already today, to really
leadership so it's near and dear >> I think, my MBA was in
prescribe to taking an to my heart, but I would say we
clients that we work with. asset-based approach with the
We really value, I think, Oorganizations and leaders that.
take a look at what's working.
appreciative inquiry method or I So whether that's an
authenticity and being who you think it really comes down to
organization prescribes to, but arereally making sure there'sour
alignment there as well.
also in this particular Iuncertain economy or theses
trends are really kind of shifting the sector quite
drastically.
willing to, I think, stand up and throw a stake in the ground
at times and say we're not going
this, and it's, I think, about to do that or we are going to do
calculated risks I think is being abimportant. risks,
But it also is understanding how
that everyone brings to the cantable, whether that'salue
for-profits, whether that's start-ups.
I think it really gets down to
people in that authentic role. how do you engage with other
students join me in thanking you >> Well, Dennis, I know the
s[APPLAUSE] y.