Revenue Generation Challenges Brought on by COVID-19

Originally published in NonProfitPRO

What is our new normal going to be? As I’ve talked to fundraisers across the nonprofit sector, from those working at small local organizations to some of the largest national groups in the country, this question is the common theme.

We can look to the Great Recession for some answers. We know that both individual and institutional giving will contract during and immediately after a recession. But recession modeling does not give us all the answers we need now. Nonprofit fundraisers are grappling with uncertainties we couldn’t have imagined just a few months ago and ones that go far beyond a donor or a foundation’s capacity to give.

Can virtual events be successful replacements for all the canceled galas, walks, rides and house parties? Will canvassing ever recover, or will people come out of this pandemic less likely to talk face-to-face with a stranger? What model can immediately help backfill canvassing for this year’s donor acquisition goals? Will the major political 501(c)(4) organizations expect to see donations in the second quarter of an election year materialize? Can our reserves survive the increased demand for our mission services while our revenue contracts with the recession?

To ensure that nonprofits can continue to serve their missions through this pandemic and through whatever new normal emerges, immediate philanthropic investment in nonprofit independent revenue generation is paramount. The moment is overwhelming. But it is one that fundraisers in the progressive movement believe their organizations must thrive through.

“Families have so much need right now, it feels like this is the moment Parents Together was built for,” said co-founder and co-director Justin Ruben.

Parents Together reaches more than 2.5 million parents via Facebook, SMS, email and web with news content they need to take care of their families and communities. And what they need is changing daily during the COVID-19 pandemic. Providing what their constituents need now — like information on applying for unemployment and other benefits — has Justin’s team stretched beyond its skillset and bandwidth.

To create space and resources for these critical new lines of work, nonprofits, like Parents Together, need flexible independent revenue to support the rapidly changing demands on their missions. With additional resources, Justin said he would prioritize getting additional bandwidth and skill sets on his team, as well as leaning into revenue generation opportunities that accompany the pandemic.

“This could be the moment we breakthrough to new donors and brand partners because we can show more clearly than ever the positive impact we’re having on families.”

The pandemic has primed a breakthrough moment for Faith in Action as well. This faith-based organizing group, which trains those most impacted by injustice to mobilize their communities and lead campaigns for community transformation, has traditionally been a “feet-on-the-pavement organizing group,” according to individual giving coordinator Kelly Boehms.

“We’ve been on a slow transition to become more digital in both organizing and fundraising. But in this moment, more people are connecting authentically online. The pandemic has pulled back the curtain on the injustice that our communities have known all along. This time of crisis calls for Faith in Action’s kind of mobilization — it’s a moment we need support to live into most effectively.”

Kelly, like Justin, believes that support must include an expansion of the team’s skill set and bandwidth. With just two associates who have focused on this kind of digital work, pivoting the entire organization online has been an unprecedented challenge for the team. As they rapidly accelerate building their new digital fundraising and organizing model, Kelly believes strongly that to weather the crisis, beyond small dollar digital donors, the organization needs “funders who are thought partners, not hand holders.”

“We have to evolve our fundraising in a way that makes sense for the long game, and that answer is not going to come overnight.”

Expanding digital fundraising and organizing in the wake of the pandemic is also a top priority for Karen Middleton, president of Cobalt (formerly NARAL Colorado).

“What will stabilize our 501(c)(4) revenue is small dollar donor fundraising, which will primarily happen online.”

Cobalt’s spring fundraising gala, like so many others, has been rescheduled for the fall. The COVID-19 pandemic is also robbing nonprofits of expected faith-based spring giving centering around Ramadan, Passover and Easter. This drastic change in seasonal revenue, coupled with an expected decline in 501(c)(4) major donor commitments coming in April and May, will make taking electoral strides in Cobalt’s battle for reproductive justice in November more difficult.

If funding is secured, Karen plans to immediately take steps to expand Cobalt’s digital fundraising and organizing program, using her current staff.

“We have to keep the people in the movement whole and give them the opportunity to do the work that is increasingly needed by the people we serve.”

Erin Bridges, fundraising director at Sunrise Movement, is looking to her online small dollar fundraising program to sustain the organization through this moment as well.

“In 2008, nonprofits our size lost about 30% of their revenue the year after the Great Recession hit,” Erin noted.

Her team at the youth-centered climate justice nonprofit is trying to quickly build out its monthly sustainer program, as well as determine how to leverage the new Sunrise School in its appeals to small dollar donors. Built over just weeks in response to the pandemic that forced face-to-face organizing online, Sunrise School is an online training community that is welcoming those young people confined at home to build the skills and knowledge they need to actively confront the climate crisis.

“My hope is that people see this crisis as the opening act, because we are and have been in an emergency that requires us to demand what we need. From government, from each other and from philanthropy.”

A Philanthropic Stimulus Plan for Progressive Nonprofits

Gara LaMarche is  president of the Democracy Alliance, Philip Radford is executive director of the Progressive Multiplier Fund, and Sonal Shah is professor and executive director of the Beeck Center for Social Impact and Innovation at Georgetown University.

Progressive Multiplier Fund Stimulus Package Progressives

Originally published in The Chronicle of Philanthropy, 3/18/2020

The novel coronavirus — and the likely economic recession it will touch off — affects not only individuals but families, organizations, and small businesses.  Grant makers have stepped up to help with this pandemic — including the Bill & Melinda Gates FoundationRobert Wood Johnson Foundation, and others. Their work alongside governments, universities, and public-health facilities will help stem the spread and support research for a cure and vaccine development for Covid-19. But even as we focus on the science, this pandemic has exposed and exacerbated our communities’ needs and demonstrated the urgency of calls for a better health-care system, paid family leave, and real protections for workers and their ability to earn a decent income.

According to the Organization for Economic Cooperation and Development’s latest Interim Economic Outlook, Covid-19 presents the greatest danger to the global economy since the financial crisis of 2008. Recessions affect the most vulnerable in our society the hardest – the sick, the elderly, people of color, and low-income Americans. This increases demand on nonprofits serving these people to do more with less. But that is not a solution. Instead we need systemic change — and that means empowering the nonprofits that can successfully press for it.

But nonprofits, especially groups providing and advocating for a social safety net, are typically underfinanced. A report released by Candid shows that half of all U.S. nonprofits are operating with less than one month’s cash reserves, leaving those organizations particularly vulnerable.

If normal patterns follow, we won’t see them getting the help they need from grant makers. Generally, foundations give 5 percent of the average value of their endowment from the previous three years, meaning a steady decline in giving during and after a recession. 

What’s worse, according to data provided by Candid, foundation investments in helping nonprofits achieve financial sustainability after the last recession dropped more precipitously than their overall giving. During recessions is precisely when we should be both supporting and strengthening nonprofits, especially those that serve the neediest and advocate for them.

Deepak Bhargava, a veteran social-justice leader and former executive director of Community Change, told us that “in economic downturns, we must do everything in our power to protect and expand the social safety net that offers a lifeline to those who are most deeply impacted and also strengthen the community-led organizations that advocate for that safety net. The community-based nonprofits that serve, organize with, and advocate for low-income people are on the front lines.  They are and yet are also most at risk during an economic crisis.”

What is putting these groups at risk?

Undiversified revenue.

Many nonprofits depend heavily on grants from federal, state, and local governments or foundations, which means most of their revenue is restricted for specific purposes. This means that nonprofits have little funding to test new revenue-generation ideas or expand what’s working. Research by the Progressive Multiplier, an organization that works to improve fundraising by advocacy groups, shows that organizations need the ability to test new approaches to earning revenue in ways that go beyond government aid and philanthropy, and they need funds that will allow them to build on what they learn.

Ups and downs of election-year funding.

Civic engagement and advocacy organizations face extreme boom and bust cycles. They receive excess funding in even years when elections are underway but inadequate funding in off years. This prevents organizations from building their reserves during off cycles to more effectively expand their reach during boom times. 

Limited investment in revenue generation during recession years.

 Candid data shows a significant drop in funding for financial sustainability and fundraising during and after the last recession. Nonprofits should not have to sacrifice long-term fundraising investments during economic downturns by cutting their budgets for recruiting and keeping donors. These investments are critical to helping groups learn new approaches to earning money and raising it; sustainability doesn’t happen without startup support.

What Philanthropy Can Do

Now is the time to put an end to these concerns. As the coronavirus spreads and the downturn deepens, philanthropy has the opportunity now to fund organizations to push Congress to mitigate the economic burden on Americans. One crucial way that philanthropy should support these organizations is to do what Congress does: adopt a stimulus package. Here are the components that would strengthen nonprofits in 2020 and beyond:

Help groups quickly test efforts to improve their fundraising efforts.

 During recessions, some individual donors give less or less often. For organizations that already run successful fundraising programs, investing in improving and expanding those now is paramount and lessens the blow from any future declines.  As examples, Progressive Multiplier provided $25,000 to PushBlack, the nation’s largest nonprofit media platform for black people, which engages 4.6 million subscribers with emotionally driven stories about black history, culture, and current events.  The grant allowed PushBlack to develop a model to “supercharge” its experiments with subscriber donations. As a result, the organization increased the number of people who make recurring gifts from 2,000 to 8,000, and is now generating $50,000 a month from those supporters.

Another grantee, People’s Action Institute, advances racial, economic and gender justice by investing in state and local organizations and campaigns to win real change in people’s lives. Thanks to experimentation, People’s Action has expanded its fundraising program to build a more robust planned-giving program.  It has secured more than $400,000 in planned gifts.

Show  groups how to turn increased public awareness into long-term financial viability.

While none of us would have hoped for this moment, the current pandemic places a spotlight on many of the issues that progressive nonprofits are working to improve — such as paid leave and universal health care. Moments like this offer a great opportunity to recruit new donors. However, organizations can only capitalize on this moment and turn new donors into an active power base if they have the funds, expertise, and capacity to do so. 

That trifecta is rare for most small and medium-size progressive organizations. Linda Wood, senior director of Haas Leadership Initiatives at the Evelyn and Walter Haas Jr. Fund, told us, “This is a time of great experimentation in fundraising, but grantees need to be able to take risks to try them out. We can help by releasing restrictions on grants.” Rachel Baker, the fund’s director of special initiatives, added: “And we can make additional grants so grantees can try out new fundraising and revenue-generation strategies and get the expert support they need to succeed. Now is the time to act.”

The National Immigration Law Center, which defends and advances for rights and opportunities of low-income immigrants, gained unprecedented visibility helping fight the Trump administration’s Muslim ban. Its very small pool of individual donors grew from 280 to 15,500 over 18 months. With a grant from the Haas Jr. Fund, the center’s leaders developed strategies to build long-term relationships with new donors and  a stronger pool of supporters to help with future policy fights. 

Tiffanie Luckett, the center’s senior officer for individual giving, said, “We caught lightning in a bottle by acting quickly in the aftermath of the Muslim ban, but our subsequent work to integrate fundraising and communications strategies while developing relationships with this newly mobilized audience has allowed us to turn this moment into a long-term strategy to strengthen our supporter base and diversify our revenue streams.”

Enable organizations to diversify their revenue streams based on what is “shovel-ready.”

An effective way for nonprofits to quickly develop new revenue streams is to play to their existing strengths. The Progressive Multiplier has been working with several grantees to create these new revenue streams based on available assets.

The Texas After Violence Project works to reduce the trauma created through the criminal-justice system. The organization has developed expertise in legal training so it created a continuing-education program that lawyers pay to attend. At the same time, the organization is creating a network of pro bono lawyers to support its mission.  The organization’s executive director, Gabriel Solis, said that support from Program Multiplier “allowed us to experiment with this concept without compromising our already limited funds.  Without it, this new channel would have never opened up for us.  [Now I’m] incredibly optimistic about the long-term viability of this organization.” 

Increase flexibility and loosen restrictions on low-interest loans and other program-related investments.

Remove restrictions on existing grants and make it easier for organizations to use foundation support to experiment with ways to generate revenue. Foundations should invest in revenue-generation projects like an investor, picking the important mission-focused projects most likely to allow nonprofits to produce new income streams rather picking a small number of grantees based solely on their program work. Going beyond making direct grants also makes a difference: Program-related investments allow foundations to give nonprofits the capital they need to make a difference; what’s more, they are often repaid in part or in full. It’s a lot better to get 50 percent of an investment returned than just making a grant that offers no return.

Economic downturns are inevitable. They create moments for leadership and change.  This is the time to invest in people and organizations. We know that every nonprofit organization will not survive a recession. But when we act with courage and rigor, we can drive change in the reach and capabilities of advocacy groups. If we expect to strengthen the social safety net, which has atrophied over the past three decades and especially during the Great Recession, then philanthropy must adopt a new strategy.

As Bhargava, the veteran advocate told us, “This is a time to stretch to support vulnerable communities and the organizations that support and fight for and with them.”

Gara LaMarche is  president of the Democracy Alliance, Philip Radford is executive director of the Progressive Multiplier Fund, and Sonal Shah is professor and executive director of the Beeck Center for Social Impact and Innovation at Georgetown University.

Grant Ideas: Look Here!

Grant Ideas Progressive Multiplier Fund

Since the early days of the Progressive Multiplier, we have come across a lot of innovative grant ideas. While we’ll continue to steer organizations towards techniques that we discover that work (e.g. Free Will), we’d be loath to over-steer, because we truly want your best ideas, not ours. In that spirit, we thought we’d share some of the questions that you can ask yourselves when coming up with your proposal, and share examples of grants that we believe fit the line of thinking raised by these questions.

Question 1: What worked in the past that was not part of your plans, and therefore you didn’t pursue? Could this idea be your idea for a grant?

I still recall the day that Frank Canata returned to my door-to-door canvass office in Chicago in 1998, gregariously shouting towards me that I had not given him enough houses, but that he’d still beaten his daily goal by standing on the street corner and asking for money. I thought “only Frank could pull that off” and brushed past his surprising success. Years later, after someone had paid attention to a similar, accidental success in Austria and launched street canvasses, door-to-door canvasses were largely replaced with the street canvass. I even launched a street canvass for Greenpeace, which raised $23 million per year. Since then, I’ve always asked what has worked that wasn’t in the plan, and should that surprising success be tested further.

Paid Leave for the US (PL+US) is an example of an organization that discovered something unplanned that worked, and now they’re testing it more fully. PL+US found that they were the beneficiaries of Facebook crowdfunding hosted by people who were sharing birth announcements and paying their own paid leave “forward” by asking their friends and family on Facebook to donate to PL+US. Their Test & Innovation Fund grant is helping them build lookalike models, target them through Facebook Ads, and recruit them to host crowdfunding campaigns on Facebook.

Question 2: How can you play to your strengths, and test one new thing at a time?

Many organizations approach the PMF asking for funds to test lead generation and test email fundraising for the first time at the same time. Trying too many new things that don’t play to your strengths is likely to fail. Don’t get me wrong; the PMF aims to fail 80% of the time with the experimental grants we provide. But the kind of failure we like is by organizations, staff, and their partners who have experience testing one or two things that stretch them, but aren’t all brand new to them.

Texas After Violence Project (TAVP) is a great example of an organization playing to its strengths — legal training — and testing one new thing with its grant idea — marketing legal trainings — as an experiment. TAVP designed three legal trainings that are qualified to be Continued Learning Education Credits. The trainings are focused on preventing future traumatization from the criminal justice system, and promoting restorative, nonviolent responses, all while generating income from attorneys paying for the courses. With TAVP’s grant, they are testing a wide array of marketing techniques to determine the best methods for generating paying customers. Their objective is to find successful, replicable marketing techniques that TAVP and other organizations can use to market CLE courses.

Corporate Accountability International based its grant idea on its expertise in house party fundraising and distributed organizing. With their grant, CAI is activating and training their volunteers to host fundraising house parties. Through these house parties, they are building their monthly giving program and engaging their current base to be even better advocates for their cause.

Question 3: How can you take what you’re doing well to 11 to design your grant ideas?

PushBlack is building off of their 1,000,000 Facebook Messenger list and their experimentation sprint culture. Through a series of 2-4 tests per week over a year, PushBlack will very quickly learn and adapt to what increases and engages their audience and what doesn’t. With each test, they’ll look at subscriber engagement, acquisition cost of new subscribers, viral growth, format and campaign ask effectiveness, and adapt accordingly. All of their tests seek to optimize the cost and return on investment of increasing their subscriber count and income per subscriber.

Let’s Go Negative

If you were to ask these questions in the opposite way, you’d get a great list of things not to do in your proposals:

  1. Don’t ignore things that surprisingly work when thinking of an idea for a grant. Those are the best next things to test;
  2. Don’t propose to do a big plan that includes multiple new things, none of which play to your strengths. Stretch yourselves or test one new thing in your tests, but do it with staff or consultants who have skillsets that can be applied to these new ideas;
  3. Don’t rule out improving your current programs. Just optimizing them, in some cases, could lead to millions of dollars.

For more examples of grant ideas we’ve funded, check out the Center of Excellence. If you aren’t registered yet, go here to sign up.

For a full list of our guidelines and our FAQ, please click here.

PMF is Hiring: Marketing and Communications Internship

MARKETING AND COMMUNICATIONS INTERNSHIP OVERVIEW

Progressive Multiplier Fund is looking for a Marketing and Communications intern to help expand its reach to potential grantees and grantors. This internship is an excellent opportunity to exercise marketing tools and techniques and to learn about breakthrough methods of helping progressive non-profits. The successful candidate will be a driven and creative individual who wants to pursue a career in media and content marketing. We offer a flexible schedule and provide extensive guidance and support, as well as the opportunity to explore the world of non-profit fundraising and grantmaking. This opportunity is for 30-40 hours a week.

As our Marketing and Communications intern, you will hone your skills in researching target audiences and developing multi-media strategies on how to connect with them. You will assist in developing content for blogs, newsletters, and other marketing avenues. You will also have the opportunity to review grant applications and fundraising techniques and tactics, helping develop your communications and marketing strategic skills.

ORGANIZATIONAL OVERVIEW

The PMF is a non-profit organization that finances revenue generation projects for the progressive movement.

The PMF gives grants from two funds, the Test & Innovation Fund and the Growth Fund, which have different funding criteria and priorities.

  • The Test & Innovation Fund provides grants to nonprofits interested in testing new revenue generation models, as well as testing the replication of revenue generation programs that have worked in other organizations. Grants range from $1,000 to $25,000, with an average grant size of $10,000. Successful revenue generating projects can be scaled up with funding through the PMF Growth Fund.
  • The Growth Fund is a valuable resource for organizations that wish to scale up existing revenue projects. The Growth Fund provides recoverable grants and market rate loans to support organizations seeking to expand their revenue streams and have a greater impact.  Recoverable grants and loans from the Growth Fund can be as large as $120,000.

Of equal importance, the PMF works to share everything it learns with all progressive organizations, equipping the whole community to grow more quickly.

MARKETING AND COMMUNICATIONS INTERNSHIP ESSENTIAL DUTIES

  • Create content for our non-profit social media accounts and websites, including organizing cross-platform content strategies
  • Develop marketing campaigns considering our target audiences & their progressive causes
  • Monitor social channels for relevant trends, ideas and memes; apply analysis to drive traffic
  • Assist with capturing and analyzing social media and website metrics
  • Other responsibilities as assigned

EXPERIENCE

Marketing and Communications Internship candidates should be:

  • Hard workers;
  • Committed to progressive causes;
  • Familiar with social media tools and wordpress;
  • Able to demonstrate a track record of research and finding solutions to challenges; and
  • Determined to find solutions.

PAY AND BENEFITS

  • The internship is unpaid;
  • Internship perks are:
    • Working for great progressive causes
    • Fantastic networking opportunity (nonprofit orgs all over the country will know who you are)
    • Great first hand experience in a startup nonprofit
    • Collaborating with and learning from a diverse team, including Phil Radford, former ED of Greenpeace

To Apply

Send cover letter and resume to info@progressivemultiplier.fund with “Marketing and Communications Intern” in the subject line. Visit our website, www.progressivemultiplier.fund.  No phone calls please.

Progressive Multiplier Fund is an equal opportunity employer strongly committed to diversity and inclusion within the workplace. Women, People of Color, LGBTQIA individuals, and other historically disenfranchised populations are encouraged to apply.

Fundraising Innovation: Study Shows Need for New Non-Profit Finance

Most progressive organizations can dramatically increase unrestricted, sustainable revenue through disciplined financing and information sharing according to a recent study on fundraising innovation.

In 2016, a group of fundraising innovation thought leaders conducted a six month study that unearthed a critical mass of progressive organizations that are ready to launch small donor and fee for service tests, and to roll-­out proven programs, but cannot find the needed financing. Of the 35 organizations interviewed for the study, each organization was testing an average of two scalable revenue projects. These project were primarily focused on small donor fundraising, fee for service, and certification programs. Half of the organizations surveyed could raise $500,000 more annually from proven models if they had the funding to invest.

The Results: Fundraising Innovation is Widespread, Financing is Inadequate

  • Widespread Fundraising Innovation, particularly among smaller organizations. Smaller progressive organizations are doing a higher volume of innovative experiments, which could benefit significantly from increased funding. While some of these non-profits lack the capacity to scale, there is no shortage of consultant and intermediary support organizations to complement non-profits’ existing capacities.
  • Proven Scalable Revenue Programs. A critical mass of larger progressive organizations have developed scalable fundraising models that, if expanded, could raise significantly more revenue. Unfortunately, the organizations lack the financing to expand these initiatives.
  • Experimentation and Innovation. A small number of foundations provide limited grants to progressive groups to conduct scalable revenue experimentation. Unfortunately, this form of financing is neither readily available, nor abundant enough, to optimize scalable revenue testing. Strikingly, the study found that smaller social, economic, and racial justice organizations conducted a higher volume of innovative experiments that could benefit significantly from increased funding.
  • Best Practice Sharing can Accelerate Learning and the Scaling of the Progressive Movement. While organizations share some best practices, there is no progressive-wide hub where results and techniques from rigorous tests are widely shared. Indeed, because the field is changing rapidly, even general best practices around grassroots fundraising are not easy to find for organizations with limited experience.

A New Path for Fundraising Innovation and Scalable Revenue

We designed the Progressive Multiplier Fund (PMF) from these findings to provide the following three core services:

  1. Create a Test and Innovation Fund to turbocharge experimentation and knowledge dissemination. An essential component of scaling progressive groups is to fund experimentation and prototyping. When such experiments succeed or fail, the next step is to share that information across the progressive movement. Small donor fundraising needs constant innovation as older methods (e.g. on-line, direct mail) lose steam. The Test and Innovation Fund will incentivize progressive groups to experiment more creatively. The fund will ensure that a diverse range of progressive organizations are able to participate.
  2. Create a Growth Fund that leverages donor dollars. Our research demonstrated organizations need a relatively unavailable type of funding: recoverable grants. These investments are risk-­free to the grantee. Any income returned to the Growth Fund will be reinvested in future projects. The grantee would pay back the Growth Fund (or not) out of gross revenue from the scalable revenue project proceeds, not out of its general budget. All net income after the loan repayment would go to the non-profit organization. This model leverages funder dollars in two ways: First, the Growth Fund would re-grant this money several times in the future. Second, as the Growth Fund builds a track record, it may take out commercial loans against its track record and balance sheet – which many organizations are unwilling to do – using its cash on hand as a guarantee to leverage larger sums to invest in progressive organizations; and
  3. Create a Center of Excellence on Scalable Revenue. Our findings support the need for a Center of Excellence (CoE). The CoE will share best practices in small donor, fee for service, or sales efforts across the progressive movement.