After the big game, you approach your car in the vast parking lot and click your key fob. Nothing. You click again. Still nothing. You don’t understand it—earlier the fob operated perfectly. You reach to jiggle the door and glance inside. A jacket and hat sit on the backseat. They aren’t yours. You step back and look again. Even though it’s the same make, model, and color, this is not your car.
It is unlikely that you will gain access to a locked vehicle you don’t own. Likewise, you can’t obtain income by trying to access mythical vehicles—even if you think they’re real. From my twenty years of advising organizations, I have compiled my top list of incorrect vehicles that leaders seek to open, but for good reason cannot.
1. Believing that Doing Good Is Sufficient
The flights of Prince Charming, your fairy godmother, and the leprechaun with the three wishes all have been canceled. Thankfully, as the sophistication of the nonprofit field grows this myth is slowly fading. Even so, do not underestimate the power of the expectation of “being rescued” in the thinking of your leadership team. We carry the rescue myth deep in our psyche. In part, it is built on the naïve idea that good deeds get rewarded. In reality, doing good is the opening salvo; like taking the SAT to attend a fabulous college. Doing good, like mastering the SAT, is critical but not enough.
Get it right. Strategize how to fund your good work and then implement that strategy. That way if Prince Charming does make it you’ll already be at the airport to pick him up.
2. Expecting Grants to Do the Job
Grants represent critical (and amazingly helpful) opportunities to launch organizations,
Grants teach newbies to create a plan with outcomes, to consider other people’s goals, and to ask others for help. Getting grants early on is an excellent training ground and confidence booster. When funded, they demonstrate that your nonprofit can convince others of worthiness of the need and your ideas. You’ve learned to articulate your ideas in a convincing document.
Unfortunately, just as ducklings sometimes imprint on people instead of their mothers, new nonprofits sometimes imprint on grants. Once they have been grant-fed, leaders expect grants to fund them forever. Leaders hope grants will solve their nonprofit income challenge for the whole journey. Just like ducklings, new nonprofits must move from being imprinted on a single funding source to independence where they tap the other, bigger income streams. To understand all your options read: 7 Nonprofit Income Streams.
Get it right. View grants, like milk, as a starting place. As you mature you can enjoy grants, like milk, as one of many nutritious foods.
3. Thinking Individual Donations are the Largest Source of Nonprofit Income
This thought is just as pernicious and misleading as the often incorrectly quoted, “money is the root of all evil.” The largest source of nonprofit income is mission revenue, or income you earn providing services or products related to your mission. Think apartment rentals, medical fees, admissions, and the like.
Get it right. Individuals are the largest source of donated income. Most nonprofits, as the statistics bear out, earn their income just as for-profits, by selling products or services related to their mission. And for the record, the quote is, “The love of money is the root of all evil” (1st Timothy 6:10).
4. Misunderstanding Development
The late comedian George Carlin, in a famous monologue, explained how the military has taught us over time to use euphemisms for the cumulative mental trauma of soldiers in high-stress situations from shell shock, to battle fatigue, to operational exhaustion, to post-traumatic stress disorder. Likewise, many outside and inside nonprofits believe development and advancement represent euphemisms for sales or getting money. Naturally, with this understanding they are mystified when asked to help.
Get it right. Continually educate all newcomers and old-timers about the fact that development involves growing relationships with people and helping them to develop their philanthropic selves. It’s not about capturing low hanging fruit, secret cash machines, tricking someone, or otherwise “getting money.” Money follows value, not the other way around.
5. Misunderstanding the Real Challenge with Government Revenue
The real challenge with reliance on government income is not that governments won’t pay for everything or the risk taken in filling out 100 page applications with unknown returns. The real problem is that government-dependent nonprofits learn how to manage “up,” and gain little skills managing “out” to create and engage a community. Unlike government funds, both obtaining donations and mission revenue require nonprofits to manage out. Similarly, a major challenge for the governments of the Middle East is that abundant oil taught them to manage oil customers and alleviated the need for taxes. Yet taxes force a government to learn to manage residents—lessons they need.
Get it right. Sustainability results from creating a dense community that, because you skillfully seek it and your value, provides both earned and donated income.
What do myths like these cost nonprofits? We won’t ever know. We do know that for eight of the last ten years the sector ended in the red, which is scary for a sector challenged with solving our hardest challenges. To move toward sustainability, eliminate these myths in your nonprofit. While that may not be enough to get you there, removing them will enable you to enter your vehicle at the big game.
Follow this link to access our library of articles about dynamic nonprofit income growth.