Don’t settle for one network: build three.

We all know how important networks are to succeeding in business. But most people mistakenly focus on building one network. Instead, you need to think about three separate ones:

1. Your operational network is comprised of the people you rely on to get work done: your peers, direct reports, bosses, and external contacts. Often times you don’t choose these folks, but you still need to cultivate them.
2. A developmental network is a group of individuals whom you trust and to whom you can turn to for advice. Select people who bring a diversity of perspectives.
3. Your strategic network helps you prepare for and succeed in the future. In this group, include people who work and live at the edge of your current world and can help you see what’s on the horizon.

Adapted from “The Three Networks You Need” by Linda Hill & Kent Lineback

3 tips for surviving difficult conversations.

No one is immune to workplace tensions: It is inevitable that you will have some trying conversations with colleagues or clients. Here are three ways to reach a productive outcome, no matter how tough things get:

1. Keep it civil.

Don’t turn the conversation into a combat with a winner and a loser. Everyone looks bad when the discussion turns toxic.

2. Don’t rehearse.

When you know things are going to be tough, it’s tempting to practice what you’re going to say ahead of time. But this is a conversation — not a performance. Instead, know where you stand but be open enough to listen and react.

3. Resist making assumptions.

You don’t have access to anyone’s intentions but your own. Don’t assume that you know where your counterpart is coming from or how she views the problem. Instead, ask for her perspective.

Adapted from “Difficult Conversations: Nine Common Mistakes” by Holly Weeks

10 tips for the times ahead.

Talking about the current federal budget negotiations is like talking about the weather. Cuts are happening, but unless you’re a member of Congress or a power broker, you can’t do much about it. What you can do is position your organization to survive–and to continue to serve your community.

Severe cutbacks in the nonprofit and public sectors have occurred more than once since The Grantsmanship Center first started training, in 1972. Recently several of our trainers and our editorial board met to discuss what more than two centuries of combined experience have taught us about surviving hard times.

Here are 10 key ideas that came out of our meeting. We hope these will help you through the days ahead. In future issues of {Centered}, we’ll discuss these suggestions in more detail.

1. Keep a close eye on your community’s needs, and focus your available resources on those that are the most pressing.
2. Continue to do what you do best. This is no time to experiment, unless some innovation promises greater community impact or economy.
3. Every proposal should have a solid evaluation plan. Now, more than ever, grantmakers want documentation of how their financial investments make a difference. And now, more than ever, your organization should want the same.
4. Make sure you understand what outcomes are. Include specific and realistic outcomes in your proposals, and speak in terms of indicators of change rather than methods or activities. Most organizations that come to our trainings have not been documenting outcomes. Documentation has always been important, but it is more crucial now than ever. Proof that your services have the desired impact on community needs is a strong argument for support.
5. Be realistic. The federal budget is being cut. Assess your vulnerabilities. Don’t get blindsided. Anticipate what’s ahead, and instead of panicking, take the time to carve out options and develop contingencies. Develop a back-up plan (or two) that will enable you to maintain core services, even if your organization is hit with massive cuts. Since projected federal budget cuts are already affecting how foundations give, monitor changes in the kinds of grants foundations are making and the kinds of organizations they’re giving to. If you haven’t already done so, now is also the time to look seriously at non-grant sources of support, such as individual donors and earned income opportunities. Social enterprise is the wave of the future for nonprofits. And major gifts are still out there, if donors are convinced of the community need and of your ability to meet it. Build relationships with potential donors now.
6. Look for opportunities to build new partnerships and collaborations.
7. Don’t accept a grant for less than it will take to do the job you propose to do unless you have additional funding sources or reserves. Doing a bad job on a shoestring can be worse than not doing it at all.
8. You may have to make hard, painful choices. If so, it’s your responsibility to do so thoughtfully and with foresight. Otherwise what your organization becomes will be shaped by abdication, rather than design. Manage the organization’s budget with great discipline. Then, if you have to eliminate programs and staff positions, you’ll be certain that these cuts could not have been avoided.
9. The current environment challenges nonprofits to clearly articulate who they are, what they do, and why their work is critical to the community’s well-being. If there is a human need–or any other kind of need–that relates to your mission but that can’t be met in the current environment, document the damage you see.  It’s important for the arguments you’ll need to make in the future. Think about the role of public information in influencing future funding. As you collect documentation of unmet community needs, share it with elected officials. In this era of cost-shifting, governments and organizations will try to shield themselves from public anger, so you can expect to see a lot of buck-passing and finger-pointing. Don’t get caught in the crossfire. Since there is a lot of ignorance about the nonprofit sector, position yourself to communicate about how costs are being shifted, how these shifts impact the critical needs of your community as a whole, and how they impact individual residents. When a cut comes down the line, make it clear–to the community, in the newspaper, to the voters–what it means, who’s getting cut off, who’s going to go hungry or cold. This may prompt donors to contribute needed funds, and it may encourage politicians to reconsider what they decide to cut.
10. The organizations that will fare best are those that do the best job of planning, focusing on community needs, and documenting the benefits of what they are doing. These are the organizations that make a real difference in the long run. Beyond that, the people who make a real difference are the ones who persevere. The short-term forecast may look gloomy, but you’re not facing it alone. As you continue to carry out the missions of your organizations, lend support to each other, sharing ideas and resources.

This article summarizes a March 2011 roundtable discussion with {Centered}’s Contributing Editor Jim Abernathy and Grantsmanship Center trainers Mary Ruth Clowdsley, Barbara Floersch, Judy Gooch, and Chuck Putney.

Jim Abernathy, “10 tips for the times ahead”, {Centered}, Volume 4, Issue 4, April 2011

How to survive big cuts in government funding.

If we can be certain of one thing in these changing times, it’s this: For at least the next two years, we’ll see cuts–sometimes radical ones–in government budgets. Federal grant programs are shrinking, and state and local programs that have been supported by federal funds will shrink or disappear. In “Preparing for Federal Cutbacks in Spending” (Local/State Funding Report, March 14, 2011), Glenda O’Neal suggests steps organizations that depend on grants can take to survive this scenario:

• Prioritize and focus on the things you do best.
• Show proven outcomes from your programs.
• Demonstrate that your programs are cost-effective and, where possible, that they will save the government money in the long run.
• Clearly document the need for your services and programs.
• Strengthen or establish collaborations and partnerships with other groups.
• Learn how to accurately forecast likely revenue from grant sources.

Jim Abernathy, “How to survive big cuts in government funding”, {Centered},
Volume 4, Issue 4, April 2011

Get ready for increased foundation giving.

The Chronicle of Philanthropy recently surveyed 89 private foundations that account for about a third of the total assets of U.S. foundations. A key finding: their overall grants will go up modestly in 2011. In “Foundations Rethink Priorities in 2011 as Assets Slowly Recover” (The Chronicle of Philanthropy, March 10, 2011), Marisa Lopez-Rivera and Caroline Preston report that 37% of the surveyed foundations plan to give more this year, 33% say their giving will remain the same, and 11% anticipate a decline. Most expect to increase their giving in 2012, as their assets continue to recover from the drops that began in 2008.

The Chronicle asked foundation staff and others for advice on how best to approach foundations this year. In “A Focus on Signature Programs Can Help Charities Gain Grant Makers’ Support” (also from the March 10 issue), Caroline Preston offers these tips:

1. Emphasize how your group is collaborating or partnering with other organizations.
2. Demonstrate the urgency of your project or activities.
3. Show how your organization has limited your suite of programs to those that have demonstrated success.
4. Show exactly what results funds granted to your group will produce.
5. Report your financial condition honestly and completely.
6. Be sure your goals are compatible with those of the foundation.
7. If organizations like yours have received grants from the foundation, ask those grantees for advice.

Jim Abernathy, “Get ready for increased foundation giving”, {Centered}, Volume 4, Issue 4, April 2011

3 ways to avoid communication breakdowns.

Even though communication is the lifeblood of an organization, it’s difficult to find a company that doesn’t have its momentary breakdowns in that area. Part of a manager’s job is to keep these to a minimum. Here are three ways to ensure employees understand and communicate well:

1. Provide context.

For people to understand a message, they have to know why it’s important. Give people enough information so they know where things fall on the priority list.

2. Encourage questions.

Don’t just ask if people have questions, encourage them to raise concerns. This type of interaction helps people absorb information and understand messages so they can pass them on.

3. Stay connected.

People respond to communications very differently, even when they’re hearing the same information. By being in tune with your employees, you can anticipate their reactions and better understand how to deliver messages.

Adapted from “Your Communications May Not Be Communicating” by Ron Ashkenas

Your six fundraising numbers.

1. Net annual growth in active donors.

Every year you add donors through acquisition and lose donors through attrition. The difference between these two numbers is your net growth. It’s either positive or negative (or unchanged–unlikely). Don’t measure just the number of new donors you add annually. That number might look impressive, but it’s false. 80,232 donors acquired minus 81,439 donors lost isn’t growth.

2. Net cost per donor acquired.

Figure out how much you need to spend to acquire a new donor for every channel you use (direct mail, face-to-face, online, direct response TV, special events, and so on). You need to know this number to win board approval for a donor acquisition budget. Donor acquisition costs money. The other number you need to know is Lifetime Donor Value by Channel (below).

3. Attrition rate by channel.

Donors die, lose their jobs, move, retire, divorce and do other disagreeable things that make them stop supporting your cause. Although many of these things are beyond your control, you still need to know the number of donors you lose each year, expressed as a percentage of your active donors, and calculated for every channel you use to raise funds. When you know your attrition rate, you know how many new donors you must acquire each year just to stop your file from shrinking. Because it is shrinking.

4. Renewal rate by channel.

What percentage of your donors who give a gift one year also give a gift the next year? That’s your renewal rate. Your renewal rate indicates how passionate your supporters are about your cause. It also indicates how successful your donor stewardship program is.

5. Second gift conversion rate.

Most people who make one gift to a charity never make another. If you have a low Second Gift Conversion Rate, you either are attracting donors who are unlikely to make a second gift, you are not treating your first-time donors properly, or you are not asking for that vital second gift soon enough (or all three).

6. Lifetime donor value by channel.

How much does one of your average donors contribute to your charity in her lifetime? That’s the number you need to know to justify your investment in donor acquisition and stewardship. Include in this number every gift ever given, including annual gifts, major gifts, special event gifts and bequests. Know this number for every channel you acquire donors by.

Alan Sharpe, Know Your Six Fundraising Numbers or Die