Last week, the Georgia Center for Nonprofits and Bank of America hosted a special program featuring Bill Burckart, Special Initiatives Manager for the Center for Civil Society Studies at the Johns Hopkins Institute for Policy Studies. The Center's New Frontiers of Philanthropy Project is examining the proliferation of new tools and actors on the frontiers of traditional philanthropy that are ushering in a new phase of social purpose finance. Burckart discussed many of these emerging trends and their significance for nonprofit leaders and other social innovators. Read GCN's recap of the event here.
Following Burckart's keynote, representatives from several area organizations added their thoughts on the practical implications of social investing for Georgia's nonprofits. While not a traditional source of funding for nonprofits, loans and social investments are the major source of funding for most for-profit social enterprises and are even now being offered to nonprofits by some grantmakers, such as the Community Foundation for Greater Atlanta. The field is expected to expand greatly in the next ten years, with an estimated infusion of $500 million to $1 trillion in social investment capital entering the market. What should nonprofit leaders be doing now to prepare their organizations to take advantage of these new forms of philanthropy?
1. Prepare a cash flow assessment. Social investors providing loans or other capital may be motivated by social benefit, but they still require a return on their investment. If your organization is considering these types of funding, you must show that you will be able to repay the investment within the required timeframe and on the funder's terms. Some guides from our collection to help you get started:
Finance Arts Guide to Nonprofit Cash Flow: A Guide for You and Your Nonprofit Organization, by David Gray (Princeton, NJ: Finance Arts, 2010).
The Cash Flow Solution: A Nonprofit Board Member's Guide to Financial Success, by Richard Linzer and Anna Linzer (San Francisco, CA: John Wiley & Sons, 2007).
Cash Flow Strategies: Innovation in Nonprofit Financial Management by Richard Linzer and Anna Linzer (San Francisco, CA: John Wiley & Sons, 2008).
The Cash Flow Management Book for Nonprofits: A Step-by-Step Guide for Managers, Consultants, and Boards, by Murray Dropkin and Allyson Hayden (San Francisco, CA: Jossey-Bass Publishers, 2001).
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2. Develop a strong business plan for your programs or earned income ventures. In addition to cash flow, investors want to see your plans for initiating and sustaining any new venture. Before seeking funds, it's important to identify potential competitors or collaborators, sources of revenue or contributions, and organizational strengths and weaknesses. Get help developing your business plan with these resources:
The One Page Business Plan for Non-Profit Organizations: The Fastest, Easiest Way to Write a Business Plan, by Jim Horan (Berkeley, CA: One Page Business Plan Company, 2007).
Business Planning for Enduring Social Impact: A Social-Entrepreneurial Approach to Solving Social Problems, by Andrew Wolk and Kelley Kreitz (Cambridge, MA: Root Cause, 2008).
The Business Plan that Got Funding: A Complete Model for a Nonprofit (or Profit) Organization, by Melissa M. Montalvo and Karym V. Urdaneta (Miami, FL: Global Resource Cycle, 2010).
Nonprofit Business Plan Development: From Vision, Mission and Values to Implementation, by Terri Theisen (Atlanta, GA: Healthcare Georgia Foundation, 2008).
3. Be able to measure and effectively communicate impact. Your organization's impact in the community is your primary return on investment. To attract social investors, a nonprofit will need to show a history of progam effectiveness through evaluation and outcomes measurement. The efficacy of your programs is the key indicator of success for most social investors. Our recommendations for books to help you form an evaluation plan:
Mission Impact: Breakthrough Strategies for Nonprofits, by Robert M. Sheehan (Hoboken, NJ: John Wiley & Sons, 2010).
The Nonprofit Outcomes Toolbox: A Complete Guide to Program Effectiveness, Performance Measurement, and Results, by Robert Mark Penna (Hoboken, NJ: John Wiley & Sons, 2011).
Finally - Outcome Measurement Strategies Anyone Can Understand (2nd ed.), by Laurel A. Molloy (New York, NY: Innovations Quantified, 2010).
Building A Performance Measurement System: Using Data to Accelerate Social Impact, by Andrew Wolk, Anand Dholakia, and Kelley Kreitz (Cambridge, MA: Root Cause, 2009).
Remember to search for additional resources online in our Knowledge Base or search our library collections in the Catalog of Nonprofit Literature.
Stephen Sherman, Reference Librarian, Foundation Center-Atlanta
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