LITMIR.BIZ

Preface

      SOCIAL ENTERPRISE ORGANIZATIONS have played a vibrant and important role in the United States for the past century, encompassing nearly 15% of the workforce. These organizations have received deep and enduring support from philanthropy as they pursued their mission. My earliest memories include the kettles of the Salvation Army, the offering plates in church, and the extraordinary success of the 70,000-person organization The March of Dimes in the 1950s that funded the discovery of the Salk vaccine and the Sabin vaccine. These vaccines led to the elimination of the scourge of polio. This work has continued unabated until today with the research supporting cures for the Coronavirus Covid-19 being only the latest.

      I have spent a large amount of my time working for a social enterprise and much of the rest of it serving on social enterprise boards over the past 40 years. It has been rich and exciting work. New transforming services have been launched and the world is much the better for them. It is both exciting and fun to design these new services. Not so much fun is designing a revenue model to work in tandem with the services to produce a viable organization.

      In my previous book, Joining a Nonprofit Board: What You Need to Know with Marc Epstein, we placed a heavy focus on the board's role in defining mission, evolving mission, and understanding mission. In retrospect, we slid by too rapidly the fact that mission is sometimes deeply constrained/shaped by financial realities and must morph to deal with that reality.

This book is about development. In Joining a Non-Profit Board: What You Need to Know¹ we laid out three roles for the board of trustees:

      This book has focused on the third of these roles—the one that social enterprise CEOs repeatedly say consumes 50% of their time. Without funds, mission cannot be fulfilled. Development is the lifeblood of most social enterprises, be they large or small. It is the unique and special responsibility of its trustees and supporters to help secure resources for the organization. These resources are often critical to the organization's success, if not survival. There are many ways that individual trustees, given their resources and skill sets, can go about this task. Attracting and harnessing the energies of the right people is key to the long-term success of development.

      Without a sustainable revenue model, even the most exciting mission-driven organization will collapse. Repeatedly, my social enterprise CEO friends say that over half their lives (and the harder half) are focused on fundraising. The dirty truth is with no fundraising, there is no social enterprise or enduring mission.

This book is focused squarely on that reality: Asking for Money. Many people dislike doing it, seeing it as akin to begging. Others don't do it very well. My view is that everything from governance to specific services is shaped by the need for a sustainable revenue model. You must have the right trustees and other solicitors to make this happen. An organization often does noncore things to raise money to support the essence of an enterprise. That is why the first chapter is on governance. The assembly of askers and connectors in the right numbers and with the right abilities on the board, in the volunteer community, and in senior management, is key. The second chapter is the companion to Chapter 1—namely, the senior management and senior board membership must be revenue/philanthropic oriented to their very core. A church minister, a museum head, a school head, all must be able to create the excitement and ambiance that brings the organization alive and makes people want to contribute financial resources to it. Revenues come in two kinds. The first are fees that can be charged for services or products. Vital to the operation of these organizations, they are not normally sufficient to keep them alive. Rather, there are five major sources of additional revenue that collectively must make up the gap. The first is the annual fund. An annual fund can range from covering 90% of the organization's budget and expenses (a church) to 3% of the budgeted expenses for a large teaching hospital. The second is a capital campaign, targeted at raising money for long-term strategic purposes, which can range from short and modest to large and long. Often a capital campaign provides institutionally transforming gifts. The third source of revenue is planned gifts. Realizable in full on the death of the donor, they often take several decades to materialize. They lay the foundation for infrastructure improvements, financial aid, new programs, and so forth. This is money that you will not get today but will irrevocably get eventually. Fourth are grants secured from foundations. These grants help enable a whole variety of useful projects. Finally, there are galas and all sorts of special fundraising events. These are occasions where people convene to have a good time and also raise funds. University reunions, golf tournaments, and museum black-tie galas are prototypes of these sorts of events.

This book is not devoted to the romance of mission definition and how to shape it. Rather, it is devoted to helping raise the financial resources for these good deeds. It is inelegant and absolutely vital. It puts the burden of social enterprise success on the right shoulders—yours! As a trustee, as a donor, as a connector, or a friend, you are the person most responsible for the success of the social enterprise.

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