Two weeks ago, the executive director of Idealist, a nonprofit job board, sent out an emailsaying his organization was facing a critical financial challenge. The openness with which he discussed the issues they were facing reminded many people of the public appeal by FORGE over a year ago that ended up raising significant money from the Tactical Philanthropy Community and landed FORGE in the Wall Street Journal. Today, I’m featuring two guest posts about Idealist.
Read Part 1 here.
By Rich Polt, Louder Than Words
47 seconds ago (as of this writing), Idealist.org received a $35 donation from Shelburne, VT. Now bear with me while I hit refresh on my Web browser … just another second … wait for it … BAM! Less than 2 minutes have elapsed and a $20 donation just came in from Laurel, MD.
This is what life has been like at Idealist.org since Executive Director Ami Dar sent out his “help save us” email/tweet on Wednesday, January 27. In just eight days, Idealist brought in $143,452, about 29 percent of their half-million dollar target. The donations have come in from 4,293 people, which averages out to about $33.40 per donation. Astounding! You can watch the process unfold for yourself on Idealist’s recently installed real-time fundraising counter here.
For a moment, let’s set aside messy issues like organizational strategy, public relations fallout, pathways to social “profitability,” and so forth. What Ami has been able to accomplish over these last few days is darn impressive and speaks volumes about the community and credibility Idealist has fostered since its inception in 1995. And how many of us wish that, like Ami, we had the network and the political capital required to elicit $143,452 in donations with an email and a few tweets?
In October of 2008, Kjerstin Erickson would have given almost anything for that kind of fundraising power. Kjerstin, as you might recall if you’ve been part of the Tactical Philanthropy community for a while, is Executive Director of FORGE, an international nonprofit doing critical work in war-torn African communities. On October 17, 2008, Kjerstin wrote a blog on Social Edge titled “We’re in trouble…,” in which she also issued an organizational distress call: “it’s time to send conventional wisdom to hell. The truth is that though our programs have never been stronger, our bank accounts have never been lower. We’re in trouble… and I can’t sit back and act as if everything is okay.”
In the wake of both Ami’s and Kjerstin’s communications, lots of intelligent folks from the Nonprofit sector offered a great deal of critique. On this very blog, Sean invoked the rare superlative by calling Kjerstin’s Social Edge post “The Most Important Nonprofit Blog.” He was impressed and excited by how Kjerstin embraced utter transparency and was open to exploring new models to achieve long-term success. This stands in stark contrast to Nell Edgington’s post in which she calls Ami’s public appeal “a mistake” because he failed to articulate Idealist’s long-term plan for ensuring this doesn’t happen again.
To be certain, the situations facing Idealist and FORGE were and are not the same. These are very different organizations in different phases of their life-cycle, with drastically different causes, and completely different business models. But as a communications specialist, I’m much more interested in the similarities here. Both Idealist and FORGE required an immediate infusion of cash, both E.D.s went public with their appeals via the social Web, and both appeals were met with short-term, game-changing responses (Kjerstin received a healthy dose of funding and a great deal of pro-bono support to get FORGE back on its feet).
So does this mean if you’re a nonprofit in trouble, you should be issuing a public S.O.S. call? I certainly don’t think you can answer that question with an outright yes or no, but I do think a sinking nonprofit would be foolish if it didn’t at least consider the option. In Kjerstin’s case, she had absolutely nothing to lose. FORGE was going to go under anyway, so she decided to make a Hail Mary pass. Many variables contributed to FORGE’s eventual success, but I believe these were the two most important: 1) The passion and dedication that Kjerstin exudes is palpable. This comes across on the social Web and I’m certain it’s why she was able to rally the troops, and 2) She was open to the critique that followed. She put her ego aside and said the cause is more important than me or my reputation.
Idealist on the other hand, is not in a do or die situation. As a more mature organization with a larger infrastructure, they have been bleeding money each month since the economic downturn. Idealist needs these funds not to survive, but to “breathe, recover, and plan ahead.” Like Kjerstin, Ami could only do this kind of thing ONCE. But for different reasons. As an organization grows, it accrues goodwill, just as one amasses chips in a casino. By issuing an S.O.S., Ami has cashed in his chips. The onus is squarely on Idealist to convert these funds in to demonstrable outcomes. They cannot make a similar appeal until they’ve once again stockpiled goodwill.
Like Kjerstin, Ami is passionate about his work, and like Kjerstin, he is not dismissive of the critiques that are rolling in almost as fast as the donations (he responded to Nell in the comments section of her blog). Overall, I am very impressed with how Idealist has been able to grow such a dedicated network and I commend Ami for tapping all that goodwill in the organization’s time of need. Incidentally, I spoke with Ami earlier in the week, and he told me that although this has been a stressful time, it has also been strangely wonderful because he was not aware of just how much goodwill there actually was out there. Sometimes that kind of validation is just the shot of adrenaline an organization needs to reaffirm its commitment to mission and cause.
All this said, I do believe that Ami’s note could have been used to greater effect, but that is me splitting hairs as a communications dude (see this post on my agency blog Communicate Good if you’re interested in learning more).
In conclusion, I think what we’ve learned over the last year is that the “nonprofit S.O.S.” is just another arrow in an organization’s quiver of options, when facing hard times. But we’ll still need to see many more S.O.S.s before we can gauge their true impact or develop a comprehensive list of “best practices” (do you know of others besides FORGE and Idealist?). By the way – I just checked the Idealist Web site and they’re up to $144,687; $1,235 in donations since I started writing this. Wow!
Sean, Rich, and Nell,
Thanks so much for this. First a couple of updates. In the week since we put up the counter that Rich referred to, another 1,500 people have given close to $50,000 more, and money aside, it’s been incredibly moving to see and feel this wave of support. Also, to give people who didn’t get the original email some more background on this, we added this page: http://www.idealist.org/appeal
Regarding Nell’s points, as I commented on her blog, I agree that a) this was a one-time thing for us; and b) that the onus will be on us to turn things around. But looking back now, I still think this was the right decision for us.
I applaud Ami for his forthrightness and am rooting for Idealist; they’ve played a critical role in the nonprofit world for years now. (Just as I loved Kjerstin’s courage and impact-orientation.)
But I couldn’t help thinking that there are no fewer than 54 different online philanthropy, volunteering, and social investment platforms (see note below). They are built on the same premise as Idealist: let’s use the Internet to match resources and needs.
Each of these websites has huge potential. For some (like Idealist) that potential has been realized, at least in part. But I’m not sure the sector can support so many different platforms. By having so many, we thinly spread our limited resources (money and users) across many platforms — forcing everyone to struggle.
I think the time has come for us to discuss how to transform this (extraordinary!) decentralized innovation into an open, coherent & sustainable system that can serve our shared needs over the long run.
See research on this topic (which the Hewlett Foundation supported) at: http://philanthropy.blogspot.com/2009/12/new-research-on-online-giving.html
Thanks Jacob! I would love to talk to you more about this when you have a chance.
We are definitely at a time of consolidation, only the fit will survive, time of scarce resources stretches business models to prove their viability.
A leader like Adi needs to step up and re-invent his organization value proposition and business model, who is his target market? the 33 dollars donors? why not go after 3 million dollars strategic donors? how can do that?
You bet. I’ll follow up separately!
The SOS appeal is an operational imperative. It is the last step before closing the doors. When it works, it buys the time needed to right the ship. When it fails, it delays closing the doors by a few days, weeks, or months. In the worst case, it is harmless.
Every executive must do it. We consultants must encourage all of them to do it at the appropriate time.
When an executive makes the SOS appeal, they need to split their attention. Ensuring the appeal works is now a half time job. Creating a strategy that changes the future is the other half of the job. Delegate the rest of the executive responsibilities to subordinates.
In the six weeks to three months that follow the launch of the appeal, operations is less important than it ever was. If the appeal fails, the operational mess that someone else makes is unimportant. When the appeal succeeds and the new strategy is ready, the operational plan will change. Again, the mess is unimportant. Besides any caretaker can maintain a garden for six weeks to three months.
The new strategy must create a structural break within the organization. Failure to create the structural break will result in making another SOS appeal in the near term.
An SOS appeal is an attempt to sell a boat with a hole in it. It damages the reputation of the nonprofit. How much damage is done and how long the damage lasts depends on the strategy.
If the strategy makes sense to the donors, they will see the appeal and crisis as a learning experience. The damage will be short lived, if at all. If they lack faith in the strategy, the damage will last as long as the doubt exists. If they are never told about the strategy, they will never develop an opinion. That means they will be waiting to see tangible results. It takes a long time to create tangible results (Filling the bank with money is not a tangible result to anyone other than the CFO. Demonstrating that the new course is producing different results is tangible but time consuming.). The damage will be long lasting.
Up to this moment, there seems to be another part missing from the discussion. The board has a role to play. It is a multipart role.
As the group responsible for oversight, one expects the board to have far vision. While the executive is in the process of managing the SOS appeal, the board should be looking into the future. What is the next crisis? This is the worst possible time for a second crisis to arise unexpected.
This crisis was unexpected. Calling it an SOS appeal emphasizes the unexpected nature. Does the board dare allow another surprise to happen?
The executive is too busy to look for the next risk. The board must step up, use its expertise and wisdom, and sound the alert if another threat arises.
The board must also support, encourage, and participate in the strategy development. It is a big job in a short time period. The board needs to be actively engaged and doing all it can to facilitate the process. In addition, anything that can be done to shorten the strategy development process will help to restore the confidence of the donors and change the course of the organization. Changing the course will shorten the time needed to end the crisis.
At the end of the appeal campaign, the board must begin the process of determining how the problem occurred. Why did the board underestimate the importance of X and fail to realize that Y and Z would follow? What new policies will it write to prevent future surprises? This must be a learning experience and never blame assessment.
The board must avoid asking questions during the crisis. Questions that are typical and tempting are, “Who did what, when, and why?” Those questions are a distraction from the immediate needs, cause people to take defensive positions, and slow the process at a time when speed is of the essence.
After the crisis, let the executive do the analysis. With a clear head and without the pressure of the crisis everyone can analyze the executive’s findings.
The board must stay out of the daily operation. The distraction of trying to understand, come up to speed, and run the operations will be harmful. It is much more important to have the board focused on the preceding. The iceberg has been hit. Rearranging the deck chairs is meaningless. Stay back on the shore and analyze the navigational systems.
If the executive needs assistance there are experts available who specialize in turnarounds. Let the executive call in the experts. It is rare for a board member to have the experience to qualify as an expert. Managing a turnaround is a full time activity. Who on the board has the time and the expertise? Trust the executive to know what help is needed.
In short, the board must engage in the process at the appropriate level but becoming subsumed by the crisis is a mistake. If the board becomes subsumed, the crisis becomes deeper and harder to turn around. The potential for another ugly surprise increases.
At Mission Enablers our primary focus is helping nonprofits of all types who are experiencing difficulties. We help clients restore vitality, develop sustainable practices, and build their capacity to serve. The majority of our work is with parochial schools whose enrollment is declining and are facing significant financial challenges.