“The Road Less Stupid” for Nonprofits: Avoiding the Mistakes That Sabotage Growth

I learned a lot in 2020, and I’m sure you did, too. 

Not that it wasn’t scary. In addition to public health concerns and economic instability, from the beginning, the news was assuring us, “Most small businesses won’t survive this pandemic!” 

Um, hi, that’s me. 

I chose to tune out the noise. In early April, 90% of my projects felt like they were on hold, but I knew I had spent every minute of 2018 and 2019 putting infrastructure in place to make 2020 “my year.” So, I just kept showing up. I ended up having my best year yet, serving the largest clients of my career, while they got their greatest results, all over the country. 

And then everybody said, “Most nonprofits can’t survive this pandemic!”

Oh, hey, that’s you. 

But the reality is, my clients secured more money than they ever had in their lives. The number of organizations I was working with that were fully funded, well before their fiscal year ended, was astounding. I’ve never had more celebratory emails and texts about 6-figure gifts or seen so many clients secure unrestricted, capacity-building funding. 

My clients kept showing up. They stood in the gaps where we needed them most. They served more people, shifted programs where they needed to, added programs to care for so many. Nonprofits, as they so often do, saved the day, every day. 

Now, I understand 2020 wasn’t a cake-walk and it wasn’t “a year of bests” for everyone. But I’m encouraged (and hope you will be too) by the fact that my clients aren’t magic, and neither am I. Our success came from showing up and doing the work, sticking to the activities that bring the greatest results, and adopting a growth mindset. 

You can do that, too. 

In 2020, I read an awesome book, The Road Less Stupid, by Keith Cunningham. I bought it to help me think about my own business, but I found it full of golden nuggets I just had to share with my nonprofit clients. 

It’s all about avoiding mistakes that sabotage growth, revenue, and business success. Here are my three biggest takeaways for all of us in 2021. 

1.Generalizations Kill Clarity

The first idea from the book that I knew I had to share with nonprofit leaders is this: generalizations kill clarity. Unfortunately, the nonprofit sphere is no stranger to big generalizations that keep us from dreaming big or even creating achievable plans. 

Generalizations like:

...We’ll always struggle financially because we’re a nonprofit.

...Donors never want to pay for overhead.

...We won’t get funding if we have too much money in the bank.

Let’s get some clarity about those myths and generalizations.

They aren’t true.

They sound true, and sometimes they feel true, but they’re not. There’s a practical, straightforward path to being fully funded. But, it feels counterintuitive, and that’s often misinterpreted as being risky. 

It’s not risky, in the sense of “foolhardy.” It’s a calculated risk that looks a lot like running a successful, growing business. 

If your plan is to grow this year and your budget has increased, you’re in a great position because mid- and major-level donors want to invest in forward-moving missions – not one that hopes to just squeak by with just a slightly better impact than they had last year.

I see it all the time. When you commit and plan for the stretch-budget, you raise more money. Instead of generalizing and thinking, “We probably can’t raise much more than last year,” set aside your assumptions, get into the income side of your budget, and start making real goals based on your true needs. 

To grow and hit those goals, you must commit to tearing down the traditional nonprofit siloed fundraising activities by copiloting a true and overall financing plan with your Development Director. 

The compass of your income plan must be pointed at:
-50-75% of your revenue from your Top 30 donors
-75% of your revenue from unrestricted, charitable sources (individuals)

Then, and only then, you can align your fundraising time and activities to meet those needs every month. This must be represented and tracked on the income side of your budget.

These standard nonprofit generalizations can keep you from clarity at any organization size. I’ve had high-performing nonprofit CEOs tell me the same thing as leaders of grassroots organizations, “We’re consistently bringing in the same amount every year, we even struggle to make payroll some months.” Whenever this happens, I can tell they’ve been driven by these generalizations, not the real facts. 

If you’ve had something similar happen to you, ask yourself these questions:

✔️ Am I confidently spending on both admin and fundraising (not just programs)?

✔️ Am I creating a true, needs-based budget that includes a reserve that floats tight months?

✔️ Am I sure the fundraising (financing) plan we’ve created will propel us to reach that budget?

✔️ Am I planning for 75% of my revenue from unrestricted, charitable sources?

If you answered NO to these, then it’s time to do two things:

• Plan for and raise toward a reserve fund or cash balance (the amount your team raises is directly tied to your budget)

• Create a REAL Financing Plan that helps you raise MORE money EVERY month

I don’t mean to sound harsh. 

But the truth is that too many boards and leaders spend tons of time figuring out every cent they’ll SPEND and don’t take the time to figure out every single dollar they’ll RAISE. And when you don’t do that, you never feel like enough is coming in and you allocate time and resources to the activities that don’t bring in the size donations you need. 

2. Don’t Waste a Crisis

The title of Chapter 10 of The Road Less Stupid, “A Crisis is a Terrible Thing To Waste” is particularly relevant right now. In it, Keith shares about how his business was making scores of millions from real estate deals, and then lost every last penny they had. 

Ouch.

He said, “We needed to hear, recover, and rebuild - but do it differently next time. We wanted to be certain that we NEVER had to experience this kind of disaster again. The thinking was not that we could somehow control the economy or interest rates. We couldn’t. But what we could control was the thinking, disciplines, and strategies that allowed us to get caught in the tsunami in the first place.”

Now, if you’re reading this I hope your organization didn’t lose every penny it had last year. That’s a bit dramatic. 

But, I worked with dozens of organizations last year whose desire was to commit to doing it differently going forward. They wanted to rebuild their funding model so that they weren’t exposed to such risk during the next crisis or economic downturn. 

Here’s a vulnerable and partial list of favorite lessons Keith took the time to outline the week he lost it all. Some of these really ring true in our sector:

Keith: A lack of rules, skepticism, and discipline caused every mistake we made. If you aren’t setting a course, anything can pull you off track. 

Questions to ask yourself: Is your staff in a pattern of reactive activities that keep you on the spin-cycle that never fully funds your big vision? Are you skeptical your team and board can help scale your revenue?

Keith: Catching a big wave is not the same as being a good swimmer.

Big waves that bring a sudden influx of cash are nice, but they’re not a sustainable strategy.

Questions to ask yourself: Are you spending too much time on one-off activities like galas or celebrity endorsements that keep you from learning the daily activities that steadily grow your annual fund?

Keith: No team has ever won the game with an “offense only” strategy. Great teams, the ones who win championship rings, all have fantastic defenses. They think about the prevention, protection, and risks. 

The best time to buy an umbrella is before it starts raining.

Questions to ask yourself: Is your annual financing model protecting you from the next crisis? Is it diverse, not overly dependent on one revenue source, and made up of a majority of unrestricted funds?

Keith: We acted like it was a sin to miss a revenue opportunity. That makes as much sense as needing to eat everything at a Sunday buffet.

Just because an activity or opportunity will make money, doesn’t mean you should participate in it. It’s ok to say no.

Questions to ask yourself: What activities do we need to STOP doing that are generating low dollars and taking way too much of our time? Are you doing appeals, campaigns, and events every year just because, well, you’ve done them every year? (And side note, am I alone on missing buffets these days?)

Seriously, this book is good. There’s a list of probably hundreds of these lessons. 

Let’s not waste what our eyes were opened to in 2020. Let’s do this together. 

3. In Business, the Only Constant is…

The idea that change is a constant and you have to adapt to stay relevant isn’t new, but I really liked Keith’s angle.

He says, “The reason companies lose relevance, go broke, or fade into the sunset is because they continue to grow, but fail to evolve. They rely on the wrong questions and old answers.”

We can be really honest with each other, right?

Our sector is FULL of wrong questions and old answers.

My favorite wrong question and answer . . .

Q: What percentage of my dollar goes to program? 

A: We are cutting costs everywhere we can so that it’s over 90%.

This is the completely wrong approach. 

Every time my students spend a lower percentage on programs, they increase their program budgets. They spend the resources they need to raise money, so they have more money to spend, so they spend more money on programs. Do the math. 

Now, we have to educate donors on these percentages. Many of them have been taught to expect that programs are all that matter, but when you explain it, I’ve found donors usually get it. Outside of nonprofits, most of the world does not believe you can spend no money while still accomplishing giant goals.

A client of mine ended his fiscal year on December 31, 2020, in the black for the first time since 2016 (and, no, his organization isn’t on the “front line” COVID response). He’s the National Development Director for an international organization and took my 90-day program in August of 2019. 

So, how’d he do it so quickly?  

💲   He learned how to pivot from fundraising to an overall financing plan that attracts larger donors.
🕒 He learned what to spend his time on that leads to donors giving larger gifts.
👫🏽 He learned how to create donor experiences that attract and lead donors to ‘a yes’ every year.

And, he did this while:

👊 Hiring staff
👊 Spending more money on overhead
👊 Increasing his budget

Early on he said to me “I think we have donors who would give more, but I don’t know what I don’t know. So, I think I’m leaving money on the table.”

Did he feel vulnerable admitting he needed a coach?

Did he feel the risk associated with ‘spending money to make more money’?

Sure he did. But, the only thing constant is change. And that’s what he embraced.

That’s what I want for every one of my students. And it’s possible in a much shorter time than you think. It takes a mindset shift, but there are donors in your midst who are also not giving their best gifts to you. You can reach them if you start asking new questions. 

New questions like:

❓Are we learning or evolving as fast as the world is changing?

❓What skills do we need to invest in learning that will shift our growth trajectory?

❓What am I avoiding doing because it feels to risky or hard?

Starting on the Road

January is a good time for resolutions. Is this the year you get your nonprofit off the spin-cycle of spending all your time raising never-enough? Here are three ways to get started when you’re ready…

Whenever you’re ready, here are 3 ways I can help you grow your nonprofit revenue:

1. Follow me on LinkedIn for content and resources first
I give away trade secrets and insider info every week - the same lessons I teach my clients about what they can do to start attracting larger dollars and generate more unrestricted money for your nonprofit.

2. Read my WHITEPAPER to see if your overall approach to financing your mission every year might be keeping you from growing.
Here you’ll learn THE BIG FUNDRAISING SECRET that keeps organizations from having the funds to achieve what’s in their strategic plans. Click here to get it.

3. Work with me to reimagine your overall approach to revenue generation
If you'd like to add 7+ figures of charitable revenue to your nonprofit, just send me an email at Sherry@QuamTaylor.com with the subject line “grow.” Tell me a little about your nonprofit and what you need to raise this year. I’ll get you the details! 🎯