Contrary to popular belief, fundraising is not about begging for financial or in-kind support. It’s the art of enlisting people to invest in your venture. For some, fundraising is seen as an arduous chore that, while necessary to “keep the lights on,” takes away from the fun and excitement of changemaking. If you identify with this perspective, here is an opportunity to change the way you think about fundraising.

Instead of being an activity separate from your mission, fundraising can be integrated with your changemaking activities. For example, fundraising is closely linked to communications and outreach. From this perspective, fundraising provides an opportunity to share your story about what your cause is and why it matters as well as provide opportunities for involvement. For some organizations, fundraising has evolved from collecting donations from unknown individuals to building relationships within your personal and professional networks, which is known as “friend-raising.” Additionally, people who have benefited from your work may want to express their gratitude by becoming supporters of your organization. This provides another avenue to engage others in your cause while generating support.

Fundraising is a process that begins with the conceptualization of your venture and continues throughout the life of the organization. As you prepare your strategic plan, you will want to determine what the mission of your organization is, how you plan to accomplish it, and what resources are needed. Once you’ve determined your startup and operational costs, you can begin to consider sources of funding. After you meet your initial fundraising goal to launch the venture, a steady stream of income will be needed to generate social impact. Over time, your funding goals are likely to increase as the organization extends its geographic reach and broadens the depth and breadth of its activities.

Fundraising is a continuous cycle that consists of the following stages:

1. Identification

This is where the fundraising process begins. Before you start enlisting the support of individuals and organizations, know who they are. This requires researching what types of people and organizations are likely to care about your cause and whether they have the means to contribute. Find out as much as you can about prospective donors, as this information will come in handy later on in the fundraising cycle, including (a) how much money they have given in the past for similar causes, (b) their requirements for obtaining funding, (c) how often and when their funding decisions are made, and (d) how your changemaking activities fit into their overall strategy for social impact. Once you have determined who is a good fit with your cause, prepare a list of prospects that you intend to approach for support. Rank your prospects in order of who is most likely to provide the most amount of money in the shortest period of time and work your way down this list.

Think strategically and creatively about who are the best candidates to approach for funding.

Spend some time doing an analysis of potential sources of funding. Brainstorm creative ways to meet your funding goal, such as generating revenue by offering products and services, accessing in-kind donations and pro bono support, obtaining seed funding from friends and family, and applying for a low or interest-free loan.

2. Cultivation

Developing relationships with prospective funders before making requests increases your chances of success. Not only is it easier to reach out to people you already know, you’re more likely to receive a positive response when the person or organization is familiar with you and your work and believes in what you’re doing. Cultivation is especially important in cases where you want to approach a funder when there isn’t an existing relationship. In these situations, you’ll want to find a way to directly connect with the funder, such as through a professional fundraiser or board members, and begin forming a relationship. The idea is to not ask for funding at this point, but to inform the funder about your organization and the work you’re doing in a way that builds interest in your cause. For example, you can start off by sharing a brief description of your organization and programs, such as a brochure, website, or report. Then gradually engage funders in your work by inviting them to visit your organization.

Come up with a plan for how you will approach prospective funders and get them excited about supporting your cause.

Develop a plan for cultivating prospective funders. Include specific steps that will be taken, who will be responsible for each step, a timeline with deadlines, and space for jotting down notes and ideas. As you prepare your plan, you may want to have a brainstorming session to come up with creative cultivation ideas. Remember, the goal is to help funders get to know you and your organization; the more they learn, the more likely they will want to become involved.

3. Solicitation

This stage of the fundraising cycle is about asking for funding. Your “pitch,” regardless of whether it’s a verbal presentation or a written proposal, should be delivered in a way that is likely to result in funding. To get to this point, you should have a good sense of who the donor is, what types of programs they tend to support, the range of funding they tend to provide, and what criteria they use to decide whether to make an investment. Unless you’re applying for competitive grants, for which funding decisions are based primarily on quality and cost-effectiveness, it’s important to have established a relationship with the funder. Before making a request for funding, be sure that the funder is ready to entertain your proposal.

Make sure that you’re prepared and that your request is well-timed to increase your chances of obtaining funding.

When you make a request for funding, you’ll want to “have your ducks in a row.” This means knowing how much to ask for and how the funds will be used, as well as having a compelling case for why funders should support your cause and being able to articulate what they will get out of their investment. Be prepared to answer questions about your program, qualifications, and operations. Much like a job interview, you want to ask for what you want at the right time. The right time is the moment when funders have demonstrated an interest in actively supporting your cause. In the case of competitive grant applications, it’s critically important that you submit a proposal that addresses all of the funding requirements before the deadline.

4. Stewardship

With attention focused on getting the funding you need, it’s easy to forget this stage of the fundraising cycle, which is about thanking and recognizing your supporters. The goal is to help funders feel appreciated to the point where they will want to continue to support your work and may even be willing to make a larger contribution the next time around. Consider having a strategizing session to think through ideas for expressing appreciation to funders, such as sending a handwritten thank-you note, providing invitations to an exclusive event, or offering a token gift that symbolizes your organization and the meaning of the work you do. In the case of grants, you’ll want to be sure that you understand and are able to strictly follow the terms of the agreement before signing on the dotted line. It’s also important to maintain a steady flow of communication with funders to keep them in the loop on the status of your program, above and beyond any required reporting.

Put processes in place for demonstrating your gratitude to funders.

Consider using contact-management software, or a tracking tool, that includes reminders for stewardship activities like writing thank-you notes and meeting reporting deadlines. On the financial side, you’ll want to have systems in place that allow you to keep track of funds received and spent. For some grants, you may need to keep funds in separate bank accounts to track how income is spent at a very detailed level. Don’t forget to use electronic and hard-copy filing systems to maintain important records and correspondence.

There are various technological solutions that can help you effectively and efficiently manage stewardship activities. Choosing an automated system to organize valuable information and quickly generate customized reports can save you time and money. Rather than provide an exhaustive list, in the resource section of this guide I’ve included a sampling of some of the most popular software solutions that are used to manage fundraising, accounting, and grants management activities. Consult with your staff and an IT specialist to help you select the product that best fits your needs.

Social Good Guides (SGG): Do I need to hire a professional fundraiser or is this something I can do on my own?

Kimberley Jutze (KJ): This is a personal decision that depends on a variety of factors, such as the overall size of your funding goal, your urgency to reach it, and the resources that are already at your disposal. If your funding goal is relatively modest and there are sufficient resources in place to help you reach it, consider developing your own and your staff’s fundraising skills, looking to board members for support, or hiring a fundraising consultant or part-time staff. However, if you foresee a long-term need to continuously raise significant funds, you’re probably better off securing the services of a full-time development professional. You may also wish to consider establishing a fundraising committee within your board of directors to actively support fundraising efforts. Board members can share responsibility for tasks that are more time consuming; they may also have valuable relationships outside of your network or complimentary fundraising skills.

SGG: Where can a nonprofit founder go to research various opportunities? What foundations provide early stage funding for startup nonprofits?

KJ: The Foundation Center is a good resource for researching funding opportunities. Depending on where you live in the U.S., there may be a Foundation Center office near you. If you’re interested in obtaining a grant, Foundation Directory Online is a database of private and corporate foundations located in the U.S., which can be used for free at a Foundation Center office. Foundation Center offers online and in-person training, webinars, and a resource library containing books and articles on a variety of topics related to nonprofit fundraising. Philanthropy News Digest is the Foundation Center’s news service on philanthropy related topics. The Chronicle of Philanthropy also provides news and information on philanthropy.

The pool of institutional donors that funds early stage nonprofits is fairly small. This is primarily because funders prefer to support organizations with an established track record to lessen their financial risk. Most foundations also require nonprofits to have a 501(c)(3) status. While funders are usually interested in supporting a particular cause, there are some organizations that support early stage social enterprises and bold, innovative solutions to large-scale social problems: Draper Richards Kaplan Foundation, Echoing Green, and the United States Agency for International Development’s Development Innovation Venture are a few that come to mind.

SGG: What are early stage funders looking for?

KJ: Most early stage funders are interested in seeing a good idea that has strong potential to succeed. They also want to obtain a good return on their investment in terms of social impact. It’s important to demonstrate that there is a strong demand for your organization’s products or services, that your leadership team has a successful track record, and that your organization and its programs have the potential for long-term sustainability. Remember that providing financial support to an early stage nonprofit poses a significant risk, so you’ll want to do your best to overcome funders’ concerns. Bear in mind that there are many nonprofits out there that are seeking funding, so you need to be able to make a very compelling case as to why your organization is worthy of support and can make the best use of funding.

SGG: What are the biggest mistakes a startup founder can make when seeking early funding?

KJ: One of the biggest mistakes I’ve seen people make is haphazardly pursuing whatever funding opportunities come along. Without having a fundraising strategy in place, you run the risk of investing a significant amount of time and energy pursuing funding options that may not be the best fit for your organization. As a result, you can end up spinning your wheels without making much progress. Instead of leaping straight into fundraising activities, take the time to develop a well-conceived strategy that identifies the most suitable sources of funding and how your resources can be effectively leveraged to achieve your funding goal. For example, if your organization has a cause that many people identify with, develop individual giving as a significant source of support.

Another mistake that nonprofit leaders frequently make is trying to secure funding on their own, instead of developing an effective support system. While the nonprofit leader is accountable to the staff, board, and other stakeholders, he or she doesn’t have to manage the nonprofit alone. Smart leaders attract the resources they need, and surround themselves with the right people.

SGG: What are the pros and cons of asking friends and family for money?

KJ: The advantage of asking friends and family for funding is that it’s easier to approach people who already know you and are likely to invest in your cause. This is a good way to generate momentum towards reaching your funding goal. This approach can also demonstrate to other funders that you have had some success in attracting funding and are capable of effectively managing an initial investment. However, there is a risk of damaging relationships if friends and family members don’t feel properly appreciated or are unhappy with how their contributions are being used. Accepting money from people with whom you have a close relationship may also open the door to unsolicited advice about how your organization and programs are run. Before approaching friends and family for funding, determine what being a financial supporter and recipient means and ensure that these expectations are mutually understood.

SGG: Is throwing an event a good strategy for raising money in the beginning?

KJ: The short answer is – it depends. It’s hard to know whether event planning is a good strategy for obtaining funding until you’ve carefully considered it in comparison to other potential sources of funding.

It takes experience to be able to generate a positive return on investment. Event planning tends to be very labor intensive and an event’s component parts require consistent attention, from the large-scale items (i.e., theme, venue, guest list, catering) to the minutiae (i.e., following up on RSVPs, tending to decorations and entertainment, managing costs). Do you have the human resources needed to pull off a successful event? If not, can you afford to hire a professional event planner or recruit volunteers? Make sure you know up front what the anticipated costs and revenue will be. Can you make enough money to cover the cost of the event and meet your funding goal? A good rule of thumb is to earn at least 5x the cost of the event.

In addition to planning and budgeting your event, it’s also important to know how to market your event to ensure that there will be a good turnout. What’s the best way to reach your target audience (i.e., social media, email, snail mail)? Are there other organizations with broad networks that are interested in supporting you and can help get the word out? Do you have a strong draw for your event? Is there a sufficient incentive (in addition to supporting your cause) for people to attend? Have you checked with other organizations in your industry to make sure that there are no competing events on the same day?

SGG: Is crowdfunding a good strategy?

KJ: Much like event-based fundraising, the answer is – it depends. It’s hard to know whether crowdfunding is a good strategy until you’ve carefully considered it in comparison to other fundraising options.

Some factors to keep in mind when considering crowdfunding as a source of funding are:

Crowdfunding can be a good option if you’re seeking funds for a modest project that requires a relatively small amount of capital, such as a demonstration or pilot program. While crowdfunding can help you obtain money in a relatively short amount of time, the total amount acquired can end up being a small portion of your overall budget. Before pursuing this option, make sure you come up with an accurate estimate of the amount of funds you anticipate receiving. If you’re not sure how much money you think you can raise, talk to others who have done similar campaigns. Don’t forget to account for costs associated with crowdfunding, which may include fees, shipping charges, or other debts associated with fulfilling pledges. It’s important to end up with a positive return on investment in terms of the time and money spent running the campaign, which includes fulfilling donation incentives. Can you keep all of the funds raised even if you don’t meet your funding goal? How large and robust is your network? As mentioned earlier, it’s easier to ask people you already know for a contribution than it is to convince those who are unfamiliar with your cause. Crowdfunding websites can help you raise money and visibility for your cause, assuming that you’re able to drive enough traffic to your campaign page. If you have a strong network, it may be worthwhile to consider entering fundraising challenges that are based on getting the winning number of votes or donations for your project.

Before the campaign starts, get a group of “ambassadors” lined up to help promote your campaign. It’s not easy to get publicity, but often bloggers who are interested in your cause can get the word out to their readers. Consider asking other associations and networks in your industry to reach out to their members on your behalf.

Seed the project with your own money, as well as with funds from family and friends, before publicly launching the campaign. By demonstrating progress, you can encourage contributions from those who don’t know you as well.

SGG: What are the greatest assumptions and misconceptions that many startup nonprofits have in the beginning in relation to fundraising?

KJ: Nonprofit leaders tend to get hung up on generating cash. While there is no disputing the flexibility and freedom that comes from having money in the bank, it’s a good idea to think creatively about other ways to get your needs met, especially if you’re just starting out and resources are limited. Some options that may be worth considering include accessing pro bono consulting services, obtaining in-kind donations, and bartering. The idea is to adopt a resource-mobilization (rather than a fundraising) mindset and to broaden your perspective beyond money seeking. This is especially important given that it’s extremely difficult to obtain funding during your first year. Many donors are unwilling to take the risk of investing in a venture that is just getting off the ground and is in the early stages of proving that its change model will be successful and sustainable.

Nonprofit leaders also tend to rely on grants as a major source of their funding. While it’s possible to obtain a significant amount of funding with a small number of grants, there is a tendency to underestimate the amount of time it takes to obtain a grant (anywhere from six to eighteen months) and the level of competition for funding. It’s also important to keep in mind that there are fewer opportunities available for early stage ventures, which means that there is greater competition for limited funding. For example, Echoing Green is a nonprofit organization that provides seed funding to early stage social entrepreneurs and has a highly competitive application process. Of the approximately 3,000 applications that are received each year, only fifteen to twenty-five are selected to receive an Echoing Green Fellowship.

If you decide to apply for a grant, keep in mind that many foundations that accept unsolicited funding applications require a letter of inquiry or a concept paper, which is a summary of your request for financial support. Once initial proposals are screened, a small number of nonprofits are invited to submit full applications for funding. Depending on the foundation’s grant-making deadlines and how often its board meets, there could easily be a few months between each stage of the application process – not to mention the amount of time needed to process a grant award and release the first disbursement of funds. This is another reason why it’s helpful to put a fundraising strategy in place before seeking grants. Invest your limited resources wisely to ensure the highest possible return.

SGG: Is it true that you don’t have to incorporate as a nonprofit to begin fundraising?

KJ: While it’s true that you don’t have to incorporate as a nonprofit to begin fundraising, there are some good reasons to obtain 501(c)(3) status, which means that your nonprofit is recognized by the federal government as a tax-exempt charitable organization. Nolo, a legal resource, cites several advantages of incorporating as a nonprofit, such as not having to pay income tax on profits that are earned from charitable activities. If you plan to obtain donations from individuals, a 501(c)(3) status allows funders to benefit from tax deductions. To be eligible to receive a grant, it’s common for foundations and government agencies to require nonprofits to be registered as 501(c)(3) organizations. Having a 501(c)(3) status means that your organization is exempt from paying sales tax on purchases. In addition, nonprofit staff and board members are protected from being personally liable in the event of a lawsuit. To find out more about 501(c)(3) registration, check out Foundation Center’s startup guides.

Before moving forward with registering your nonprofit, which is a resource-intensive process, consider alternative options. The nonprofit sector is a highly regulated and competitive field – it can be difficult for new organizations to meet their compliance obligations while also raising the necessary funds to build their programs. It may be advisable to partner with an existing organization or test your ideas through a fiscal sponsor. Fiscal sponsorship is an arrangement whereby an existing charitable organization with 501(c)(3) status acts as a sponsor for a new organization or project, allowing the new organization to receive tax-deductible donations under the umbrella of the sponsoring organization. A fiscal sponsorship arrangement enables a new organization to raise funds and test the viability of a project before going through the lengthy process of establishing a new charitable organization or obtaining tax-exempt status. For more information about obtaining a fiscal sponsorship, check out Fiscal Sponsor Directory.

SGG: What is the difference between a board of directors and board of advisors and what can a nonprofit startup expect from each? What control does either have over a nonprofit’s funding strategy?

KJ: Nonprofits are legally required to establish a board of directors, which serves as a governing body. The board of directors is responsible for making sure that the nonprofit meets its goals and develops policies supportive of these goals. Essentially, the board of directors is responsible for determining the organization’s overall plans and policies, including its funding strategy, while staff members are required to carry them out. The board of directors’ primary responsibilities include (a) hiring the senior leader who is responsible for managing the operation of the nonprofit on a day-to-day basis, (b) strategic planning, (c) developing organizational policies and overseeing their implementation, (d) making sure that funds are spent in support of the nonprofit’s mission, and (e) participating in fundraising activities. Since the senior leader or founder reports to the board of directors, the board is responsible for reviewing this person’s performance and compensation. This means that the board can fire the senior leader, even if he or she is the founder, in the event that this person’s performance is unsatisfactory or in instances of professional misconduct. A board of directors may decide to establish a board of advisors, which is essentially a committee that fulfills an advisory function and does not have the authority to act without the approval of the board of directors.

After reviewing Part I: Getting What You Need to Succeed, you’re probably feeling more prepared to obtain the funding and other resources needed to launch your social change venture. You may be thinking that once your funding goal is reached, you will be ready to hit the ground running. If this is the case, resist the temptation to stop reading. While having a steady stream of funding is crucial to the success of your social enterprise, there are other factors that are just as important and should also be taken into consideration. After all, the decision to launch a social venture should not be made lightly. You owe it to yourself, your staff, the people you serve, and your financial supporters to have the kind of organization that can effectively support your changemaking efforts. Take the time to think through your mission, test the demand for your products and services, develop a sustainable revenue model, attract the right people, and seek out appropriate sources of funding – doing so can determine whether you succeed or fail. Being unprepared can put your reputation and the sustainability of your venture at risk. More importantly, you can end up jeopardizing the welfare of the people you intend to help.

It should be emphasized that launching and managing a social venture requires a significant commitment of time, skills, funds, and other resources. The reality is that few changemakers succeed in getting their ventures off the ground or reaching sustainability. Regardless of whether your venture is a traditional business, a nonprofit, or a social enterprise, the failure rate is considerably high. According to multiple studies, 55% of startup businesses fail in the first three years of operation. For nonprofits, the failure rate can be as high as 75%. Startup ventures commonly fail because they are started by well meaning people who (a) have limited experience running a successful organization, (b) rush through the launch process without properly considering the feasibility of their revenue model, (c) fail to ensure that there is sufficient demand for their products and services, and (d) devote insufficient attention to social venture operations.

Having spent the vast majority of my career in the nonprofit sector, I’ve witnessed a number of instances where organizations have been so focused on getting funding and implementing programs that they neglect what goes on inside of the organization.

Some examples include:

1. Being tempted into mission creep as a result of not having a clear strategy in place

2. Giving in to pressure from donors to operate programs that fall outside of the nonprofit’s mandate

3. Placing the wrong people in the wrong positions resulting in personal misery and an unhealthy work environment

4. A lack of attention to operational efficiency that has led to precious funds being wasted

5. Espousing empowerment as a fundamental value while staff have little or no say in the conditions that directly affect them and their work

Part II of this guide alerts you to pitfalls that can prevent your nonprofit from achieving its goals. As social ventures have the potential to bring about transformative positive change, it’s important to pay equal attention to what goes on both inside and outside your organization.

As you move forward with launching and growing your social change venture, here are some things to keep in mind:

Let a well-conceived strategy be your guide.

Changemakers tend to think in terms of the big picture. It can be exciting and invigorating to come up with a groundbreaking solution that will fundamentally change society in a positive way. While the world needs visionaries, it also needs doers that can put great ideas into action. This is where having a roadmap can be helpful. As you begin putting a strategy in place, make sure that your plan is written as an actionable document that serves as a blueprint for developing your organization. When treated this way, your strategic plan is more likely to be used as a guide in your day-to-day work, rather than as a check-the-box exercise that will be forgotten once it’s completed. Build flexibility into your overall strategy to account for unforeseen changes that may occur during implementation. For example, revisit your strategic plan at least once a year and make whatever modifications are needed to ensure you stay on track.

Make sure that your strategic plan includes a definition of success for each of your programs and for your organization as a whole. This includes developing units of measurement with clear indicators for how and when success is achieved. It’s not enough to make a general statement in a pretty brochure that your organization helped X number of people. To demonstrate the positive difference your organization has made in the lives of others, you’ll need to develop an appraisal of the current situation before you begin your program and periodically monitor changes made along the way by collecting and analyzing data from the people your organization serves and organizations you work closely with. For example, in addition to measuring the number of children who completed their secondary education, include indicators that demonstrate a broader impact, such as the percentage of students who went on to earn a bachelors degree, amount of income earned following completion of education, and level of job satisfaction.

Surround yourself with the right people in the right positions.

Savvy changemakers know that they can’t do it all alone. Instead, they attract others into their organization who share their vision and have complementary skills. More than getting people in the door, it’s about matching your organization’s needs with the right skills, talents, and personalities. While it may seem tempting to fill positions with warm bodies, especially when you’re short on time and funds, getting the wrong kind of help can sometimes be worse than having no help at all.

The same idea applies to your board of directors. If it makes sense to expand the size of your board, consider adding members that demonstrate passion for your cause and have expertise in an area that is lacking within your organization (i.e., law, accounting, marketing, or fundraising). Another option is to invite individuals with special expertise to serve as advisors to your nonprofit. Keep in mind that a diversity of perspectives on your board, as well as in your organization, can stimulate creative thinking and richer dialogues.

While people may have different motivations for supporting your nonprofit, it’s important to make sure that everyone feels that they are being properly appreciated so that they continue to stick around. Keep in mind that financial compensation, while important, is only one form of appreciation. Think creatively about other ways that you can express your thanks, such as handwritten notes, homemade treats, invitations to special events, gift cards, etc. The idea is to ensure that people are incentivized to give their best effort and that the reward they receive is meaningful to them.

Think creatively within your organization.

Beyond getting the right people in the right positions, it’s also important to establish the kind of work environment that enables everyone to perform at their best. This means paying attention to how your nonprofit is set up as well as the work systems and communication protocols that are in place. Having an ad hoc approach to running your nonprofit may serve your needs in the beginning, but as the organization grows you’ll want to have clear and specific goals, roles, responsibilities, and expectations that can help guide the people you work with. This doesn’t mean that you need to set up a traditional hierarchical structure. Consider what type of organizational structure is most appropriate for your nonprofit based on its mission, strategy, staff, culture, and work processes.

Keep the overall purpose of your organization in mind as you develop systems and processes for administration, finance, human resources, and information technology. Consider whose needs are being served (your own, the nonprofit’s, the client’s, the customer’s, etc.), and whether the systems you are putting in place are the best ones for getting work done effectively and efficiently. You may want to consult with a skilled organization development professional that can help you design and implement work processes and an appropriate organizational structure for your nonprofit.

Align your organization’s intentions with perceptions.

The culture of your nonprofit is expressed in your mission statement, the way in which your office is set up and decorated, staff interactions and attire, business cards, etc. What do you want your nonprofit to be known for? How do staff, funders, people served, and the general public perceive your organization? If you don’t know the answer to this question, perhaps it’s time to find out how closely aligned the desired and perceived images of the nonprofit are. The more consistent the perceptions of your nonprofit are, whether among people inside or outside the organization, the more accurate your image is. We can all easily think of instances when the product we purchased or the service we received was inconsistent with the marketing message. One way to avoid this pitfall is to make sure that verbal and nonverbal messages, whether they be inside or outside the organization, are consistent with your mission, strategy, and values. Take advantage of opportunities to ask the people you work with and serve how they would describe the organization and what they think of it.

Social change organizations often seek to create transformational benefit for disadvantaged members of society; it’s important to integrate these values into the way in which the organization operates and with whom it does business. Keep in mind that how you spend nonprofit funds is a reflection of your organization’s values. It’s important to avoid perceived value conflicts. For example, if your organization’s mission is environmental conservation, demonstrate these values by instituting a recycling program, using clean energy, and sourcing paper from sustainable forests. If your organization promotes human rights, use fair trade products in the office, compensate interns, and choose a bank that avoids predatory lending practices and invests in the communities it serves.

SGG: Is it true that you need to develop a strategic plan before launching a nonprofit?

KJ: While it’s true that nonprofits are not required to have a strategic plan in place, it is beneficial to carefully think through fundamental aspects of your organization. Take the time to determine your mission, vision, programs, operations, how success is defined and measured, and what resources are needed to sustain the organization over the long-term. There is also value in “moving slow to go fast.” This means investing the time to carefully consider the kind of organization that is being developed, as well as how it will operate and sustain itself. Resist the temptation to rush the launch of your nonprofit. Critical details left out of your plan may end up getting left to chance. “Kicking the can down the road” can end up consuming more of your time once you reach a decision point.

For example, I once consulted with the founder of a nonprofit social enterprise who was anxious to get started with implementing his idea. I convinced him to take the time to develop a social impact strategy and helped him to develop this plan. After having gone through this strategic planning process, he appreciated having a plan in place to guide the launch of the organization and was better prepared to execute his idea.

SGG: What are the essential skills and personality traits that changemakers need to successfully run a nonprofit organization?

KJ: Strong leaders understand that the art of managing people and the art of managing processes are distinct skill sets that sometimes require different approaches. For instance, being tough on results and soft on people typically leads to more satisfactory results, particularly when staff are held accountable for their actions without being diminished. Balance between checking in with staff to understand what is going on and giving them the authority and resources they need to get the job done. Leading a nonprofit means paying attention to what is going on within and outside of the organization. Too much focus on programs can result in the neglect of day-to-day operations. Conversely, letting yourself get distracted by organizational problems can prevent you from achieving the nonprofit’s mission. Know where the organization is in terms of meeting its goals and ensure that overall progress remains on track. Know how to communicate effectively when speaking to others and in writing. Nonprofit leaders need to know how to persuade funders and recruit talented staff, board members, and volunteers.

Changemakers need to have faith in themselves and their ideas. Faith, along with an optimistic outlook, can sustain you through challenging times. An important aspect of leadership is having a clear and compelling vision of what you want to achieve, while being open to different paths for getting there. Be shrewd about what your strengths are and surround yourself with experts who have the skills that you’re lacking. Seek to understand before being understood by actively listening. Exercise good judgment by listening to your instincts, as this can help you to know when to push forward with your idea and when to take the advice of others. Frame failures as opportunities to learn from your experience and do a better job the next time around.

SGG: When does it make sense to hire staff versus consultants?

KJ: There are a number of factors that can be taken into account, such as the type of skills needed, whether the need to be addressed is ongoing or not, and the availability of resources to fairly compensate new hires. Among the options to consider are full-time and part-time employees, short-term workers, consultants (paid and pro bono), interns, and volunteers. It’s also useful to consult salary scales to ensure that financial compensation and benefits are consistent with what similar nonprofits offer. Before hiring full-time or short-term staff, consult local labor laws to ensure that you’re in compliance with regulations.

SGG: How can I attract and retain the talent needed to fill key positions?

KJ: Beyond ensuring that the people you hire have the right skills and a passion for your cause, make sure that they have the right personality for the job and represent a good cultural fit for the organization. It’s also important to demonstrate your appreciation to the people you work with. Consistently show your thanks verbally and in writing. Consider providing other perks like organizing staff social events and providing token gifts. Equally important is taking an interest in the professional development of your staff by investing in training programs and promotions.

SGG: How much time and attention needs to be focused on nonprofit operations vis-à-vis programs?

KJ: Equal attention needs to be given to nonprofit operations and programs. If this is not feasible for you given your passion or talents, find someone with whom you can share these responsibilities. If you choose to go this route, have regular meetings and check ins with the other leader to ensure that you both remain on the same page. Keep in mind that changes in the way your organization operates will affect programs and vice versa. Also, to enhance stability and minimize confusion, send staff consistent messages about how the organization and its programs are being run.

SGG: Is it true that nonprofits need to limit 10% or less of their total funds to overhead in order to be considered financially efficient?

KJ: It’s becoming increasingly common for funders, particularly grant makers, to expect nonprofits to reduce their total operating costs to 10% or less of the total budget as a way to demonstrate financial efficiency. Some foundations limit the amount of funding they provide for overhead operations; such limits can be as low as a single digit percentage. However, the U.S. government has an established practice of covering costs associated with operating a nonprofit that are not directly attributed to a project. While demonstrating financial efficiency is important to ensure that funders’ resources are used wisely and reach those most in need, setting arbitrary limits on the amount of funds provided for operating costs can also be detrimental to the long-term sustainability of the nonprofit. In such instances, it can be useful to educate funders about the importance of investing in nonprofit operations. Consider seeking institutional funders that invest in organizational capacity building. Another option is to generate unrestricted funding from individual contributions, fundraising events, sponsorships, and fee-based products and services.

SGG: What essential tools, processes, and systems are needed to demonstrate accountability to financial and other supporters?

KJ: You’ll want to have a financial system in place for processing funds received and spent, as well as for auditing on an annual basis. As for donor reporting, it’s important to demonstrate progress made in implementing programs and to account for how funds have been spent. It’s also recommended to put processes in place to monitor and evaluate the impact of your programs. As you put these processes in place, consider developing indicators that are consistent with the interests of your funders and also support the achievement of your mission. Lastly, it’s helpful to set up electronic and hard-copy information management systems to keep track of important documents.

SGG: How often do I need to report to donors on how their funds are being used? What are the characteristics of a quality report?

KJ: How often you report to financial supporters depends on the terms of your funding agreement. If reporting deadlines are unclear, get in touch with your funders to agree in writing on when reports will be submitted and in what format. A good rule of thumb is that the larger the grant size, the more often you will be expected to provide reports. Frequent reporting is also likely to occur if your organization is newly established and is still developing a track record of managing financial contributions. For individual funders, an annual report that is publicly accessible may be sufficient. A quality progress or narrative report includes information about activities that took place during the reporting period, how challenges encountered were addressed, progress made towards achieving goals and objectives, success stories, and photos. A quality financial report shows how much and in what budget categories funds were spent during the reporting period and how much money is left at the end of the reporting period.

SGG: When does it make sense to enter into a formal partnership versus having an informal collaboration?

KJ: It depends on the situation. Formal partnerships tend to be more appropriate in situations where all parties share a common objective that can’t be reached independently and the rewards of working together outweigh the risks. How do you know where you are on the “partnership to collaboration” continuum? Start by assessing the pros and cons of entering into a formal partnership, conduct due diligence on the prospective partner to ensure that they are capable of fulfilling their commitments, and start off slowly by working together on small-scale activities and gradually progress towards a longer-term, formal partnership once favorable circumstances are in place. An informal collaboration can be useful in situations where interdependence is less critical to the success of the project and resource commitments tend to be of shorter duration and smaller in scope.

SGG: What are the characteristics of a successful partnership?

KJ: Characteristics of a partnership that has the potential to be successful are honesty, trust, open communication, commonly understood and agreed upon objectives, and equity. Enter into relationships where each party’s contributions are recognized and valued.



“An Introduction to Understanding and Accessing Social Investment: A Brief Guide for Social Entrepreneurs and Development Practitioners” by The SEEP Network and Virtue Ventures, September 2009

Echoing Green: Impact Investing

Readers can download the Funding Social Enterprises document from this page.

“Fundraising Mastery for Change Agents” by Jonathan C. Lewis, Social Entrepreneurship Clinic, June 2014

“Involving the Board in the Fun of Charitable Gift Planning” by Barbara Diehl in the Journal of Gift Planning, December 2006

“How to Develop a Fundraising Plan” by Western Organization of Resource Councils, November 1998


The Benevon Model for Sustainable Funding: A Step-By-Step Guide to Getting It Right by Terry Axelrod, October 2012

This book provides a step-by-step process for implementing the Benevon model for building long-term relationships with individual supporters.

Effective Fundraising for Nonprofits: Real-World Strategies that Work, by Ilona Bray, 2010

This book explains how to work with individual donors, plan events, and obtain grants from foundations.

Fundraising Basics: A Complete Guide by Barbara Ciconti and Jeanne Jacob, Third Edition, 2008

This is a practical guide to fundraising that offers an overview of this function along with guidance on how to operate fundraising programs.



This fundraising software is appropriate for any size nonprofit and offers a comprehensive set of features that include information management, fundraising activities, donation processing, and reporting and analysis.

This fundraising software offers a robust platform for entering and managing contacts as well as donations, mailings, and fundraising campaigns.

Financial Edge

This accounting software is specially designed for nonprofit organizations and includes features that are specific to grants management and financial reporting. Financial Edge can also be integrated with Raiser’s Edge fundraising software.

Raiser’s Edge

This software has a variety of features that can be used to support your organization’s resource-mobilization activities, from establishing a database of prospects and current donors to research and analytic tools for prioritizing prospects, generating personalized communications, and measuring results.


In addition to offering general accounting features, such as bookkeeping, invoicing, and billing, this software also includes features that are nonprofit-specific like tracking donations, pledges, and grants, as well as allocating expenses to specific programs.

Sage 50 for Nonprofit Organizations

This accounting software helps nonprofits record donations, manage restricted and unrestricted income, administer expenses, and generate financial reports. Sage 50 allows you to create customized financial reports and manage donor outreach.


This cloud-based relationship-management software is available to nonprofits for free and can be used for a variety of functions, such as building relationships with your target audience, fundraising, managing programs and services, volunteer recruitment and management, and team collaboration.

To obtain donated and discounted computer software, check out TechSoup. In addition to providing free and low-cost technology products and solutions, TechSoup also offers additional resources, such as blogs, webinars, and technology forums that can help you make informed decisions about your technology needs.


TED Talks, “The Way We Think About Charity is Dead Wrong” featuring Dan Pallotta, March 2013


Please note that this is a sampling of websites and is not intended to serve as an exhaustive list of fundraising resources.


Causevox Learning Center

The Chronicle of Philanthropy provides print and online news and information on issues related to philanthropy.

Grants.Gov contains announcements and application materials for all grants funded by U.S. government agencies.

Foundation Center serves as an online source of information about philanthropy. It operates offices throughout the U.S.

Foundation Directory Online

This is the Foundation Center’s database on private and corporate foundations in the United States.


Ashoka offers fellowships to selected social entrepreneurs through an ongoing selection process.

Draper Richards Foundation provides grants to early stage high impact nonprofits.

Echoing Green offers fellowships to social entrepreneurs that are in the process of launching or recently started a social enterprise through an annual competition.


Network for Good
Start Some Good


Creating Good Work, edited by Ron Shultz, 2013

This book includes the stories of successful social enterprises along with real-life examples of how challenges to generating lasting impact were overcome.

Succeeding at Social Enterprise by Social Enterprise Alliance, 2010

This is a practical guide on starting and growing a social enterprise.

Managing to Collaborate: The Theory and Practice of Collaborative Advantage by Chris Huxham and Siv Vangen, 2005

This book explains managing situations related to engaging in inter-organizational collaboration.

Primal Leadership: Learning to Lead with Emotional Intelligence by Daniel Goleman, Richard Boyatzis and Annie McKee, 2002

This is an exploration of the role of emotional intelligence in leadership based on the idea that a leader’s emotions are contagious within an organization.

Difficult Conversations: How to Discuss What Matters Most by Douglas Stone, Bruce Patton, and Sheila Heen, 1999

This book provides a step-by-step approach for how to successfully engage in tough and challenging conversations.


“How Do We All Get in the Same Room?” by Kimberley Jutze, Collaborator Magazine, January 2013

“Monk, Architect, Diplomat” by Mark Albion, Stanford Social Innovation Review, Fall 2010

“Social Sector Business Ventures” by Steven D. Cohen, Haviva Y. Kohn, and Allison A. Van, Hauser Center for Nonprofit Organizations, June 1, 2008

“The Limits of Social Enterprise” by Seedco, June 2007

“The Nonprofit Paradox” by David LaPiana, Stanford Social Innovation Review, Summer 2010


Next Billion

This is a website and blog that explores the connection between development and enterprise.

Stanford Social Innovation Review

Stanford Social Innovation Review contains best practices for nonprofits, foundations, and socially responsible businesses.

This is a not a comprehensive list and no paid endorsements were made.


A Legal Primer for Changemakers
Accounting & Taxes for Social Enterprises: Your Journey Starts Here
Business Plans and Planning for Social Enterprises and Nonprofits
Funding Your Startup Social Enterprise
What’s Strategy Got To Do With It?


The guides are primarily intended for social entrepreneurs based on the United States, though some of the resources may be generally of interest to an international audience. Please remember that many of the topics covered by the guides, such as corporate structures, laws and legal customs, accounting, business planning, funding and fundraising, etc., vary widely from country to country, and that the information presented here may not be correct, applicable, or relevant to any other country or jurisdiction.

We strongly advise those of you building social impact ventures outside the United States to seek advice and support from reputable professionals who are licensed in your jurisdiction, and/or have area expertise in the country where you plan to build your businesses. For more information, please see our Terms of Use.



Chief Change Architect, Shifting Patterns Consulting

Website | Email

Kimberley Jutze is chief change architect at Shifting Patterns Consulting, a certified B Corporation, where she facilitates social change by working alongside organizations that think and act outside the box to address society’s most pressing challenges. She frequently collaborates with startups and early stage social enterprises to help them obtain funding and strengthen their organizational capabilities. A strategic thinker with a passion for excellence, Kimberley draws upon her organization development experience to bring additional value to her work. Beyond the satisfaction of achieving sustainable results, such as facilitating the transition of an international nonprofit social enterprise from a concept to a fully functioning organization, she also takes an active interest in the success of the people she works with. Kimberley has consulted with nonprofits and for-profits in Africa, Asia, Europe, and North America, working within the communications, economic development, education, gender, health, information technology, and international development sectors. She is also an organization development and social enterprise presenter at industry conferences, webinars, and workshops. Kimberley’s commitment to social change and socially responsible business includes serving on the nonprofit board of LDI Africa and as an advisor to the Chesapeake Sustainable Business Council. Professional affiliations include the Affinity Lab, Impact Hub DC, Mentor Capital Network, #SocEntDC Host Committee, and Think Local First DC.

Raised in New York, Kimberley has since made her home in Washington, D.C. An avid traveler, she has visited over thirty countries and has gone on long-term assignments in Southeastern Europe and Asia while working for an international humanitarian aid and development organization. She also enjoys improv acting, boot camp classes, and cooking.



Designer and Partner, | Website | Email | Facebook |

Yvette Perullo is a Boston-based designer and educator that believes good design values people, the environment, and improves lives. She has lectured internationally on sustainable graphic design and as partner at, Yvette has helped build an independent online resource and tool that advocates awareness and action for sustainable systems thinking in the communication design community.

Yvette is an Assistant Professor and Program Director of Graphic Design at Newbury College in Brookline, Massachusetts. She received her MFA in Visual Communications Design from Purdue University and her MA degree in Graphic Design from the New England School of Art & Design at Suffolk University. Prior to joining the faculty at Newbury College, Yvette was the Art Director for Sage in Boston, MA where she worked to reduce the negative environmental impact of political and social cause campaign design.

Photo credit: © Lindsay McCormick of Manchester Lane Photography

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Consultant and Strategist, Social Good Guides

Website | LinkedIn | @think5577

As a Design Strategist and Creative Facilitator, Marc focuses on human-centered design and social innovation. Marc organizes, plans, and leads creative workshops to create positive change and tackle some of today’s gnarly social challenges.

Through playful exercises, he helps people come up with fun, usable, and innovative solutions to challenges. With a graphic and web design background, Marc is able to put ideas generated from these workshops into action, which continues conversations and encourages further collaborations across multiple industries. He loves finding ways for organizations to make huge changes and impacts in unexpected places.

Since 2009, Marc been actively involved, as both an advisor and facilitator, in Project M, an immersive program designed to inspire and educate young creative individuals by proving that their work can have a tangible impact on the world.

A multitude of his collaborative workshops and projects have been featured in the New York Times, Fast Co, AIGA, GOOD, Print, ID, PSFK, and various other design and culture outlets. Marc has lectured and facilitated numerous workshops at a number of distinguished universities and conferences throughout the country. Among other things, Marc is building out Secret Project @ CCA along with teaching in the graphic design department, and leading GOOD SF. He also rides a bamboo bike, makes homemade hot sauce, and unplugs in the outdoors. You can follow him on Twitter, @think557

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Founder, Social Innovators Collective
Series Producer, Art Director and Editor, Social Good Guides

Website | Email | LinkedIn | @shanadressler | @sic_org

In 2011, Shana Dressler founded the Social Innovators Collective with the mission to train and nurture the next wave of social change leaders to help them achieve measurable impact and financial sustainability. Since then she has been creating and leading workshops on business development for social enterprises and nonprofits at General Assembly, New York’s premiere center for entrepreneurship, the Social Good Summit, and social enterprise conferences at Harvard, Columbia, New York University, Brown, the School of Visual Arts, Rhode Island School of Design, and others. In 2014, she designed the curriculum for a startup business school designed to support 21st century entrepreneurial problem-solvers and creatives tackling the most pressing social and environmental challenges of our time.

A deeply committed social entrepreneur, Shana is widely recognized as the first person in New York to organize rigorous educational programming for social entrepreneurs in startup mode. To fill a notable gap in the lack of resources available, Shana co-created the Social Good Guides, a series of 20 guides focused on the essential small-business skills that would-be changemakers need to know and an 8-week workshop called Social Good Startup: Idea To Launch.

Shana is an Aspen Institute Scholar, a member of the International Academy of Digital Arts and Sciences, and a judge for The Webby Awards. In 2014 she became a Delegate to the United Nations Foundation Global Accelerator which brought together a “100 of the world’s top entrepreneurs to work together with policy leaders on global issues.” Shana was recently honored by the World CSR Congress as one of the 50 Most Talented Social Innovators. In addition to frequent travel to far-flung places, Shana loves all things chocolate, and makes her way around New York on a midnight blue Vespa. You can follow her @shanadressler and @sic_org.


Project Manager: Shana Dressler
Copy Editor: Kelly Cooper + Jessica Winney
Web Developer: Keyue Bao
Consultant + Strategist: Marc O’Brien
Series Producer, Art Director + Editor: Shana Dressler


Three years in the making, the Social Good Guides are the result of the generous contributions of a team of esteemed authors, designers, copywriters, proofreaders, project managers, marketing consultants, researchers and interns. Initially conceived as a “nights-and-weekends” labor of love, the project quickly expanded beyond its original scope once we realized that accessible information about the essential small-business skills needed to build sustainable social impact organizations was missing in the social impact space.

If you would like to make a general donation so we can finish the last four guides, click here. If you received value from reading this guide, and you would like to make a donation click here.

Please donate. Your support is needed and appreciated!





Text © 2015 Kimberley Jutze
Cover © 2015 Yvette Perullo
All other graphic design and elements © 2015 Social Innovators Collective.

All rights reserved. All guides have been created for private use. No part of this publication may be reproduced, distributed, published, transmitted, photocopied or stored by third parties for download or for sale in any form or by any means, including electronic or mechanical methods, except with the written permission of the publisher, the Social Innovators Collective. Please see our full Terms of Use for more information.

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