Show me the money

Love it or loathe it, you’ve got to know where the money’s going to come from, and where it all goes.

Get it right from the start – it’s essential to the health and credibility of your project or organisation.

It also works like an extra sense, helping you spot trends, opportunities and issues earlier than you might have otherwise.

Financial Intelligence, Revised Edition: A Manager’s Guide to Knowing What the Numbers Really Mean by Karen Berman and Joe Knight is a really great place to start.

A downhill slope (find others)

If you’re in a book group, social pressure is going to get you to read that book. The act of joining the book group is the hard part. Once you’re in the book group, the books are going to get read, because now you’re playing a game. It’s a game you’re enrolled in, it’s one you want to move forward.

The easiest way to start creating this game dynamic is to form a group. To find others, to find others and challenge those others to play the game with you. Because we all know that solitaire might be a little fun, but solitaire isn’t the kind of game we dream of when we dream of games.

We do better when we do it together.

Seth Godin – Akimbo – The Wedding Industrial Complex

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Make it happen. Find others. Say the words.

Team Performance (1)

I’ve just been listening to Richard Hackman on teams and team performance. His first lens for evaluating team performance is straight forward:

Delivering the goods

Did you get the job done? How well did you do it?

Who is the legitimate receiver, user, reviewer of this performance and what to they think of it? Did you serve the client first?

At a non-profit leader you might have several ‘customers’: the people you serve, donors, the team itself. If you can’t keep everyone happy, where do your priorities lie?

I listened to Andy Kaufman interviewing Richard Hackman on the People and Projects Podcast.

Bootstrapping the non-profit organisation Rule 1: Real Work for Clients First

This is the first in a series applying Seth Godin’s rules of bootstrapping (see also here) to building a non-profit organisation.

Rule 1: Ship Real Work

“Planning and coordination are fine, but not if they don’t lead to real work. Don’t spend time trying to please [middleman-funder-etc] – the real work is figuring out how to engage with and serve your customer.

In the non-profit world:

The real work

Vision and mission statements, organisational structure, a shiny website, gala dinners are fine – but they are not your purpose, and they are not your real work.

The real work is getting in front of the people you are aiming to serve – first your clients (or ‘beneficiaries’) and secondarily potential donors. If you’re not getting to know and making a difference for your clients, you’re wasting your time. Your project is almost certainly a waste of money, and quite possibly the worst kind of vanity exercise.

In my experience this kind of work is often messy and quite often slightly unsatisfactory – because you’re working with real people, who quite often have those traits…

Two types of customer

In a non-profit, it’s quite possible that your services are paid for people people other than your clients – most charities are working in two-sided markets – donor pays, client receives benefit (incidentally, most news and magazine companies, and Google and Facebook, among others, operate this model).

The question is… what are your ‘donors’ buying? It might be:

  • The knowledge that they’ve done some good in the world
  • The ability to show off to their friends that they’ve done something good in the world
  • A fulfilled CSR requirement, and a pleased boss
  • The confidence that their money has been used responsibly and effectively

It’s really easy to exaggerate the work that you do. It’s easy to make grand claims, tell only the best stories, and play to every donor’s particular foibles, telling them what they want to hear so that they’ll give you money, and keep on giving you money.

Don’t.

At the end of the day, the product that your donors and supporters are buying (or should be buying) is the work that you do for your clients. Everything else is (relatively speaking), fluff.

And at all costs resist the temptation to let the ‘needs’ of your donors shape what you do for your clients. Don’t lose sight of the reason you’re doing this in the first place. Listen to your supporters, but always be clear that you seek to serve your clients first, to focus on their needs and make a real difference to them in a way that they value.

Be accountable to your clients and their needs first of all, and everything else will be (relatively) easy.

Rule 1 of bootstrapping the non-profit

Ship real work for your clients [beneficiaries] first. Be real with your supporters.

* More on being real with your supporters in Rule 3

Who pays? (3)

Last but not least… changing who pays for what can help you to take better care of your team.

In the early years we asked team members to do occasional evening and weekend work as part of their contract. This worked okay, but created two bad incentives.

  1. We had effectively already paid for for the extra time in advance, so we had an incentive to use the resource (out-of-work-hours work) that we’d already paid for more than we otherwise might – it wasteful not to.
  2. To get our money’s worth, we were less careful about arranging work commitments outside office hours. We gained by using (or over-using) our staff – in effect, we were asking them to pay the price of the additional activities we chose to do.

To solve this problem, we started paying our staff a bonus for every night that they spent away from home for work. If the work is important, it’s worth paying for – so we (or the customer) pays, and our employees are happy to be compensated for their lost time.

If the work isn’t important, we’re forced to ask the question “is it worth paying this much to get this done?”. If the answer is no, we don’t do it.

Who pays? (2)

Shifting to a user-pays model had another significant impact on our work – we became more accountable to the people we serve, and the quality of our work went up as a result.

Accountability and Quality

Under our old operational model we received charitable donations and provided our materials and training to partner schools for free. We were accountable to our donors for how we spent their funds. We did our best for our users, but, well, they were getting our service for free. It was infinitely better than nothing, even if there was the odd typo, or the odd part of the curriculum that didn’t really make sense.

When we began asking users to pay (mainly in an effort to allow us to serve more people), an improvement in quality was an unexpected benefit:

“We’ve got to fix those typos – people are paying for this.”

“This curriculum needs to fit together way more tightly, or no-one will buy it.”

Asking your users to pay creates more direct accountability and a tighter feedback loop to your users. The shift from giving to beneficiaries to selling to customers / clients forces you to focus more intently on creating products and services that meet their needs rather than yours or your donors’, and on making something that they think is worth the cost in terms of time, money and attention.