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Earl Martin Phalen

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Looking Ahead: How We Can Make 2012 the Year of the Nonprofit

Posted: 01/19/12 06:28 PM ET

Last year was not an easy one for our country, our citizens and our world.

Many of us in the nonprofit sector struggled to raise funds and engage donors in this tight economy. We were forced to make tough organizational cuts and prioritize among equally compelling needs.

Some of us were challenged to keep our nonprofits afloat despite devastating federal funding cuts. We had to rely on partners, many of whom were facing their own economic challenges.

Although toward the end of 2011, the nation's top 400 nonprofits appeared "to be pulling out of the recession," The Chronicle of Philanthropy reported that "for nonprofits that depend primarily on cash gifts, the situation was not nearly as healthy. Looking at those groups alone, giving was virtually flat, increasing by 0.2 percent."

And where there were increases, The Chronicle reminded us, they "don't come close to erasing an unprecedented 11-percent decline in the total raised by charities on the survey in 2009."
We are now in 2012. It's a new year. It's time to move forward and rally around 2012 as the year that nonprofits -- and the children, families and causes that we serve -- make their comeback.

As the founder of two nonprofits and the CEO of a third, I've thought long and hard about how we, as a community, can make this year different than the past few:

1. Launch innovative projects. It may sound like a cliché, but it's critical that we think outside of the box when it comes to fundraising. We can't rely on the standard approaches, appeals and events. Rather, we have to engage and excite our donors with interesting fundraising concepts. At Reach Out Read, one of the nonprofits I lead, we've just launched the "Giving Tree Project." It's the brainchild of a 13-year-old Boston boy who sought out artists and invited them to create original works of art to support our early literacy efforts. The initiative was featured in The Boston Globe, and we are highlighting the campaign on our website homepage. We know that donors will be moved by this project and the boy behind it -- and more importantly, that giving inspires more giving.

2. Identify a sustainable business model. Often times in nonprofits, we get wrapped up in applying for the latest grant, adapting our organizational message to fit the latest fad, or coming up with "patchwork" funding solutions. We focus on how to raise enough money to support our efforts; we don't make the time to develop a plan for our long- term sustainability. The best leaders, though, do both. Like any other business, we need a sustainable business model with consistent revenue streams. George Overholser of the Nonprofit Finance Fund has a great piece on this topic, called "Patient Capital: The Next Step Forward?" (PDF). The subhead: "Why nonprofit capital funding often backfires, and how we can adapt traditional capital campaigns to fix the problem." Give it a read!

3. Become more cost efficient. This next idea may seem unfair because we already "do more with far less." That said, we still must find a way to become more cost efficient in operations without affecting our missions. That could mean moving to a smaller office space, finding a way to engage volunteers/interns, or devising creative ways to hold our administrative budgets down. Cost reduction measures are never easy but businesses make them all of the time to survive when sales are down. We must do this to survive and ultimately thrive. A great example of this in action is Rocketship Education, a national nonprofit elementary charter school network that "combines traditional classroom teaching with individualized instruction using tutors and online technology to meet the specific needs of each and every student." This blended learning model is cost efficient while driving strong academic results.

4. Encourage foundations to stand the line. Too often in 2011, I heard foundations tell nonprofits that funding was not available due to "the economy." While I understand that we've all faced a difficult year, foundations -- with their tax-exempt status -- should not be cutting back in their giving. They need to make the same hard decisions we've had to around reductions. They need to understand that it is fact now that we, and the nation, need them more than ever. Encourage foundations to maintain, or even increase their philanthropic giving levels.

5. Wage the battle. Like the saying goes, "When there's a will, there's a way." No one said that figuring out how to successfully fund and grow a nonprofit was easy. And with so much competition, it may only get more difficult. Dig deep and do what you need to do to survive. Consider 2012 a battle, a competition. Only those nonprofits with an unwavering commitment to support their missions will remain standing and thrive.