Four methods that non-profit organizations can use to develop project budgets for their funding proposals

This article will help you to think more broadly about developing project budgets for your funding proposals and donors. It will highlight four budgeting methods to include in your toolkit. This will help your organization to be more prepared, versatile and likely to build (as opposed to consume) its financial reserves.

Non-profit organizations tend to rely on grants for their survival. Fundraisers must be skilled at developing a narrative for how a project will achieve its impact, and how the anticipated activities and costs will serve this purpose.

I’ve worked with several organizations that routinely get the full funds they need for their projects. I’ve noticed they tend to use a variety of methods for developing project budgets. They have also developed innovative products, and have used marketing and PR to bolster their bargaining power.

In this article I will discuss four methods of developing project budgets. I will also discuss the issue of cost structure and bargaining power since these concepts are relevant to this conversation.

When are business ideas good ideas?

In the past month, I’ve had several conversations with non-profit organizations and social enterprises about when a business opportunity is a good opportunity.

This got me thinking more explicitly about this topic. I also debated it with my colleagues.

We concluded that while there is definitely a need for these organizations to explore opportunities to generate revenue, too many organizations are rushing blindly forward without proper consideration or due-diligence.

This short presentation captures my ideas on the subject. I’d love to hear your thoughts.

Enterprise and supplier development (SED) for non-profits and social enterprises

I frequently have conversations with non-profit organizations and social enterprises that are working to establish and strengthen small businesses.

We often discuss how these organizations can enter into a commercial relationship with larger businesses (“corporates”) to speed up their Enterprise & Supplier Development (ESD) efforts.

This short presentation explores three opportunities for collaboration and provides some useful background information. There are others opportunities (e.g. establishing an investment fund, or providing consulting services), but these are more specialized and less common, and therefore not discussed.

These opportunities are created by South African legislation, specifically the Amended B-BBEE Codes of Good Practice.

Identifying Simple, Complex and Wicked Problems

I’ve been helping organizations to solve some very difficult problems over the past months. This got me reflecting on the different categories of problems that are confronting social enterprises and non-profit organizations, both within themselves and the communities they’re striving to serve.

In this article I’ll discuss the difference between Simple, Complex and Wicked Problems, and how to identify them. I will provide many real-life examples.

Those of us who work in the social sector have an intuitive grasp of these problems.

How to develop a philosophy, vision and mission for your organization

Every organization has a philosophy.

Some organizations make it explicit and write it down. This helps their leaders to craft focused strategies and make decisions during difficult times. It also makes it easier for them to communicate with stakeholders and induct employees into their culture.

But for the majority of organizations, their philosophies are informal and unspoken.

The board and CEO are responsible for articulating the philosophy of an organization, and ensuring that its strategy, culture and operations are congruent.

In this article I discuss the philosophy, vision, mission, purpose and values of non-profit organizations and social enterprises. I provide some practical tips for how to craft these. My insights are based on over two decades of such work.

Manifesto on strategic clarity

Most of my time is spent helping leaders of non-profit organizations and social enterprises to cultivate strategic clarity.

I want them to think clearly about their organizations. I want them to make sensible decisions and act swiftly upon them.

But I’ve noticed how easily we get lost in the activities, documents and tools of strategy. These can become an end in themselves.

I recommend we shift our attention to what we’re trying to achieve: clarity of thinking and good decision-making. Then we become open to possibilities we never considered before. Sometimes, all we need is a good night’s sleep.

This article explores some creative ideas for how we can improve our strategic clarity.

Estimating probabilities is key to strategy

Leaders must be good at taking bets against the future. They must be able to choose a course of action that is most likely to advance their organization in an uncertain world. Competent leaders make the right bets most of the time; bad leaders don’t.

However, many of the leaders I help are overwhelmed by the strategic choices facing their non-profit organization or social enterprise. 

They have realized that they have limited resources such as time, attention, money and people. They recognize that they cannot pursue all opportunities. Neither can they protect against all threats and risks, with equal enthusiasm, despite wanting to do so. They have learned that the future is uncertain and unpredictable. They have begun to accept their limitations as leaders.

Leaders must learn how to embrace the ‘agony of choice’. They must become skilled at estimating probabilities. They must learn to act swiftly with imperfect information.

“The Pumpkin Plan”: a focused strategy for growing organizations

Recently I’ve been fascinated by the Pumpkin Plan – a business strategy described in the book “The Pumpkin Plan” by Mike Michalowicz. I found the book inspiring and accessible. It is currently my favourite book in this genre.

The Pumpkin Plan uses the example of farmers who grow gargantuan pumpkins that weigh over 500kg.

It is a focused approach to finding your ideal customer (or beneficiary), serving them with your unique ability, and designing systems for your enterprise to run more efficiently.

The Pumpkin Plan resonates with my philosophy of minimalism and simplicity because it requires a focused approach and the reduction of strategic clutter.

The Pumpkin Plan was designed for entrepreneurs who wish to set-up businesses that can be sold, or run without their constant involvement. It is not a one-size-fits-all strategy. However, I believe that many of its insights can still apply to social enterprises and non-profit organizations in South Africa.

Pitch deck for customers and donors

Twice in the past week I was asked to suggest the slides to include in a “pitch deck” – a handful of slides that are used to “pitch” an organization, its programmes or products. Pitch decks tend to be fairly standardized, have a high level of design work, and make selective use of text.

I recommend 10 slides @ 2 minutes to discuss = 20 minute presentation. Here are the slides that I would include for a presentation to a customer or donor. Please adapt as necessary.

Thanks to Guy Kawasaki’s Art of the Start for inspiring my thinking on this topic many years ago.

Unique opportunities for social enterprises with a for-profit legal form

A social entrepreneur recently called me for some advice.

He had started a “social enterprise” with a for-profit legal form – a private company (“PTY”).

He had managed to secure the South African licence to sell a very promising product that serves the people at the “bottom-of-the-pyramid”.

He then approached some local foundations and corporate social investment (CSI) departments for funding. They said that he had to first create a non-profit company (NPC) and then use this vehicle to submit a funding proposal. In other words, these donors were suggesting that he create a hybrid social enterprise.

We had a short and productive discussion about where the best opportunities for his business were to be found. I explained that creating a hybrid model in this instance is most probably a bad idea.

Since I have this type of conversation quite regularly with social entrepreneurs, I decided to share and elaborate upon the six opportunities we discussed.

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