Takes Money To Win Money:
Fiscal Health and Expectations of a Start-up
By Mary E. Costello © March 2007
A word to the wise: You get what you pay for.
Like many days, this morning began by fielding email inquiries, and, as usual, I received a note from a new non-profit leader explaining how financially strapped the organization is at the moment. Generally, I can already tell you what the remainder of the email is going to say after reading the opening line.
As time has gone by, I have found it easier to explain the fiscal realities to a new Executive Director, yet talking about money—or lack thereof—remains my least favorite part of what I do. My response is usually a difficult pill to swallow, and one that is equally hard to serve up.
In a perfect world, we wouldn’t need money. In such a world, everything we need would be available to us based on passion and good intentions. Since such a world does not exist, except in our dreams, today’s leaders need to do their homework about what lies ahead. Expectations regarding all the tasks that must be completed and the associated costs need to be realistic, and well thought-out.
I fully understand the dilemma facing founders of new non-profits. I have been there myself. The path is full of sacrifices and continual problem-solving. There is a learning curve involved and tons of information to digest.
Since you are reading this article, there is a good chance you are committed to learning more about this process so that you can make sound decisions and best plan for the activities that will bring your program to fruition. As they say, knowledge is power, and a responsible leader will investigate the truths and fallacies in all aspects of planning.
First of all, new programs who cry poor will not find many to sympathize. The argument that the organization is a non-profit, and therefore has no budget, is something you should keep to yourself. Even when approaching a grantmaker, no one wants to support an organization that has no financial track record whatsoever.
Specifically, I am talking about the very early stages when a new group needs to find seed money. At the very least, your organization needs to be able to demonstrate grassroots fundraising, starting with your Board of Directors.
Although I am partially referring to how many people contact me thinking that Grant Writers work on contingency, accept deferred payments, or can in any way guarantee grant success, many new non-profits underestimate the true costs of starting up a new agency. They fail to take into consideration legal and accounting fees, state licensing costs, and even the 501(c) 3 application, which runs $500 as of this writing.
Sometimes, in order to keep costs down, decisions are made based on lowest bid or comfort zone. While it may appear to be the best choice at the time, these can be costly mistakes, as I have seen people choose accountants or lawyer who do not specialize in non-profit work—as well as proposal writers who have never stepped foot in a non-profit setting. Typically, this results in a need to revamp materials later or, such as can be the case with an accountant, an organization paying for the learning time of their paid professional.
I suppose the greatest “truth” I can offer to a new non-profit manager is in reference to the grants process. Although many people in our country seem to think that grants are a “sure thing,” it really does behoove a new leader to get a reality check on this one. Point is—everyone is going after the same money as you. This is a competition, not an opportunity that was simply waiting for your organization to apply. You need to have the best “product,” a sound plan, and a financial history that warrants support. You are an investment for the grantmaker.
Starting with your Board of Directors, grantmakers want to see that you have put your money where your mouth is. They want to see that each Board member has contributed financially or in-kind. Otherwise, just like a Grant Writer who you naively ask to take a chance on you and be paid a percentage of a grant, you are asking others to take risks that you have not taken on yourself.
On the other side of the coin, you are not alone. Most new non-profits are in exactly the same predicament as you. So, the question remains, what are you going to do about it?
Although the rarity, I work with one group who is doing things differently. The Aaron Meyer Foundation has experienced a degree of corporate and community support that is truly unprecedented for a new organization. Is this about their Grant Writer? No.
While I have helped develop written materials, their programmatic offerings, and “pitch,” these folks bang down doors. They take the tools I give them and call people. They network. They succeed.
Telling me that you serve the poor and, therefore, are poor yourself— is just unacceptable. Stop being poor. Non-profit doesn’t mean no money. And that argument does not serve you well.
If you can’t do the basics at this level, it could be you are not ready to embark on this journey. Yes, it takes money to win money. It does not matter if you are in private industry or a non-profit entity, you cannot reach your goals without raising money for your early expenses.
Have a bake sale. Get local businesses to sponsor you. Partner on events with other non-profits in your area.
Don’t give up. You’re just getting started.
About the Author: Mary E. Costello holds a BA degree in Social Work from The Catholic University of America in Washington, DC. She is a former Social Work Administrator who specialized in the management of complex human services programs and leading new projects creation. Forming Creative Edge Consulting in February of 2005, she now is the “resident expert” on grant writing and non-profit program development issues on the Boys Project website, a sponsored project of the University of Alaska/Fairbanks. She serves clients throughout the United States, including both community based programs and those of national scope. Programmatic and grant related questions or inquiries regarding her professional line of services may be directed to MaryCostello@CreativeEdgeConsulting.org. Mary will attempt to answer all general questions from the public but cannot guarantee a personal response, dependent on volume of requests at any given time.
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