Flipping the Rule Book
Written by Megan Brown
Director of Marketing | Fortify Foundation
Let’s talk about the role nonprofits play in the economy. It is safe to say that we can all agree nonprofits have a space in society because of the good work that they do. We must ask ourselves this question: do we really believe they can and will make a difference in our economy and in our world? Or, do we believe businesses are truly the only ones who hold a lasting impact? Businesses play a huge role in an evolving economy, but no matter their impact, there still remains around 10% of people who are left out or disadvantaged. What is the answer to helping reach that 10%? The nonprofit world and philanthropy are the answer. Philanthropy is marketing for all those that the business world is forgetting, or for those who have no marketing. If we really want to see a world that is changing, then nonprofits and philanthropy must be a serious part of the conversation. At Fortify, we are driven by the desire to make an impact on earth for Christ, through Christian education. This is the 10% that we are driven to reach.
We can establish that nonprofits have a role to play in the world, but the reality is that we don’t see many nonprofits actually making a lasting impact. Cancer charities haven’t come close to finding a cure, homeless charities have not yet overcome homelessness, and poverty has remained stuck at 12% of the US population for 40 years now. The issue is that there are two rule books in society. One for the nonprofit sector, and one for the rest of the economic world. This rule book discriminates against the nonprofit sector in five ways: compensation, advertising and marketing, taking risks, time, and profit. An unequal balance of compensation is seen when in the for-profit sector, the more value you bring the more money you can make, but in the nonprofit sector, people don’t like to see someone making a lot of money while helping other people. The same goes for advertising and marketing. The for-profit sector is told to spend exuberant amounts of money on advertising and marketing initiatives, but no one likes to see the donations they make to a nonprofit spent on advertising. People overlook the fact that money invested in advertising could bring in dramatically greater sums of money to serve others.
When it comes to taking risks, nonprofits are reluctant to attempt big fundraisers because if it fails, their character can be questioned. When you stop failure, you kill innovation, and when you kill innovation in fundraising, you can’t raise more revenue. This ultimately leads to a stop in growth, prohibiting you from solving the issue you have burdened yourself with. When you do set out to solve the issue you are passionate about, your nonprofit is then faced with an unrealistic timeline. Amazon went six years without turning a profit for their investors, and no one questioned them. There was patience. If a nonprofit had a dream of scaling its organization that required a six-year period in which no money went to serving others but instead invested into building scale, people would react negatively. Lastly, in the for-profit sector, you can pay people profits in order to attract their capital for new ideas, but you can’t pay profits in the nonprofit world. The for-profit sector has a lock on the multi-trillion dollar capital markets, but the nonprofit sector is starved for growth and idea capital.
To give you some more perspective, from 1970 to 2009, the number of nonprofits that grew over the $50 million annual revenue barrier is 144. The number of for-profits that crossed is 46,136. A dangerous question nonprofits are often asked is, “what percentage of my money goes to the cause vs. the overhead?” This question paints overhead in a negative light when it in fact is an important part of a nonprofit’s growth. This mentality forces nonprofits to go without the overhead things they really need in order to grow. We’ve been taught that charities should spend as little as possible on things like fundraising with the mindset that more money will then be spent on the cause. But in a logical world, investing in fundraising and other overhead things actually raises more funds. Nonprofits should be investing more money in fundraising because it is the one thing that can multiply the resources available for their cause.
We’ve all been taught that the bake sale that makes 10% overhead is superior to the professional fundraising enterprise with 50% overhead, but what if we considered the actual size of these fundraisers as a whole? Does the 10% overhead of the bake sale really matter if it raises $81, while the professional fundraiser netted $81 million because it invested in its scale? Which return on investment would you prefer?
How does all of this information apply to Fortify Foundation and, more specifically, those we serve, the Christian schools? We want to see this rule book changed. We want to see charitable giving go above 2% in the GDP. We want to change the way the world looks at nonprofits and their impact, and change the scale of fundraising and investing that nonprofits have been held up against until now. As a nonprofit foundation, we take the liberty to invest in our overhead in order to scale our own growth. This allows us to have a more significant impact on Christian schools across the nation in the long run. We invest in advertising and marketing initiatives, we hold fundraising events such as our yearly gala, and we grow our reach through our podcast, social media, and this very magazine, all with the intention of taking that return on investment and pouring it into our mission of serving Christian schools. We are growing and scaling our own endowment fund, just as we advise our partnered schools to do. This endowment fund is a long-term investment, something we established to ensure that the future of our nonprofit is secure for as long as God allows. People often want to see their donations go directly to the cause they are contributing, but we strive to educate our own donors to see the value in investing those donations for the future through our endowment, making a much larger impact than they would be standing alone.
This is exactly what we want to see for our partnered schools. We want Christian schools to see the value in investing in themselves for the long term. While you may not reap the benefits of your endowment fund in the immediate, the long-term benefits of that fund will far exceed any other short-term fundraiser. We encourage our schools to invest in themselves through fundraising and marketing initiatives that promote their endowment fund and invite others to become a part. We teach our partners to educate their donors on the benefits of a gift to their endowment, its lasting effects, and even unique ways they can contribute through planned giving. While they may not see their donation put into action right away, they will see their donation grow year over year in the fund and can rest assured its lasting impact will be more significant than their original donation.
If you haven’t yet considered opening an endowment fund with Fortify Foundation, I challenge you to consider what investing in your school today could do for the future generations who come through your doors.