Jimmy LaRose knows that financial capacity-building is the key to charitable growth. LaRose shares, “It’s a simple matter of the order of things. If you want to take your nonprofit mission to scale then YOU HAVE TO PRIORITIZE MONEY FIRST. If you want to ‘solve’ problems instead of just ‘servicing’ them then you have create an every expanding flow of cash. Remember Logan Pearsall Smith’s famous quote, ‘There are few sorrows, however poignant, in which a good income is of no avail.'”
I recently attended a NANOE Conference (National Association of Nonprofit Organizations & Executives) to hear Jimmy LaRose speak. Here’s how he opened his keynote address.
“I’ve been getting in a lot of trouble lately for a recent declaration I made to a group of nonprofit executives and board members. I emphatically stated, “MONEY IS MORE IMPORTANT THAN MISSION (OR MINISTRY)”
The old adage, there are things in life that are more important than money, is about as silly as saying there are things in life that are more important than air. Money, like air, in and of itself is not very impressive, nor does it give life meaning. However, life has very little meaning…if you can’t breathe!
Upon sharing this controversial axiom, many of the executives in the room pushed back, so I advised, “Ok, let’s pause and take a deep breath…Oh I’m sorry…you can’t breathe? That’s because YOU GOT NO MONEY!!!”
Money is oxygen. Without it, charities asphyxiate, atrophy and fail.
It’s simply a matter of THE ORDER OF THINGS. The healthy flow of lots of money (air) allows a nonprofit to flourish and, in turn, realize its important mission in ways never dreamed possible.”
After Jimmy’s opening I immediately became a believer. The entire nonprofit sector is all and only about money (ever think about the word “NONPROFIT?” EVEN OUR BRAND NAME IS ABOUT MONEY.) The designation 501(c)3 allows nonprofit enterprise to secure contributed revenue and in turn offer donors a tax deduction for the purpose of advancing education, health, human welfare, religion, the arts, and environment. In short, the nonprofit sector is a largely unregulated mechanism used voluntarily by individuals, corporations, and governments to direct MONIES to causes, groups and movements ensuring that others live a life worth living.
Broadly speaking, the financial sources available to a charitable organization fall into four categories:
1. Public Funding
3. Retail Sales
Jimmy LaRose is fond of sharing, “Why then would you hire…
…a medical doctor to head up a hospital?
…a therapist to oversee a counseling center?
…a social worker to head up child abuse prevention?
…or an educator to provost a college?”
To his point, we must hire expert CEOs with a proven record of making money for the bottom line, using marketplace economics (fees/tuition), social enterprise (retail sales), fundraising (philanthropy) or government grants (public funding).
Simply put, strong nonprofits replace “do-gooders” with aggressive entrepreneurial money-making CEOs who can grow their enterprise!
Now, let’s go further. If money is more important than mission, then…DONORS ARE MORE IMPORTANT THAN CAUSES OR PEOPLE
Remember what Aristotle said, “To give away money is an easy matter and in any man’s power. But to decide to whom to give it and how large and when, and for what purpose, is neither in every man’s power nor an easy matter.”
Too often (quite often), we reduce donors to ATM machines that reside somewhere outside the organization, who we wouldn’t visit or communicate with if we didn’t have to. You see, it’s much easier to be in a for-profit enterprise than a nonprofit one. I’m reminded of author Jim Collins, who wrote, “Regarding the social sectors, unfortunately, there is no guarantee between exceptional results and sustained access to resources.” The for-profit business owner provides a service or a product that customers purchase, generating income that, when properly managed, ensures the business expands, grows, and flourishes. Conversely, in nonprofit enterprise, the customer (student, homeless, rainforest, family, etc.) historically doesn’t pay for the service or product provided.
Every time I read that last line, I’m startled by how idiotic it sounds. Tragically, it’s a maxim so widely-held that few comprehend the flawed concept in which it’s rooted. Let me share it again.
Conversely, in nonprofit enterprise, the customer (student, homeless, rainforest, family, etc.) historically doesn’t pay for the service or product provided.
Here’s what Jimmy LaRose shared in his industry best-selling book RE-IMAGINING PHILANTHROPY, “You see, the premise is all wrong. Nonprofits mistakenly think that the student, homeless, rainforest, family, etc. are their customers. Your clients or causes are not customers…they got no money. Successful nonprofits understand that donors are the object of their mission, and must be served before people in need.”
LaRose is right! DONORS ARE YOUR CUSTOMERS. Donors pay for the opportunity to participate in the transformation of a people…they underwrite the advancement of an important issue…they purchase a stake in your meaningful cause.
Like I said, Jimmy LaRose made me a believer. Money is truly more important than mission.