What You Can Learn From the Largest Nonprofits


Turns out some of your most admired nonprofits are also the largest nonprofits. Based on the timing of my survey, one of the nonprofits I feature probably would fall off the list after the recent publicity firestorm (I’ll let you figure that one out), but I decided to leave it in here since I think there is some valuable insight to gain.

Which nonprofits do you admire most?

I pitched this question recently to a group of nonprofit starters and received some interesting responses.

So who made the list?

Turns out some of the largest nonprofits lead the way in our most admired nonprofits list, including the nonprofit with the highest program expenses – the American Red Cross.

What are Program Expenses? This measure reflects what percent of its total budget a nonprofit spends on the programs and services it exists to deliver.

You can learn a lot from the largest nonprofits through watching how they approach things like fundraising, administration, and programming. If you haven’t already done so, head over to Charity Navigator and look up your most admired nonprofits to see how they perform in these areas.

How efficient are they in fundraising? Administration? These numbers shed a fascinating light on how the nonprofit is performing. Although the numbers provided at Charity Navigator are helpful, the site is thin on commentary on how the largest nonprofits are hitting it out of the park. So I’m going to offer my own.

Based on the responses of the survey, following are the top seven most admired nonprofits. I take a stab at some thoughtful conclusions regarding what these nonprofits are doing well. Be sure to add your commentary to this post in the comments section at the end.

 

Susan G. Komen Foundation

komen.org

Twitter @komenforthecure
Charity Navigator rating: 4 out of 4
2010 Revenue: $311 million
2010 Program Expenses: $255 million
Nancy Goodman Brinker, Founder & CEO

What you can learn from the SG Komen Foundation:

  • An engaging story is an effective catalyst to start a nonprofit.
  • In many ways, size does matter.
  • Provide a place for your supporters to tell their story.
  • Apply your efforts to (1) eliminating the root cause, AND (2) helping those affected.

Nancy Brinker turned a personal tragedy into a near triumph after her sister died from breast cancer. Nancy promised Susan she would do everything in her power to rid the world of this disease. This promise became what is now a global leader in the breast cancer movement, having invested more than $1.9 billion since inception in 1982.

SG Komen Foundation uses creative and innovative strategies to engage their supporters. One of my favorites – a forum linked directly from their site, which is teeming with thoughtful perspective and stories of winning the fight against breast cancer.

Another key to their success- SG Komen Foundation is engaging both ends of the spectrum. They are one of the only cancer organizations that raises money both for research and to support communities. When your organization is seen as part of a solution to the root cause (a defining measure of a social enterprise), while at the same time relieving the pain of those communities at the heart of the mission, it makes it easier, I think, to fundraise.

Another big advantage – strength in numbers. The Komen Foundation is the U.S.’s largest and best-funded breast cancer organization providing breast cancer research, education and advocacy, health services and social support programs worldwide through more than 100,000 volunteers in a network of 124 affiliates in more than 50 countries.

 

American Red Cross

redcross.org

Twitter @RedCross
Charity Navigator rating: 4 out of 4
2010 Revenue: $3,587,775,430
2010 Program Expenses: $3,091,878,966
Gail J. McGovern, President and CEO

What you can learn from the largest nonprofit:

  • Identifying your brand early makes things easier later on.
  • Maintain laser-like focus on your brand, and things can get even easier.
  • Don’t always think fundraising or grants. Income from products and services can be an effective means to fulfilling your mission.
  • Look for creative ways to raise money. Donations through a branded iPhone app maybe?

When we hear of a natural disaster, the first thing we think of is donating to the Red Cross.

Why is that?

It’s probably because the Red Cross does an incredibly effective job at branding themselves as the deliverer of humanitarian aid. Indeed, blood, neutral humanitarian care, emergency assistance and disaster preparedness are hallmarks of the Red Cross.

The Red Cross sits at #1 on Charity Navigator’s list of Largest Nonprofits. This volunteer-led organization, an affiliate of the International Federation of Red Cross and Red Crescent Societies, is supported by community donations, but also in some part, income derived from trainings, blood products and non-blood merchandise.

This is likely a primary reason for their incredibly low fundraising expense – only 3.9% of their total budget.

Red Cross also is pushing the envelope of creative giving strategies. Remember the Haiti Earthquake? And remember the texting craze that was taking off around the same time? Red Cross leverage these two events coming together to provide relief to Haitians through text messaged donations.

To the tune of $5 million.

I wonder what the next frontier of creative giving will be. Mobile wallets perhaps?

 

Teach For America

teachforamerica.org

Twitter @TeachForAmerica
Charity Navigator rating: 4 out of 4
2010 Revenue: $269,477,329
2010 Program Expenses: $127,219,402
Wendy Kopp, CEO & Founder

What you can learn from this nonprofit:

  • Support those you recruit into your organization, then empower them to become your supporters- financially, politically, and through community organizing.
  • Focus on your talent pipeline – people you recruit into your organization will remain avid supporters of your mission long after they leave, so long as they are well-trained and empowered to do so. Stealing a line from Jerry Maguire, ‘Help Them, Help You.’

Wendy Kopp presented the idea for Teach for America as an undergraduate at Princeton University. At the age of 21, she raised $2.5 million dollars and began recruiting teachers. The first year of service was in 1990 with 500 teachers. Today over 2.5 million students have been taught by teachers through this program.

Teach For America is a college campus powerhouse. You’re not going to have to look very hard to find TFA’s presence during recruiting seasons. This emphasis on recruitment feeds a funnel of scary-smart, ambitious college grads into a wide variety of opportunities to close the achievement gap in America.

The emphasis here is really on that funnel, which develops teachers (known as corps members) into savvy education reformers who go on to open charter schools, run for school board, get elected to public office, and more. The two year commitment TFA asks these corps members to make in the classroom is only the beginning.

How can you use this principle? You may have a similar goal in your nonprofit – developing a pipeline of supporters who can promote your vision and create action to make the vision become reality. But in order for that pipeline to develop, focus your time and effort on things like professional development (TFA spends an enormous amount of money and energy on professional development), and support after the commitment.

For example, TFA supports alumni post-teaching pursuits through a well-development portal at TFAnet.org. Here, alumni can collaborate and network with one another to pursue initiatives after the corps – things like starting schools of their own, launching startups, and getting career advice.

 

Arkansas Rice Depot

ricedepot.org

Twitter @RiceDepot
Charity Navigator rating: 3
2010 Revenue: $10,372,048
2010 Program Expenses: $10,271,285
Laura Rhea, President and CEO

What you can learn from this nonprofit:

  • Starting and running a successful nonprofit is a marathon, not a sprint. For all the time I spend on helping you get up and running quickly, keep in mind that many great organizations like Arkansas Rice Depot have been around for 25 years or more.
  • Satellite locations can make it easier to collect donations and deliver services. In this way, you can position yourself for significant growth in particular times of need.
  • Consider a variety of programs to expand your reach.

Huh? I know that’s what you’re thinking right now. How do I go from Susan G, to Red Cross, to Teach For America, to… the Arkansas Rice Depot?

There were a significant number of food banks listed in your survey responses as nonprofits you most admired. So I put on my super-sleuth investigative reporter cap and looked into how I can capture the food bank response in a meaningful way in this post.

I think I came up with a pretty darned good answer.

Arkansas Rice Depot experienced an 82% growth in program expenses last year, earning it the top spot in Charity Navigator’s survey of 10 Charities Expanding in a Hurry. Over the past three years, ARD grew their primary source of revenue by more than 35% each year, expanding their programs and services by more than 35% each year. No doubt that ARD stands to become one of the largest nonprofits in the food bank sector if they continue on this trajectory.

That is significant growth, and reason enough to feature the nonprofit here by asking the question ‘how is this kind of growth possible?’

The Arkansas Rice Depot has spent more than 25 years developing a network across the entire state of Arkansas. This network represents more than 800 local hunger-relief organizations, including local food pantries, shelters, soup kitchens & schools.

So think of ARD as more of a coordinator of services delivered by smaller organizations. This ‘shared resource’ model can help boost efficiency, and prepare your organization for fast growth when demand rises. I suspect that with the deteriorating economic conditions in the US over the past 4 years, the ARD has had to step up to the challenge of meeting that increased demand. They’ve accomplished this through regional food drops to make it easier to donate and receive food donations.

Good leadership. Slow and steady network building. Core tenets of many successful nonprofits.

 

charity: water

charitywater.org

Twitter @charitywater
Charity Navigator rating: 4 out of 4
2010 Revenue: $16,034,390
2010 Program Expenses: $9,396,092
Scott Harrison, Founder

What you can learn from this nonprofit:

  • Video allows your supporters to watch their donations be put to use in real-time.
  • Remove the obstacle of administrative costs entirely: get a small handful of high-investment donors to support all overhead costs, allowing for application of 100% of remaining donations to go towards the mission.
  • Never underestimate the impact influential people can make on your nonprofit. It may only take one well-connected supporter to set your nonprofit on a rocket-ship trajectory.
  • Stories of a reformed leader can go a long way to getting recognition (you can’t make this stuff up!)

Charity:Water’s accountability and simplicity of purpose has made it a popular charity in New York, Hollywood and increasingly, Silicon Valley. Here’s the value proposition…

One-out-of-six-people on the planet doesn’t have access to clean drinking water. $5,000 buys an African village a well. Every dime you donate, goes to these wells. You can even watch the wells being tapped for the first time via Web video.

Stop and think for a minute about the power of a video on YouTube where one of your supporters can watch donated coats being handed to children, food being served to the homeless, or an orchestra concert put on by schoolchildren playing donated instruments.

The nonprofit is very good at summarizing their numbers in visual terms a reader can quickly grasp:

Charity:Water has been around a little over five years, and it’s raised more than $19 million over that time—much of it in $20 increments from a base donors, many of whom create and launch their own ‘campaigns’ to raise funds. As a result some 1.7 million people in the world now have access to clean drinking water.

How has this nonprofit been so effective in landing those $20 donations? By removing obstacles for giving.

Charity:Water depends on private donors to cover everything from staff salaries to basic office systems to office rent and supplies. These donors are some of their most dedicated: their investment fuels Charity:Water’s use of 100% of public donations for water projects. So a supporter knows that all of their donation goes to the effort, not the nonprofit.

But what may quite possibly be the most compelling piece of this puzzle is who is running this show. Before starting Charity:Water, Scott Harrison was a New York City club promoter who used to make a living “selling people $16 drinks and $300 bottles of vodka.”

It wasn’t until a trip to Africa aboard Mercy Ships when something clicked. Harrison needed to save himself from spiritual bankruptcy, and the best way to do that was to start something that mattered.

Charity:Water’s early donations came from people in technology. For example, Michael Birch, who successfully exited Bebo, was their initial bridge to Silicon Valley. Through Birch they started spending more time in Silicon Valley and got to meet people like Dennis Crowley and Jack Dorsey. These influential people had a remarkable impact on the nonprofit, including, the idea of giving up a birthday to donate.

Who are the influential people in your community that you should be approaching?

Rest assured, I’ll be highlighting more of what Charity:Water is doing right in future posts. Stay tuned.

 

Kiva

kiva.org

Twitter @Kiva
Charity Navigator rating: 4 out of 4
2010 Revenue: $9,127,055
2010 Program Expenses: $7,457,758

What you can learn from this nonprofit:

  • Engage your support network through the use of a dashboard where donors or lenders can get a picture of the impact their money is having on those you serve.
  • Think of your organization as a facilitator of giving. Donors give through you, not to you.

Kiva’s numbers are a bit misleading. While their 2010 program expenses appear low compared to the largest nonprofits in our list, their impact is enormous from a dollars and cents perspective.

But you have to first understand what it is Kiva does before understanding what I mean.

Microlending is a term coined by microfinance pioneer Muhammad Yunus where very small loans are extended to impoverished borrowers in the hope that money will be used to start or grow a business. The microdonation / microlending model is something nonprofits should consider when fundraising. This model leverages the power of crowdsourcing – rather than have a small number of large donors or lenders, you have a large number of donors / lenders offering a small sum of money.

How small?

$25 is all it takes to get started as a lender at Kiva.

So although program expenses last year were $7.5 million, Kiva facilitates lending much more sizeable amounts of money- to the tune of $235 million in the last six years.

One of the most powerful features of Kiva’s system is My Portfolio, where a lender can gather information about the status of his loans, whether or not he has repaid loans he can use for lending again, and a summary of other entrepreneurs he has lent to.

So what’s up next for Kiva? They are set to test Kiva Zip, which does away with the microlending middleman through the use of mobile and electronic payment methods to send the loan directly to the borrower. This development should help boost the efficiency of the microlending transaction, resulting in faster distribution and easier repayment.

 

Matthew 25: Ministries

m25m.org

Twitter @M25M_org
Charity Navigator rating: 4
2010 Revenue: $110,006,423
2010 Program Expenses: $109,897,762
Michael Brandy, Jr., Chairman

What you can learn from this nonprofit:

  • Transparency is a powerful motivator for giving. Check out Matthew 25’s shipment reports on a month-by-month basis.
  • Strive for efficiency in everything you do. Matthew 25 has incredibly low administrative and fundraising costs – 0.1% and 0.3%, respectively.
  • Maximize giving by emphasizing efficiency through operations – if you can apply 99.4% of cash and in-kind donations to program expenses, emphasize that to your supporters. Donors want to know that their money is ending up in the hands of those you serve.

Like I mentioned at the beginning of this post – my intention was to feature most admired nonprofits you provided in the survey. After all, you listed off some great ones- enough to fill this post and then some.

However, I had to break with that. Just this once.

See, as I was researching this article, I happened across Matthew 25. And I was blown away.

So, call this Bret’s most admired nonprofit if you like. But I think as you look closer at what Matthew 25 is doing, you’ll have a similar reaction.

Matthew 25: Ministries rescues and reuses approximately ten million pounds of corporate discontinues, misprints, overruns, off-spec, slightly damaged, returned and past season products each year and redistributes them to people in desperate need throughout the US and worldwide. Each year, Matthew 25: Ministries serves 12 million people through these in-kind donations.

But here’s the data that really caught my attention- More than 99% of Matthew 25: Ministries’ cash and in-kind donations go toward programs. That is 99.4%, to be exact. Matthew 25’s administrative and fundraising costs are ridiculously low – 0.1% and 0.3%, respectively- begging the question, ‘How did they scale so effectively?’

The answer – creative ways to collect donations and small armies of volunteers.

Take a closer look at Matthew 25’s numbers and you’ll get where I’m going with the first point – in-kind donations accounted for 97% of total revenues, compared with just 1% of cash & equivalents. These in-kind donations include slightly damaged, overstocked, or outdated inventories of clothing and personal care products, medical supplies from hospitals and clinics that are either downsizing or upgrading their facilities, and food and school supplies collected through churches, school and other community organizations.

Volunteers play a very important role in getting these in-kind donations out the door. Matthew 25: Ministries does almost everything through the help of volunteers. These volunteers contribute to the 590 40-foot containers getting to where they were needed last year. That is essentially 590 semi-trailer loads.

Enough to stretch 4.5 miles of highway end-to-end. Amazing.

 

Which of the largest nonprofits (or most admired nonprofits) did I miss?

Your turn to sound off and offer the nonprofits you most admire. What is it you admire about them? Is it their efficiency? Their brand or clarity of mission?