Case Study: How One Grassroots Nonprofit Achieved Success – and You Can, Too!
Guest Post by Pamela Barden
Although there are more than 1.57 million registered nonprofit organization in the United States, Urban Institute reports that in 2013, fewer than 2 in five (35%) filed at least a 990-EZ. This means that 65 percent of nonprofits raised less than $50,000.
The reality is that many nonprofits are small – and are not able to break away and grow significantly, both in terms of income and mission fulfillment. So when a nonprofit grows its income by 430 percent over eight years, it’s worth asking why.
I recently sat down with Mark Lillis, executive director of The Leaven, a California-based nonprofit organization that provides no-cost tutoring and mentoring to children living in low-income housing. Mark has lived through the growing pains of a small nonprofit and shared what worked – and what didn’t – on the path to expansion.
The Leaven was begun in 2005 by a committee of Parkway Community Church in Fairfield, CA, with support from the City of Fairfield and the school district. The children in the neighborhood surrounding the church were struggling in school and the city leaders knew they had to do more to help these children – many from immigrant families – get the kind of education that would allow them to achieve success in life.
Q: Mark, how did you get involved with The Leaven?
ML: Since I was a member of the church, a family friend came to me when he never received a receipt for a sizable donation to the after-school program. I talked to the church about it and they asked me to serve on the committee. They eventually hired me as their first employee.
Because the program model was proving to be successful and earning praise from the school district, we were asked to expand to a second community. Frankly, we were somewhat skeptical if that was a good plan. Where would the money come from? How would we recruit enough volunteers to serve as tutors?
It became clear that we couldn’t continue to operate as a committee of the church; we needed to be an independent nonprofit organization. The committee members were concerned that the mission would change, so the committee chair invested a great deal of effort into unifying the members. It was a daunting task to apply to be an independent organization, but we knew we had outgrown the committee structure.
[In 2009, The Leaven became an independent 501(c)(3) organization.]
Q: What were some of the challenges in being independent and starting to grow beyond your first two centers?
ML: Those first years were risky, and we were very cautious about growth. Our growth was a result of invitations to replicate the program, not because we set out to expand. In the city where the organization began, we had good name recognition and established marketing. When we looked to expand further out, we had none of that. To complicate things further, we were in the middle of the Great Recession. Most nonprofit organizations were pulling back, and they certainly weren’t starting new work!
We took a leap of faith and decided to pursue another after-school center only after wrestling with questions like, “How do you get your name out fast? How do you build a reputation? How do you show you have lasting value and your success wasn’t just a one-time thing?”
Q: So how did you overcome those obstacles?
ML: The most important factor to our success was that Fairfield Mayor Harry Price and City-Councilmember Chuck Timm (now Vice Mayor) put their name on it. They said, “We endorse this work. We stand behind The Leaven.”
That resulted in more people trusting us, and more donations – but also more pressure not to squander that trust. A major contributor told me straight out, “This thing better not embarrass me!” That became a challenge to us – to make all our donors proud to support The Leaven. Indirectly, a donor is putting his or her name on the organization, and we have a responsibility to honor that personal endorsement.
We immediately wrestled with the fine balance between being too flashy and reflecting the care that the organization deserves. We committed to be the best we could afford. My dad told me, “Mark, you have to run it like a business.” With that admonition, I sought advice from business people who gladly shared their wisdom. I realized immediately that we had to have good management tools. We obtained an inventory management system and hired a CPA to do an audit from the very beginning. These aren’t luxuries for a nonprofit organization; they are necessary tools to manage properly.
I keep asking questions of and listening to people who were operating successful nonprofits. For example, I asked a local organization how they grew their fundraising base. They recommended a marketing firm, and that firm recommended an independent fundraising consultant to me. I quickly learned the value of surrounding myself with people who have been down the road a lot further than I had.
Q: What was the role of your board over those early years as an independent organization?
ML: Of course, there were different opinions among board members, but our chair was firm about establishing a solid operational foundation. He made it clear that the board was going to set policy and provide oversight. In his words, the board needed to lead, not count pencils. He recruited wise people for the board and established term limits from the beginning.
Q: How did staffing change as you grew?
ML: I knew we had to have someone to run point on development. We have three events each year and despite having exceptional volunteer committees running them, I knew I couldn’t continue to manage the details and succeed as a leader. We also went from a salaried model to an hourly pay model (which aligned with the IRS guidelines), transitioning over several months, explaining the rationale to staff and making the hourly rate comparable. We implemented quarterly assessments and raises. Staff turnover is very expensive, and our board knew that we would retain staff if we provided a competitive wage. We also are committed to treating our staff well, making sure they understand the big picture behind change.
Q: What do you say to a donor who is concerned that The Leaven isn’t like is used to be?
ML: We get a lot of that! I assure them we are the same group we’ve always been. The mission is still the same. We’ve added locations and programs, but the basis of our purpose is unchanged.
We’ve made some mistakes, but we keep a pretty big rear-view mirror so we don’t repeat the mistakes. We make sure we are meeting our benchmarks, because we have made a promise to the community and to our donors,
Q: A few years ago, you replaced your major event with a gala. How did you keep that change from disenfranchising former participants and make it more successful than the prior event?
ML: It was a big change, but the volunteers on the committee were clear: if you don’t change this, it will die. One key volunteer had a vision and the rest of the committee members were ready for change. It turned out our donors were ready for change, too!
Q: The Leaven is very volunteer-dependent. How do you keep them excited and involved?
ML: Our volunteers are critical, or we have good programs to orient them and we hold two volunteer appreciation dinners a year. We make sure they are constantly seeing how they make our mission possible. We also don’t have strict requirements for hours and flexible schedules. Our goal is to make it easy to be a volunteer at The Leaven. [Volunteers are required to pass a background check.]
We probably retain about 90 percent of our volunteers, and I estimate our volunteer hours are worth $30-40,000 a month in in-kind services. Our program is underpinned by many great volunteers!
Q: How do you keep your fundraising growing?
ML: We’re very grassroots; we made a promise to the community and we are determined to keep that promise. We focus on the community, the people who volunteer and those who donate funds. When you’re successful and people know about it, they want to be part of it. We view fundraising as a very natural way to connect to the community.
We’ve become more sophisticated over the years, but we’re not afraid to realign when we need to. Frankly, we’ve gotten a bit ahead on occasion and had to reconstruct some messaging. We take comments from our supporters to heart because we know we need people who are going to be hard on us and tell us when we’re off the mark.
Q: What’s next for The Leaven?
A: We’ve added a new board member who is a Millennial, but also very connected to our mission. We’re excited because that will give us a new perspective on a market segment. We’re also working to be more strategic in the sense of getting the right information out to our donor base.
Q: So what’s the secret formula to succeeding as a nonprofit?
A: Good processes from the beginning, good people, wise counsel and a lot of hard work.
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About the Author
Pamela Barden, DBA, CFRE, is a fundraising consultant and university professor; a member of the Advisory Panel for Rogare at Plymouth University’s Hartsook Centre for Sustainable Philanthropy; a columnist for NonprofitPRO and contributor to npEngage (Blackbaud); and co-author of the 4th edition of The Complete Guide to Fundraising Management. You can find her online at www.pjbardeninc.com or on Twitter @pjbarden.
Photo Credit: Kate Ter Haar