Break Free From the Nonprofit Starvation Cycle

The other day I met with a nonprofit leader (let's call her June) who has a great idea for an earned income venture that fits directly with her mission, but she doesn't have the startup capital to launch. When she explained this to me, she threw up her hands as if to say, "I'm powerless to move forward."

But from my vantage point she has all the pieces necessary to raise the startup capital and launch, she just isn't putting them together. It's a common refrain — nonprofit leaders complain about being in a catch-22 of not having enough money to raise enough money. But the answer is often right in front of you. To break free from the starvation cycle, assemble the assets you already have in order to raise capacity capital.

The nonprofit starvation cycle is one nonprofit leaders know only too well. Nonprofit organizations rarely have the technology, staff and systems to function effectively. So they scrape by trying to wring one more drop out of a completely dry rock. But instead of waiting for funders to fix the situation, it is up to nonprofit leaders themselves to break free. And you break free by raising capacity capital.

Capacity capital is a one-time investment of significant money that can help build or strengthen a nonprofit organization so it can create more social change. Capacity capital funds things like technology, systems, a program evaluation, revenue-generating staff and startup costs for an earned income business. It is money that strengthens the organization so it can do more.

But often nonprofit leaders, like June above, don't recognize that everything they need to raise capacity capital and break free from the starvation cycle is in right in front of them. Here are the necessary pieces.

A plan