Most successful nonprofits operate in a silo by design. To stay on mission, they narrow focus their programs and projects. They serve a particular need and identifiable group of people and their donors and volunteers reward them because they do.

This formula worked exceptionally well until recently. Nonprofits are starting to feel a real crunch in their pocketbooks. In short, fundraising is getting even more difficult. With baby boomer donors thinning out and millennials expressing their generosity in service and hospitality, nonprofits are scrambling for new streams of operating revenue.

At the same time, many foundations and larger funders are now looking for nonprofits to demonstrate their operational competency before funding their organization, programs or projects. This is new for nonprofits. Until very recently, nonprofits simply had to request the needed funding from sympathetic larger funders with similar sensibilities through a simple proposal process.

Nonprofits need more funding. Funders need more confidence.

It is interesting to note that larger funders have always been more sophisticated than most of their nonprofit counterparts and have always had their own philanthropic objectives. These funders, now more than ever, feel an incredible burden to invest their charitable funds with worthy programs that not only match their agendas but exhibit the competence and capacity to do what they say they will.

Traditionally, nonprofits just provided compelling success stories supported by their financial track record to accompany their funding requests to prove capability. About a decade ago, the concept of Performance Philanthropy started to gain momentum in the financial media and entered the funding conversation.

The spirit behind Performance Philanthropy is that philanthropy is similar to investing and should be treated with a similar level of discipline. Although many larger funders would not specifically identify with Performance Philanthropy or any of the derivative philosophies, the concept has changed the the charitable landscape forever.

Here is a simple five-step plan for nonprofits and funders to consider to expand beyond the organizational boundaries to achieve their respective objectives: 

Step One: The Project

The nonprofit defines the need with objectives, timelines and funding requirements.

Step Two: The Invitation

The nonprofit invites the funder to review, comment and collaborate on the project.

Step Three: The Collaboration

The nonprofit and funder work together to make the best plan possible while meeting respective objectives.

Step Four: The Delivery

The nonprofit implements the plan and the funder receives real time updates and ongoing communications.

Step Five: The Impact

The nonprofit demonstrates competency. The Funder gains confidence. Lives are changed.

For a free four-step infographic on how nonprofits can demonstrate operational competency to funders, please email me at marc.stein@theglobalcenter.net.

For more thought leadership on nonprofit best practices and operational excellence, please visit The Global Center for Nonprofit Excellence where nonprofits, funders and industry experts work together for the greatest impact.