The Nonprofit Growth Code: Mastering Audiences, Metrics and the Science of Sustainable Revenue

Ralph Vasami, Esq. is the Chief Strategy Officer at Kellen, offering 20+ years of executive leadership. A specialist in strategic planning, law, and engineering, he excels in association management and public affairs. A former industry trailblazer, he now helps organizations navigate building codes and stakeholder relationships.

 

Episode Overview

In this episode of The Nonprofit Exchange, Hugh Ballou interviews Ralph Vasami about strategies for nonprofit sustainability, mastering audiences, using the right metrics, and building diversified revenue streams. This discussion explores practical leadership principles that help nonprofit organizations become fundable, sustainable, and effective in fulfilling their mission.

Key Topics Covered

• Mastering Audiences – Understanding corporate sponsors, individual donors, and foundations
• Metrics that Matter – Measuring outcomes, impact, and financial stewardship
• Sustainable Revenue – Diversifying income streams and building long-term funding
• Leadership and Implementation – Engaging boards, staff, and stakeholders in execution

Full Transcript

Hugh Ballou

This episode of the nonprofit exchange is like none other. I find that to be true more and more and more. There’s just people with wisdom that we need. So today I have a new friend, Ralph Vasami, who’s got a really extensive corporate background and a lot of expertise in many areas. We’re going to focus on the title today is the nonprofit growth code. Mastering Audiences, Metrics, and the Science of Sustainable Revenue. Ralph, welcome to the Nonprofit Exchange. Give people a little sense of your background and, you know, what your learning journey was to get here.

Ralph Vasami

Thank you for having me today. I’ve been working with nonprofits since 1977, both as a volunteer member of the of the associations and the boards, but for the last 22 years. as part of the Kellen Company, which manages over 50 non-profit organizations in the U.S. and another 40 or so worldwide. And with that, we come in contact with non-profits of all types, trade associations, professional societies, charities and foundations. And so those organizations that are looking for funding and for fundraising, mostly charities and foundations, have a little bit of a different path to generating and sustaining revenue. And so I think that’s probably what we’re going to be spending most of our time on today.

Hugh Ballou

Thank you. You speak about mastering our audiences. So what do most nonprofit leaders misunderstand about their audiences, and why does this impact our fundraising?

Ralph Vasami

Well, we look at audiences really in three categories. A corporate audience, an organization, a corporation that may have a charitable or a social responsibility department, but they also have a marketing department that looks for ways in which they can align with mission driven organizations. Then there’s the individual donors or donor boards where people that are on the board are expected to raise money. for the organization. And then there’s the large foundations and grant giving organizations. And generally those three buckets will encompass most of where a nonprofit will get their money and support. But each one of them may be looking for different types of metrics and outcomes before they are willing to help fund. and to be attractive to the organization. And I think sometimes that’s missed in that they’re not all the same. And their requirements are not all the same. And what they look for from the nonprofit leadership is not always the same.

Hugh Ballou

So segmenting our audiences instead of just having one email list and one methodology for contacting people, there’s an effective way to segment our audiences and then figure out the most effective way to build relationship and communications with those. Will you speak a little bit about that? Because those are very different audiences.

Ralph Vasami

Yes, they are. And that’s why segmenting them is probably the easiest to start out with. because each one of them will have their own concept of what outcomes that they’re looking for. In a corporate audience, they’re looking for things in which they are aligned from their corporate charter to what the mission is of the organization and the outcomes that the organization is looking to drive and how that comes and fits back in with the with the corporation and really they want to be inspired. They want to be inspired by what the organization is doing so that they can have that as part of either their social responsibility or their marketing department. There are funds in the marketing department to do this kind of work and fund this kind of work as well. On the individual standpoint, they’re going to be very focused on the mission of the organization. What is the organization looking to accomplish? Is it feeding the hungry? Is it education for those underserved? Is it bringing health care? Is it building schools? And so those donors, number one, if they’re an individual donor, they’re going to want to make sure that they’re very well aligned with that mission. And in terms of the donor boards, where donors are boards, those serving on the board are expected to bring funding in, same thing. they’re going to make sure that they’re very, very well aligned so that they feel comfortable in going out to their sources of funding or perhaps their own funding to help the organization. Foundation and grants, obviously there’s an application process there. And the organization is going to need to know exactly what the application process is, what information they’re going to have to provide. and then have the personal contacts with those grant writing organizations or those big foundations like the Ford Foundation or you name it. So, very, very different. An email is not gonna get through by itself. And so, targeting the right kind of communication to the right audience will help it get through. And of course, you know, always looking at where, you know, where you can have examples of successes in the past, examples of outcomes, and examples of, you know, methods that you’ve used to communicate and establish relationships in the past are always helpful.

Hugh Ballou

So let’s go to metrics and we could measure a lot of things. And we, sometimes we measure the wrong things. So what matters, you know, what can we measure? And so they’re very different. And the, um, majority of most funding for most nonprofits comes from private personal donors. There are exceptions. And the hardest, the hardest, the most competitive is the grants from foundation, the most rigorous. But all of those are going to want to know about your work, the impact of your work, in different ways. So let’s go to one. You spoke about corporate support. Now, there’s one pocket. for any corporation where they have donor money. They have a certain percentage they donate to charities and they try to spread it out in the community. There’s also a very different pocket and a different rubric, different metrics for sponsorship money. So contrast those two and why those messages are different.

Ralph Vasami

Well, in the area where they have donor money for the for a nonprofit, they’re looking at outcomes. And they’re looking at the outcomes. What is the association? What is a nonprofit doing? Or what are they intending to do with the funding? And as I said, the more success stories they can show where they’ve used funding in the past to achieve the outcomes of the organization. their stated outcomes. Those are always the best, whether the case studies or their actual, you know, showing, like I said, in some cases, I’ve worked with groups that were building schools, showing the schools being built, showing the children in the schoolroom afterwards, and the kinds of connections there. Others, it’s how much that they’re providing food to those in need. So, those types of things resonate for those corporations from the outcome standpoint. I think the basic information that all of these groups are going to need, Hugh, really comes down to, you know, the financials and the financial rigor that’s in place for the organizations. So, financial statements, past tax returns, if there’s a strategic plan that shows the mission and how the group is working towards that, any budgets. As I mentioned, they may even request commitment letters from the leadership of the nonprofit, showing that they believe in this mission and they believe that the funding is going to be used for the right purposes. And also looking at what’s the next step. So, we’re donating this amount of money. You’re looking to achieve this outcome. What comes next? They want to know that they’re part of a sustainable organization. And so, they like to see what the organization has in mind, you know, for next steps. Very important in dealing with those audiences as well is I call it a stewardship team, but having someone in the nonprofit or a team in the nonprofit that stays in touch with the donors on a regular basis, letting them know how things are going, letting them know the progress that’s being made. And it’s especially important if an objective ever needs to get changed for some reason. It’s really important to not just Go to a donor, you know, when something needs to change. But if you’ve got a relationship built up and they’re seeing progress along the way. And then for whatever reason, an assumption changes and they’ve got to make a mid course correction, you know, they’re, they’re part of that decision making and not necessarily being surprised by it. So I think that’s, you know, that’s, that’s important. You know, and I think they want to, they just want to make sure also that the, especially in the corporate side, that there’s compliance, you know, with the requirements under, under 501c3. in terms of percentage of overhead, no goods or services exchanged, and limited lobbying and advocacy. Those things that keep the association in good standing with the IRS.

Hugh Ballou

Yeah. Got to do that. Got to do that. So, what we do in Center Vision is we help organizations become fundable. And you mentioned a strategic plan. This is the meat of it. This is the context. If you spend time writing your plan, then you can take parts of that and move it into your sponsor proposal or your grant application, and you’re going to need every bit of data that you can come at. That’s right. So, we’re forced to do the reporting with a foundation. We get a grant. We’re going to have to do the metrics about what happened and because they give us money for a specific result and it’s up to us to report on what that result was. Right. That’s also helpful to us. You know, all of this work, we think, oh, it’s a lot of work, but really it helps us learn about our own work, doesn’t it?

Ralph Vasami

Oh, yes, absolutely. Because, you know, having a plan, a strategic plan, it allows you to show how it drives your budget, shows how you’re driving your staffing decisions, and all. But really important to also demonstrate that you know what your organization is trying to accomplish, that you’ve got, you’ve got, you know, good handle on where it should be operating and more importantly, where it shouldn’t, and that you’re gonna be a good steward of that money when they donate it. I mean, they’re donating it because they wanna be helpful. They wanna see the mission being fulfilled. They wanna make sure that there’s a good steward, that the organization is run well and can provide the results that are being promised. That’s why they want to see planning. They want to see what’s next. They want to see budgets. They want to see good financials because they want to make sure that the organization is sustainable.

Hugh Ballou

That’s our next topic is sustainability. But let me go back to this one before I leave it. A year ago when I was 78, I wrote my first grant. And I found that to be a very enlightening process. I would encourage people, even if you don’t think you got a chance of getting the grant, you should go through the steps that they require because you will learn what’s going to make you fundable. Do you have any comments on that exercise as a learning exercise?

Ralph Vasami

Well, I think that, uh, there’s no question about it. Um. You can learn a lot from the grant process, the application process, what information they’re looking for, what data that you need that maybe you don’t have or you’re not collecting. Obviously, there’s a ton of data around that you can have access to, but what’s going to drive a funder to notice you and to take that application seriously. So going through those steps will help you learn what you need and what you don’t need, but also going through those steps will help you learn about your organization and where you might be able to shore some things up that you haven’t been doing or really promote some things that you’re doing very well. And from that, that information will then be able to spill over to your individual donors and to your corporate donors as well. So I think you make a very good point that using the grant process and coming up with that information forces you to learn really about your organization, how you can be fundable, and then you can then use it in any of the other categories.

Hugh Ballou

You learn about what’s missing.

Ralph Vasami

Yes.

Hugh Ballou

Because it’s, I found it, even though I have taught this for many years and worked in many organizations, I still learn stuff. And, you know, we don’t ever stop learning stuff. And I constantly hear early stage companies say, oh, if I only had the money, everything would be fine. Which is not true, is it? If you don’t have all of this.

Ralph Vasami

That’s right, that’s right. And that’s really why organizations who are funding want to make sure that your organization is sound and well run. Because they want their donations, they want to be used for something that has sustainability. The organization is going to be around, the mission is going to be around, and they can see the results of that in the really good work. There’s no question about it. The biggest fear is, you know, the organization gets the money, doesn’t use it wisely, doesn’t have these controls. And the next thing you know, the money was, the goals weren’t achieved and the organization is out of money.

Hugh Ballou

Which happens more often than it should.

Ralph Vasami

Yes. Yes.

Hugh Ballou

And so the fallacy is this about the money is not true. So you’ve said sustainability numerous times. Let’s get to that. Sustainability has many, many factors. Now, the part that you have described all of those metrics. Underlying all of that is building relationships with all of these entities, the private donors. And that’s that’s the purpose of your donor messages, letting people know what’s happened with their money. You’ve been really good stewards of their money. But, you know, sustainability, we’ve got the sustainability of everything we’re doing, not only the people or the projects, but sustainable revenue. So let’s pick that one for a moment. You know, the organizations want to know they’re not the only funder and they want to know there’s sustainability and funding. So, that’s one factor of sustainability. Do you want to elaborate on that just a little bit and why it’s important and what’s the magic bullet there?

Ralph Vasami

Yeah, I think that’s right. Unless it’s in a very unusual circumstance, nobody wants to think that they’re the only funder and if they don’t continue to fund, the organization will go away. So, they want to know that they have that there are other organizations that are partnering. And I think that the key there is, again, you mentioned it, but it’s relationships and how can you leverage your current funders to develop additional sources of funding that, again, will look down the road with you into a year three and four and five to make sure that there’s sufficient funding to continue to deliver on the mission. Those are important connections and they take time to develop. You know, they take time to develop, it takes time to develop the trust in the individuals that are talking with the donors. And they could be, you know, many organizations have, you know, categories of donors, you know, major donors and major gifts and different types. And they may need different people communicating those. those benefits to different levels of donors. But it takes time. Rarely does somebody walk up to a potential donor and say, oh, look what we’re doing. And they say, hey, that’s great, and here’s your money. So I would always stress, and you mentioned that as underlying, these are relationship businesses. you know, associations, organizations that are relationship businesses, and the folks that are in those organizations need to know that, and they need to build relationships along the way, you know, well before they actually get a check.

Hugh Ballou

So we’ve identified, so part of the sustainability is diversifying your revenue streams. And entrepreneurs, they all got this client, I got this track of business, have one source of revenue. Well, the chance of you going broke is probably a hundred percent. So, you know, one big donor is going to leave you and then you’re dead. So diversifying the amounts and the sources of money, but the different buckets. So we’ve talked about grants. We’ve talked about sponsorships. We’ve talked about donors, corporate donors, private donors. There’s also wills and bequests. There’s eight slam-dunk streams and out in kind is one of those. So why is diversifying revenue important for sustainability?

Ralph Vasami

Well, you know, I can use an example, Hugh, from COVID. Many organizations rely on a conference or a meeting of some type to generate 70, 80, 90% of their revenue. And when COVID hit, those organizations that were not fortunate enough to have their major conference in January or February, they all had to panic because 70, 80% of their annual revenue was coming from one conference and you couldn’t have the conference. People couldn’t travel, people couldn’t meet. And so, yeah, so nimble organizations were able to move virtually at least to keep some connection, but they didn’t recoup all of that revenue. And so if you rely on one source of revenue, one donor source, and for whatever reason, having nothing to do with the ability of the nonprofit, that goes away, the nonprofit’s in trouble. So, the more it’s like putting an investment portfolio together. The more diversified you are, as opposed to buying one stock and hoping that it goes up and down or keeps going up, the more you can diversify and have a solid base underneath the more sustainable you are in fact, but also the more sustainable you are when you show that those revenue streams to the organizations that you’re trying to get money from. So, you’re really, really, really critical to not have, you know, all of your revenue coming from, you know, one or maybe even two sources.

Hugh Ballou

Yes. So, suppose a leader has all this in their brain. Now, There’s a leadership component of this. How do we engage our board, our staff, our committees, all of our volunteers, our stakeholders? How do we engage people in all of these themes? What’s the challenge for leaders?

Ralph Vasami

Well, I think part of it is educating the boards as to what their role is. You know, and so I’ve always, always been a big proponent of board training, even for seasoned board members. Always, you know, board training. What are their responsibilities? What are their, what are not their responsibility? And then making sure that there’s always a good connection and a good relationship between the board and the staff. so that they know that what the board is directing and agreeing on, the staff is able to execute and understanding that. Having a good relationship, having a good knowledgeable board, a good relationship between the board and the staff and the staff that can execute, those are essential in being able to get all of this accomplished. And then it’s educating the staff as well as to, you know, what’s important, what’s got to get done, why it’s important, so that they can be, you know, experts in their role as well. You know, there are so many misconceptions about nonprofits. Everybody thinks that it’s a, you know, it’s a charity only. They don’t realize that nonprofits do a heck of a lot of things besides what one would call a charitable organization. So, they’re all different. They all have their structures or operational structures, but they all need to be excellent at what they do, not only because they’re looking for funding from a number of different sources, but they’re also looking at the end mission, which is helping whatever group it is that they’re looking to help.

Hugh Ballou

It’s a tax-exempt business. And we get our head around the business model. We need to generate revenue to do the work we’re going to do.

Ralph Vasami

That’s right. And Hugh, I’ve always used this line with boards. Nonprofit is a tax status. It’s not an operating philosophy. And you know. A lot of times you’ll be dealing with leadership or some boards and they don’t really understand that it’s okay for the organization to raise money and in certain cases to make money to fulfill the mission of the organization. Because if you don’t have revenue, you can’t do what you want to do.

Hugh Ballou

 Bottom line, you can get a nice car, you can learn how to drive it, but if you can’t put gas in it, it’s not going anywhere.

Ralph Vasami

Not going anywhere. That’s right. And what we’re looking for here is to help people understand some of the things and the hurdles in order to get people to give you the gas.

Hugh Ballou

So there’s absolutely, there’s some many things that people learn today. And if you’re listening to this or watching this and you’re trying to get it all down, don’t worry. If you go to the nonprofitexchange.org, there’ll be a full transcript with all these great pieces in writing. So you can look at them and cut and paste and then put them to work. So Ralph is where we’ve covered a lot of stuff today in this short interview. Thank you for that. But as a, as a. The closing point, you brought up something that we use the word non-profit to identify the sector. It’s tax exempt, it’s social benefit, it’s a for-purpose organization, we can call it a lot of things, but the mindset. mindset shift do we need to get out of this scarcity mindset or how we’ve been taught or what we’ve always done to embrace some of these themes that you’ve talked about? How do we embrace a new mindset to move forward?

Ralph Vasami

Well, I’ve always been working with the teams that we work with. And as I said, with our firm, we touch probably 10,000 different companies as members of different organizations. And you have to recognize that what your nonprofit is a corporation. And it’s got to be run like a corporation. There has to be, you know, there has to be principles of, you know, operating principles. There has to be rigor in financials and financial management. There’s got to be, you know, professional development in your team. so that they understand what their role is and what they need to do. And there’s gotta be an excellent relationship between the board. And so I think those are the things to keep in mind that this is a business, all right? And people don’t like to think of it sometimes as a business, but it is absolutely a business. And the business principles that apply to any business apply to this one. You may not have a product to sell, but you have an idea and a mission that you want people to believe in. and provide revenue for you so that you can fulfill that mission.

Hugh Ballou

That’s great advice. Ralph, you’ve given us some precious wisdom in the short period of time. Thank you so much for sharing that with our guests on the Non-Private Exchange today.

Ralph Vasami

Hugh, thank you for having me. And if there’s anything I can do, just let me know.

Hugh Ballou

Thank you so much, Ralph.