The Future of Social Impact Fundraising with Eric Ressler

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Allison: Welcome back to the Deliberate Leaders podcast. I am your host and executive business coach Allison Dunn. I’m very excited to introduce our guests. Today we have with us Eric Ressler. He is the founder of Cosmic, which is a social impact creative agency, Eric and Cosmic are on a mission to help social impact leaders and organizations develop a digital first culture that leads to adopting the tools that move humanity forward. Today, in this episode, we’re specifically going to be talking about the attention economy, which I think applies to social impact organizations, and just businesses in general. So, Eric, thank you so much for joining us today.

Eric: Thanks so much for having me on.

Allison: My pleasure. I love to kick these off with a deliberate conversation, what would be your number one leadership tip for our listeners today?

Eric: We abide by a principle called Kaizen, which is a Japanese business philosophy, it sounds like you’re familiar with it. We have integrated that into our strategy for quite a while at this point. And I would say that, although there’s many different tips that I could outline, that’s the one that’s most core to our approach to doing business. And my approach is a leader and just outlined it briefly.

It means continuous improvement, but it especially means allowing anyone at any level of the team to have the ability to make strategic decisions, or are presents strategic ideas around how the overall process could be improved. And allowing space for everyone on the team to feel empowered to do so.

And that really, to me is kind of the core of the concept and what makes it either work or not.

Allison: Yeah, I love that one of the things. As a tip, one of the things that we talk about as a team, and even just in my family is that continuous improvement, but when you get the right things, right, yeah, not continuous improvement in the wrong areas, but choosing the things that really move the needle forward. So fantastic tip, thank you so much. So talking about things from the attention economy, why do so many social impact organizations struggle to find grow and maintain the necessary funding they need.

Eric: So if I want to frame this, from the side of the attention economy might be worth just kind of finding that for folks who maybe have heard the term but don’t really know exactly what it means. And so really, the way that I think about the attention economy is that the internet and technology has essentially allowed all of us or almost all of us, limitless and free access to information. And so information used to be scarce, it used to be privileged. And now it’s become democratized, which is largely really great. However, there’s some downsides of that too, which I think we’re all starting to become more aware of a, that information can be kind of used for as a force for, you know, nefarious goals versus only altruistic ones. And also, even maybe more.

More listeners can relate to this just an overwhelming feeling of just like information overload, and not being able to keep up and missing important things, and also just so much noise. And so I kind of think about the attention economy as a signal noise problem, when there’s so much noise out there, how can you as a leader, as a business, boost your signal and actually capture people’s attention and sustain it our attention, as a culture has become so fragmented, so fragile, that that really, it’s hard to break through and capture people’s attention, there’s some strategies that we can talk about that are effective there.

But that’s really, I think, the beginning of this problem. And as a social impact organization, or a social impact leader, this may become even more challenging, because oftentimes, you don’t have the same budget as some of these players in the space like Netflix and Apple and Nike and really big organizations that have limitless budgets to spend on incredible content creation, whether that’s actual like entertainment, like TV, movies, etc. Or even just like a really well polished digital media and communications. With that said, a lot of empowerment is also starting to flow into smaller organizations, because the cost of doing some of these things has become much more accessible, production costs, etc, are starting to go down a lot of DIY. opportunities exist and the production value requirements for people to actually engage are lower than ever, I think, thanks to, you know, Twitter and Instagram and TikTok people are used to consuming content that people are literally just taking their phone and filming themselves, right.

That’s something you couldn’t have even done 10 years ago. So how does that tie back into some of the issues that I think a lot of have social impact organizations find themselves up against all the time. I think that if digital first culture is something that you can start to bring into your organization at a strategic level, not something that’s thought of as an afterthought, or something that you can like, do if you have some extra budget lying around which most social impact organizations don’t typically just have extra budget lying around, then it can actually become an impact multiplier, and really help grow and sustain funding, help break through into the attention economy to build brand awareness to inspire action at scale. And ultimately, to help you move a little bit closer to your vision.

Allison: I think that I understand what digital first means. But culture. With that said, can you give me an example that every, every organization, regardless of its social, like, if you want to be digital, first, what are the things that we constantly need to be making? We should be thinking about?

Eric: So the way that I think about this is that when you’re doing marketing, or when you’re trying to reach your audience, if we want to kind of use that terminology, you’re basically building a machine, a digital machine, especially because so many of our conversations and so much of the information in the way that we communicate these days, happens through digital channels, whether that’s email or social channels, or digital platforms, or communities.

Whatever it is, and this machine that you’re building, if you think about it as a flywheel, the website really is the hub of that flywheel, it’s the thing that everything else attaches to, and is powered by.

And so the website is the home base. And as much as a lot of conversation, and a lot of interaction happens through some of these communication platforms and channels. Ultimately, we want to be driving people back to the website where they could find other ways to engage. So as a leader, I would be thinking about, what is that machine like for us? How does that serve us? How does it move our organization forward against its goals? And are we producing content that is engaging and interactive and allows us to engage our audience in a way that is strategically aligned with our business goals? Are we just pumping out content for the sake of pumping out content? Are we jumping on every new social network, because that’s where people are, and we must be there too.

So really getting a little bit more deliberate and intentional about it? I think when we started to think about the word culture, I think that starts to talk about behavior change and change management within the organization, everything from who’s responsible for overseeing this machine, the strategy, who’s responsible for maintaining it? And is it built into the core operations of your business, beyond just being siloed, off to someone’s second or third job, or siloed, off even to a marketing department with many people, but it’s not integrated into the overall strategic decision making at the organizational level. I think that’s where you start to see a cultural shift.

And ultimately, it’s everyone’s responsibility to participate in design and marketing and branding.

At some level or another, whether that’s literally overseeing it, or running it, or contributing or proposing ideas around what opportunities there are for content or for marketing.

Allison: That was a great description of it. And just, you know, just speaking from my organization, which I feel like we’re very digital culture first, it’s still a challenge every day of making sure that we’re including that in our decision making process, even though I’d say it’s the hub of our business, in so many ways. So cool. Thank you for describing that. You have something that’s called the starvation cycle. Can you explain what that is, and how an organization can break out of that?

Eric: This is a term that comes out of the nonprofit world. And I think the shortest way to kind of describe it is that when nonprofit organizations, I think this applies to business to or social enterprises, or B corps, as well, but when nonprofits specifically are underfunded, and there’s many reasons why that happens, and we can kind of get into some of those reasons, if you’d like. You start to develop as people within that organization and ultimately, as an organization as a whole, this mindset of lack of lacking, right of not having enough of not having the right budget, and it’s not. I don’t mean that in a derogatory way, it’s just a natural reaction to being under resourced, right is that you start to make bad decisions, you start to make decisions that are you know, focused on short term needs versus longer term goals and it’s a self perpetuating cycle because then you’re not able to invest in the things that you need to be a sustainable organization.

Like investing in the right people. At the right pay rates, being able to invest in infrastructure, whether that’s tools and machines, or digital infrastructure for digital first culture. And so you’re kind of running around putting out fires, like getting the day to day work done. But you’re kind of spinning in place as an organization, because you don’t have the fuel that you need to actually grow. And I don’t mean grow just in terms of number of people, or whatever kind of standard metrics you might look at, but actually grow culturally or grow in terms of your ability to make an impact.

And so the starvation cycle is the last place you want to be whether you’re a nonprofit, or you can think about this first startup, right, same kind of thing where you have a certain amount of runway and you start to make short decisions, short term decisions to just kind of stay alive for that certain amount of time.

You may need to start there, right? There’s, there’s reasons why an organization will find themselves there, especially in the early days. But ultimately, the goal is, you want to have more runway, you want to have more opportunity. And you want to be able to make investments in the business that might not pay off for a month or a year or even three years. But you know, are the right thing to do long term for the strategic trajectory of where you’re going.

Allison: What guidance or what, I know, flags metrics, would someone know when they are in starvation cycle, just so that we can self reflect and go oh, that may be the one the charity I’m sitting on?

Eric: Yeah, I mean, of course, this is going to vary depending on your specific organization, the classic thing to look at would be just, you know, cost of doing business versus income or revenue. Right. And just looking at your quote unquote, runway, like What’s your general monthly operating costs? What are you paying employees, contractors, you know, what are your expenses? What’s your runway or projected income? And are you basically starting to save up a cash buffer?

Because really, when whether or not you’re a nonprofit, or a corporation, cash is king in terms of running the business, right in terms of it being stainable, because cash allows you to an investment allows you to make choices, and it gives you the freedom and the power to say no to things that you know, you should say no to.

And if you get into a situation where you have to say yes, for revenue reasons, that’s usually a sign that you’re at some stage of a starvation cycle, it might be early stage might be a late stage.

I mean, obviously, the final stage of a starvation cycle is going bankrupt or going out of business or having to shut down operations, because you don’t have a sustainable system, the numbers just don’t add up, or you have to get into, you know, doing layoffs or staff reduction, or whatever it is. So you know, that’s the first place to look. But what I would say is that the near enemy of that is being financially okay, but being culturally stuck in that mindset.

And that’s pretty common to is, in some situations, let’s say because of your early days, the pandemic when the whole economy was really shaky and strange. And everyone was trying to figure out what was going on and kind of hunkering down. Maybe your organization was forced into that kind of mindset, because of just the implications of where the culture was. But then you got through it, you know, you bounced back things were kind of back to normal. But in a sense, like, you’re still stuck there mentally, either as an individual at the organization or culturally, at the organizational level, the way you make decisions, the way that you plan and strategize, are kind of stuck in that kind of survival mode, instead of more of a long term thinking mode.

Allison: What do you see as the future of charitable social impact type of organizations? What do they need to be thinking about today in order to ultimately survive?

Eric: So I think, from my perspective, really starting to think of themselves not necessarily as just a charity, or even just social impact organization, but that they need to also think and act more like a digital media company, because so much of communication and so much of making change these days happens through these digital channels. And the way that we communicate through those digital channels is by producing media in one form or another.

And at the end of the day, media is really just another term that means ideas in different formats, right, whether that’s visual or written or some kind of combination.

And I think that a lot of intention and hard work and strategic planning goes into more operational or program focused work in this realm, and that is obviously critically important. And I think culturally, nonprofits have been forced into this starvation cycle but also this kind of In this sense of not having enough resources, or making sure that every dollar spent is going directly to program work, and I think that that is actually a fallacy because just like a normal business, nonprofits, B Corp, social enterprises, businesses that exist and move humanity forward is their primary focus. They need overhead too, they need the ability to have investment, they need to be sustainable as well. If you looked at a company like Apple and said, You need to put 100% of your funding into product development, Apple would fail in a month, because so much of what they need to do is r&d, marketing, advertising, research, right? Like all this stuff is important as well, and it strengthens the overall operations of the organization.

Now, of course, the flip side of that wouldn’t be good either, right? If you spun up a nonprofit or B Corp, and said, you know, we’re going to put 90% of our money into marketing, and only 10% of our money is going to go into, you know, program development or like boots on the ground operations. Well, that’s probably not a good balance, either. So I think, really, at the end of the day, this ability for these organizations to spin up these media arms within their organization, thinking and acting like that is going to really empower them to build brand awareness to get more people in their community, inspired, activated, actually taking action, and that will grow funding that will help them get out of this starvation cycle. And ultimately, it allows them to make a big bigger impact on the mission that they’re working towards.

Allison: Awesome. You’ve kind of brought up my two different questions, but that that one answer did. Why should social impact organizations concern themselves with their brand? When it seems like there are more important things to focus on?

Eric: Yeah, it’s funny in the in the social impact space, this kind of the word brand, although it’s growing, and in terms of acceptance has traditionally been thought of as like, Wait, isn’t that something just for, you know, corporations are like b2c or b2b brands. And I think that we’re starting to see a little bit of a sea change there as more leaders and experts from the branding world and the digital world are moving into social impact in an effort to bring more purpose into their lives or bring with them expertise and learnings from the corporate sector. And you know, one thing I will say, having gone through the transition of doing more corporate work into social impact work is that you can’t just copy and paste the playbook from, you know, b2b or b2c work into social impact and have it work.

But that said, there are some best practices and fundamentals that do transfer, I think branding is one of them.

And this, this concept of investing in and caring about brand building is, I think, one of those cases. And I think the reason why it’s important and helpful for these organizations to think about the organization as a brand, is because when you start to think about it from that mindset, you start to see all the ways that branches out into how you should think and act in other choices. So everything from brand reputation to brand awareness to actually having a brand at all, and by brand maybe is worth defining, because you so you know, in so many different ways these days, a lot of times people think of the brand is like it’s the logo, or it’s the colors, or it’s the voice of the organization. And it’s really all of those things.

But at the end of the day, I think it’s probably most important that there’s a strong brand promise and set of values that an organization works towards. And then there are real world actions and habits that reinforce those values. And so if you have a set of brand values, and you know, a marketing campaign around some promise that you’re making to consumers, but then in the real world, you’re doing all these actions, you’re making choices, decisions, you’re doing things that don’t adhere to those or maybe even go completely in the opposite direction of those brand values, well, then, that’s where you start to get into people complaining about there’s just a marketing tactic or this is just, you know, rooted in BS, right. It’s not authentic.

And I think we’re becoming as consumers extremely adept at sniffing those things out when you look at cause marketing campaigns, when you look at these PR campaigns that some corporations are doing, really essentially trying to just kind of tap into conscious consumerism, or to tap into whatever the latest cultural war topic is, and having a position on that topic as a way to remain relevant as a brand. If it’s not rooted in consistent action and values that you’re living as an organization, it is just a marketing tactic at the end of the day, and so I think that if you start to think about brand in that way, at an organizational level, then it unlocks all these different paths that are ultimately going to help you grow and thrive as a business. For sure.

Allison: You also mentioned that one of the metrics that a lot of social impact organizations focused on is overhead percentage. So why is the overhead percentage the wrong metric for them to be assessing the organization’s effectiveness? Ultimately?

Eric: Yeah, we touched on this briefly, I’m glad we get to spend a little more time on it. And again, luckily seeing some good trajectory of change here, but it’s a little it’s been built into the culture at some level around how donors expect this to work, especially donors who are, you know, household donors, not like professional donors or institutional donors, right, if you’re giving to any given cause that you care about. And this is, you know, based in good intention, you want to make sure that the money that you’re spending is going directly to helping the people that organization is helping, right, I think it’s harder to make the logical leap that in certain cases, and I would maybe even argue, in most cases, the money that organization needs most, is just general operating funds, right, they need to be able to pay their team better, they need to be able to invest in infrastructure and equipment, and tools and things that they need to be able to do their work.

And unfortunately, because a lot of institutional funding is provided in restricted grants, where it can only go to a particular program, or there is actually a literal overhead percentage cap on that money. This is partly what leads organizations into the starvation cycle, they may have a million dollar grant for one program, and be bleeding out somewhere else or not be able to afford to pay staff a living wage, there’s a huge amount of burnout and turnover in the nonprofit and social impact space, because a lot of folks are doing really good work. They’re experts in their work, and they’re taking a pay cut, to do that work for a cause they care about when they could go work somewhere else and get double triple the salary in certain cases. And you know, because of the larger structural inequities around the economy, a lot of folks aren’t able to make that sacrifice for their family and their lifestyle and their author living. So back to the concept of overhead percentage, we need to kind of look at different metrics beyond just overhead percentage as the gold standard for assessing the effectiveness of an organization.

I think it’s not an irrelevant metric, again, if we start to see overhead accounting for a large majority of the, you know, budget for an organization, and alongside that we’re seeing that they’re not actually making that big of an impact. And you know, measuring impact is a whole other topic, it’s a lot harder than it seems to measure that thing. But then we can start to say, hey, you know, there may actually be an issue here, but I think oftentimes, you know, and this is, nonprofits do this to themselves to some degree, and I don’t blame them for it, there’s a reason why but they will pride themselves on having a low overhead percentage, right back to that starvation cycle, way of thinking and acting, because they know that they’re more likely to secure donations, if they kind of brag about that. But then they have to kind of stick with that and actually own that and, and work within it as they run their organization.

So it’s, again, this kind of short term thinking, if I present this as a, you know, a goal of the organization, I know, I’m going to get more donations now. But then once those donations come in, I still have the same problem where I don’t have enough overhead to actually sustain the organization effectively. So I think, I’m not arguing the overhead isn’t an important metric, I just think it’s not quite as simple. There could be an organization that puts 100% of their money into programming, but their programming is crap, right? And it doesn’t actually make an impact. But they would be, you know, a gold star for the overhead percentage.

So I think we need to look at it as an important metric alongside other important metrics as well, such as staff retention, cost of living, and, you know, how are they paying staff compared to other like, industries and organizations? What’s the standard, you know, rate of retention on employees, that kind of institutional knowledge and not having turnover makes an organization so much more effective?

I think all business leaders can resonate with the cost of losing employees and the cost of spinning new employees up, it’s very inefficient. Alongside that, like, what are the metrics of impact? How can you measure those in a way that is effective and present some of those metrics instead of overhead percentage is the main thing that we’re assessing these organizations on?

Allison: Yeah, I think, you know, when I correlate that to just organizations can be highly profitable, or they can be not profitable, profitable, all that but if you look at that as the only metric it doesn’t make for good business necessarily, so yeah. Exactly. Fantastic, Eric, I just want to make sure as we’re wrapping up what would be the best way for listeners to connect and or find you?

Eric: So the website is the best place to go design by cosmic.com. I’ll point out a couple of key areas there. One, we have an insights tab where we publish a ton of free articles and podcasts like this white papers, some videos well. And it’s really meant to kind of dive into like, if you believe in some of these concepts, you must start to put them into practice. That’s a great place to start. And even if you don’t necessarily strictly fall into the social impact category, there’s still a lot of good thinking there that could be helpful for you. We also published a manifesto that kind of outlines some of these kind of key proclamations of making this digital first transformation and understanding the attention economy. That’s just the top tab on the website as well. It’s called manifesto. And then folks who are also you know, free to reach out to me directly. My email is Eric er IC design by cosmic.com.

Allison: Fantastic. Eric, thank you so much for joining us today. It’s been a pleasure speaking with you.

Eric: Yeah. Thanks for having me on. Thank you.