On the cusp of major change for nonprofits

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Special thanks to Thomas A. McLaughlin for this article. McLaughlin is the founder of the nonprofit-oriented consulting firm McLaughlin & Associates. He is the author of Streetsmart Financial Basics for Nonprofit Managers, 4th Edition (Wiley).  His email address is tamclaughlin@comcast.net. This article first appeared in The Nonprofit Times.

Lately when we have been facilitating a group at a conference we have made a point of asking the following two seemingly unrelated questions:

How old are you?

At what age do you expect to retire?

Before we move on, answer the two questions above for yourself (in an actual session, responders are asked not to print their names).  Think about the answers your parents’ and your grandparents’ generations would have given to the questions.  If we were able to go back in time it would be a virtual certainty that your answers would look very different from those of your parents and grandparents had they grown up in the United States.

While we do not yet have enough responses to claim a statistically valid group, the outcomes to date are worth examining.  Here are the averages of the responses we’ve received:

How old are you? 56

At what age do you expect to retire? 70

If these results remain consistent, it confirms that we are nearing the cusp of a major change in nonprofit organizations (not to mention the rest of the economy).   playbuzzIt won’t be business as usual as we near 2030, which seems to be the projected ‘average’ retirement year of our current 56 year olds.

Because the numbers of Baby Boomers born each year began to drop significantly in the early 60’s, the Gen X and Millennial generations will not come close to the Baby Boomers’ higher birth rates.   In fact, we are already hearing about an unusual level of shortages of management candidates, not to mention a shortage of qualified Gen Xer CEOs.  Even entry-level candidates seem scarcer now than ever before.

Nonprofit employee trends aren’t the only ones due for some changes. Nonprofit entities themselves are another area where long-time patterns seem to be changing.  The number of active nonprofit public charities steadily grew from the 80s until 2010, when the upward trajectory abruptly decreased to about 2003 levels.

The pattern is probably not arbitrary.  In all likelihood, the recession that began in 2008 right after the Wall Street crash of 2007 had a tempering effect on the numbers of new nonprofits each year.  Organization creators that had already finished the application process and turned in their request for IRS approval may well have lengthened their intense startup phase, while other potential post-recession applicants for nonprofit status may have deliberately slowed their process in order to begin providing services once the economic conditions improved.  The recession may also have caused some to give up altogether.  Fortunately the upward trend appears to have resumed, although perhaps with less velocity.

Putting the Baby Boom into context reveals some hard-to-see advantages.  The biggest one is that the Boomers were the healthiest generation to reach retirement age.  Most of the Boomers reached full employment age at just about the time that hard physical labor began to decline as a major part of most jobs.  As a result, the Baby Boomers were the first
generation that didn’t have to work largely in the factories.   By the time that the first Boomers were ready to find permanent work, the factories had already begun migrating overseas.

As a result, the Boomers were the first generation in history to be able to work in non-physically stressful environments.   Improvements in health care, communications, education, and widespread motorized travel all contributed to far less physical decline than at any time in the previous two hundred years.

Overall Impactresearchimpactnetwork

Nothing brings as much pressure on a nonprofit organization as the lack of staff.   At the moment we infer from economic reports – and the firsthand observations of CEO’s and others – that the Boomers’ exits are already being felt on both ends of the generational spectrum.   Naturally the first shortage is likely to be felt in the executive ranks as those individuals either reach their preferred retirement age, or move on, but there are also staff shortages in direct care.

Fortunately there are a few sources of labor (and optimism), many of which relate to immigration.  For example, the Pew Charitable Trusts report that the foreign-born U.S. population grew 109% between 1990 and 2012 (the overall impact of immigration varies significantly in different parts of the United States).   Moreover, the Pew Charitable Trusts quote Census Bureau projections that net international immigration will be the major driver behind US population growth between 2027 and 2038.

What Can be Done

If the shortage of available employees follows the predicted trend lines above, it could affect virtually all nonprofits in the country.  A major part of the pressure will come from the fact that the birthrates of bothdhmh-maryland-gov the latter part of the Gen Xers’ generation and all of the Millennials’ generation are half that of the Boomers’, so today’s status quo will eventually feel more like the status squeezed.

If we are right about our analysis, this situation will evolve relatively slowly over a period of time, which should make it easier to accommodate but harder to recognize.  Start your strategy planning now so that it fits the circumstances before you feel the squeeze.  Here are some suggestions:

Re-Work Your Staffing Patterns slantimage

If you are feeling the pressure at the bottom of your workforce as well as at the top, it’s time to re-think your staffing patterns.  While we have no way of proving this, it would not be a surprise if your underlying assumptions about direct care workers are still embedded in the 1980 to 2000 era.   And while you’re doing this, be sure to apply the same scrutiny to your assumptions about your senior-most executives.  Do you really need a CIO and his full staff now that you have that 24-hour technology company on call?

Re-Think Your Service Models seedshakers

If you don’t already know the year your nonprofit was founded, pull out your most recent IRS Form 990 and look exactly three inches below the word ‘income’ as in ‘Return of Organization Exempt  From Income Tax’.  You’ll find a box labeled ‘L’ and the words Year of Formation followed by the four digit year of your corporation’s founding.  If your organization was founded in the two or so decades since 1970 there is a chance that the organization is still at least partially grounded in that era.  That could mean that some of your service models are similarly aged.    

Consider a Merger

One way to accommodate the realities of the 21st century is to grow your scale.  The combination of declining birth rates (labor) and steady needs for service (aging clients with longer lifespans) will put pressure on many nonprofits.   Lately we have detected less instinctive opposition to mergers than had been true in the past, suggesting that this opposition might lessen.  The advantage of larger scale operations run correctly is that the resulting efficiencies – one ‘back room’, one Human Resources department, etc. – can strengthen the entire organization.

Today’s U.S. economy has never had aging baby boomers like we see today, nor a 50% drop in birthrates.   Navigating the next two or three decades will force many nonprofits to change their models and to try different approaches.   Being wanted will be just part of the terrain.

See book summaries related to this topic:

Nonprofit Mergers and Alliances by Thomas McLaughlin

Fundraising and the Next Generation: Tools for Engaging the Next Generation of Philanthropists

Working Across Generations: Defining the Future of Nonprofit Leadership

Cause for Change: The Why and How of Nonprofit Millennial Engagement

Image credits: researchimpactnetwork, dhmh.maryland.gov, slantimage, seedshakers, and playbuzz

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Find answers to nonprofit measurement questions in new e-book by Katie Delahaye Paine

Measurement 101 for Nonprofits eBook Released by Paine Publishing

Practical handbook by the co-author of Measuring the Networked Nonprofit

Katie Paine, co-author with Beth Kanter of the award-winning book, Measuring the Networked NonprofitUsing Data to Change the World, has released an eBook  designed to serve as the practical handbook for any nonprofit wanting to become a data-informed organization.

Paine wrote the book in response to feedback she has received since Measuring the Networked Nonprofit was first published. “Since our book came out, I’ve been getting questions from nonprofits about how to make measurement a reality, and how to implement good metrics.  I’ve been accumulating those questions and my answers for the past few years and the result is this eBook,” said Paine. “Things are moving so fast in the measurement world, we chose to put out an electronic handbook so we can update it as new tools and techniques are released.”

Buyers of the eBook may also join Paine’s subscriber-exclusive monthly Measurement Hour in which she answers any measurement questions her readers have.

Measurement 101 for Nonprofits provides practical, detailed guidance on how nonprofits can become data-informed organizations. It covers everything from a simple checklist to begin the measurement process to detailed guidance on how to analyze results. Other topics include:

·        Seven tips to help you understand your data

·        How to budget for measurement (including 6 ways to measure if you have no budget)

·        Understanding and measuring the different levels of engagement

·        Criteria for selecting the right vendors, tools, and metrics

Measurement 101 for Nonprofits is available for $101 and can be purchased by visiting: http://painepublishing.com/measurement-mall/

Paine Publishing, LLC is a New Hampshire-based consulting firm founded by Katie Delahaye Paine in 2013. Its mission is to train and advise individuals and organizations on how to measure their public relations, social media, marketing, and communications efforts. Her company also publishes The Measurement Advisor, the world’s only newsletter dedicated to expert advice, how-to articles, and industry news for communications professionals.

See also:

Measuring the Networked Nonprofit

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CausePlanet’s Choice Awards–Our Top Nonprofit Books for 2015

This is my favorite time of year for many reasons. One of them is our chance to look back at a great year of book choices for our readers.

It’s also the hardest time of the year because we choose books that stand out among the rest. Now, this may seem like an easy task but it isn’t. Choosing from titles that are already among our favorites is like choosing a favorite child. Thankfully, the challenging task is tempered by the fact that we know you love these awards. Thank you for the wonderful feedback when we launched this designation last year.

All our Choice Award titles are chosen based on the following criteria: original insights, inspirational content, well-organized and easy-to-follow format, voice, applicability, and strong evidence of case stories and/or exhibits.

Our Choice Awards for 2015 go to the following authors:

The Sustainability Mindset by Steve Zimmerman and Jeanne Bell
This book not only effectively argues the importance of having financial and programming discussions within the same conversation, but the authors also provide a proven framework designed to guide the process toward sound decision-making. Thanks to matrix mapping, your leaders can leave the guesswork out of strategic planning.

The Last Virtual Volunteering Guidebook by Jayne Cravens and Susan Ellis
Cravens and Ellis do a wonderful job of addressing how volunteering has changed so dramatically over the years that calling out the notion of virtual volunteering is no longer necessary because this form of giving has meshed with traditional volunteering. This thorough guidebook is the resource for anyone managing volunteers.

Global Fundraising: How the World Is Changing the Rules of Philanthropy edited by Penelope Cagney and Bernard Ross
Cagney and Ross create a rare and fascinating look at what types of fundraising are working all over the world. In a telescoping society that’s facilitated by technology, nonprofits’ reach is farther than ever before. This book helps you gather context for your fundraising efforts and consider what’s influencing your donors outside of traditional boundaries and borders.
On behalf of the CausePlanet team, we would like to thank these authors and the company of authors they share who’ve contributed so much to the sector in which we work. We hope our Page to Practice™ book summaries have inspired you to engage in deeper reading and make better book choices. Don’t forget—December is Read a New Book Month. Choose one of these titles or any of the great recommendations in our book summary library and work smarter in 2016.

See also:

The Sustainability Mindset: Using the Matrix Map to Make Strategic Decisions

The Last Virtual Volunteering Guidebook: Fully Integrating Online Service into Volunteer Involvement

Global Fundraising: How the World Is Changing the Rules of Philanthropy

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Nonprofit decisions: Complexity made clear with matrix mapping

According to a recent Nonprofit Finance Fund’s State of the Sector survey, “Forty-two percent of organizations reported that they do not currently have the right mix of financial resources to thrive over the next three years.”

This level of economic uncertainty requires the kind of adaptive leadership and system-wide reckoning that feels like a daunting task until now. Authors Steve Zimmerman and Jeanne Bell have introduced a proven method for change management called matrix mapping. The matrix map cultivates sound decision-making that embraces the entire organization’s capacity rather than one program or person.

Zimmerman and Bell have accumulated a deep understanding of how the matrix map tool is working for nonprofits thanks to five years in the field with their first book, Nonprofit Sustainability. Today, The Sustainability Mindset builds on the candid self-reflection and bold decision making created by the first title.

Introduction to the matrix map

Simply put, the matrix map allows organizations to view both their impact and profitability at the same time. Often, during a strategic planning meeting, organizations will look at the success of their programs in one conversation and then their budget in another. The map gives them a combined look so they can make better decisions. For example, if one program shows high impact but low income, the organization can turn to other sources of income that can cover the expenses. To see a sample of the map, click here.

Zimmerman’s favorite example of the matrix map in action

We asked Steve Zimmerman to tell us about one of his favorite case stories where the matrix mapping process brought to light the critical observation of impact and profitability simultaneously.

CausePlanet: Would you tell us about your favorite case study that implements the matrix map?

Zimmerman: One of my favorite uses of the matrix map is to help organizations make decisions that have been put off for too long. An example of this comes from a 100-year-old social service agency that had offered mental health counseling for their constituents among several other programs including financial literacy, job training and a day care program.

Over the years, the counseling program had fallen on hard times, but because it was the founding program of the agency, they kept re-tooling it and bringing in new supervisors to improve the program. When the matrix map was completed, it showed counseling, financial literacy and job training operating at financial deficits. However, counseling also was considered a low-impact program.

Deeper analysis showed that while the program was important for the organization’s impact, there was a lot of competition for quality counselors and the organization couldn’t match competitors’ salaries. This led to poor outcomes. What is more, the job training program showed very high impact but was relatively small because the organization didn’t have enough resources to grow the program.

The organization used the matrix map to engage in a robust discussion about the future of counseling and decided to close the program. Because it was still an important component of the organization’s overall impact, it partnered with another agency in the city to deliver those services to constituents. It then invested the money that had been utilized to subsidize counseling to expand the job training program. This included partnering with local corporations for job placement on a fee-for-service basis.

The opportunity cost of decision-making

This example demonstrates using the matrix map to highlight the opportunity cost of decisions. The leadership often thinks in terms of “Should we offer Program A or not?” when the correct question is, “Should we invest in Program A or Program B?” By investing in the high impact program, the organization was able to increase its impact and financial viability. It would not have had the resources or capacity to do so unless it focused its program offerings. By presenting the map in this way, even those leaders who strongly supported the counseling program came around to see the organization and its constituents were better off as a result of this decision.

If you’ve historically looked at your budget and your programs in isolation of one another, Zimmerman and Bell would argue that this kind of decision-making will only lead to poor sustainability for your nonprofit. Get a copy of The Sustainability Mindset and turn complexity into clarity.

See also:

Nonprofit Sustainability: Making Strategic Decisions for Financial Viability

The Nonprofit Leadership Transition and Development Guide

Building Nonprofit Capacity: A Guide to Managing Change Through Organizational Lifecycles

Image credits: julianreese.com, vbpm.org, wallbasehq.com

 

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Nonprofit planning: Mindset over matter

Last week I enjoyed a keynote address delivered by The Sustainability Mindset coauthor Steve Zimmerman in Baton Rouge, Louisiana. With smarts and wit, Steve enlightened a room of nonprofit executives about the advantages of looking at financial and programmatic sustainability in the same conversation. According to Steve, most nonprofits look at these critical elements in isolation of one another, which deprives them of accurate sustainability evaluation and productive planning.

What is the mindset?

You might be asking what mindset means. The Sustainability Mindset is about financial sustainability: meeting the needs of the present without compromising the future. It’s also about programmatic sustainability: the ability to develop, grow and retire programs in sync with your constituencies. Because this is easier described than done, Steve Zimmerman and his coauthor Jeanne Bell provide experienced-based guidance and a specific framework to follow using their supremely helpful visuals and templates.

Introduction to the matrix map

The primary visual that facilitates the authors’ process is the matrix map. The matrix map allows organizations to view both their impact and profitability at the same time. Often, during a strategic planning meeting, organizations will look at the success of their programs in one conversation and then their budget in another. The map gives them a combined look so they can make better decisions. For example, if one program shows high impact but low income, the organization can turn to other sources of income that can cover the expenses.

How it works

This map can provoke strategic discussions on how to strengthen the model. For example, the organization can look at the upper left quadrant (see below) to decide if the Youth Services and Adult Education & Family Literacy are worth the expense for a high mission impact. If they are covered by other
bubbles and if they provide a necessary service that no one else provides in the community, they may be worth the expense.

Organizations can create these maps during strategic planning, annual budgeting and operational planning meetings, loss of funding, new opportunities, or changes in external environments.

Depending on the purpose, the map can either be a quick look or a more detailed vision of the organization’s status. Again, depending on the purpose, various people should be involved. For example, funders and constituents could be surveyed for a closer look at mission impact in a more detailed version. Otherwise, the senior leadership, staff and board can be involved in the input and can learn more about the organization through this process.

Ultimately, the map provides what is for many leaders the first time they’ve seen their nonprofit programs mapped according to their financial and programmatic viability in one single action.

What are the stages?

In the book, the authors cover these stages of the matrix map process: 1) introductory meeting, 2) articulating intended impact, 3) defining programs, 4) assessing mission impact, 5) determining profitability, 6) plotting your map, 7) analyzing your map, and making strategic decisions.

When looking at these stages, my editor and I were compelled to ask Steve and Jeanne about where most leaders experience challenges when applying the matrix map process and what is the most critical step within the process:

CausePlanet: At what point do nonprofits experience challenges when trying to apply the matrix map to their organizations and how do they overcome them?

Zimmerman: Senior management teams are often not used to having open, candid discussions about the contribution a program makes to the organization’s intended impact relative to other programs or about how the program is differentiated from other offerings in the community. As a result, assessing mission impact can be a challenge in the matrix map process. These conversations can be frightening, as participants often fear hurting a co-worker’s feelings or being vulnerable in front of a group. However, the leadership’s efforts in creating a safe environment where candid feedback and discussion is encouraged, appreciated and respected will ensure the success of the matrix map process. Everyone in the room is committed to the organization’s mission and with the appropriate lens of continuous improvement, the organization will have an opportunity to better understand the perception and reality of its programs’ impacts.

CausePlanet: What is the most critical step in the Sustainability Mindset process?

Zimmerman: Moving toward greater sustainability requires making hard decisions. It isn’t that the leadership doesn’t necessarily want to make decisions, but they’re fraught with implications. Constituents who depend on services may find them suddenly not available or the staff may find shifts in their jobs. These are difficult decisions. The leadership may feel it doesn’t have enough information or even worse, may have conflicting information about which decision to make. Like any strategic decision, the leadership is ultimately guessing at what the future may hold. The matrix map is a useful tool for engaging key stakeholders in a discussion about what the future should be. However, it is just a tool. It ultimately is up to the users to make a decision, learn from implementation, adjust and learn again. We say often that sustainability is the integration of financial viability and mission impact, but there is a third equally important component–leadership. The most critical step is the leadership ultimately making a decision to begin implementation and move toward greater sustainability.

If you and your fellow leaders on the board are in a place where you could benefit from taking a rigorous and candid look at the viability of your current programs, I encourage you to get a copy of the The Sustainability Mindset. You may never allow yourself to look at sustainability the same way again.

See also:

Nonprofit Sustainability: Making Strategic Decisions for Financial Viability

The Six Secrets of Change: What the Best Leaders Do to Help Their Organizations Survive and Thrive

The Necessary Revolution: Working Together to Create a Sustainable World

Image credits: pixabay.com, wiley.com, Steve Zimmerman and Jeanne Bell

 

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The worst of economic times brought out the best in nonprofits

“A crisis is a terrible thing to waste,” American economist and NYU professor Paul Romer was credited for saying in 2004. His sentiment, unfortunately, is appropriate again today as nonprofits throughout the sector learn from tough decisions that help them recover from the Great Recession and what we are now seeing will likely be dubbed, “The Great Correction.”

Many of you are familiar with the notion that negative news often gets repeated more often than positive news. This post is an effort to tip the scales toward encouraging information I recently read in The Chronicle of Philanthropy: “How Recession-Racked Charities Emerged Stronger Than Before.”

Paul Romer would be pleased to learn the nonprofit sector did not waste the Great Recession. They’re making good use of it and demonstrating impressive resolve. “Hopeful lessons” are shared in the Chronicle article, and one in particular involves Voices for Children. Voices is a nonprofit dedicated to providing every foster child in San Diego County with a volunteer court advocate.

Voices for Children

After laying off a quarter of the staff, the board resigned itself to the fact that it would have to scrap its ambitious fundraising goal set years earlier and rebuild by stepping up with its own members and setting up a skeletal development shop. The executive director courted and hired a seasoned development director from the arts arena and paid the fundraiser more than anyone else. Today the budget is approaching $6 million, double the amount of its pre-recession budget. Payroll has reached 73 employees. Voices is now in a better financial position and perhaps better equipped to handle the next economic downturn.

Administrative and space collaborations

Stronger nonprofits have also resulted from collaboratives to share space and administrative resources. For example, in Denver, international development nonprofits renovated a 19th-century horse and trolley barn, which they call the Posner Center. The Center is a 25,000-square-foot space that now houses 60 nonprofits. According to the Chronicle, “The Center recently awarded $60,000 in grants to fund partnerships among its tenants, including one between Engineers Without Borders and a group that builds footbridges in Guatemala.”

Built to last

In a related article, “Bold Choices in Dark Times,” St. Louis Opera general director Timothy O’Leary was faced with collecting promised pledges on the day the stock market crashed. The donors told him they needed to “trim” their major gift commitments. O’Leary reported, “The difference [between pledges and fulfillments] was not unsubstantial.”

On the heels of these discouraging donor visits, O’Leary, the new board chair and artistic director, set to work creating a long-term strategic plan that would weather a long economic crisis. While other arts organizations were reducing schedules and turning to crowd-pleasing classics, the St. Louis opera committed to commissioning new and creative work. O’Leary was convinced new and exciting material would compel loyal patrons to return and support the opera.

“The downturn hit the opera’s corporate sponsorships the hardest, and revenue slipped further when the company reduced its draw from its $16.5-million endowment. To compensate, it froze salaries, suspended staff 401(k) contributions, and renegotiated deals with its unions. Yet as the opera rallied donors around its commitment to risk-taking productions, individual giving climbed — gradually at first, and then 21 percent in 2011.”

In 2013, a commitment to innovation and collaboration paid off with an unprecedented debut of “Champion,” which generated more ticket sales than any other production in the history of the St. Louis opera. “Champion” was named a finalist for international opera of the year. Today, the endowment is now topping $28 million.

Always in crisis

With the Great Recession over and a market correction that hopefully will be fleeting, it might be tempting to try risky ventures or allow yourself some wiggle room with financials. Perhaps the lesson here is that nonprofits should act as if they’re always preparing for a crisis. Look for ways to work smarter and leaner and focus on what’s working and core competencies. If you’re interested in engaging in financial forecasting or looking at different scenarios, consider contacting us at Execute Now! where we can help you assemble a financial plan you can feel confident about following.

Image credits: nonprofitcenters.org, urpe.wordpress.com, nytimes.com

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Nonprofit board members: What to do when they just don’t get it

Every now and then there’s a board of directors that — how can this be written diplomatically — doesn’t seem to get it. This doesn’t happen often, but when it does it’s never a pretty sight. Usually the not-getting-it board seems to be paying attention, and its members really do want the best for their organization, but somehow or another “the best” never seems to happen. In fact, to most outsiders, the organization might seem immobilized and floundering. There are many reasons why nonprofits seem headed for doom, dysfunction, or both, and most of the time it isn’t directly attributable to board members. But when it is a board problem, here are some frequent scenarios and potential fixes.

The past and the short term future

This common problem was covered in “What Time Are You?” in the May 2013 issue of The NonProfit Times. Ideally, a board of directors is focused mostly on the future, less so on the details of the present. This is because boards of directors should be leaders, not outsiders immersed in management detail. Perhaps not surprisingly, board members’ preferred orientation to time is often connected with their personalities and what they do for work. Board members who work in technical roles of any kind often prefer to operate in the here and now. This means they could be uncomfortable with the kind of thinking that leaders must do to position a nonprofit for the next three or four years.

The solution to this kind of board dysfunction is straightforward yet admittedly difficult. The simplest approach is to construct each board agenda so that the bulk of time will be spent on future opportunities and challenges instead of focusing on subjects from the past or votes requiring immediate attention. Constructing the agenda so that the majority of items relate to future decisions is actually simpler than it seems. It does require that the CEO and board chair work closely together, but that is largely a matter of sharing the same future orientation to time. Part of leadership is shared discipline among the leadership team, and this is a relatively easy place to start.

Visioning as trustees

The term “trustee” is sometimes used to refer to a conventional nonprofit board member, but that is usually either a loose statement of philosophy or an inaccuracy. In legal terms, a trustee holds property on behalf of an outside beneficiary. That is in no way similar to nonprofit board member responsibilities, which are more related to leadership than conversation of assets, but the mythology persists.

Implicit in a trustee self-image is the idea that the trustee must protect the asset as their primary duty. But nonprofit board members are intended to lead the organization, along with the CEO, and preserving assets for beneficiaries is never in the equation. Board members who see their role as “protecting” the organization will always be conservative in the literal definition of the term. While this role might work well for financial assets not owned by the trustee, it can lead to an exaggerated sense of outside threats and a paralyzed nonprofit board if it becomes the dominant image of the board’s role.

A good board member selection process and continual self-education will fix this problem over time. One board, for example, recruited new members by inferring from their strategy the type of characteristics that would be most beneficial. This requires discipline because the tendency is always to search for “star” board members and then try to adapt them to the organization. A self-education process can reinforce those board member skills.

Different “business models”

Any large industry develops its own jargon and shorthand references, and the nonprofit sector is no exception. But nonprofits funded in large part by federal and state governments are inevitably immersed in payment systems, quality assurance mechanisms, and political developments so detailed that even a nonprofit CEO may not be fully abreast of all the nuances.

Board members from outside the sector often speak of their meeting agendas as a thicket of obscure regulations, political connections and mystifying lingo. While these are all necessary elements to manage, board members quickly give up hope of being conversant in them and as a result their ability to make contributions is reduced. This is a situation where Not Getting It says more about the industry than it does the board members. The solution is to reduce the language and complexities to an understandable level. Votes and discussions should take place to allow both board members and senior staff to have solid discussions, with insider references kept to a minimum. And the policies and decisions arising from the discussions need to be expressed in lowest-common- denominator language.

Denial of service

Fundraising imperatives help shape a preference for wealthy board members in a nonprofit with an established fundraising capacity. Equity investors, bankers, and high net-worth individuals can be prized board members because of their personal ability to make contributions and for their networks of similar professionals. The conflict these kinds of board members face is that they are so thoroughly steeped in equity investing and money management that they cannot operate in the non-equity world of nonprofits. Often their personal approach to governance becomes a largely passive and reflexive acceptance of majority decision-making.

Here’s what happened with the board of directors of a large national organization.

Arguably the most powerful person in the room was a former corporate titan with an international reputation who sat silently during a lengthy presentation and discussion of nonprofit mergers. His knowledge of the subject would have been welcomed by all, but for whatever reason he remained silent. Whether motivated by a sincere desire not to complicate the discussion, or for personal reasons, this kind of “denial of service” will make the board less effective by not offering personal expertise. Unlike the other scenarios this one is likely to be tied to individual board members, and often they are the board members with much to offer. Board presidents can be useful in reversing the situation simply by making a personal appeal, and the CEO has the ability to coax more input should they wish to do so. Nonprofit board governance is an imprecise process at best.

Although in theory the role of the board of directors is clear enough, the actual practices of boards vary greatly. A nonprofit board’s apparent passivity or disinterest may be a reflection of the difficulty of nonprofit governance, but on occasion it is the result of a breakdown in the governance process itself. Left unchecked this can lead to confusion and decline. But with the right kind of self-reflection and support, most boards will get it — and get it done.

See also:

A Fundraising Guide for Nonprofit Board Members

Super Boards: How Inspired Governance Transforms Your Organization

The Invisible Yellow Line: Clarifying Nonprofit Board and Staff Roles

Image credit: friendshipcircle.org, publichealthontario.ca, aauw-wa.aauw.net

Special thanks to author Thomas McLaughlin for allowing us to cross-post this article, which originally appeared in The Nonprofit Times.

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What makes nonprofit failures useful or useless? FailBetter authors answer.

“Not all failures are useful. The key is to enable the productive ones. You’ll need to know what makes some failures worthwhile and others useless.”

Authors Anjali Sastry and Kara Penn have recently published a new book to help you make the most of mistakes. They claim that, “Failure is not necessarily bad. Accepting that it’s inevitable, and maybe even desirable, sets the stage for a more nuanced discussion of learning, failure, and success.”

Today we’re building on our recent introductory post and featuring an excerpt of our interview with the coauthors to give you a better sense of how mistakes can be a path to great efficiencies rather than a source of regret or frustration.

More about the book’s premise

But first, let’s review a little bit more about the book’s premise. Sastry and Penn explain that “smart leaders, entrepreneurs and change agents design their innovation projects with a key idea in mind: ensure that every failure is maximally useful.” In Fail Better, the authors show you how to create the conditions, culture and habits to determine what the most effective solutions are by:

1) launching every project with the necessary groundwork,

2) building and refining ideas, products and services through iterative action, and

3) identifying the learning moments and embedding the knowledge.

Launch, iterate, embed

In other words, the book discusses how to address failures and make them beneficial before (launch), during (iteration) and after (embedding) the project’s work. You will learn an invaluable skill you may never have developed before: how to distinguish “preventable, wasteful and uninstructive failures” from helpful ones you can incorporate into your process.

Interview with the authors

CausePlanet: Where do most people “get it wrong” when they’ve failed? Which part of your model tackles it?

Penn and Sastry: There are so many areas to choose from! Fail Better addresses common failure modes at each step—whether at the outset of a project when the seeds of a failure may be sown in failing to identify faulty assumptions that underpin the rest of the project’s actions or a needed skill set or resource is never secured (the Launch Phase of Fail Better aims at addressing this), or at the end of a project when many a manager and team member rushes into the next project without extracting, sharing and translating into changed behavior the lessons learned (the Embed Phase tackles how to do this).

People often “get it wrong” when they miss opportunities to prevent more costly failures in exchange for smaller, more informative, more affordable mistakes. And they get it wrong when they march to the end of a project on the back of a single monolithic approach, without testing and experimenting along the way. Not much can be done to improve an outcome at the end of a project, so if a faulty path is pursued with determination, larger, more public and more costly failures are bound to be the result. Fail Better’s Iterate Phase intervenes here.

On a more individual level, once failure has occurred, two critical pitfalls often await:

First, failure makes each one of us feel so uncomfortable, that often examining the causes of that failure are avoided and written off to circumstantial issues. This is a coping mechanism, but it’s the exact sort of thing that contributes to repeating similar mistakes. Fail Better works hard to help implementers avoid this outcome by creating the space and structure for reflection and behavior change in a safe way.

Second, there is a temptation as a manager to hide failure stories instead of owning them and crafting a narrative that shows why a course of action was selected, what was learned and what will be done differently going forward. A smart failure that drives learning and positive change and a response that demonstrates resilience and action is highly valued. And it is much better to craft our own failure stories than to have others, who may not know the nuances or intentions, do it for us by default.

CausePlanet: What makes a failure useless? What makes it useful?

Penn and Sastry: Our starting point is the idea that the right kind of failure—small-scale, reversible, informative, linked to broader goals, and designed to illuminate key issues—paves the way to success. Such failures are in service of a larger vision or goal, are stepping stones to refined and improved ideas, and create a platform of understanding and learning. In short, a better failure moves you forward. The wrong kind of failure entails waste, leads to discouragement, reflects rigid thinking, “bets the farm,” and contributes to reputational damage.

See also:

Little Bets: How Breakthrough Ideas Emerge from Small Discoveries

Made to Stick: Why Some Ideas Survive and Others Die

Repeatability: Build Enduring Businesses for a World of Constant Change

Image credits: firstamerica.com, moneycloud.com, mixcloud.com

 

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Build your nonprofit leadership capacity with development programs and learning communities

In recent years, forward-thinking capacity builders have learned that they could build the leadership capacity of the nonprofit sector not just through direct individual consulting, but also through the design and delivery of leadership development programs and learning communities. These professional development modalities provide an intensive learning opportunity, usually for executive directors, structured on a peer-learning model. Through these programs, small groups of executives commit to working and learning together over an extended period, often a year, or, in the case of a learning community, longer. The groups are supported by consultants/trainers who are experienced in organizational capacity-building, leadership development and the nurturing of learning communities.

The goals of these programs include:

Enhancing participants’ management and leadership skills;

Creating networks of nonprofit professionals that can sustain and develop their members; and

Developing each participant’s awareness of the impact of his or her personality upon his or her leadership style.

Leadership development programs

Leadership development programs, which are more formal than learning communities, often work from a core curriculum, which is customized for each cohort and timeframe, and generally covers the following areas:

The role of the executive director—leading the organization

The relationship of the executive to the board—getting the most out of the board

Understanding and managing strategic issues—growth, competition, new ventures

Managing people—volunteers, staff and interns

Communicating your message—internal and external communication strategies

Developing a nonprofit that people want to support—fundraising strategies

Leveraging resources—board members, consultants, peers

Setting and measuring goals—you don’t have to be a research wonk to do it

Developing a lifelong, sustainable approach to leadership development

Leadership development programs usually combine a small amount of reading with discussions and role playing, as well as group and individual projects. The group leader ensures that key concepts are communicated in each meeting, using discussion among peers as an important learning tool. The leader seeds conversations and presents cases for discussion by the group. Group members are encouraged to contact one another between meetings—enhancing the peer-to-peer approach to learning and support.

These programs can also contain informal communication vehicles developed to facilitate between meeting contact. For example, a program might utilize a Web site that is accessible to group members only, where members can post their respective strategic plans or other documents, ask one another questions, etc. These sites can be quite simple and bare bones, or they can become much more elaborate “knowledge management centers.”

Currently, most leadership development programs are designed for executive directors. However, both funders and nonprofits are increasingly asking for similar programs aimed at other organizational leaders and mid-level managers (e.g., the chief financial officer, chief operating officer, program director, development director, etc.), who may be future executive directors. In this way, the current management structure can be deepened as the future leadership pipeline is strengthened.

Of course, the curriculum for these leaders is somewhat different. In place of the leadership development program’s heavy emphasis on the challenges executive directors face working with boards, there might be somewhat less attention to this still critical area, with the addition of a section on “managing up,” or how to manage from the middle of an organization.

Learning communities

Learning communities have similarities to more formalized leadership development programs, but differ in a few meaningful ways. For example, learning communities usually do not have a pre-determined curriculum, but instead are composed of a group of peers, usually executive directors (although this too is changing, with aspiring leader learning communities also on the rise), meeting regularly to discuss issues of mutual concern. The topics for consideration mirror those in the curriculum of a more formal leadership development program; however, they emerge naturally from discussion.

Learning communities are often used as a sustainable follow-up modality to a leadership development program, since they can be self-managed and continue for as long as the members have interest. In creating a variety of leadership development programs and models, and in facilitating various learning communities, I have learned that three elements are essential—not just to the overall success of each program, but also to the individual success of each meeting or session. These three elements must be present for participants to get the most learning out of their participation and to come away with a perception that their time was well spent.

The elements are:

Hard skill development: Participants must actually learn something new and useful at each session, such as how to run a better board meeting, read financial statements, manage a troublesome staff person or develop a personal performance plan.
Networking with peers: Participants need time and opportunity to connect with their peers in the group, through activities, discussion, exercises or other means.
Self-reflection: Participants must be given an opportunity to see themselves as others see them, in order to both build on their strengths and minimize any weaknesses in their self-presentation, communication style or other behaviors.

Well organized and ably facilitated, leadership development programs and learning communities are useful tools for capacity building. Not only do they help participants to develop skills and networks that will improve their job performance, but they are also generally reported to reduce stress and burn out, which may lead to longer tenure in their current jobs. For a board wondering how to keep its high-flying executive director or development director motivated and engaged, these tools might be something to consider.

See also:

Image credits: commlabindia.com, rutgers.edu

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CausePlanet’s Choice Awards–Top Books for nonprofits from 2014

Here they are — our favorites from 2014. We read so many compelling, insightful books last year on a variety of essential topics, but the final choices came down to originality and applicability.

Each of our Choice Book Awards had either a fresh perspective on an imperative competency or broadened our thinking by tackling new territory. Additionally, all the authors brought their content to life through helpful case stories, exhibits, tools and evidence. These favorites are sure to help you work smarter; we hope you delve into them soon.

CausePlanet’s Top Five Choice Awards from 2014:

1) Fundraising the Smart Way: Predictable, Consistent Income Growth for Your Charity + Website by Ellen Bristol


Bristol gives you an innovative, concrete way to track and monitor your donors’ progress toward making donations. No more guessing about a prospect’s ability and desire to give means you can confidently meet and surpass your fundraising goals. Learn more about the author, book and Page to Practice summary.

2) The Money-Raising Nonprofit Brand: Motivating Donors to Give, Give Happily, and Keep on Giving by Jeff Brooks


Brooks shares an unvarnished, refreshing look at how to captivate more donors with accessible ideas that specifically work for nonprofits. He delivers new ways to connect your brand with your donors in a manner they won’t forget. Learn more about the author, book and Page to Practice summary.

3) The Nonprofit Leadership Transition and Development Guide by Tom Adams


Adams establishes an irrefutable link between effective leadership and organizational impact. What’s more, he comprehensively illustrates numerous advantages and opportunities bestowed upon nonprofits that engage in proactive training, succession planning and transition management. Learn more about the author, book and Page to Practice summary.

4) Fundraising with Businesses: 40 New and Improved Strategies for Nonprofits by Joe Waters


The organization of this book is what really caught our attention. Waters gives you specific cause (pronounced “khaz” by Waters) marketing strategies, how to implement them, ideas you’re encouraged to steal and success stories at every turn. His approachable format is chock-full of applicability. Learn more about the author, book and Page to Practice summary.

5) The Abundant Not-for-Profit: How Talent (Not Money) Will Transform Your Organization by Colleen Kelly and Lynda Gerty


Kelly and Gerty reveal a transformational method for utilizing your community’s expertise. At the center of this transformation is a new breed of volunteer—a “knowledge philanthropist.” The abundance model will revolutionize your use of talent, cultivate a renewable resource and be a welcome relief on the budget. Learn more about the author, book and Page to Practice summary.

Thank you to all our authors who give us reading pleasure and professional inspiration every day. It’s a pleasure to promote your smart advice at CausePlanet.

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