This post's title is a question I was asked a dozen times in December in front of live audiences or by email. It's not a short or easy answer.
The bad news first.
1. The recession is nowhere near over (although technically it apparently ended in July of 2008--I wish I lived in THAT world), and with US employment still just under 9%, those nonprofits who are either heavily dependent on donations OR state funding are a long way from daylight.
2. Nonprofits continue to close their doors. There's a bad and good part of this: recessions are brutal on weak organizations, both for profit and nonprofit. So, in theory, the weaker nonprofits (read: the ones with less cash or a too single funder dependent business model) are the ones that are closing. No matter, the people who depend on these nonprofits are being hurt or displaced, often as a new (unfunded) burden on the stronger nonprofits that remain. The small good news here is that less nonprofits mean less competition for limited dollars.
3. There's no real end in sight to state and local budget cuts as long as we, as a nation, remain as committed to avoiding taxes as Superman is to avoiding kryptonite.
Now to the good news.
1. Thousands of the unemployed have shown up at nonprofits' doors to volunteer.
2. Donations overall have remained fairly steady, and in the face of the unemployment numbers this is a testament to Americans' generosity.
3. Businesses have stepped up their commitment to social outcomes, even if this doesn't mean simply giving money to existing nonprofits. In many cases, businesses are being formed to both make a profit and fund specific social outcomes. Think TwoDegrees bars or Tom's as great examples.
So what should your nonprofit do to minimize the bad and take advantage of the good?
First, re-examine your business model. Is it time for a significant change?
Second, look at your people resources. Do you need to change your skillset on your staff, or your board, or ramp up more use of volunteers?
Third, examine your marketing (and I don't just mean your fundraising--ALL of your marketing). Are you spending your time and money wisely, and targeting the right demographics?
Finally, can you, even in tough times, put aside a bit more cash this year? In a crisis, cash gives you time to think and not kneejerk. The fact that you're reading this means your nonprofit is one of the stronger ones, one that has survived to this point.
Here's hoping that 2012 is a great one for your mission and the people who depend on you!
Showing posts with label leadership. Show all posts
Showing posts with label leadership. Show all posts
Tuesday, January 03, 2012
Tuesday, December 13, 2011
Does your gift list include teaching how to give?
I've posted about this before, but it is the holiday season, and we are in mind to be generous. If you're thinking about a different kind of gift this year, here are two thoughts.
First, go to TisBest and consider giving a charity gift card. You can select from dozens of images on the card, or even upload your own. The recipient of the card goes to TisBest and selects which charity gets the money you spent on the card. Very cool, and I like this for gifts of all kind.
Second, consider giving a book that will help grow the next generation of donors. It's called Raising Charitable Children, and it's by Carol Weisman of BoardBuilders. Awesome book, awesome message.
Happy shopping!
First, go to TisBest and consider giving a charity gift card. You can select from dozens of images on the card, or even upload your own. The recipient of the card goes to TisBest and selects which charity gets the money you spent on the card. Very cool, and I like this for gifts of all kind.
Second, consider giving a book that will help grow the next generation of donors. It's called Raising Charitable Children, and it's by Carol Weisman of BoardBuilders. Awesome book, awesome message.
Happy shopping!
Friday, December 02, 2011
How to Run Out Of Cash
(Note: This post comes directly from my new book Smart Stewardship for Nonprofits: Making the Right Decision in Good Times and Bad, to be released in February 2012 by John Wiley and Sons. You can pre-order at Amazon by clicking on the link above.)
Almost all nonprofits have too little cash on hand at any given time. Sometimes this is the result of funder policies not letting the nonprofit keep what they earn (or tut-tutting when a nonprofit has 2 dimes to rub together), sometimes a result of poor long-term management on the part of the nonprofit, sometimes caused by a short term crisis, or a combination of the above. And, if you don’t have any cash cushion, as CEO, you lose a lot of sleep.
I know a CEO who has been in her position for 20 years and who has fretted about making payroll twice a month for every one of those 20 years. When I asked her a few years back about why she hasn’t built up any reserves, she looked like I had hit her: “We can’t do that. People are in need. It’s immoral for us to carry any money from one fiscal year to the next.” So, her organization is intentionally cash poor.
While I understand her sentiment and admire her empathy for the people her organization serves, this is not Smart Stewardship. The quality the space where the organization provides services is appalling, her staff turnover is high, there’s no website (thus impacting her fundraising efforts) and the next longest serving employee has only been there three years. And, any delay in payments from key funders, or reductions in donations, and the doors close.
Not every nonprofit falls into the trap of being cash poor, but if you feel your organization is chronically cash short, you cannot, let me repeat cannot grow. Growth sucks up cash like a giant vacuum cleaner. And you need cash.
Here’s the key takeaway for this issue. CASH = OXYGEN. Cash buys you time to think, is insurance against funding cutbacks, let’s you sleep at night assured you can make rent at the beginning of the month. Cash lets you manage rather than just survive.
And growth? Growth is funded by cash. Remember my mantra earlier in the book: Money enables mission, but profits enable growth. Without profits (and profits that are retained, not immediately spent), you can’t grow.
Let’s do the numbers using a not all that unusual example. A funder, who loves your services and has been a strong supporter, calls you and says,
“We have a one year grant opportunity for you. We want you to expand ServiceX for the next year and measure the impact.”
You are intrigued and excited: More mission! And, ServiceX is your core competence and serves your highest priority demographic. More high priority, high quality mission! The funder continues.
“You need to shoot me a financial projection, but we know you and trust your management. Also, send me a number of units of service based on a one year, $1million grant. We’ll go from there.”
You are nearly speechless. $1million? ONE MILLION DOLLARS? And full reimbursement? There’s no risk! Then, you think, where’s the catch?
The funder continues, “No worries about match. We want to get this project going, so we’ll reimburse your costs fully. We’ll reimburse you each month within 45 days of your billing us. Get back to me by the end of work tomorrow and we can make this month’s contracting and approval cycle. Have a nice day.”
Now there’s an understatement, you think...a nice day....this is the best. day. ever. You shoot out of your chair to go share the news that your mission growth just went off the charts.
How does all this sound to you? Awesome? Unlikely? Yes on both counts of course. But while you have visions of mission growth dancing in your head, let’s look at this amazing, high priority, no risk mission opportunity in a bit more depth.
Let’s assume you start the service at the beginning of the next month, which we’ll call June 1. Let’s also assume you can just start doing more mission from a standing start--no upfront expenses like more space, licensing, training, etc. You and I both know we always have those expenses, but for now, just keep them in the back of your mind to add in later.
So, June 1 you start doing a LOT more mission. On June 30, if you’re like most nonprofits, you bill the funder, and the 45 day reimbursement clock starts. If the funder actually gets you the reimbursement in 45 days, that means you get paid on August 15, or 75 days after you started the expanded mission.
During those 75 days, what has your organization done? LOTS of great, high priority mission. You’ve helped LOTS of people.
And spent LOTS of cash. LOTS. How much? Let’s do the math.
Take $1,000,000. Divide it by 365 to get a cash cost per day. The result is a daily cost of $2,739.73. Then, multiply the daily cost by the 75 days you have to wait for reimbursement. $2,739.73 times 75 equals $205,479.45.
That’s a lowball calculation of the amount of money that goes out before you get paid. Ouch. And that’s real cash going out the door, money that can’t be used to pay rent or insurance or other staff payroll. Remember that the $205,000 does NOT include the startup costs we pushed aside earlier. So in nearly all cases the number would be higher, perhaps much higher than $205,000.
Moral? To afford this no risk, high priority mission opportunity you need more than 20% of the grant total in hand, in cash, before you start. This money is called working capital, and it’s the money you need between the time you make a product or provide a service and get paid. The more you grow, the more working capital you need, even if it’s not in big, one time $1,000,000 increments. The longer the funder takes to pay you, the more working capital you need. The higher your startup costs are, the more working capital you need.
Where does this working capital come from? From prior years earnings. If you haven’t put funds aside, you can’t take advantage of opportunities as they arise. And, by the way, no bank is going to lend you funds to cover this grant’s working capital. Loans are paid back by profits, and this grant, while fully reimbursing your costs, does not include a profit. And, you can’t sell stock in your nonprofit--that’s only for for-profit firms. So, you need to be making a profit to grow.
Remember, money enables mission, but profit enables more mission. And here we are with a perfect example. Your nonprofit’s prior profits allow you to take the $1,000,000. If you haven’t made the profit and set it aside, all you’re doing is running out of cash.
This is why so many nonprofits who have a budget goal of breaking even and, like my CEO friend, feel that making a profit is wrong, are always out of cash as they grow, even if that growth is minimal. They make the mistake of thinking that if there income and expense report shows a break even that they should have enough cash to pay the bills. Fatal error. Accrual and cash are different, and a break even P&L does not mean that your cash in and cash out match for the fiscal year.
Again, my point here is that growth, any growth, sucks up cash. Your organization already has working capital invested in your operations now. Even if you grow organically, you’ll need more. Conversely, if programs end, it frees up working capital for you.
Almost all nonprofits have too little cash on hand at any given time. Sometimes this is the result of funder policies not letting the nonprofit keep what they earn (or tut-tutting when a nonprofit has 2 dimes to rub together), sometimes a result of poor long-term management on the part of the nonprofit, sometimes caused by a short term crisis, or a combination of the above. And, if you don’t have any cash cushion, as CEO, you lose a lot of sleep.
I know a CEO who has been in her position for 20 years and who has fretted about making payroll twice a month for every one of those 20 years. When I asked her a few years back about why she hasn’t built up any reserves, she looked like I had hit her: “We can’t do that. People are in need. It’s immoral for us to carry any money from one fiscal year to the next.” So, her organization is intentionally cash poor.
While I understand her sentiment and admire her empathy for the people her organization serves, this is not Smart Stewardship. The quality the space where the organization provides services is appalling, her staff turnover is high, there’s no website (thus impacting her fundraising efforts) and the next longest serving employee has only been there three years. And, any delay in payments from key funders, or reductions in donations, and the doors close.
Not every nonprofit falls into the trap of being cash poor, but if you feel your organization is chronically cash short, you cannot, let me repeat cannot grow. Growth sucks up cash like a giant vacuum cleaner. And you need cash.
Here’s the key takeaway for this issue. CASH = OXYGEN. Cash buys you time to think, is insurance against funding cutbacks, let’s you sleep at night assured you can make rent at the beginning of the month. Cash lets you manage rather than just survive.
And growth? Growth is funded by cash. Remember my mantra earlier in the book: Money enables mission, but profits enable growth. Without profits (and profits that are retained, not immediately spent), you can’t grow.
Let’s do the numbers using a not all that unusual example. A funder, who loves your services and has been a strong supporter, calls you and says,
“We have a one year grant opportunity for you. We want you to expand ServiceX for the next year and measure the impact.”
You are intrigued and excited: More mission! And, ServiceX is your core competence and serves your highest priority demographic. More high priority, high quality mission! The funder continues.
“You need to shoot me a financial projection, but we know you and trust your management. Also, send me a number of units of service based on a one year, $1million grant. We’ll go from there.”
You are nearly speechless. $1million? ONE MILLION DOLLARS? And full reimbursement? There’s no risk! Then, you think, where’s the catch?
The funder continues, “No worries about match. We want to get this project going, so we’ll reimburse your costs fully. We’ll reimburse you each month within 45 days of your billing us. Get back to me by the end of work tomorrow and we can make this month’s contracting and approval cycle. Have a nice day.”
Now there’s an understatement, you think...a nice day....this is the best. day. ever. You shoot out of your chair to go share the news that your mission growth just went off the charts.
How does all this sound to you? Awesome? Unlikely? Yes on both counts of course. But while you have visions of mission growth dancing in your head, let’s look at this amazing, high priority, no risk mission opportunity in a bit more depth.
Let’s assume you start the service at the beginning of the next month, which we’ll call June 1. Let’s also assume you can just start doing more mission from a standing start--no upfront expenses like more space, licensing, training, etc. You and I both know we always have those expenses, but for now, just keep them in the back of your mind to add in later.
So, June 1 you start doing a LOT more mission. On June 30, if you’re like most nonprofits, you bill the funder, and the 45 day reimbursement clock starts. If the funder actually gets you the reimbursement in 45 days, that means you get paid on August 15, or 75 days after you started the expanded mission.
During those 75 days, what has your organization done? LOTS of great, high priority mission. You’ve helped LOTS of people.
And spent LOTS of cash. LOTS. How much? Let’s do the math.
Take $1,000,000. Divide it by 365 to get a cash cost per day. The result is a daily cost of $2,739.73. Then, multiply the daily cost by the 75 days you have to wait for reimbursement. $2,739.73 times 75 equals $205,479.45.
That’s a lowball calculation of the amount of money that goes out before you get paid. Ouch. And that’s real cash going out the door, money that can’t be used to pay rent or insurance or other staff payroll. Remember that the $205,000 does NOT include the startup costs we pushed aside earlier. So in nearly all cases the number would be higher, perhaps much higher than $205,000.
Moral? To afford this no risk, high priority mission opportunity you need more than 20% of the grant total in hand, in cash, before you start. This money is called working capital, and it’s the money you need between the time you make a product or provide a service and get paid. The more you grow, the more working capital you need, even if it’s not in big, one time $1,000,000 increments. The longer the funder takes to pay you, the more working capital you need. The higher your startup costs are, the more working capital you need.
Where does this working capital come from? From prior years earnings. If you haven’t put funds aside, you can’t take advantage of opportunities as they arise. And, by the way, no bank is going to lend you funds to cover this grant’s working capital. Loans are paid back by profits, and this grant, while fully reimbursing your costs, does not include a profit. And, you can’t sell stock in your nonprofit--that’s only for for-profit firms. So, you need to be making a profit to grow.
Remember, money enables mission, but profit enables more mission. And here we are with a perfect example. Your nonprofit’s prior profits allow you to take the $1,000,000. If you haven’t made the profit and set it aside, all you’re doing is running out of cash.
This is why so many nonprofits who have a budget goal of breaking even and, like my CEO friend, feel that making a profit is wrong, are always out of cash as they grow, even if that growth is minimal. They make the mistake of thinking that if there income and expense report shows a break even that they should have enough cash to pay the bills. Fatal error. Accrual and cash are different, and a break even P&L does not mean that your cash in and cash out match for the fiscal year.
Again, my point here is that growth, any growth, sucks up cash. Your organization already has working capital invested in your operations now. Even if you grow organically, you’ll need more. Conversely, if programs end, it frees up working capital for you.
Monday, November 28, 2011
Are You Over Capacity Already?
(Note: This post comes directly from my new book Smart Stewardship for Nonprofits: Making the Right Decision in Good Times and Bad, to be released in February 2012 by John Wiley and Sons. You can pre-order at Amazon by clicking on the link above.)
In Smart Stewardship, I look at the issues of core competence and capacity in light of making decisions to grow your nonprofit, take on a new service, accept a foundation grant etc: In that context, here are some ways to assess if you’re already over capacity.
Before you even think about growing more, as a Smart Steward you should assess where you are. Is you nonprofit already at the edge of its flight envelope. Many nonprofits are already under-resourced, under-funded, under administered. In addition, most don’t have the cash to expand either. What you don’t want to do is to pile more work (even though it will result in more mission) on to an organization that is already overburdened. The proverbial straw that broke the camel’s back is a cautionary tale you need to keep in mind.
Current capacity is hard to objectively measure, but not impossible. While the specific metrics will vary organization by organization, here are some things to look at:
Look at Your Management Staff Load
As I said above, most organizations are under-administered. I often tell audiences that their personal Full Time Equivalent (FTE) count has risen: five years ago, they probably only had two FTE living in their bodies, now they may have 3, 4 or 5. While sort of funny, it’s also true. Just because funding goes down, it doesn’t mean that management responsibilities do. To take a look at this, start by looking at your organizational chart 5 years back and comparing it to now. Are there less managers per line staff person? Have some functions (like accounting or IT) had a reduction in staff while the organization has grown? Slow and steady staff burdening often goes unnoticed until it is a crisis, like the frog in the slowly heating pot. You need to be looking out for this, starting now. There is of course, no clear cut measure, but it will get you started.
Some other tell-tales of staff being over capacity include:
Staff Satisfaction
I hope you’re already measuring staff satisfaction regularly. This kind of surveying is crucial to making sure you don’t miss what’s going on at the level of service provision. Of course, comparative data over time is also key--are you doing better or worse than prior years? What about the comments? Do they show an issue you need to drill down into? This survey can be an early window into staff that are overworked
Staff Turnover
Turnover is a tricky thing to use as a metric. Some turnover rates that seem high are really pretty good in context of national numbers, while too low a turnover can hold an organization’s growth back. What you want to look for is spikes over time, as well as spikes in certain programs, or administrative areas.
Use of Sick Days
Sick days can go both ways. If people think they can’t take the time to be sick, they’ll come in sick--and get everyone else sick. On the other hand, if people are miserable at work since they feel overwhelmed, this number may rise steeply. Monitor this closely.
Use of Vacation Days
In most overburdened organizations, the management staff don’t take much if any vacation. This is a bad thing--we all need a break. If this number is low and getting worse, you’re near or at capacity.
Look at Your Quality Indicators
I assume you have a quality assurance program or monitoring system. Take a look at that on a regular basis (perhaps every six months) and compare the results over time. Are you having more problems? Is your accreditation or licensing review turning up more negative findings than in the past? Again, these are issues that need to concern you and get fixed before you consider growing any more.
You don’t want to crash your organization while trying to grow. While these indicators will help, you have to get out of your office and talk to your staff, listen to their input to make sure that growing (for all the right reasons) doesn’t result in serious unintended consequences.
(Note: This post comes directly from my new book Smart Stewardship for Nonprofits: Making the Right Decision in Good Times and Bad, to be released in February 2012 by John Wiley and Sons. You can pre-order at Amazon by clicking on the link above.)
In Smart Stewardship, I look at the issues of core competence and capacity in light of making decisions to grow your nonprofit, take on a new service, accept a foundation grant etc: In that context, here are some ways to assess if you’re already over capacity.
Before you even think about growing more, as a Smart Steward you should assess where you are. Is you nonprofit already at the edge of its flight envelope. Many nonprofits are already under-resourced, under-funded, under administered. In addition, most don’t have the cash to expand either. What you don’t want to do is to pile more work (even though it will result in more mission) on to an organization that is already overburdened. The proverbial straw that broke the camel’s back is a cautionary tale you need to keep in mind.
Current capacity is hard to objectively measure, but not impossible. While the specific metrics will vary organization by organization, here are some things to look at:
Look at Your Management Staff Load
As I said above, most organizations are under-administered. I often tell audiences that their personal Full Time Equivalent (FTE) count has risen: five years ago, they probably only had two FTE living in their bodies, now they may have 3, 4 or 5. While sort of funny, it’s also true. Just because funding goes down, it doesn’t mean that management responsibilities do. To take a look at this, start by looking at your organizational chart 5 years back and comparing it to now. Are there less managers per line staff person? Have some functions (like accounting or IT) had a reduction in staff while the organization has grown? Slow and steady staff burdening often goes unnoticed until it is a crisis, like the frog in the slowly heating pot. You need to be looking out for this, starting now. There is of course, no clear cut measure, but it will get you started.
Some other tell-tales of staff being over capacity include:
Staff Satisfaction
I hope you’re already measuring staff satisfaction regularly. This kind of surveying is crucial to making sure you don’t miss what’s going on at the level of service provision. Of course, comparative data over time is also key--are you doing better or worse than prior years? What about the comments? Do they show an issue you need to drill down into? This survey can be an early window into staff that are overworked
Staff Turnover
Turnover is a tricky thing to use as a metric. Some turnover rates that seem high are really pretty good in context of national numbers, while too low a turnover can hold an organization’s growth back. What you want to look for is spikes over time, as well as spikes in certain programs, or administrative areas.
Use of Sick Days
Sick days can go both ways. If people think they can’t take the time to be sick, they’ll come in sick--and get everyone else sick. On the other hand, if people are miserable at work since they feel overwhelmed, this number may rise steeply. Monitor this closely.
Use of Vacation Days
In most overburdened organizations, the management staff don’t take much if any vacation. This is a bad thing--we all need a break. If this number is low and getting worse, you’re near or at capacity.
Look at Your Quality Indicators
I assume you have a quality assurance program or monitoring system. Take a look at that on a regular basis (perhaps every six months) and compare the results over time. Are you having more problems? Is your accreditation or licensing review turning up more negative findings than in the past? Again, these are issues that need to concern you and get fixed before you consider growing any more.
You don’t want to crash your organization while trying to grow. While these indicators will help, you have to get out of your office and talk to your staff, listen to their input to make sure that growing (for all the right reasons) doesn’t result in serious unintended consequences.
Thursday, November 10, 2011
Been gone, but don't miss this
I've been missing in action for a few months, and I apologize and appreciate those of you who have contacted me making sure I'm OK. Here's what's been going on....
1. I just finished up a new book that will be released in February. It's titled Smart Stewardship for Nonprofits: Making the Right Decision in Good Times and Bad. You can click on the link to see the Amazon pre-order page.
2. I had a busy family summer with a second wedding in a year; literally our two son's weddings occurred within 12 months. Are there Irish Weddings? Both joyous occasions, but very time consuming.
3. I've been busy re-working a number of major documents for clients, which is good news, but in sum, all these things made me put the blog aside. I hope to be better.
So, first thing back, I wanted to alert you to (and strongly recommend attending) The Center For Leadership Innovation's 2012 National Summit in New Orleans. You can read more about it here. I've done work with TCLI for a number of years and they put together the most awesome learning experiences. It would be well worth your time to go.
1. I just finished up a new book that will be released in February. It's titled Smart Stewardship for Nonprofits: Making the Right Decision in Good Times and Bad. You can click on the link to see the Amazon pre-order page.
2. I had a busy family summer with a second wedding in a year; literally our two son's weddings occurred within 12 months. Are there Irish Weddings? Both joyous occasions, but very time consuming.
3. I've been busy re-working a number of major documents for clients, which is good news, but in sum, all these things made me put the blog aside. I hope to be better.
So, first thing back, I wanted to alert you to (and strongly recommend attending) The Center For Leadership Innovation's 2012 National Summit in New Orleans. You can read more about it here. I've done work with TCLI for a number of years and they put together the most awesome learning experiences. It would be well worth your time to go.
Tuesday, January 25, 2011
Webinar listing for February 2011
As regular readers know, having a culture of life-long learning is a key component of success for any nonprofit.
Leading that culture by example is the job of senior management.
"But I just can't get away right now" is the early foreshadowing of failure in this crucial area.
So, stay at your desk and choose one (or more) of over 30 webinars for nonprofits listed on the Wild Apricot Blog yesterday. A shout out to them for gathering all this information.
Go. Learn. Be brilliant......and show your staff that they should do the same.
Leading that culture by example is the job of senior management.
"But I just can't get away right now" is the early foreshadowing of failure in this crucial area.
So, stay at your desk and choose one (or more) of over 30 webinars for nonprofits listed on the Wild Apricot Blog yesterday. A shout out to them for gathering all this information.
Go. Learn. Be brilliant......and show your staff that they should do the same.
Tuesday, January 12, 2010
Will businesslike charities become charitable businesses? Part 2
A couple of days back, in Part 1 of this post, I discussed the trendy idea that businesses and charities are inevitably going to merge, and took the position about the nonprofit side of the equation that I simply don't see this happening for a variety of reasons.
But what about businesses: are they becoming more charitable? Will business force out nonprofits by taking over our turf?
Again, no.
There is no question that more and more businesses have figured out that having social outcomes do a variety of good for the community and for the business. They build morale among staff, help develop a corporate culture that attracts people who care and are motivated, and provide a competitive edge to attract customers who also care.
This trend is largely evident in smaller companies who are more flexible, and most evident in smaller companies led by younger owners and managers. New entrepreneurs often try to marry up their entrepreneurial skills with a social or community problem, and are not shy about saying that they need to make money in order to do good. Look at Tom's Shoes, one example that's on television a lot. Great organization, great idea. But if the for-profit side doesn't sell shoes, the charitable side can't donate them.
The thing to remember is that this trend, while incredibly laudable, is still a distinct minority among business. It gets lots of press since it's newsworthy (read: unusual/weird) but it is nowhere near mainstream yet. And, given the behavior of so many for-profits (see yesterday's post) in the recent past, I don't suspect the idea of always doing social good will become the norm in practice for a long, long time.
So, to summarize both posts, more nonprofits are becoming businesslike in their pursuit of mission--but nowhere near all. More businesses are pursuing social good in addition to profits, but nowhere near a majority.
Both of these are good things that we should encourage, not angst over.
But what about businesses: are they becoming more charitable? Will business force out nonprofits by taking over our turf?
Again, no.
There is no question that more and more businesses have figured out that having social outcomes do a variety of good for the community and for the business. They build morale among staff, help develop a corporate culture that attracts people who care and are motivated, and provide a competitive edge to attract customers who also care.
This trend is largely evident in smaller companies who are more flexible, and most evident in smaller companies led by younger owners and managers. New entrepreneurs often try to marry up their entrepreneurial skills with a social or community problem, and are not shy about saying that they need to make money in order to do good. Look at Tom's Shoes, one example that's on television a lot. Great organization, great idea. But if the for-profit side doesn't sell shoes, the charitable side can't donate them.
The thing to remember is that this trend, while incredibly laudable, is still a distinct minority among business. It gets lots of press since it's newsworthy (read: unusual/weird) but it is nowhere near mainstream yet. And, given the behavior of so many for-profits (see yesterday's post) in the recent past, I don't suspect the idea of always doing social good will become the norm in practice for a long, long time.
So, to summarize both posts, more nonprofits are becoming businesslike in their pursuit of mission--but nowhere near all. More businesses are pursuing social good in addition to profits, but nowhere near a majority.
Both of these are good things that we should encourage, not angst over.
Sunday, January 10, 2010
Will businesslike charities become charitable businesses? Part 1
One of the more interesting debates in our sector at the moment is the discussion (panic/hue and cry/gnashing of teeth) about the merging of the nonprofit and for profit models of business. Critics and analysts have noted correctly that many nonprofits are acting in a more businesslike manner than 10 or 15 years ago. Then, these observers marry that "fact" with the growing desire of businesses to have a social outcome and become one definition of a social entrepreneur. These two trends are seen as inevitably ending the distinction between charitable groups, often accompanied by much verbal angst and pulling of hair.
My suggestion? Chill out. We are not approaching the nonprofit apocalypse by any means, so let's dissect this discussion a bit to see why in this post and my next one.
Are nonprofits in general more businesslike than 15 years ago? Absolutely. Are all nonprofits this way? No chance. There are hundreds of thousands of sloppily run nonprofits today, and there always will be, just as there are sloppily run for-profits, poorly managed government agencies, and badly managed personal finances.
What has happened is that the expectations of the quality of nonprofit management have climbed dramatically. Take outcome measurements for example, a term that was just gaining traction 15 years ago (with, I might add, much angst-filled commentary about how such measurement would be the "end of the sector" since it took valuable time away from mission). Or, look at the spread of best practice models, standards of excellence (such as the terrific ones from Maryland Nonprofits) and accreditation. And, of course, the online oversight of watchdogs like Guidestar and Charity Navigator. All of these forces have slowly raised the bar on nonprofit management, outcome and accountability.
To which I say, good, good, and good.
And, certainly we talk more about mission-based businesses (a term I've been pushing for 25 years) and using business skills such as marketing and finance. But have most nonprofits moved from being charities to becoming mission-based businesses to going all the way to being businesses with a mission on the side?
No, and it won't happen any time soon. Why? Because nonprofit staff and board have seen the light regarding the key rationale for managing their mission better: They get to do more and better mission as a result. All the business "stuff" that critics worry about is not based on becoming a business--it's about doing better mission. That's what people on the ground tell me and show me all the time. There are just too many people who are too committed to service and mission to let this morph out of control. Will some organizations go too far? Yep, and they already have. But the vast middle of the bell curve on this issue is just doing more and better mission, not turning into some sort of nonprofit Wal-Mart.
Now, how about the for-profit world and their social aspirations? That's also a real trend, and we'll look at that in my next post.
My suggestion? Chill out. We are not approaching the nonprofit apocalypse by any means, so let's dissect this discussion a bit to see why in this post and my next one.
Are nonprofits in general more businesslike than 15 years ago? Absolutely. Are all nonprofits this way? No chance. There are hundreds of thousands of sloppily run nonprofits today, and there always will be, just as there are sloppily run for-profits, poorly managed government agencies, and badly managed personal finances.
What has happened is that the expectations of the quality of nonprofit management have climbed dramatically. Take outcome measurements for example, a term that was just gaining traction 15 years ago (with, I might add, much angst-filled commentary about how such measurement would be the "end of the sector" since it took valuable time away from mission). Or, look at the spread of best practice models, standards of excellence (such as the terrific ones from Maryland Nonprofits) and accreditation. And, of course, the online oversight of watchdogs like Guidestar and Charity Navigator. All of these forces have slowly raised the bar on nonprofit management, outcome and accountability.
To which I say, good, good, and good.
And, certainly we talk more about mission-based businesses (a term I've been pushing for 25 years) and using business skills such as marketing and finance. But have most nonprofits moved from being charities to becoming mission-based businesses to going all the way to being businesses with a mission on the side?
No, and it won't happen any time soon. Why? Because nonprofit staff and board have seen the light regarding the key rationale for managing their mission better: They get to do more and better mission as a result. All the business "stuff" that critics worry about is not based on becoming a business--it's about doing better mission. That's what people on the ground tell me and show me all the time. There are just too many people who are too committed to service and mission to let this morph out of control. Will some organizations go too far? Yep, and they already have. But the vast middle of the bell curve on this issue is just doing more and better mission, not turning into some sort of nonprofit Wal-Mart.
Now, how about the for-profit world and their social aspirations? That's also a real trend, and we'll look at that in my next post.
Sunday, September 07, 2008
Sunday Miscellany
I've had the luxury of nearly two weeks here in late summer, which has been terrific, made all the better by visits from two of my three kids, great weather and lots of boat time.
But, I set the time aside to have consistent focused time to work on the 2008 set of nonprofits that are participating in the Generational Readiness Assessment Project funded by the Foellinger Foundation. Nine nonprofits from the Allen County, IN. area are participating and I've spent much of the last ten days mulling over their data. I'm due to get them their reports and recommendations in the next few weeks, and I'll try to post the areawide findings if it's OK with the people at Foellinger. Interesting project.
In other news, Heather Carpenter at the Nonprofit Leadership 601 blog has included me in her list of "The (50) Next Generation Nonprofit Leaders You Should Know."
Thanks, Heather---and you're right, I don't quite know if I fit in "The Next Generation" or the last one! But I appreciate the thought, and I'm certainly in good company--it's quite a list.
Most importantly, check out the new Communique from The Listening Post at Johns Hopkins.
Titled "A Nonprofit Workforce Action Agenda" it makes some great suggestions on recruiting and retaining the best young people into our sector. Thanks, Lester, for yet another great contribution.
But, I set the time aside to have consistent focused time to work on the 2008 set of nonprofits that are participating in the Generational Readiness Assessment Project funded by the Foellinger Foundation. Nine nonprofits from the Allen County, IN. area are participating and I've spent much of the last ten days mulling over their data. I'm due to get them their reports and recommendations in the next few weeks, and I'll try to post the areawide findings if it's OK with the people at Foellinger. Interesting project.
In other news, Heather Carpenter at the Nonprofit Leadership 601 blog has included me in her list of "The (50) Next Generation Nonprofit Leaders You Should Know."
Thanks, Heather---and you're right, I don't quite know if I fit in "The Next Generation" or the last one! But I appreciate the thought, and I'm certainly in good company--it's quite a list.
Most importantly, check out the new Communique from The Listening Post at Johns Hopkins.
Titled "A Nonprofit Workforce Action Agenda" it makes some great suggestions on recruiting and retaining the best young people into our sector. Thanks, Lester, for yet another great contribution.
Friday, August 29, 2008
Want to learn more?
As most readers know, there has been an explosion of programs in nonprofit management over the past twenty years, both here in the US and overseas. I'm often approached by participants after lectures who tell me that they used one or more of my books in their classes, and I ask them where they studied and they tell me..."The nonprofit management program at X University", and I had no idea that there even was a program there.
I also get calls and emails from people looking to further their education, or from undergrad students wanting to go to grad school and study nonprofit management. It's been a problem to find a good resource on this issue, until the Kellogg Foundation funded Dr. Roseanne Mirabella at Seton Hall University to do some research. That effort led to the first good, searchable listing of nonprofit educational opportunities both in the US and overseas, along with a great FAQ. You can search by undergrad, graduate, PhD, credit, continuing ed, and online courses.
Here's the site: NonProfit Management Education. Thanks, Dr. Mirabella!
There's also a listing on the Nonprofit Academic Centers Council site. The NACC's mission is:
" to support academic centers devoted to the study of the nonprofit/nongovernmental sector, philanthropy and voluntary action to advance education, research and practice that increases the nonprofit sector's ability to enhance civic engagement, democracy and human welfare. ",
and the board is full of prominent people in the field. You can see the member organizations/programs by clicking on the appropriate link.
So, if you are looking to go back to school, or if you have a staff member that you want to develop, here's a great place to look for a program.
Learn, learn, learn.
I also get calls and emails from people looking to further their education, or from undergrad students wanting to go to grad school and study nonprofit management. It's been a problem to find a good resource on this issue, until the Kellogg Foundation funded Dr. Roseanne Mirabella at Seton Hall University to do some research. That effort led to the first good, searchable listing of nonprofit educational opportunities both in the US and overseas, along with a great FAQ. You can search by undergrad, graduate, PhD, credit, continuing ed, and online courses.
Here's the site: NonProfit Management Education. Thanks, Dr. Mirabella!
There's also a listing on the Nonprofit Academic Centers Council site. The NACC's mission is:
" to support academic centers devoted to the study of the nonprofit/nongovernmental sector, philanthropy and voluntary action to advance education, research and practice that increases the nonprofit sector's ability to enhance civic engagement, democracy and human welfare. ",
and the board is full of prominent people in the field. You can see the member organizations/programs by clicking on the appropriate link.
So, if you are looking to go back to school, or if you have a staff member that you want to develop, here's a great place to look for a program.
Learn, learn, learn.
Thursday, July 17, 2008
Great attitudes during tough times....
I had a wonderful day with a group of nonprofits from Sarasota, sponsored by the Community Foundation of Sarasota (and a shout out to all the staff for making my day so easy). What a great group of nonprofit staff and board. Nonprofits in Florida are facing very very tough times, and so the topic of the day "Mission-Based Management in Difficult Financial Times" drew a crowd: the room was packed.
You might expect a lot of doom and gloom in a room like that, but people were upbeat, attentive and appreciative to the nth degree. Very inspiring, but then rooms of nonprofit staff always are to me.
I go back in December to talk about "Social Entrepreneurship" and in February to talk on "Generation Change in Nonprofits". I'm looking forward to both trips.
You might expect a lot of doom and gloom in a room like that, but people were upbeat, attentive and appreciative to the nth degree. Very inspiring, but then rooms of nonprofit staff always are to me.
I go back in December to talk about "Social Entrepreneurship" and in February to talk on "Generation Change in Nonprofits". I'm looking forward to both trips.
Tuesday, July 15, 2008
Mission-Vision-Values
This morning I was working on my August edition of The Mission-Based Management Newsletter, which will cover the topic of Mission, Vision, Values. In looking up some good resources I came across a fascinating (to a mission-nerd like me) website called Missionstatement.com, which has collected hundreds of mission statements, not only for nonprofits, but for schools, corporations, government, and individuals. Interesting reading, at least for me.
At the Alliance for Nonprofit Management meeting, I had the pleasure of hearing and then talking briefly to Darian Rodriguez Heyman, who is the ED of the Craigslist Foundation. In his talk, Darian told us about a new foundation online presence and asked for input from the group. Over and over, he repeated the mantra that was guiding the Foundation in its development: "Less time searching, more time doing good."
I loved hearing such focus on a key idea. While that statement is not their mission, it is a guiding principle for a major product, and allows the staff and volunteers to say focused on the desired outcome.
This is a great example of developing a project mission, but more importantly, using that project-mission to help guide the process all the time, not just at the outset.
At the Alliance for Nonprofit Management meeting, I had the pleasure of hearing and then talking briefly to Darian Rodriguez Heyman, who is the ED of the Craigslist Foundation. In his talk, Darian told us about a new foundation online presence and asked for input from the group. Over and over, he repeated the mantra that was guiding the Foundation in its development: "Less time searching, more time doing good."
I loved hearing such focus on a key idea. While that statement is not their mission, it is a guiding principle for a major product, and allows the staff and volunteers to say focused on the desired outcome.
This is a great example of developing a project mission, but more importantly, using that project-mission to help guide the process all the time, not just at the outset.
Saturday, December 22, 2007
Mulling about legacies
At the end of the year, a lot of us review the past 12 months (think of all those holiday newsletters you get), read lists of "ten best" this of 2008, "best of" that for the year, etc. We get ready to set our goals/resolutions for the next year.
On a more mundane level, if we're on a calendar fiscal year, we also have to deal with work plans, budgets etc for the coming year. All of us as individuals think (at least briefly) about any tax planning we need to do before the end of the year.
All of this is pretty normal, customary; the usual.
But this year, I've been thinking a LOT about an email I got from someone I recently met in Florida. He sent out the copy of an obit whose last line was:
"He leaves behind approximately 6.5 billion people worldwide."
Funny, on first look, and certainly original. But it got me thinking about legacy, what we leave behind us, about how we help those who come after us do better, live better, be better than us.
Nowhere in our society is leaving that legacy more important than in the nonprofit sector. No one has more of the job of building better, fairer, more just communities, of educating, protecting, caring, healing, enthralling more than nonprofits. Its the core of what we do. Its mission.
And while most of us are justifiably concerned with helping here and now, what really happens if we foment effective change is not just improving things now, we improve them for the 6.5 billion others---and their children, and their grandchildren. So, should I change my idea of good stewardship? Should it be not only for today, for this year, this decade, but for beyond my lifetime? I think so, and I'm still sorting that out.
What do you think?
On a more mundane level, if we're on a calendar fiscal year, we also have to deal with work plans, budgets etc for the coming year. All of us as individuals think (at least briefly) about any tax planning we need to do before the end of the year.
All of this is pretty normal, customary; the usual.
But this year, I've been thinking a LOT about an email I got from someone I recently met in Florida. He sent out the copy of an obit whose last line was:
"He leaves behind approximately 6.5 billion people worldwide."
Funny, on first look, and certainly original. But it got me thinking about legacy, what we leave behind us, about how we help those who come after us do better, live better, be better than us.
Nowhere in our society is leaving that legacy more important than in the nonprofit sector. No one has more of the job of building better, fairer, more just communities, of educating, protecting, caring, healing, enthralling more than nonprofits. Its the core of what we do. Its mission.
And while most of us are justifiably concerned with helping here and now, what really happens if we foment effective change is not just improving things now, we improve them for the 6.5 billion others---and their children, and their grandchildren. So, should I change my idea of good stewardship? Should it be not only for today, for this year, this decade, but for beyond my lifetime? I think so, and I'm still sorting that out.
What do you think?
Monday, December 10, 2007
Learning in Tampa
Had a great time in Tampa working with Achieve Management, The Children's Board of Hillsborough County and the Nonprofit Leadership Center of Tampa Bay. Their hard work had gathered around 150 people to discuss Generation change. Each participant got a copy of Generations, and they were a very interactive, fun group to work with. All in all a great day for me and, I hope, a useful one for them.
One interesting vignette from the day: in the early afternoon, we broke into 8-9 groups and discussed the one thing that the group was most vexed about or most critical regarding their nonprofit and generation change. After 40 minutes or so, the groups reported out. I expected at least 3 groups to talk about inter-generational conflict, a couple to talk about executive transition, perhaps 2 to report that the age of their board as their big problem.
I was so wrong. 9 groups; 9 different issues. I've been saying that generation change is a broad issue, but I keep learning how broad every time I go out and speak.
And, as always, I heard some new questions or new, critical twists on old ones. Here are a couple.
1. "You tell us to recruit younger board members in groups. But with a small board (18) and term limits there are years where only one or two slots may come open--and we have other skill set needs. What do I do?"
2. (From a GenX supervisor) "How do I get a Silent Generation staff employee who is totally tech-averse to buy into our our email-based reporting system?"
Both of these questions highlight very good hands-on applications of the generational shift. I gave both people a few suggestions, since I couldn't answer in any depth since I didn't know all the details.
The answer to the first question is, in brief, prioritization and balance. Which skills are more important to your organization-and I understand that Generational representation may not be the priority right now.
The answer to the second question (again, lacking a lot of specifics) seemed to me to be mentoring--having a younger staff peer assist the older one until she became adequately comfortable with the technology needed to do the job.
As always, when you teach, you learn. I learned a lot!
One interesting vignette from the day: in the early afternoon, we broke into 8-9 groups and discussed the one thing that the group was most vexed about or most critical regarding their nonprofit and generation change. After 40 minutes or so, the groups reported out. I expected at least 3 groups to talk about inter-generational conflict, a couple to talk about executive transition, perhaps 2 to report that the age of their board as their big problem.
I was so wrong. 9 groups; 9 different issues. I've been saying that generation change is a broad issue, but I keep learning how broad every time I go out and speak.
And, as always, I heard some new questions or new, critical twists on old ones. Here are a couple.
1. "You tell us to recruit younger board members in groups. But with a small board (18) and term limits there are years where only one or two slots may come open--and we have other skill set needs. What do I do?"
2. (From a GenX supervisor) "How do I get a Silent Generation staff employee who is totally tech-averse to buy into our our email-based reporting system?"
Both of these questions highlight very good hands-on applications of the generational shift. I gave both people a few suggestions, since I couldn't answer in any depth since I didn't know all the details.
The answer to the first question is, in brief, prioritization and balance. Which skills are more important to your organization-and I understand that Generational representation may not be the priority right now.
The answer to the second question (again, lacking a lot of specifics) seemed to me to be mentoring--having a younger staff peer assist the older one until she became adequately comfortable with the technology needed to do the job.
As always, when you teach, you learn. I learned a lot!
Tuesday, March 13, 2007
Who Will Lead?
A really good article on the nonprofit leadership challenge from CityLimits.org
The article covers the basic information about boomer retirement (and its skeptics) and then discusses a survey showing that many younger nonprofit managers don't necessarily want to move up.
This is no surprise to me: it confirms what I'm hearing everywhere.
"Why would I want her/his job?" asks a 20 something manager referring to the ED. "I see how they have no life at all."
Can't blame them:
Boomer refrain: "Live to Work!"
GenX and Gen@ refrain: "Work to Live!"
I think the younger generations have it right.....
The article covers the basic information about boomer retirement (and its skeptics) and then discusses a survey showing that many younger nonprofit managers don't necessarily want to move up.
This is no surprise to me: it confirms what I'm hearing everywhere.
"Why would I want her/his job?" asks a 20 something manager referring to the ED. "I see how they have no life at all."
Can't blame them:
Boomer refrain: "Live to Work!"
GenX and Gen@ refrain: "Work to Live!"
I think the younger generations have it right.....
Monday, February 26, 2007
In between...
Home Friday, gone today....a good weekend. Got to make a significant donation to a local nonprofit over the weekend: a family chair that George Washington sat in when he visited one of my ancestors who fought with him in the Revolution...really.
Today, I'm off to San Francisco, to do book club calls tomorrow, and then a major presentation to what should be a very, very interesting group. The Bank of America Neighborhood Excellence Initiative(TM) has a Leadership Program that is intended to develop leaders in the best nonprofits in the country. Nonprofits compete for slots, and there are two training programs for each agency...one for emerging leaders one for CEO types. So, the leaders get to spend time with others like them and turbocharge their leadership skills. Great idea.
I'm fortunate to have been asked to speak to both groups on Nonprofit Stewardship. This week, it's the emerging leaders, and in April, I'll talk to the CEO/ED's. Lots of discussion, lots of interaction, etc. Should be fun and, I'm sure, more than a bit inspiring.
I'll let you know.....
Today, I'm off to San Francisco, to do book club calls tomorrow, and then a major presentation to what should be a very, very interesting group. The Bank of America Neighborhood Excellence Initiative(TM) has a Leadership Program that is intended to develop leaders in the best nonprofits in the country. Nonprofits compete for slots, and there are two training programs for each agency...one for emerging leaders one for CEO types. So, the leaders get to spend time with others like them and turbocharge their leadership skills. Great idea.
I'm fortunate to have been asked to speak to both groups on Nonprofit Stewardship. This week, it's the emerging leaders, and in April, I'll talk to the CEO/ED's. Lots of discussion, lots of interaction, etc. Should be fun and, I'm sure, more than a bit inspiring.
I'll let you know.....
Wednesday, January 10, 2007
Leadership Reading
As regular readers know, I've had the privilege since 2004 of facilitating a number of leadership book clubs, including sets for senior leaders and ones for "emerging" or middle management leaders.
I've updated my website with a list of the best books from these groups. If you are looking to get in some great reading that will improve your organization, check out the list.
http://www.missionbased.com/recommendedleadership.htm is where you can see them, as well as my recommendation for readings on management, marketing, boards, fund-raising, etc.
I've updated my website with a list of the best books from these groups. If you are looking to get in some great reading that will improve your organization, check out the list.
http://www.missionbased.com/recommendedleadership.htm is where you can see them, as well as my recommendation for readings on management, marketing, boards, fund-raising, etc.
Tuesday, October 31, 2006
Leadership and nonprofits
Last night's class at Kellogg was on Leadership in Nonprofits. It's always a lecture I look forward to....seems to hit a response chord with the students. Last night less so, since most of the students were exhausted from their Net Impact conference work.
But the discussion did move well, and I was intrigued that most students felt that the key leadership skills for nonprofit leaders and for-profit leaders are the same. This is a gradual trend over the past 4 years....more and more students see the intersection between the two kinds of organizations and wider and wider, and I think that's the way it should be.
I'm in the air most of the week, Sacramento, Tahoe, Chicago (5 times at O'Hare) Hilton Head, Ann Arbor. First talk is on Trends and Decision-Making in Nonprofits. Second one is on Ethics in Nonprofits. Interesting groups, too. We'll see what kind of push-back I get....
Off we go, into the wild blue yonder....
But the discussion did move well, and I was intrigued that most students felt that the key leadership skills for nonprofit leaders and for-profit leaders are the same. This is a gradual trend over the past 4 years....more and more students see the intersection between the two kinds of organizations and wider and wider, and I think that's the way it should be.
I'm in the air most of the week, Sacramento, Tahoe, Chicago (5 times at O'Hare) Hilton Head, Ann Arbor. First talk is on Trends and Decision-Making in Nonprofits. Second one is on Ethics in Nonprofits. Interesting groups, too. We'll see what kind of push-back I get....
Off we go, into the wild blue yonder....
Tuesday, November 01, 2005
Leadership fun
Had a ridiculously fun discussion at Kellogg last night with my MBA students about leadership in nonprofits. The students were engaged and animated, and it was a great time.
Most interesting to me was the number (about 25%) who responded to a pre-class assignment by providing the same top two leadership characteristics for for-profit leaders AND nonprofit leaders. Previous classes had made careful distinctions between the two. As I told the class, I think this is because, more than our previous classes, this group "gets" the concept that leadership is about people, and people are really pretty much the same everywhere.
We did agree, however, that the impact of poor leader behavior for nonprofit leaders is greater than in for-profits. Thus Martha Stewart comes out of jail, gets a reality show, and is back on track, her company little if any worse for her time in the slammer. Try imagining a nonprofit leader getting her old job back after jail time for a felony.
Anyway, good discussion. A room full of bright eyes. What a rush.
Most interesting to me was the number (about 25%) who responded to a pre-class assignment by providing the same top two leadership characteristics for for-profit leaders AND nonprofit leaders. Previous classes had made careful distinctions between the two. As I told the class, I think this is because, more than our previous classes, this group "gets" the concept that leadership is about people, and people are really pretty much the same everywhere.
We did agree, however, that the impact of poor leader behavior for nonprofit leaders is greater than in for-profits. Thus Martha Stewart comes out of jail, gets a reality show, and is back on track, her company little if any worse for her time in the slammer. Try imagining a nonprofit leader getting her old job back after jail time for a felony.
Anyway, good discussion. A room full of bright eyes. What a rush.
Thursday, July 21, 2005
Authentic and Winning books
Had a good set of book club discussions this week. Liked both the books we read,
Authentic Leadership, by Bill George and Winning, by Jack and Suzy Welch. I thought both books have a lot to offer nonprofits. Our discussions of Welch's book were more controversial, simply because Welch is. A number of participants told us that they read the book with its cover jacket (which features a big picture of Welch) off.
I can't tell you which is better. Both are well organized, and if you like checklists, Winning is the better choice. Both run down a bit at the end.
But two books to put on your list, for sure.
Authentic Leadership, by Bill George and Winning, by Jack and Suzy Welch. I thought both books have a lot to offer nonprofits. Our discussions of Welch's book were more controversial, simply because Welch is. A number of participants told us that they read the book with its cover jacket (which features a big picture of Welch) off.
I can't tell you which is better. Both are well organized, and if you like checklists, Winning is the better choice. Both run down a bit at the end.
But two books to put on your list, for sure.
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