More on boomer retirement....

A great story on boomer retirement and its effects on nonprofits from the Philadelphia Enquirer. No surprises, but an effective part of the story is on the inability of younger staff to work for nonprofits given their college debts. So sad, so true.

Speaking of sad but true, I'm in Ann Arbor for the next to last time while my son is a student here. Graduation next month!

A book in the hand....

My new book arrived from my publisher, Fieldstone Alliance, yesterday.

I rarely look at my books after they show up. People ask me what it feels like to read my own book, and I tell them..."I rarely read them in the first year or two. I might go back for a reference quote, but not often". They are astonished...and of course, what they don't realize is that by the time the book shows up, I have not only written it, but read the thing four or five times in the proofing, editing, etc stages. Frankly, I'm sick of it.

Not this book, though.

I immediately dove into it to see whether, having finished writing it 10 months ago, I still felt good about it. Why? Because the area of Generation Change is so, so dynamic and on everyone's list of big issues. I'm going to be speaking on this issue all over the place the remainder of this year, and am working with a foundation to assess generational readiness in their community. I've had inquiries from overseas, and everyone I've talked to about generation change is interested/worried/concerned/a bit freaked about the subject.

Should be fun to see what happens. If you're interested in looking at the book in more depth, there's a link on the right.

More trends to consider

Thanks to all the people for their great comments on my inquiry on the big challenges facing nonprofits. If you haven't weighed in on that, please do. Great discussion!

I'm working on the April edition of the Mission-Based Management Newsletter, which will be about the new uses of technology.

At this point, I'm focusing on these six things as changes in the tech world and their implications for nonprofits:

1. Peer Review/participation. Peer review and participation is one of the huge strengths of the web. Nonprofits in the main have not grasped this yet--but need to, and quickly. Wikis are a great way to allow for participation as well.

2. Podcasts: Incredibly cheap to develop, podcasts have revolutionized marketing and education. I think we're on the edge of thousands of nonprofits doing podcasts to educate, to train staff and volunteers, and to market better.

3. Instant Net feedback. If you want to be aware of what's going on online (about your organization, your issue, your mission, your funding) there are a number of free tools to do that. Whether it's Google Alerts or RSS feeds, search has never been easier, and more timely.

4. Blogs. A terrific way to get engaged with the community, to find out what the community is saying about your issue

5. Software. There is a ton of good stuff out there now--and this includes open source applications.

6. Fundraising. Sites like DonorsChoose and Kiva have changed the game: they are P2P fundraisers. Here's the future right in your face.

What am I missing? Which of these is not important? Or most important?
Let us hear from you!

Generational issues in the news....

A very, very good set of stories in the current issue of the Chronicle of Philanthropy about using older workers (paid workers, not volunteers) and how to adjust to them.
I've been meeting these people for years. They are boomers who are in their 50's and trying to get back to their more radical/philanthropic roots...they have tons of skills and want to help. I deal with this very issue in Generations, and it's great to see others realizing the potential these people have. The Chronicle will be running a series on this issue, called "Regeneration". I look forward to it.

Oh, and while you are at the Chronicle, check out two other disturbing updates:
First, an article on boomer volunteers not sticking with it and, second, an article on the dissatisfaction of work conditions among younger nonprofit workers.

We need to pay attention to this stuff. It's really important

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.....

What are the big challenges?

I've got to put together a presentation for a gig coming up in a few months. It's about the biggest trends/issues/challenges that nonprofits face in the next five years. I've been thinking about this issue on and off for 10 years. It shows up in my books, in my other writings and in presentations, but my list has just slowly evolved, and I've never really started it from scratch.

Additionally, I was wondering what my blog readers think.

So, let's collaborate. Take a look at my list and post a comment or two. Do you agree? Disagree? Do you have issues to add? Some that we should remove? It's not a wiki, but by providing us your list, we can learn, comment and amend our own.

Here's mine--in priority order.

The Big Issues of the Next 10 Years

1. Funding. Same old same old, but we're getting to a critical point which I think will lead to my issue #4. Government's ability to help is saddled with debt, direct fund raising is incredibly competitive and foundations and corporations often put so many restrictions on funding that it's a loss to take their money.

2. Accountability/Transparency/Outcome measurement. We have to get even better at proving that our mission is worthy and that our way of accomplishing that mission works.

3. Generational Transition. Our management teams are mostly over 55 and will move out. Who will be there to move in?

4.Unpaid Professionals. I believe we're going to need to use more and more unpaid professionals (think: super-volunteers) to be able to afford to deliver services. With waning funding and more and more requirements for outcome measurement, this may be our only option.

5. Technology as a Mission-Accelerator. How do we incorporate technology in ways that make us more mission-effective?

6. Diversity. Ethnically, generationally, economically, culturally, and in terms of families, we're more diverse than ever. How can/will we respond with our services, our employees, our volunteers, and our technology?

Whew, that's enough. Think about these and tell me what I missed, what priorities are of order, what you would add or subtract.

Post away!

Why "Who Really Cares" matters

In a post two weeks ago, I told you my preliminary thoughts about Who Really Cares, by Arthur C Brooks. I finished the book shortly afterwards, but wanted to take a couple of weeks to let it sink in before sounding off about it again. Here are my thoughts, about why it is a terribly important book for our sector, one that needs to make it to the top of your reading list, and quickly.

First, Brooks is an economist. He focuses on the data, and I don't believe he has a political agenda. (Whoever designed his cover seems to, but, as an author myself, I can assure you that's not Brooks' fault.)

I spent some considerable time with the date (that makes up perhaps the last 15-20% of the book) and felt comfortable that Brooks was telling it like it is, not the spun version. I might have chosen a different term here or there, but in the main, the tale he tells is told fairly.

Second, the tale he tells is really, really interesting, and a bit counterintuitive to our pre-conceived notions about people's generosity or lack thereof.

Not to steal the thunder from the book, Brooks data shows that people are more likely to give (time, money, blood, etc.) if they are from a strong family, go to religious services regularly at some point in their life, earn their own money, and don't think that government has all the answers. Now, combine least two of those characteristics (religious attendance and scepticism about government) and you get a rough description of a conservative. At least a trend to the right. Huh. Aren't liberals more generous? Wouldn't that be your first thought?

Brooks shows (and I did go into the data for a long, long time) that the opposite is true. He does not say that liberals are selfish or the modern incarnation of Scrooge, but that in the main, conservatives give significantly more; more time, more treasure, more of everything, to charities than liberals do.

As a social liberal, this bothers me no end. And I've been thinking about the implications to our sector. The fund raising outcomes are obvious: go where the people are who are committed to your cause, but then beyond that trend in targeting to people who fit into Brooks' major catagories. Same for volunteers.

But what about our employees? We need charitable employees. Brooks argues that parenting is a charitable act (and is in itself a predicator of later generosity). I would say the same about choosing to work in a nonprofit. You are sacrificing income (without question) to do something that needs doing, something you are hopefully passionate about.

We're in the middle of a huge turnover in employees in our sector. Perhaps Brooks is on to a way to target our HR staffs as they look for better odds in the hiring game. You gotta go where the data show you, and here the data is pretty impressive.

Anyway, read the book, and then post a comment.

Admin Percentage is a Dumb Metric

The March issue of the Mission-Based Management Newsletter is available. This month's topic is on Administrative costs. Regular readers know my feelings on this, but here's the Management Tip from the newsletter:

"Get ready. This is a subject that makes me almost literally froth at the mouth. So, straight to the question: Are Admin costs Important? Yes, but they shouldn't be. Administrative costs are a stupid and ineffective metric by which to value or even worse, compare, nonprofits.

Can you hear me now? The nearly obsessive emphasis on this one statistic drives me nuts. Comparing nonprofits by admin % is like comparing 5 cars you might buy by weight. It's interesting, but not of much value. And, it indicates laziness to me. If you want to find out what's going on from reading the financials, you have to drill down and do the work More on that later.

First, NO ONE can tell you what a "good" admin percentage is, although that hasn't stopped people from showing their ignorance by declaring that 12% or 13% is good and anything higher is bad. Nonprofits are so diverse, have such varying capital structures, that declaring one number the right one is....how do I say this nicely? Naive. Of course, we compound this error with the prevailing assumption (particularly among funders and large donors) is that less admin is always better.

Or not. The National Center for Charitable Statistics has a great brief "Getting What We Pay For: Low Overhead Limits Nonprofit Effectiveness" , which talks about the damage low overhead does. Why would a nonprofit cut overhead to a damaging level? Because every funder harps on this and the ED and board simply follow the funders' guidelines. And it hurts organizations, sometimes to the point of killing them. Read "How I Cooked the Books", if you don't believe me.

I see this damage all the time in my work. And, as we transition from Boomer ED's to GenX ED's over the next ten years, we'll see more damage--our admin costs are held so low that we have no management "bench", no cadre of mid managers who are being groomed for top spots. What else gets cut in the quest to meet the admin % expectations of funders, press and public? Leadership development, training, continuing education. Sounds like a formula for crappy services to me. I recently was told of a community foundation that sponsored (and posted on their website) a contest to see who could have the lowest admin costs. A race to the bottom if I ever heard of one.

Anyone think that FedEx is poorly run? No, they are a lean, profitable organization. How about Southwest Airlines? One of my MBA students ran a comparative analysis on FedEx's financials, and found that FedEx's "admin costs" were over 30%, and that Southwest's were 31%. Hmmm. And why is it that this admin obsession pertains only to smaller nonprofits? Most universities have admin % add-ons of over 100% on research grants, and the feds OK them without blinking...again: Hmmm.

If you think I'm exaggerating about the witch hunt mentality about admin costs, try this. Go to Google, type in the search string "Nonprofit Administrative Costs" and hit "enter". What do you see? Ads for "Find The Best Charities", and "100 Best Charities". Why? Because these online watchdogs use admin costs as a key metric in their rating system. Here's another fact: CPA firms don't all account for admin the same way...yet another reason that using admin to compare the effectiveness of different organizations is like comparing apples to watermelons.

One more thing. When I talk about administrative costs I am not talking about fund raising costs. That's a different measure, and usually more valuable, if it's used with full disclosure on how it was calculated.

Am I contending that admin costs are always a bad measure? No, not in one particular case: Year-over-year data for the same organization that is measuring admin costs the same way, is a good metric, if it is used as a gateway to deeper examination. I use this with my clients regularly. If I see four year's of data and admin costs as a percentage of total revenue go way up or way down, I raise my hand and ask why. I do the same thing with an organization that I want to donate to....I examine three year's 990's and look for any big variations in administrative and other costs. But absent this one use (which is, as I say, a good warning flag) I'm much more concerned about quality of services, or increased output of services, etc. than I am about an artificial percentage that may or may not indicate something amiss.

Remember, good quality usually requires more training, more infrastructure, etc. Such valid expenditures add to admin costs just as much as the much taunted "Excess executive pay". Finding the real cause requires a little work to drill down to examine the actual contributors to the total administrative line.

NOTE TO THE PRESS, PUBLIC, DONORS AND FUNDERS: Think, and do your homework before you rant about an organization's "ineffectiveness" because its admin % rises to the unbearable level of 13.2735%."

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.....

Be Graphic

A nice toolkit for nonprofit graphic design showed up in this week's By the Cup from Techsoup. I would definitely give it a look, particularly if you are in the process of re-working your website or other marketing materials.

I'm back on the road after a three week break. Today to Orlando to give a two day class on business development (there's a podcast on that subject here) for nonprofits and then next week in San Francisco to talk to a large group of award winning staff on Nonprofit Stewardship.

United Airlines is always glad to see me.....it's nice to be loved.

Who really cares?

I posted earlier about this book, and it took a long time to get to the top of my pile, but now that it has, I'm totally intrigued.

Who Really Cares? America's Charity Divide: Who Gives, Who Doesn't, and Why It Matters, by economist Arthur Brooks has really turned my head a bit. At this point, I'm about half-way through the text and then want to dive into the data, which makes up about a third of the book. Brooks makes some very, very interesting points, and so far at least, hasn't been strident or what I would consider too misleading about his data.

It's worth picking up, since I would imagine for most readers it challenges their pre-existing notions of who gives more: liberal or conservative, secular or religious, etc. I'll be interested to see if Brooks comes up with some solutions for the divide, or is just making a statistical case.

More on this in future posts.

Recruitment woes

Very interesting article on a survey of nonprofit recruitment efforts. It shows that while new positions will increase, recruitment budgets are not for nonprofits.

This again speaks to my concern about not just new positions, but filling the slots left by the exodus of boomers over the next 10 years.

Hmmm.

Dressing down/Aging Down

One of the themes of my new book on Generation Change is that we need to "age down" our organizations...not ignore the wisdom of the eldest, but understand that we need a lower mean age of board, staff, management, etc.

Age down, and dress down, too. Well, in some situations at least...and some that may surprise you.

Two examples: One from this past weekend, and one from the AP newswire.

First, real life. Chris and I went to a terrific Valentine's Pops Concert put on by our local symphony this past Saturday. Much fun.

Back in the day, Chris and I were season ticket holders at the symphony. It was our "date night"--8 evenings of dinner and a concert a year, and much anticipated by both of us. But, as time passed, first we needed to drive kids to their own Saturday night activities, and soon there was competition for cars as drivers licenses were earned; we drifted away from the symphony. Our concert nights were traded in for things that we could do with our kids as they got older: Broadway shows, visiting musical groups like Chanticleer, Wynton Marsalis, or Spyro Gyra.

All of which leads up to the story of Saturday night....I bet it's been a decade or more since we went to our local symphony. So, as we got ready to go, I looked at my collared shirt and khakis outfit and worried that I would be under dressed. I suggested to Chris that I wear a jacket and she said I'd be fine. I disagreed, since "everyone wore coats and ties to the symphony."

Her answer: "You're showing your age."

Chris was right. The audience was what you'd expect: we were on the youngish side of the mean age. Perhaps 1,000 people there and I saw....three ties, maybe four. No suits. Lots of cargo pants, khakis and sweaters; even jeans. My recollection of the dress "code" was a decade out of sync with reality. And, I was relieved. I HATE ties. (I think it comes from a boarding school background where we had to wear ties everywhere but the shower. But that's another story.)

As a nice follow-up, an article showed up in today's paper.(this copy is from another newspaper, but the story is the same one). It concerns a dress code fight in senior citizen retirement communities. And, its an excellent example of how nonprofits are going to need to adjust their services as generations change.

Go online, young....person.

TechSoup has a great discussion about online events calendar tools in this week's issue of By the Cup, their free newsletter. I like the suggestions, and if you don't have such a part of your website, take a look.

Of course, if you don't want most people under 30 to come to your events, or, for that matter, anyone that first goes online to find information, never mind.

The issue of getting everything online is a crucial part of making your organization more user friendly for the increasing number of people that rely (for better or worse) on the net for their news, information, movie schedules, user ratings, shopping, and communications.

Here's the rule: If anyone asks a question about anything from now on, after you answer them, go put the answer on your website. Soon. Because someone else will ask the same question....soon.

A taste of the future...

My wife Chris has her MacBook home from school a lot, and last night I saw a bit more of the future.

I grew up being promised, like everyone in my generation, two iconic tools of the future...flying cars and video phones. I remember going to the 1964 Worlds Fair in New York and there were a pair of mock video phone booths five feet apart. My grandfather and I went into one, my parents went into the other, and we pretended to be on the phone even though we could actually hear my parents through the air better than through the speaker....

Well, last night, the future arrived. Chris and I used iChat on her laptop to talk/see/chat with Ben in Denver for nearly an hour. I've been at his new place, but Chris hasn't, so he walked around the house, and gave Chris a tour, using the built-in camera in his laptop. She, in turn, showed him some new art here in our place. The connection was perfect, not jumpy. The conversation flowed very freely, with just a few "what did you say?", although all three of us were talking simultaneously occasionally....Of course, it was also free, not that cell phones cost much, but free is free, and a live video feed is worth how much audio?

In its current version, iChat supports up to four people simultaneously and works with most IM services (we used AIM last night).

I see this as a key piece of the future of team communications for increasingly spread out nonprofit staff. Small team meetings, "face time" between ED and Board presidents, a benefit for those of your staff who have to travel to stay in touch with their families.

Dream realized......I gotta go outside and look for my flying car.

Save some unemployment tax money!

This came across my screen recently and looks like something you should check out if your nonprofit has employees, and you want to save some money. Does that sound like you?

The organization is called the 501(c) Agencies Trust, and it works to reduce the expense of unemployment insurance for nonprofits. A nonprofit itself, the Trust is governed by a board of trustees representing large nonprofits from throughout the nation.

From the website:

"Unemployment Program for Nonprofit Organizations

Nonprofits have saved millions of dollars over the years by participating in the 501(c) Agencies Trust. Last year alone, members saved nearly $30 million, money that was available for valuable service programs instead of paying unemployment costs.

A 1972 federal law gives nonprofit employers the option of reimbursing the state for actual unemployment claims rather then participating in the State Unemployment Insurance (SUI) program.

The 501(c) Agencies Trust has been helping nonprofits exercise this option with a secure, cost-effective alternative since 1982."

I'd give this a look!

Democracy...LIVE!

Got to check something off my life list this morning....got to see someone declare his candidacy for President. Barack Obama.

How could Chris and I not go? Here, in Lincoln's hometown (who Obama referred to as "another tall, gangly Springfield lawyer"), how could you sit by when history was being made right down the street?

Besides, I really like the guy.

How was it? Cool....actually it was really, really, REALLY cold. Wind chill was below zero when we got there to stand for about an hour before Obama spoke. But the crowd was excited, friendly, and it must have been a few degrees warmer all packed in together.

Within hearing range, there were people from Arizona, Indiana, lots from Chicago, St. Louis, Maryland. All who made the trek to stand out on a freezing winter day to hear a man who gives them hope.

That's what's so great about democracy. Even at my age, with a lifetime of cynicism and disappointment in candidates resting on my bones, a new campaign can still bring hope.

Back to the nonprofit world in the next post.

Give your Treasurer a break

It happened again. An email from a nonprofit board treasurer asking how she could graciously get out of her job...."I've been on three nonprofit boards in the past 15 years, and because I'm a CPA everyone ASSUMES that I want to be treasurer. I understand their assumption, but I'm sick of it. Been there; done that...three times! Is this a problem on every nonprofit board?"

Sadly yes, and for many its worse than that. Sometime you're like the Pope-you have the job for life. Why? Because it takes a few years to really figure out what the organization's finances are all about, and the board counts on the treasurer to be the trusted interpreter. So, once you invest the time, they want you to stay.

They could give you help. And this is what I told my email correspondent...click the link to see the full answer. As you'll see, it doesn't help her much, but it can help your organization. I also told her to simply give a year's notice....and find a deputy treasurer ASAP.

Here's a resource....and its free

Here's a resource you may not have seen:

Free Nonprofit Management Tools, from the Fieldstone Alliance. The collection includes all kinds of good things in such areas as Boards, Collaboration, Lobbying and Advocacy, Finance, Community Building, Marketing, Management and Trends.

You can find some assessments, and subscribe to their free newsletter "Tools You Can Use."

Great stuff. Check it out.

Generation change and...

My current newsletter is out, and the topic is Generation Change and Your Staff.
This is the first in a number of issues this year that will deal with Generation Change in different contexts. I'll look at: Generation Change and the People You Serve (May), Generation Change and Technology (September), and Generation Change and Marketing (November).

All of this is because the huge issue of generation change is on my mind for good reason: My newest book is coming out in about a month. It's called Generations: The Challenge of A Lifetime for Your Nonprofit, and will be published by Fieldstone Alliance. You can see more about the book at pre-order if you are interested at the Fieldstone site.

When I talk to a room full of CEO's and board members and mention generation change, all the heads nod. They all know this is an issue, but my experience is that they see it through one lens, not the huge gumbo of competing stresses, changes and opportunities that the changing of the generations offers. For example, lots of the audience will be thinking: "Oh, he means Executive Transition." Others will be thinking "Yeah, I'm having so much conflict with my 20-something staff." And still others will be considering generation change as a fund-raising opportunity.

You know, the old story about the blind men and the elephant.

And, truth be told, I thought the issue was pretty simple until about five years ago, when people began to come up to me at training sessions and say: "I love what you say about our nonprofit being a mission-based business. I came to this organization two years ago after 25 years at GE (or in the military) and I love what we do, but I still can't talk to these people!"
Then, someone else would come up and talk to me about inter-generational conflict, or how old their board was, or how "all our volunteers are dying off", and my warning sensors began to go off.

A few months later I was speaking at a convention of CFO's and one of the workshops was on paying for retirement for Boomer managers. Ahh, crap. There's a financial side to this, too. That did it.

I dove into the subject and started reading and studying, and right after Nonprofit Stewardship came out in 2004, I started working on my editor, explaining that generation change would be a really, really important topic, and we needed to get going. He agreed, but wanted to wait for a while. I was not happy, but it turns out he was completely right.

I don't think our timing could be better. There is a regular "Boomer Files" section of Newsweek, discussion of boomer retirement on CNN, articles on generational conflict in the workplace (I found 12 titles on the subject on Amazon when I started my research, I'm sure there are more now. This issue has gotten on to the radar of foundations, United Ways, and university nonprofit programs.

I hope the book is a help to the sector. We'll see