2012-good news or bad for nonprofits?

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!

What do donors want?

Effective nonprofits? Yes, says some interesting research by Guidestar and Hope Consulting. But, the research also found that very, very few donors did any research on the nonprofits and even fewer did research on effectiveness.

This piece, from the Chronicle of Philanthropy gives an overview of the research and some hands-on ideas of what your nonprofit can do to maximize income from the many, many people who care.

It's worth a quick read....it might provide a long term return.

Simply....Awesome

With all the terrific donation aggregation sites out there like Global Giving and DonorsChoose, or the micro lending leader, Kiva, (all of whom I donate or lend to regularly) it's hard to think of an innovation to this model that would make you stop and say...."That's awesome!"

Unless, of course, it's the Awesome Foundation.

The basic idea is that 10 people (the trustees) get together to donate $100 per month and make monthly $1,000 grants for an awesome idea. 100% volunteer run, the idea is spreading fast. Started in Boston, the foundation currently has 27 chapters in the US, Canada, Australia, the UK, Germany and Switzerland.

You can fill out an application to start a local chapter online. If you're a charity or individual, you can apply for a grant as well.

How cool is all of this? More than cool: Awesome.

Probationary Board Terms

When I hear of a new idea in nonprofits, I listen, consider, perhaps investigate a bit and wait for a while to see if it's repeated somewhere else. Second time; interesting. Third time, OK, this may have merit.

Just that sequence has happened to me about the concept of a probationary one-year term for board members. The idea is that both the nonprofit and the board member need to get to know each other. The nonprofit needs to know that the board member will show up, show up prepared and show up ready to participate. The new board member needs to know whether the board obligations they were told about are true or an......understatement.

After a year, a probationary board member is, hopefully, asked to serve the first of two three year terms. If he or she agrees, all good. If either party is uncomfortable, they can back away and not take up a valuable board slot for three years.

I think this idea has some legs. With board members getting harder to recruit, it allows the good ones to be on the board one year longer, avoids "empty seat" syndrome and sends the message to all board members that they are expected to participate.

We'll see if I hear about it a fourth time.....

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!

Social Entrepreneurs 5.0

As long time readers know, the term "Social Entrepreneur" has morphed repeatedly over the past 15 years. At first, it was about the then odd idea of a nonprofit manager acting in a businesslike manner. Then, some of these managers started outside businesses; thus a second definition. In fact, my 2000 book Social Entrepreneurship: The Art of Mission-Based Venture Development, was about both of these uses of the term. In the book, I defined a social entrepreneur as "someone who takes reasonable risk on behalf of the people their organization serves."

Since that time, social entrepreneurs have been defined as investors who only invest in "good" businesses (those that don't abuse workers, for example) or businesses whose product benefits society. I've even heard pharmecutical representatives say that, since they make medicine and give away some of their product, they are social entrepreneurs. That seems a stretch to me, but whatever.

When I was teaching nonprofit management at the Kellogg School of Management, most of the students were very, very interested in making sure their business had social impact in some form. Kellogg's students are still in that frame of mind, but not unique-it's true at nearly all business schools today-and these graduates are increasingly pushing their businesses to help in some tangible manner. That's good, but....there's an even more interesting and potential-filled model

The definition of social enterprise I'm most excited about is what I would call version 5.0, the melding of the business and social benefit. Three good examples of this model are:

Toms Shoes: Buy a pair of shoes and a child in need gets a pair.

Two Degrees Bars: For every healthy food bar you buy, an aid organization gets a food pack for a child who is starving.

Sleeve Candy: Started by four Kellogg students, who linked up with the Salvation Army, Sleeve Candy retrieves, catalogs and sells vintage T-shirts, and 30% of the revenue goes back to the Salvation Army.

The best news? Investors are REALLY interested and have capitalized firms with this model repeatedly. They see the appeal of linking profitable business with meeting social needs.

Is it the answer to all the world's ills? No. Will businesses like this replace government in aiding the world? No. Does this foretell the end of the need for nonprofits? Not at all.

But with so many needs in so many places staying unmet, I'm on board with any idea that helps more than it hurts, and this model seems to have huge potential.

Finally--if there's still someone on your gift list for the holidays....think about patronizing these organizations or others you may know of that are using this model.

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.

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.

Going to Scale, Part 2

(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.)

Models for Scaling

In the first post on scaling, we looked at whether or not your service could be duplicated. There are other questions as well:
How much time, talent, and treasure do you want to invest?
What's a reasonable (read, safe) growth curve?
Can I develop a model that people can follow?

Lots of complex issues to decide. But if you choose to proceed, what options do you have? What have other nonprofits done? How have they done it? What are the models, methods and structures they’ve used? There are many options but only really two questions to answer.

The first question  might surprise you: How much control do you want of the scaling? Does your board (or management team) feel that tight control is essential to see that the mission is done properly? That’s fine, but costs more money, time, effort and liability. Or, can you give up some control and put the idea in the hands of others? If so, less time, money and oversight are needed. Or, is your need for control somewhere in between? The choice of level of control comes first. That’s the strategic issue.

The second decision is more tactical. What mechanism will you use to scale?

Are you planning on opening more offices under your current 501(c)(3)?. That would result in complete control; control of staff, budget, office location, decor, branding, etc.

A bit less control would come from a subsidiary model, where you open or take over another local 501(c)(3) in a remote community. There could be a local board overseeing a local staff. Perhaps the local gets budget approval from your organization, perhaps not. Perhaps your board has representation on the subsidiary board, perhaps not.

A third option would be for you to brand and deliver; developing a  how-to guide on a website, but to copyright the idea and trademark the brand. This might bring you some funds, but more importantly it would give you some control of the way the idea is used in other communities. You could set standards to go along with use of the brand name, offer on-site consulting, etc.

The least control comes from simply floating the idea, with your experience and a set of suggested processes. I call this the open source option, named after the very common software model, where programmers develop code, either in snippits, or in complete programs, and then put them online for others to use and/or improve. Nonprofits already do this for things like policies and procedures, and websites such as IdeaEncore.com have led the way in facilitating the free exchange of documents. In your case, you would not just share a document, but an entire service concept.

Just remember that once a programmer posts open source code online, anyone is free to use it and, more importantly, to modify it. The original programmer loses control, and so would your nonprofit.

Going to Scale, Part 1

(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. )

Can Your Mission Provision Methods Be Duplicated?

Think about nonprofits that are “everywhere:. To do that, think of the high-value nonprofit brands, ones like Habitat for Humanity, Goodwill Industries, Susan G. Komen, the YMCA, Girl Scouts, Ronald McDonald House. Why are they everywhere? Because they’re rich? Because they had unlimited resources?

No. These iconic nonprofits are everywhere because they have a very good, easily understandable core idea, one that motivates people to say “Hey, we should do that here”, COMBINED with a methodology that can be understood and then replicated with local customization, COMBINED with terrific national support and structure.

For example, what’s the core idea of a Goodwill Industries? The business model is to have people donate goods, sell them in an appealing retail location and use the profits to fund other jobs related programs. Formed in 1902 in Boston, Goodwills now work in every part of the United States and Canada as well as fifteen other nations.

How about the YMCA? Originally formed to provide safe, Christian housing for young men moving to large cities, the Y has spread and evolved with the times. Today, the mission is to strengthen the mind, body and spirit of the community. You might argue that the Y focuses mostly on the “body” part of that triad, but over 200 years, they’ve become an institution in the United States.

On a shorter timeline since its founding in 1967, so has Habitat for Humanity, based again, on simple, appealing replicable idea: use volunteers to work alongside the eventual owner to construct housing.
Ronald McDonald House? Let’s provide a place for the families of critically ill children to stay at no cost. Susan Komen? Let’s find a cure for breast cancer, a kind of cancer that affects nearly every family in the United States.

All simple, appealing ideas that are replicable locally.

Now, what about your scaling idea? If you really want to go to scale, if you really want to make a huge regional, national or global mission impact, heck, if you simply want to open four more branches in your local county, you have to have a simple, replicable idea that takes into account local needs, wants and cultures.

If you’re thinking about scaling up, how are you going to teach others how to do what you’ve done?

Will you write it down, put a series of videos on YouTube, develop a training program, how? Choose one or more, because you can’t be everywhere, and your top staff can’t all go off into the field and leave your current service area bereft of expertise.

So, the first question is this: Is our idea, our service truly replicable? Can it be done well by others the way we do it? Just because you can do your mission well, doesn’t mean others can. Just because you “get” what makes your nonprofit special, doesn’t mean the exact same thing will happen the exact same way elsewhere.

In fact, that’s the secret.....it won’t. In every new community, in every new location, your mission provision, if it’s successful will have to adapt. More precisely, you’ll have to design a mission-replication system that is adaptable, that is flexible enough to accommodate needed modifications on the ground.

In my next post, we'll look at some models for scaling.

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.

Walking for dollars

I've been in my fair share of charity walks, and for many years ran 5k, 10k and half marathons, each of which benefited some charity or other (the point being I can't remember). On our last walk for the breast cancer fight (my wife is a survivor), Chris and I talked about all the energy being expended walking in a great circle rather than doing something actually productive.

Which brings me to today's Op-Ed piece in the New York Times by Ted Gup. I think I agree. I know it's going against the trend, but I'd love to have a development pro write a counter piece to talk about the logic from that perspective.

I've often thought that some fund raising efforts are energy intensive and money more--take for example, schools sending small children out to sell crap....I mean catalog treasures...to their neighbors. How many parent child hours go to the effort, and how much of the money goes to prizes for the kids which is really their motivation?

Development is a huge part of philanthropy. It not only raises needed funds, but invests (literally) people in our causes. I'm not a development professional and I hope if you are, you'll weigh in......Can't we get a bit more efficient?

Free Online Fundraising Tips

Network for Good has made a free set of tips for online fundraising available here. You have to fill out a brief form, but free is always a good price. If you're doing or contemplating more online fundraising, check it out!

When is a fee really a property tax? And, is that OK?

As most readers know, governments everywhere are revenue short, and are trying to come up with new ways to balance their budgets without having to make politically damaging cuts. Every municipality, county, and state has a different (and sometimes dizzying) array of taxes that make up their revenue stream. As a regular traveler, I've seen one hidden one for years; the 12%, 14% sometimes 18% tax on hotels that is added in many cities, taxing the people (visitors) who don't vote. Sweet move for the local pols.

What very few governments have done up until the current recession is force nonprofits to ante up and pay property taxes. Historically, nonprofits have been tax-exempt from all taxes; sales, property, income, etc., but now cities from Boston to Burbank are making efforts to extract "fees" that are really substitute taxes. And, of course the outcry is on.

I have very mixed feelings about this. Of course nonprofits are also in financial straits, and adding another levy to their financial burden could not come at a worse time. But many cities have significant parts of their land exempt from tax: Boston is a great example, with all the colleges, church property and government land being tax-exempt (I've heard estimates of up to 40%) the city still has to provide fire, police, trash collection and public eduction despite to every square foot of the city.

Additionally, this seems like a bad place for nonprofits to put up a fight....we in the sector talk about how important we are to the community, how much we care about the community, how the community would suffer without us, but we collectively whine about paying what every homeowner and business in our community must: our fair share of the tax load.

The trend toward billing nonprofits for their part of the tax burden is not going to go away, it will only accelerate as city managers watch peers tap this new resource. Long term, funders (yes, the governments, as well as foundations and large donors) need to recognize that such participation in the community is a good thing and include property taxes as part of each nonprofit's funded budget, without dunning nonprofits for yet another dreaded "admin" cost.

275,000 gone

Well, now we know. Yesterday, the IRS announced that 275,000 US nonprofits have lost their tax exempt status. These nonprofits did not file the legally required paperwork for three consecutive years, and are now considered defunct in the IRS's eyes.

Certainly there has been enough notice, with repeated announcements from the IRS, state nonprofit associations and the nonprofit press and blogosphere, including here. But up until yesterday, we really didn't know how many nonprofits were non-operational, and it was surprising, at least to me, that it was this many. 275,000 represents over 14% of registered nonprofits, a huge number.

Agencies can apply for reinstatement, but few will, I suspect.

Here's the full article from the Chronicle of Philanthropy.

Remote board participation

Let me start and the end and work back: Should board members be allowed/enabled to attend board meetings remotely by conference phone, conference video and/or Skype?

There's a confluence of events that's pushing us in this direction: A reduction in people's willingness to serve on boards resulting in a lessening of nonprofits dunning (or canning) board members who don't attend in person; the improvement of technology; the expansion of many nonprofits to multiple locations and, as a result, having board representation from those often disparate sites; top flight board members traveling for work less and being used to attending meetings electronically.

So, the next time you revise the part of your bylaws that deal with board attendance and quorums, should your nonprofit allow remote attendance? What's the impact on board cohesion and discussion? What's the policy impact? Is this simply inevitable?

I have a good friend who runs a large nonprofit in Virginia, one that recently merged with a nonprofit in another part of the state. Board members representing both service areas come to meetings with a video hook-up that's hosted at the agency location nearest to them. My friend notes that anyone doing this kind of thing needs a dedicated tech person at each site so that the staff or board members won't be distracted. My friend also feels the technology works well, dialogue is easy since everyone can see everyone else, and that it has increased attendance at meetings.

My question to him was, "..and what about the board member who is on the road and wants to attend via Skype?" He stopped and said, "We can accommodate that, but only to the point that our video screen fills up too much. We'll probably have to set a limit on that."

There you go. You don't want a future where board members never meet in groups, but at the same time, the trade off, if well done can benefit the organization tremendously by increasing board participation.

This will be interesting to watch unfold.

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This is going to be awesome. Darien is amazing and his work is top flight.''

Check out the release...and if you're in or near one of these cities, it's a must go:


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• Insight Into the Latest, High Profile Viral Marketing Campaigns
• Resource Review of Low-Cost and Free Social Media Tools
• Monitoring and Optimizing the Impact of your Campaigns
• Social Email Campaigns: What Works and What Doesn’t
• Tweets that Travel: The Essential Skill of Viral Writing
• Using Social Media for Lobbying and Advocacy
• Selling Social Media to your Executive Director
• Identifying and Connecting with Influencers
• Maximizing your Facebook Presence
• Fundraising with Social Media
Curated and MCed by Darian Rodriguez Heyman, the former Executive Director of
Craigslist Foundation and Editor of Nonprofit Management 101: A Complete and Practical Guide
for Leaders and Professionals, these events will help attendees better grasp the challenges and
opportunities this new landscape presents for nonprofits and causes.
Registration for the full-day conferences will be $95, and will include admission to the book
release party that follows. Coffee, tea, and lunch will be provided during the day, and drinks
and hors d’oeuvres will be served at the party. We expect an audience of 250-350 nonprofit
professionals for each conference and 250-500 for the evening programs.
NTEN, the Nonprofit Technology Network (www.nten.org) is providing fiscal sponsorship
of the program and will receive a portion of the proceeds. The series will be promoted by a
variety of partner organizations and media sponsors, as well as through social media and
nonprofit blogs. To date we have confirmed The Chronicle of Philanthropy, Idealist.org,
YNPN, Taproot Foundation, Network for Good, Humanity in Action, RSF Social Finance,
Echoing Green, WiserEarth, and Ashoka’s YouthVenture.
Social Media for Nonprofits is currently planning eight dates across six cities along the following
2011 timeline:
• San Francisco, CA: May 3
• New York City, NY: May 10/11
• Washington, DC: June 7/8
• Chicago, IL: June 21/22
• Atlanta, GA: July 12/13
• Los Angeles, CA: July 19/20
• San Francisco, CA: Oct. 4/5
• New York City, NY: Nov. 8/9
If you are interested in learning more or supporting Social Media for Nonprofits, please contact
Darian Rodriguez Heyman at (415) 637-5062 or darian@darianheyman.com.


Pushback on Going to Scale

We're all so trendy. We follow the leader and often let someone else decide what we should do; what color tie/dress/shoes/suit we should wear, what jargon/slang we should use. What's in is SO important to us.

And I'm as guilty as anyone in following the trends-well, except in fashion, where my daughter and wife will tell you I'm hopeless.

That aside, the trend I want to push back on today is the far too common one from funders (foundations, corporations and governments) about funding only ideas that can be "taken to scale".

On the surface, and from the funders point of view, this makes eminent sense: if I fund one project in one city and it can be replicated elsewhere, I get more bang for the buck. The problem with this, as with so many ideas generated at the 30,000 foot level, comes on the ground. Nonprofits seeking funding are forced (implicitly or explicitly) to favor ideas that can work broadly. This causes them turn away from going after more customized solutions to local (and often unique) problems that can help their community.

Moreover, in seeking "models" that can be duplicated elsewhere, the 30,000 foot view forgets that no model is replicable without exactly the right people. What causes a program or solution to work in one place is a potpourri of the location, the issue, the people, the timing, the politics, even the geography. To assume you can just replicate the model elsewhere is...naive, and not borne out by experience. It takes a ton of work (and money)--and adjustment to the local situation on the ground.

Further, by taking funding that urges them to go to scale with their idea, nonprofits (and the funders) often forget the truth on the ground: In rapid growth situations, the two things that an organization most easily runs out of are quality and cash. If growth is the priority, what do you do, take your worst manager to open your new expanded facility or location? No, you take your best person--and in doing so remove that best person from what she's doing now--awesome, high quality mission.

And, in many organizations that have been beaten down by funders' focus on low administrative costs, there aren't more managers to just plug into program that your best manager just left. So the funder may well have first left the nonprofit under-administered and now wants it to grow. Hmmm.

Speaking of under-administered, let's get under-funding in terms of the cash cost of growth. This is huge, and, again, mostly under-appreciated by funders. The funding options I often see in the nonprofit world are for a one time grant, with the desired outcome of a scalable, replicable idea. If the idea "fails", no more funding.

What happens in the for-profit, venture capital world? A great idea gets an initial round of funding with several more rounds of financing as the business grows. Why? Because growth sucks up cash like a giant vacuum cleaner. And, venture capitalists know the idea will morph and change over time as implementation experience is added to the mix. There's no model, just the current situation on the ground. Nonprofit funders could learn a lot from embedding themselves in a VC firm for a year.

The bottom line for me is to be very, very careful when someone tells you to go to scale. Look at all the costs of taking the money: the stress on your current program, the potential loss of focus, the cash cost of growth, and look at it all before you obligate your organization.

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.

Keys to Smart Stewardship

I'm working on a new book tentatively titled: Smart Stewardship: Making the Best Decisions for Your Nonprofit. The book will contain some new ideas on innovation, growth, going to scale and a decision tree for both board and staff to use.

This month's Mission-Based Management Newsletter contains the first of two part series on the key elements of Smart Stewardship. In the next issue, I'll lay out my decision tree.

Take a look and feedback is welcome!