Wednesday, January 31, 2007

Bank on that....

I was thinking about banking today, and how far we've come in nonprofits in relation to our banks. I well remember when I was board president of a large ($12,000,000 annually at the time) human services nonprofit here in Springfield 20 years ago, and we went to the our bank for a $75,000 line of credit (which is almost nothing in terms of cash flow) and the three old line banks in town shared the "risk" for that loan because we were, well, nonprofit....I discovered that the banks did all of their nonprofit loaning in a pool to reduce risk....incredible to think of today.

Progress aside, there are things to remember when selecting a bank, or even your every five year review of the best bank for your organization. Here's my list:

1. You are the customer. If you are borrowing, the bank is selling you money. Banks want your deposits--that's the money they use to make loans with. So never walk into a bank and say "We're a poor wonderful charity, can we please open account in your nice bank?" Instead, say, we're a $750,000 a year (or whatever) small nonprofit business and we're looking for a bank that's a good fit for our deposit, transaction, and loan needs."

2. Never borrow unless you are making money. This is because debt is paid back from profits, not losses, nor from "breaking even" on your income and expense statement. Don't believe me? Ask you accountant. If you have a financial need for a program that is or is going to make money, debt is good. If not, stay away....the one exception to this is a line of credit for short term cash flow issues.

3. Ask lots of questions about services and fees. Often there are fees that are not hidden, just never discussed. Check fees, online transaction fees, etc. TIP: NEVER pay for online transaction fees, bill paying, inter-account transfers....there is far too much competition in this area.

What will the bank want to know? A lot. They'll ask about your audit, your area of service, your governance, if you have conflict of interest statements, how you budget, etc. You want to impress them with your management skills, and not wear your cause on your sleeve.

Your relationship with your banker is crucial. Choose wisely, review regularly and meet with your banker twice a year. It's worth the time.

Monday, January 29, 2007

More on wants, bad fundraising, and help for our veterans

My post on whether wants matter drew a really good comment from Nedra. It was, frankly, better said than my answer, and pointed out clearly the difference between simple education and a mix of education and marketing to get the work done. A shoutout to Nedra!

I had a scary call last night: "Hi I'm from _____, a professional fund-raising firm helping our brave disabled veterans get better accessibility in public buildings."
Huh? Repeat after me...A...D...A....

I said: "Oh, that sounds important, tell me more..."
The marketer thought she had me hooked and went on enthusiastically about making federal buildings and hospitals more accessible and how the money would go to influence congress.

Once she was done, I asked: "Have you ever heard of the Americans With Disabilities Act?"

Of course, she hadn't. I said:

"In 1991 there was sweeping change in federal law that required all the accessiblity you see today: curb cuts, wheelchair ramps, automatic doors, accessible rooms in hotels, etc."

I mentioned that I've been overseas on crutches within the past two years, and we are light years ahead of the United Kingdom...and THEY are pretty advanced in this area compared to the rest of the world. Then I said:

"So what exactly is your group doing, if this law is already in place, enforced, and effective?"

She hung up.

What a great example of scam fund-raising. Put "disabled" and "Veterans" together and you KNOW people are going to open their hearts and wallets.

And, of course, the saddest part is that there ARE real unmet needs for our disabled vets. That's why the Intrepid Fallen Heroes Fund, and other great organizations have sprung up to support the vets in ways that the Veteran's Administration won't (which is another whole disgrace).

I both need and want more responsible fund raising....

Sunday, January 28, 2007

Do wants matter in marketing?

I got a ranty sort of question from a student recently. She is taking a course in nonprofit marketing and her class is using one of my books, Mission-Based Marketing, as the text. So, she tracked me down and presented me with this dilemma:

"IF we know what's best for people, (going off drugs, or getting a mastectomy, or going to church, or staying in school), why do we need to worry about asking people what they want? We KNOW what they need. You focus on giving people what they want in your book and its driving me crazy. I don't see the point in asking people."

I was unsure of where to start. Do I address the marketing cycle for nonprofits, or the need to treat everyone like a customer, or why marketing improves mission output, or, or, or?

I finally decided to try to engage her personal experience. I asked her to think of a high school or junior high teacher that really had gotten her excited about the material in the class. A great teacher makes you want to learn and even learn in spite of your self sometimes. You have to go to the class--it's a need as defined by the school board. But the teacher makes you want to go...and then I asked her to imagine an alcohol and drug abuse program like that, or an immunization clinic. All children NEED to be immunized, but how can we make parents WANT to take them in?

Of course, I was pretty sure I was not only nailing the issue, but being persuasive.

I got back this..."OK, I guess. Thanks."

Not as engaging a teacher as I thought I was, it seems.

Saturday, January 27, 2007

Below the radar....

I was reminded yet again this week in Denver about the difficulty nonprofits have in hiring and retaining good employees in today's economy. Two key contributors:

1. Health care costs. While rates/contracts/grants for nonprofits go up at or below the rate of inflation, health care premiums do not--they go up way, way faster. And, the result is that nonprofits are passing the increased health insurance costs on to employees, who already are underpaid.

2. Educational debt. Today's college and grad school students bear an unprecedented amount of educational debt. I have students at Kellogg who tell me that they want to work for a nonprofit (and often did before grad school) but how do they pay off a $60,000 educational loan on a $40,000 a year salary?

Idea: Federal legislation that forgives one year of debt for each year worked in a 501(c)(3) with an annual budget under $20,000,000.

If we can't hire and retain good staff....we'll give crappy service. Not a good thing.

Thursday, January 25, 2007

Rocky Mountain Fun

Had a really good day yesterday...worked in Denver for Colorado Nonprofits, as well as the University of Colorado Graduate School of Public Affairs. Lots of fun interaction with some great people, and got to catch up with some long-time friends, too. And, as a free bonus, I got to spend time with my eldest son.

The subject of the day was Social Enterprise, which i posted on yesterday. The questions were good, but pretty predictable..."Do we need a new corporation?" (99.9% of the time, no), "What do we do if our board is risk-averse?" (give them more caffeine...actually just break the risk down into smaller steps and keep them involved), "What businesses work?" (read this weeks Chronicle of Philanthropy).

At breakfast, before the large 200 person luncheon, I had a more wide-ranging discussion with ten local nonprofit leaders. We talked about trends in Colorado, competition, issues of working with younger staff, and some recommended reading. They also wanted to know about my new book, Generations. Fun, smart people: I would have liked to have continued that conversation for another two hours.

A real highlight for me (as always) was talking to grad students late in the day. There was talk of me coming back to teach again, and I'd love it.

Final awesomely easy trip home, arriving three hours early.

Wednesday, January 24, 2007

The magic bullet....or not.

Today, I'm going to be talking to people in Denver all day about Social Entrepreneurism. First a small breakfast of nonprofit execs, then a luncheon of 200 and then a master class of grad students at the University of Colorado Grad School of Public Policy. A fun day, no doubt, but it my preliminary conversations with some people raise long standing concerns.

First ,the term "Social Entrepreneurism" means so many different things to so many different people that I could take all day here just running through the sometime contradictory definitions. MY definition is this "The a social entrepreneur is someone who takes reasonable risk on behalf of the people the organization serves". A good thing, no doubt.

But, let's talk about what social entrepreneurism is NOT.

It's not the salvation from fundraising.
It's not always about starting a new business.
It's not the magic bullet that saves the organization.
It's NOT a sure thing.

I do get tired listening to otherwise very smart execs talking about how they are going to start a new business and save the world. If only. I think we need a large dose of reality on this subject.

Here's the deal as I see it:
1. Being businesslike in pursuit of mission is a good thing.
2. Expanding services to new areas or new populations without doing a business plan is stupid.
3. So is starting a new business you know nothing about.
4. New things are ALWAYS risky: doing the business plan reduces that risk, but never eliminates it.
5. Building a new business is hard, long work. There is no sure thing.

I've written an entire book on the subject, titled (oddly enough) Social Entrepreneurship: The Art of Mission-Based Venture Development

And, check out two editions of the Misson-Based Management Newsletter that focus on:
Business Development

In addition, I've got more on this topic in the Ideas area of my website. Check these out:
Are You Ready for Competition?
The Marketing Cycle for Nonprofits
The Marketing Disability of Most Nonprofits

Saturday, January 20, 2007

Interim whoas

I get a call every 18 months or so looking for someone who could fill in as an interim exec. Once or twice I've been able to give the caller a suggestion, and sometimes, (I know in total desperation) they ask me to do the job. I always say, "No, no NO....thank you".

This week, I had three such calls.

This is yet another indicator of the change going on in the sector. Not only have we established that most current execs NEVER want another exec job, but also that most senior managers in the sector are at or near retirement. Thus, the math is pretty simple: More job openings plus fewer candidates equals a greater need for interim execs when searches fail to be successful before the current leader departs.

I've always thought that being an interim exec would be a horrible job, although I know two ministers who I greatly respect who have done only that for about 15 years each... and they love the work. Good for them.

Of course the irony of going after a "titular" interim ED is this: usually, after a long term ED leaves, the next person is only there for a few years anyway, and thus is really a de-facto interim exec, followed by another long termer. I've seen this a dozen times.

Well, the generation change is coming...oops, its here.

Two resources, one that I'll flog shamelessly here for the next few weeks:
My new book Generations: The Challenge of a Lifetime for Nonprofits, is coming out March 15. You can read more about the book at the publisher: Fieldstone Alliance, by clicking on the link.

And, another resource on interim directors is a great article from Bridgespan on utilizing interim directors and how it benefits the organization. Here's a news article on the Bridgespan piece, with links to the original article. And, if you do go to Bridgespan...join as a free member, and get their regular newlsetter, Leadership Matters. Good stuff.

Thursday, January 18, 2007

You think they'd learn.....

I have set up my Google News to include stories about "Nonprofit Management" "Nonprofits" and "NGO's". Most of the time, I get stories about fund raising events, or building openings, the appointment of board members or the hiring of a key exec.

Other days.....

Today, I started with a story from the New York Times about an ex-official of the American Red Cross being charged with fraud...allegedly about $110,000 over the last five of her 17 years at ARC. There was, of course, the expected disclaimer from the Orange County Exec...“The American Red Cross takes a very aggressive stance against fraud and works closely with law enforcement when criminal activity is discovered.” Since the story is a cautionary tale, I decided to blog about it, but then remembered that if readers who were not signed up for NYT online were to click on the link they would have to register, etc. So, I decided to look for another edition of the story on another paper, and found a link for you.

And, I also found more fraud at the Red Cross--in fact, almost identical to the Orange County event. The Albuquerque Journal reports that the Almorogordo, NM office suffered $120,000 fraud from a former manager. Most of this money was intended for Katrina victims. Gads. In this case, the manager admitted the crime and will spend some well-deserved time in jail.

Given the similarities of these two cases...insufficient oversight with donations, obviously inadequate auditing (the fraud in Orange County occurred over FIVE years...), it would seem that the Red Cross has not done what it said it would do---tighten up its financial controls.

So, next disaster, no money for the Red Cross from me, or anyone I can talk out of it. I was burned after 9-11 and after Katrina. No more.

I wonder what tomorrow's news will bring.

Sunday, January 14, 2007

Great nonprofit website improvements

I've been doing New Year's cleaning and adding on my website, and in doing my checks, found significant improvements to two superb nonprofit resources. Check them out. Carol Weisman has a new look, new resources, and great content. If you have a board, you need to know about this site. Carter McNamara has reformatted his incredible site, with easier search, and a more usable indexing system. This is one of the most useful resources on the web.

Saturday, January 13, 2007

Past Mission-Based Management Newsletter topics

A friend recently asked me how he could view past issues of my monthly online newsletter for nonprofits. I told him that all the past issues (at least the three years worth when I have been dealing with a single issue each month) were listed at the bottom of each issue. "But what if I don't scroll down that far? Why don't you put them on your blog once in a while?" he asked.

If you don't get my newsletter, FYI, each month's topic is covered from a management, marketing and tech perspective, and I include recommendations on both books and links on the issue. Check out one of the issues below, and if you want to subscribe, you can just email me at It's free, and I will never, ever, ever share, sell, rent or in any other way hand out your email address. You can suggest a topic for future issues, too!

Here are the past issue subjects for 2004-2006.

Jan Business Development
Feb Fund Raising
Mar Volunteers
Apr Financial Management
May On-line Marketing
June Transparency
July Nonprofit Start-up
Aug Governance
Sept Political Activities
Oct Getting Younger Staff, Volunteers & Board
Nov Outcome Measurement
Dec Lifelong Learning

Jan Strategic Planning
Feb Leadership
Mar Core Competencies
Apr Expanding to New Markets
May Endowments
June Tech and Mission
July Sustainability
Aug Ethical Benefits
Sept Entrepreneurship
Oct Internal Communications
Nov Board Recruitment
Dec Better Budgeting

Jan Generation Change
Feb Accountability
Mar Ethics and Management
Apr Staff Satisfaction
May When Boards Cross the Policy Management Line
June Staff Rewards
July Saying No to Community Need
Aug Board and Non-CEO Relations
Sept Executive Transition
Oct Advocacy
Nov When Boards Fail
Dec Conflict of Interest

Lots of stuff. Be kind when you read the technology posts from 2004---they MAY be a bit outdated!

Friday, January 12, 2007

A 15 year worry.....

The family is on the road again. Our kids are having their second annual MLK weekend reunion this year in Denver, so two of the three fly today. My wife and I head over to Indiana (hopefully, weather allowing) for a weekend away in Brown County.

Next week brings a trip to Florida for me--37 hour door to door round trip to the Keys to do a three hour pair of speeches. Make any sense to you? The group is NAPSEC, one that I worked with for many years and it will be nice to see the membership again. It's been perhaps seven years since I spoke to them. At NAPSEC, and again the following week in Colorado, my topic is Social Entrepreneurship. It's been six weeks since I've traveled at all, and I'm ready.

The time "off" has given me time to think about the structure of our sector. I read quite a bit over the break about the finances of the nonprofit sector, and the trends, and our current business model seems unsustainable to me--if you think 10-15 years.

I'm guessing that push is going to come to shove soon, and that we'll have to start dealing with more and more of our services being provided by volunteers, and less and less by professional staff. Some parts of the sector (places of worship, art organizations, etc.) already have a large share of their FTE's in the form of volunteers, but I'm talking about human services, the big dogs of both nonprofit employment (see the post of two days ago) and money.

Remember that most fire-fighters in this country are volunteers, and so are about 50% of the EMT's. So, life and death issues CAN be provided by volunteers. The questions, of course, are many. In areas where "certification" or "licensure" is required, will volunteers be available to do that? What about our volunteer management skills? Are those up to a huge change in demand?
And funders? Will they CUT funding even more if we have less paid staff?
This kind of stuff keeps me up at night.

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. is where you can see them, as well as my recommendation for readings on management, marketing, boards, fund-raising, etc.

Tuesday, January 09, 2007

More nonprofit jobs...

Here's a really interesting article from the John's Hopkins Gazette entitled "Employment in US Nonprofits Outpaces overall job Growth." Worth a read....I think it speaks to the need that nonprofits have overall, and note that the average nonprofit wage is below the average national wage---no surprise there.

Monday, January 08, 2007

Who gives a.....?

Again, I'm amazed by how long its been since I posted. Busy, busy with family, holidays, and even some work.

I'm really intrigued by a new book that I ordered over the weekend entitled "Who Really Cares: America's Charity Divide....Who Gives, Who Doesn't, and Why It Matters"
, by economist Arthur C. Brooks.

I saw Brooks on C-Span over the holidays, and his brief discussion of his research and findings was really, really interesting. As with all data and interpretation, I want to see the book and see if there are underlying prejudices or errors, but if his data backs up his oral assertions on TV, the work is groundbreaking and very, very important.

I'll post more on this when the books comes and I work my way through it.

In other news--and forewarning future posts, my newest book comes out in March, and I'm really excited about the reviews and feedback. The book is called Generations: The Challenge of a Lifetime for Your Nonprofit, and it deals with the myriad of issues around the retirement of the boomers, the rise of the next two generations, and implications for service, marketing, staff and board recruitment, technology, and finance.

More on it in a few weeks.

Tech---with Microsoft Vista (finally) coming out, I am reminded of the availability of good open source software that rivals if not exceeds the stuff MS sells. I've used Firefox for a browser, Thunderbird for email, and NvU for HTML work for years, and love them. Regular readers have seen my suggestions on this for some time.

If you are thinking about specific office software, take a look at the very good TechSoup article on OpenOffice versus Microsoft Office. Worth the read.