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What Nonprofit Sustainability Looks Like: An Interview with Hilda Polanco

By Nell Edgington



In this month’s Social Velocity interview, I’m talking with Hilda Polanco. Hilda is the founder and CEO of FMA – Fiscal Strength for Nonprofits, a consulting firm that helps nonprofits and foundations develop the fiscal capacity they need to fulfill their missions, including stronger operations and fiscal management, improved foundation grant-making capacity, and increased staff financial knowledge.

In addition to leading FMA, Hilda serves on the NYC Human Services Coalition’s special commission to study the closure of high-profile human services organizations. She was a founding member of the selection committee of the New York Nonprofit Excellence Awards and has served as an adjunct professor at Columbia University’s Department of Health Policy and Management, as well as on the faculty of the Donor’s Forum of Chicago.

Nell: Your career has been about strengthening the financial capacity of the nonprofit sector. Why do you think nonprofits struggle so much with financial sustainability?

Hilda: All businesses struggle with sustainability, as it turns out, but in the case of nonprofits, there are several additional challenges: I think of these challenges as follows:

  • Missions that compete with the business model for attention, creating an unclear vision of what it costs to deliver services and what the revenue and expense drivers are to delivering these services.
  • A lack of focus on the balance sheet, and instead a focus only on annual operating results
  • An insufficient focus on longterm financial planning
  • A lack of common understanding of the meaning of sustainability, among nonprofits and the funders that support them

Mission-driven leaders who are so important to the nonprofit sector are not often motivated by the “business” of delivering services. They care about the issues, the causes, the communities. As a result, they may not understand what a nonprofit’s business model is, or they may have absorbed a popular mistaken notion about nonprofits — that they should not strive to preserve surpluses. In order to be sustainable, an organization needs to understand its revenue and expense drivers and strive to strengthen its financial position over time.

An additional challenge is pricing. This is commonly subsumed under a discussion of “overhead,” but that term conceals some of the details of the problem. Organizations will face challenges to their sustainability if they are pursuing work or lines of business without fully understanding the cost when compared with what funds they are raising. Where there is a gap between what they raise and what it costs to perform the work, a “structural deficit” takes hold. A structural deficit is not one you can cure with a targeted fundraising appeal –as you could, say, to replace your roof or buy a new school bus. A structural deficit is one that persistently drains resources from the organization until the underlying problem is corrected. It’s a roof that, by design, will collapse every single year.

Having a focus on the balance sheet means having a focus on establishing healthy reserves. We drill our clients constantly on their Liquid Unrestricted Net Assets (or LUNA, for short). LUNA describes an organization’s available reserves for addressing strategic opportunities or unexpected expenses. They appear on the balance sheet. Too many organizations reckon their financial standing by simply comparing income and expenses for a given year. They need to look at a balance sheet. A strong balance sheet allows a leader to address the organization’s future needs. A weak balance sheet creates uncertainty. And this raises the issue of capital. There are several ‘kinds’ of capital—funding that is raised or preserved for different uses, for growth or innovation, for example.

It’s not just nonprofit leaders who need to understand this. Foundation program officers, major donors, and all buyers of nonprofit services need to share in this viewpoint, to arrive at a common understanding of what nonprofit sustainability looks like. The market for nonprofit services is sort of unusual in that we expect the funders, as much as the nonprofit leaders—to be self-reflective about their role in the transaction.

Funders should not expect their grantees to deliver quality services without understanding the full cost of the enterprise. And sometimes, they need to engage in a substantive discussion about business models so they can come to a shared understanding. Funders can have a different conversation with grantees, even if they are only funding a project. The conversation should not be just about what they are “buying”, but also about the organization’s overall capacity. Rather than focusing exclusively on this moment, the question should be “How can we be sure that you will have the capacity to achieve your target outcomes over time?”

What should they be doing to remedy the situation? This isn’t easy to solve. In many ways, it goes against how we think about our roles in a buying and selling relationship. Think about how strange this is: If you value the service your local coffee shop provides, it would be like prodding its owner to charge you more for your coffee so they could stay in business and serve the community who counts on that coffee each and every day!

Of course, the future is unknown. Sustainable nonprofits need to be planning for at least a two year horizon. Decisions made this year will have an impact on future years and preparing for those future years is much more effective with a longer horizon to strategize, rather than pretending that life happens in one year increments in isolation from the following year. For example, new hires, raises, multi-year grants that may come to an end in the coming year. These are all examples of business assumptions that should be taken in the context of their impact on future operations. More broadly, an organization must revisit its financial model over time, understanding what may have changed in the funding ecosystem or what competing organizations are doing.

Nell: There are two parts to financial sustainability: bringing money in the door and then using that money effectively. There have been some strides toward changing cultural norms around how nonprofits use money (with the Real Costs project and the Overhead Myth campaign), but what about on the bringing money in the door side? How do we get smarter about that?

Hilda: Efforts to raise funds for “services” have created a tendency to raise money for particular programmatic activities, rather than for the mission and outcomes of the organization as a whole. When an organization can articulate its target outcomes, and know what financial resources will be required to achieve these, the conversation can shift to an investment in the organization’s vision, rather than the purchase of specific activities. These are requests for investments of capital.

We see a growing trend in capital campaigns lead by a “funder prospectus” – a vision for the organization’s outcomes, with a request for investment in these outcomes; a way to focus the conversation differently. And with a funder prospectus, multiple funders can come to the table to support a common strategy – rather than create parallel strategies to suit the goals of the funder, rather than the goals of the organization. These campaigns can be for the sustainability of current operating levels, or the funding for growth.

Another issue to keep in mind is the concentration vs. diversification strategic conversation. There are a lot of consultants advising nonprofits to diversify their revenue sources, and not put “all their eggs in one basket.” This can be good advice under some circumstances, but it is not a one-size-fits-all solution. Diversification sometimes means building a much more complex—and potentially fragile—business model. For many organizations, concentrating on one revenue source can help focus, strengthen, and build the business model. For example, the skills and capacity to successfully raise funds from foundations and corporations is different from special events, major donors, or government grants. Without sufficient activity in each, the business model may not be able to support the required levels of diverse skill sets. It is somewhat of a balance – a diverse revenue strategy means a diverse skill set and capacity to succeed; often not found in a common staff position or limited organizational infrastructure.

And lastly, there is the need to balance between raising funds for current operations, vs. raising funds for new and “innovative” programming. Here’s where the “shiny object syndrome” can undermine an organization’s sustainability. The Development Director is excited about new programs, but the organization isn’t raising the necessary funds to cover core programming. Years ago, an Executive Director I know lamented to me: “If I hear ‘innovation’ one more time, I’m going to lose my mind. What happened to tried and true?” This notion of balance need not be confined to the leadership of an organization. Indeed, in healthy and sustainable organizations, this sense of balance is shared across the organization. The development team and program leaders should, effectively, understand the organization’s financial model just as much as the finance team. It is particularly important for development leaders to be able to articulate a coherent and compelling financial story of the organization as a whole, not just respond to the new ideas a funder may be focused on.

Nell: What role does research to understand what works and what doesn’t play? There seems to be a dearth of research in the sector about effective financing models. Do you agree with that assessment? And if so, how do we change that?

Hilda: I agree that there’s not much research, and there should be more.

And the first step toward research is sharing knowledge and lessons learned as these are happening rather than waiting for longer term research and evaluation. We need to build more of a shared understanding of the universe of possibilities. For example, what are Program Related Investments (PRI’s)? We hear about PRIs from time to time, but what are some early lessons learned? Who is making them effectively? More esoteric investments like Social Impact Bonds have made a splash, but there’s little understanding of the risks organizations take on by accepting this type of investment and the lessons learned in getting them off the ground.

Funders who are funding in a more holistic way can help the sector by educating other funders about it. Can a foundation make an investment in an organization’s operating reserves rather than operations? What does that look like?

Funders who are willing to experiment and share their experiences can play an important role here.

Photo Credit: FMA


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Tuesday, February 21st, 2017 Innovators No Comments

Nonprofit Leaders Have More Power Than They Think

By Nell Edgington



A few weeks ago I wrote a post on a controversial topic, “How to Remove a Troublesome Board Member.” As I wrote in the post,

Of the many taboos in the nonprofit sector, the taboo against asking bad board members to resign is one of the most destructive. Instead of encouraging ineffective or meddling board members to move on, nonprofit leaders often show misplaced gratitude for those errant board members continuing to take up space.

Because it is such a taboo idea, I predictably received several emails, Tweets and comments in response to the post. The most thoughtful of which was from Tom Klaus, who wrote:

Like anyone who has ever led a nonprofit, I’ve wanted to make changes to my board to make everything run a lot better, and I can sympathize with the folks for whom your blog is intended. What I’d like to hear, though, are your thoughts on the legal and ethical aspects of a nonprofit leader making such changes to board.

In most states, the by-laws of a nonprofit organization establish the board of directors as the legal entity upon which the organization is established. The ED or CEO is typically not also a member of the board of directors, in my experience. Hence, there is a legal conundrum facing the leader. He or she may not have legal standing to make the changes to the board you are suggesting in your blog. Now, this is not to say, of course, that nonprofit leaders don’t try to do it anyway; only that doing so might provide the grounds for board members to significantly challenge and even release the nonprofit leader.

The ethical challenge this presents, I believe, is this: Is it ethical for a nonprofit leader to try to change the makeup of the group that hired her or him?

I think the most difficult governance challenge in a nonprofit organization is achieving the delicate balance between the power of the ED/CEO and the power of the Board of Directors. I’m sure we’ve both known organizations that have done this remarkably well, and they become high performing, heartily sustainable, and wildly successful in their work. I’m sure we’ve also both known organizations that just can’t seem to get the balance right.

One of my clients is like this latter. Over the years they have continued to fluctuate between too much power in the hands of the board and too much power in the hands of the ED/CEO. These are among the most unproductive times for them, of course. Just curious about your thinking on this.

Tom raises an excellent point. The nonprofit board of directors are and should be charged with the legal authority to hire and manage the nonprofit executive director. However, that does not mean that they are the only ones to possess the power to make changes in the leadership of the organization. It is important to understand that both board members and executive directors possess power but very different types of power.

In the 1950s two social psychologists, John French and Bertram Raven, defined a new way to think about the kinds of power people possess. They classified six bases of an individual’s social power:

  1. Reward Power is based on a person’s ability to give rewards
  2. Coercive Power is based on a person’s ability to give punishments
  3. Referent Power is based on a person’s ability to make others want to model his/her behavior
  4. Legitimate Power is based on a person’s official title or role
  5. Expert Power is based on a person’s expertise
  6. Informational Power is based on a person’s possession of specific content

Instead of the Legitimate Power that board members enjoy because of their legal title of “board member,” I was referring in my previous blog post to the Expert Power a nonprofit executive director can employ.

A nonprofit’s executive director possesses tremendous expertise in (to name a few):

  • The mission, program delivery and results
  • The organization’s strategy and goals
  • The organization’s day-to-day work
  • The skills, experience, networks needed on the board
  • The resources (potential funding, strategic alliances) available to the organization

The most effective boards are those which are led by the Legitimate Power of the board chair and her committee chairs, paired with the Expert Power of the executive director. Because the reality is that as a group of volunteers who have many more pressing items on their to do list, a board of directors rarely functions at their best when left to their own devices.

Therefore the executive director can and should play a critical role in helping the board leadership to assemble the type of board that will help move the mission forward. This includes:

While the nonprofit executive director does not have Legitimate Power because, as Tom rightly points out, she serves at the behest of the board of directors, she can and should wield Expert Power to help assemble and manage a board that can be instrumental in the nonprofit achieving it’s mission and being sustainable.

To learn more about how to do that, download the 10 Traits of a Groundbreaking Board book.

Photo Credit: 24×7 Photo

 


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How Funders Can Help Overcome the Overhead Myth

By Nell Edgington



Note: In April I will be moderating a panel at the Center for Effective Philanthropy Conference about what funders can do to support nonprofit sustainability. To promote that panel and the conference, the Center for Effective Philanthropy asked me to write a post for their blog, which is reprinted below. You can see the original post at the CEP blog here.

 

Among the many myths that pervade the nonprofit sector, the Overhead Myth is perhaps the most destructive. It is the erroneous idea that nonprofits must keep their fundraising and administrative costs cripplingly low, which leads to anemic organizations that are not as effective as they could be.

In fact, the disparity between the nonprofit and for-profit sector in investment in strong organizations is striking. As just one example, research from the Foundation Center found that in 2011, the business sector spent $12 billion on leadership development, whereas the nonprofit sector spent $400 million. Or, viewed another way, businesses spent $120 per employee on leadership development, whereas the nonprofit sector spent $29 per employee.

But the reality is that nonprofit organizations are no different than for-profit organizations in terms of overhead. Last summer a Bridgespan study analyzed the indirect costs of 20 different nonprofit organizations and found, not surprisingly, that overhead rates vary greatly depending on the business model and industry of a given organization (just as it does in the for-profit sector).

Some nonprofit, philanthropic, and government leaders are recognizing that we must move beyond the Overhead Myth and start building stronger nonprofit organizations. This is partly due to the Overhead Myth campaign, launched in 2014 by GuideStar, CharityNavigator, and BBB Wise Giving Alliance with their famous “Letter to the Donors of America” and follow up “Letter to the Nonprofits of America,” which argue that nonprofit leaders and funders must stop judging nonprofits by their overhead rate — and instead focus on a nonprofit’s results. So the idea is that instead of evaluating the effectiveness of a nonprofit organization based on how it spends money, funders would move to evaluate the effectiveness of a nonprofit based on the results it achieves.

This campaign has gained some traction. The federal government and some local governments have moved to increase the indirect costs paid to nonprofits, which means more money for things beyond direct program costs.

But unfortunately, we are far from overcoming the Overhead Myth. An article just this month in Philanthropy Daily extoled the virtues of the Salvation Army because “the most effective nonprofits are those with lean management. The Salvation Army is a constructive example of an effective charity with very low overhead.” And a recent article in Forbes profiled five nonprofit leaders advising other nonprofit leaders about how to keep overhead costs low.

There is still much work to be done in recognizing the need for and investing in strong, effective nonprofit organizations.

Which is where progressive funders, like those who will be attending the 2017 CEP Conference in Boston in April, come in. If a critical mass of funders could start supporting nonprofits to create strong and effective organizations, we could perhaps overcome the Overhead Myth once and for all.

But what does that look like? In my mind, funders can lead the effort to eradicate the Overhead Myth by:

  • Working with their nonprofit grantees to uncover the full costs of their work. Instead of hiding or severely limiting non-program costs, nonprofit leaders must fully analyze, report on, and fund ALL of the expenses necessary to achieve results.
  • Uncovering the capacity constraints that impact their grantees. Funders must actively work with their grantees to determine what is standing in the way of building stronger, more effective organizations — and then fund the solutions to those hurdles.
  • Moving from program-specific funding to unrestricted, general operating support of the organization.
  • Investing in the revenue-generating functions of their grantees. It takes money to create mission, so we need more investments in sustainable financial models, which includes (among other things) smart plan development, recruitment of effective revenue-generating staff, and training of board members on their role in the financial model.

The good news is that there are already funders who are doing these things. For example, there is the collaboration of California grantmakers who lead the Real Cost Project aimed at helping grantmakers understand “what it would take to fund the real costs of the organizations they support — that is all of the necessary investments for a nonprofit organization to deliver on mission and to be sustainable over the long term.”

So to help move this conversation and work further, I will be moderating a breakout session at the 2017 CEP Conference titled “Supporting Nonprofit Sustainability,” where Jacob Harold, president and CEO of GuideStar, Vu Le, nonprofit blogger and executive director of Rainier Valley Corps, and Pia Infante, co-executive director of The Whitman Institute, will be discussing how foundations can start advocating for and investing in stronger, more effective nonprofit organizations.

If nonprofits and those who fund them could overcome the Overhead Myth once and for all, it could be a watershed moment for social change.  It would be the point at which we move from a nonprofit sector that is just trying to get by to a nonprofit sector that is armed with the people, infrastructure, and systems necessary to deliver on lasting social change.

I hope you’ll join us for what promises to be an exciting conversation.

Photo Credit: Mike Baird


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Is Your Nonprofit Stuck In A Rut?

By Nell Edgington



The other day I was talking with a nonprofit leader and was suddenly struck by how much his story echoed so many of the stories I hear from nonprofit leaders.

See if your nonprofit fits some or all aspects of the scenario he faces:

  • His board is passionate about the mission and wants to be helpful, but they don’t really contribute much to the financial model.
  • His staff and board want to expand services, but they can’t grow their budget past where it has been for years.
  • Their funding is fairly dependent on just a couple of sources.
  • Their funders support specific projects, rather than the organization or mission as a whole.
  • Their strategic plan hasn’t been updated in 5 years.
  • The board worries whether some of what the nonprofit does duplicates other efforts out there.
  • Board and staff don’t have a common way to articulate what the nonprofit is and does.
  • Their nonprofit is just barely getting by and has no cash reserves.

They, like so many nonprofits, are stuck in a rut.

They want to accomplish something much bigger and better but continue to spin their wheels against what they have always done. It’s really a chicken or the egg scenario. A nonprofit is unable to grow their services, their board, and their supporters because the organization has limited resources. And so they keep soldiering on, same as it ever was.

But let’s face it folks, in times like these, the status quo just isn’t going to work anymore.

Luckily, there is a way out.

When I encounter a nonprofit leader like the one above who has a real desire to break out of this pattern, I suggest a Financial Model Assessment. A Financial Model Assessment analyzes every aspect of the organization (Mission, Vision, Strategy, Program Delivery and Impact, Staffing, Board, Marketing, External Partnerships) in order to understand how each element helps or hurts their financial sustainability and their ability to achieve results. It then analyzes all current and potential revenue streams to find opportunities for sustainable growth. Finally, the Assessment gives very detailed recommendations for creating a more effective and sustainable organization.

I am a firm believer in a holistic approach. You simply cannot bemoan a lack of financial resources and call it a day. You must dig deep and figure out how everything you do contributes to or detracts from your current reality.

But because nonprofit leaders are usually consumed by putting out fires and worrying when the next check will come, they don’t have the ability to take a big step back and figure out how all of the pieces can and should fit together. So a Financial Model Assessment allows a nonprofit board and staff to understand what is holding their organization back from becoming financially sustainable AND achieving more mission-related results.

Once I’ve written my final Assessment, I lead a change discussion among board and staff. We delve into the Assessment and discuss how and why I came to the conclusions I did. This is often a galvanizing moment for the nonprofit — a moment when board and staff finally understand together a way forward that can allow them to be smarter, more strategic, more sustainable and ultimately achieve more results.

If you are interested in big change and need help navigating how to get there, download the Financial Model Assessment Benefit Sheet that describes the process in more detail. And if you’d like to read about other nonprofits who undertook a change process, check out these case studies.

Photo Credit: Public domain via Wikimedia


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10 Great Social Innovation Reads: January 2017

By Nell Edgington



In January it seemed as though we moved into social change hyper drive.

With the inauguration of a new president, a litany of controversial executive orders, numerous efforts to block or minimize them, and advice for or frustration with the nonprofit and philanthropic sectors’ responses, the world of social change moved at warp speed.

Add to that lots of predictions and advice for the nonprofit sector, and some small, but inspiring efforts to feed and comfort those in need and January was a very busy month.

Below are my picks of the 10 best reads in January, but feel free to add to the list in the comments. If you want a longer list, follow me on Twitter @nedgington, and if you want to see past months’ lists go here.

  1. Some still struggled to understand the 2016 election. Continuing his 4-year series on the smaller cities of America for The Atlantic, James Fallows argued that while Americans distrust national policy and institutions they still have faith in local government: “City by city, and at the level of politics where people’s judgments are based on direct observation rather than media-fueled fear, Americans still trust democratic processes and observe long-respected norms.”  And Eytan Oren offered some insight into how social media and major technology companies took civic engagement to a new level in the 2016 election.

  2. A few days before Trump was inaugurated, President Obama gave a farewell speech that focused on the need for greater civic engagement, and he and Michelle Obama launched a new foundation to help deliver on those ideas. And Pew Research crunched the numbers on how America changed over his 8-year term.

  3. Quite quickly after his inauguration, President Trump signed several executive orders, and a “resistance” movement that is rather unprecedented in U.S. history mobilized in response.   thing the resistance movement has going for it is their savvy use of social networks.

  4. In particular, Trump’s executive order banning immigration from 7 Muslim-majority countries created some soul-searching in the philanthropic sector. Inside Philanthropy‘s David Callahan expressed frustration about a seeming silence among philanthropic leaders on Trump’s immigration ban, asking “What’s the point of being in charge of society’s risk capital if you don’t take risks at a moment like this?” But 50 philanthropic leaders signed a strong statement against the ban.

  5. Amid all of the uproar surrounding the immigration ban, there was light in small places. A group of people from New Jersey launched a supper club that creates community among and raises money for Syrian refugees.

  6. Because January started a new year, there were the usual posts predicting what the new year will bring for philanthropy and nonprofits.

  7. But this year was different because several writers argued that the nonprofit sector needs to move more strongly into advocacy. And there was lots of other advice about how nonprofits should approach the Trump era, from building resilience, to messaging more effectively in a “post-truth” world, to making America “good” again, to answering 12 “Ifs”.

  8. A rather more sweeping bit of advice for the social change sector came from Pablo Eisenberg who argued that the organization Independent Sector should no longer be an association of both nonprofits and foundations, but just nonprofits. The HistPhil blog asked him to elaborate on the history of that important institution.  

  9. BoardSource, GuideStar, BBB Wise Giving Alliance, and the Association of Fundraising Professionals partnered to release a new method for evaluating a nonprofit’s fundraising effectiveness. The method looks at three metrics in a nonprofit organization: the fundraising net revenue, the cost of fundraising, and the dependency quotient (the percent of the budget funded by the nonprofit’s top 5 donors). Because let’s remember, as Rick Moyers pointed out, Development Directors Are Not Miracle Workers.

  10. Finally, a tangent into something small and really cool. The idea of little free libraries that have been cropping up on people’s front lawns has gone in a new direction. Mini food pantries have started helping neighbors in need.

Photo Credit: Jens Schott Knudsen


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Speak Out and Be Counted

By Nell Edgington



I had an ache in the pit of my stomach all weekend long. I get a stomach ache whenever something is very, very wrong. Friday’s Executive Order banning immigrants from seven Muslim-majority countries is so very wrong, and so fundamentally un-American.

I am an American because my ancestors at one point or another immigrated to this country because they thought it would offer better opportunities and/or more tolerance. And I have spent my career working in and with the nonprofit sector, which is fundamentally about giving voice and support to the oppressed.

For these reasons (and so many more) this executive order is completely anathema to me.

By yesterday my stomach was aching for some sort of salve. So here’s what I did:

  • I called my members of Congress — both of my Senators and my Representative, at both their D.C. and local offices to ask them to stand up against this immigration ban. And I will continue to do so every day. Several of their voicemail boxes were already full, so I took some comfort in the fact that others are as upset as I am. But I will not rest on that knowledge, I’ll keep trying to leave my own message.

  • I donated to the ACLU, who by the way, received $24 million in online donations from 350,000 people over the weekend (six times their normal annual online donations!). So again, there is comfort in numbers.

  • I emailed a message of solidarity to my client, the Muslim Public Affairs Council, which is an amazing group working tirelessly (and much harder these days) for the civil rights of American Muslims.

  • I’m continuing to follow resistance hashtags on Twitter like the 80+ alternative Twitter handles for the various government agencies that are no longer allowed to Tweet information at odds with the administration, and the #ThisIsYourLand and #Resistance hashtags, as well as the growing social movement of protest and resistance.

  • I will continue to work to encourage the nonprofit sector — the moral compass of this great country — to be bold and speak out against anything that goes against the fundamental values of our country.

As Charles Blow wrote yesterday in the New York Times:

“America will not stand for this, so if obsequious conservative politicians or lily-livered liberal ones won’t sufficiently stand up to this demagogic dictator, then the American people will do the job themselves. Over the weekend, protesters spontaneously popped up at airports across the country to send an unambiguous message: Not in our name; not on our watch. It is my great hope that this will be a permanent motif of Trump’s term. If no one else is going to fight for American values, it falls to the American people themselves to do so.”

Yes, that is right. As Americans, we’ve been training for this since we had our first civics lesson back in middle school.

And as social change leaders, we all have an obligation to speak up.  As Greg Oliphant put it “There are truths that need to be spoken now, spoken out loud and unapologetically by people who know them to be true. Spoken with love, yes, but also fierce conviction…They are where we as a sector…must find our voice, in holding them out not as criticism but as the True North we still must point towards, the star we still see and hold steady in our gaze despite attempts to obscure it.”

If you too felt sickened by the events of this past weekend, get engaged — speak out and be counted. Do not sit back and wait for someone else to do it.

Not in our name. Not on our watch.

Photo Credit: Miraage.clicks


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How to Remove a Troublesome Nonprofit Board Member

By Nell Edgington



One thing that most nonprofit leaders have in common is that they often have at least one (or more than one) challenging board member. You know — the one who doesn’t show up for board meetings, or doesn’t do what she says she’ll do, or never makes a contribution, or derails meetings with his own agenda.

But do you ever kick them off? I doubt it.

Of the many taboos in the nonprofit sector, the taboo against asking bad board members to resign is one of the most destructive. Instead of encouraging ineffective or meddling board members to move on, nonprofit leaders often show misplaced gratitude for those errant board members continuing to take up space.

But the real risk in keeping a troublesome board member is that his presence will put a cloud over the rest of the board, hampering your higher performing members.

So instead of letting the sickness spread, you must address it. And here’s how:

Be Clear on Your Expectations
You can’t ask someone to resign if you’ve never explicitly told them what you expect of them, so make sure that you have each board member sign a roles and responsibilities document at the beginning of each fiscal year. This spells out exactly what you are expecting from them (in terms of meeting attendance, committee service, fundraising, etc.). The act of having each board member (even those returning from the previous year) sign this annually cements in everyone’s mind exactly what is expected. Better yet, have them sign it as part of your annual one-on-one meetings with each board member.

Tell Them They Aren’t Performing
Managing a board is very similar to managing a staff (or managing your children, let’s be honest). Once you set very clear expectations, then update them along the way about whether or not they are performing effectively. When a board member isn’t showing up for meetings, or is meddling where they shouldn’t, or isn’t meeting their give/get requirement, or is taking committee discussions in unhelpful directions, sit down with that board member (and your board chair and/or your board governance chair) to explain the situation from your perspective and ask them to explain their side.

Give Them One Last Chance
Once you’ve told them they aren’t performing the way you would like, agree on a path to improvement. Decide together what an improved performance looks like (attend all upcoming board meetings, meet the give/get requirement) and the deadline (3 months from now) to get there. It is your job to hold them accountable, so as that deadline approaches, analyze their performance to see if they did what they said they would.

Ask Them to Go
If the deadline comes and they still haven’t performed adequately, sit down with the errant board member and your board chair and explain that while you would love for them to stay on as an informal advisor and supporter, you are asking them to resign to make room for a board member who can fulfill their commitment to the organization. Explain the importance of the work your organization does and how critical it is that you have fully committed and contributing board members. Describe how this is probably best for them as well because it frees them up to focus more energy on the things that are taking them away. If you are truly allergic to confrontation, and this still seems too hard, read Crucial Conversations.

Contain Any Fallout
When asked to resign, not all board members will go quietly into the night. As soon as you’ve asked your troublesome board member to leave, tell the rest of the board what you all have done and why. Help them to understand how this is a positive step for the organization and how it will help further your larger mission. Ask for their support in seeing this decision through, and most importantly, tell them what the next step is.

Find a Replacement
And that next step is to find that board member’s replacement. Beyond the fear of confrontation, many nonprofit leaders are hesitant to ask a board member to resign because they fear they won’t find another warm body to replace that member. But board recruitment should be an ongoing and strategic exercise. Your board governance committee should be constantly analyzing the board matrix of skills, experience, and networks in order to see where holes lie and identifying and vetting new potential candidates. Then when a board member leaves (or is asked to leave) you have several great new candidates in mind.

Stop selling your nonprofit short by letting disengaged, uncommitted, or meddlesome board members get in your way. By setting clear expectations, measuring performance, being honest, and constantly identifying new candidates, you can build a much stronger, more effective and engaged board of directors.

If you want to learn more about building a great board, download the 10 Traits of a Groundbreaking Board book.

Photo Credit: Jane Davees 


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Will the Women’s March Usher In a New Era of Civic Engagement?

By Nell Edgington



Perhaps like many of you, I participated in the Women’s March on Saturday. In my hometown of Austin, Texas I stood with my husband and two teenage sons amid a sea of 50,000 other people, and I suddenly wondered whether we are witnessing the birth of a new era of civic engagement.

Saturday was to me an amazing and previously unseen (in my lifetime) display of citizen participation. Whatever your political views, when 2 million+ people take to the streets in a single day, you have to admit that something is going on.

As one of my East-coast based colleagues said in an email on Saturday morning:

“I’m on a bus to DC this morning with my wife and daughter.  The excitement is palpable  on the I-95 corridor as thousands of buses are lined up to enter the Capital. The buses are filled with patriots, patriots with a lovers quarrel with their country.  It should be an exhilarating day for the promise of America.”

And as I looked around at the thousands and thousands of smiling faces around me on Saturday, I too felt my patriotism swell. It was perhaps the beginning of a more inclusive and engaging democracy — Americans re-entering the public sphere. (Although some argue that if this movement doesn’t connect to larger institutions — like the political parties — it won’t actually result in social change).

It is too soon to tell where this will take us. It could be that the nonprofit sector will be called to lead this movement. Indeed, many of the speakers across the country on Saturday urged people to join and support nonprofit organizations. And many new organizations are cropping up amid this new energy, while, as I’ve mentioned before, many nonprofit organizations have seen donations soar since the election.

As Josh Marshall wrote last week, these times demand something much more from us — something more than any of us have ever been asked to give. And we must rise to the challenge:

“We know the curse: may you live in interesting times. We are living in interesting times. Most of us would not have chosen it. But we have it. I think many of us look back at critical momentous moments in our history, the Civil War, World War II, the Civil Rights Movement and other comparable passages in the country’s history and think, what would I have done? Where would I have been? Well, now’s your moment to find out. We are living in interesting times. We should embrace it rather than feel afraid or powerless. We have a fabric of 240 years of republican government behind us. We have the tools we need. This isn’t naiveté. It’s not any willful looking away from anything that is before us. It’s being ready. It is embracing the challenge of the moment rather than cowering. It’s having some excitement and gratitude for living in a moment when a new and potent challenge to preserving who we are has fallen to us.”

So while I spent much of November and December full of dread about what the future may bring, I now have a burgeoning sense of hope. Perhaps our democracy isn’t crumbling. Maybe instead we are being asked, each one of us, to remake it stronger, more inclusive and more energetic than ever before.

These are certainly interesting times.

Photo Credit: National Guard photo by Tech. Sgt. Daniel Gagnon


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