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Board of Directors

What Nonprofits Really Need From Their Donors [Video]

My hope in creating the growing library of Social Velocity videos is that nonprofit leaders will use the topics as a jumping off point for honest discussions with boards and donors. It can often be intimidating for a nonprofit leader to raise a controversial question like:

A nonprofit leader could set aside 30 minutes in a board meeting agenda for a discussion kicked off by a 2-minute video. Play a video, and then simply ask “What do you think?” Or you could show a video to a donor when you meet and ask for their opinion.

Some will disagree vehemently with what I have to say, but others might agree, or at least be open to thinking in new ways. An interesting, thought-provoking conversation might ensue. From that discussion you might start to plant seeds for change.

So to add to the library of conversation starters, today I offer this video on What Nonprofits Really Need From Their Donors.  And if you want to see other videos in the series go to the Social Velocity YouTube channel. Good luck!

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10 Great Social Innovation Reads: September 2014

social innovationThere were some pretty exciting things happening in the world of social innovation last month. From a new fund to make philanthropy more effective, to a new blog series written by funders making the case for investing in nonprofit leadership, to some ideas for making performance measurement more accessible to small nonprofits and arts and culture organizations, to some interesting partnerships between philanthropy and city government.

It all made for a great month of reads. Below is my pick of the 10 best reads in social innovation in September. As always, add what I  missed to the comments. And if you want a longer list, follow me on Twitter, Facebook, Google+ or LinkedIn.

You can read past months’ 10 Great Social Innovation Reads lists here.

  1. The Fund for Shared Insight, a collaboration among seven major foundations, launched in September. The group plans to “pool financial and other resources to make grants to improve philanthropy…to encourage and incorporate feedback from the people we seek to help; understand the connection between feedback and better results; foster more openness between and among foundations and grantees; and share what we learn.” They plan to be very transparent with this entire experiment. I can’t wait to see what develops.

  2. Another development in the realm of improving philanthropy was the launch of the Stanford Social Innovation Review blog series where foundation leaders discuss why and how they have invested in nonprofit leadership development. As I mentioned earlier, Ira Hirschfield from the Haas Foundation kicked off the series, and Surina Khan from the Women’s Foundation of California was next up. To have such an open dialogue about nonprofit capacity investments, particularly around leadership development, is amazing. Let’s hope it encourages similar conversations outside the blogosphere.

  3. And the third piece from the world of philanthropic enlightenment, Daniel Stid of the Hewlett Foundation wrote a great post about ending the nonprofit starvation cycle. As he put it, “Effective leaders need to be willing to take the risk of saying something that a funder might not want to hear when their organization’s long run effectiveness is at stake. If they are not, then shame on them. Funders, for our part, should fund the full cost of the work we are asking our grantees to undertake in a way that leaves their overall organization and its finances whole; if we don’t, then shame on us.” Amen!

  4. There is further evidence that philanthropy as we know it is changing – a new report by The Economist takes a hard look at how Generations X and Y (those born between 1966 and 1994) are transforming philanthropy, particularly around “a strong desire to have a measurable, enduring impact.” This is exciting because if donors increasingly invest based on results, we can shift more money to social change. As the authors of the report put it, “The young generation of givers is focused on data, measurement and demonstrable results. More than any other generation, they want to check facts, know all the information ahead of time and ensure that they are well-informed at every stage of the process.”

  5. And there was lots to say about measuring performance this month. The Foundation Center and WINGS, a global network of 90 support organizations serving philanthropy in 35 countries, announced the creation of The Global Philanthropy Data Charter to gather and share philanthropy data for public benefit.

  6. Measuring impact is complex and costly, but Carly Pippin from Measuring Success, offers 4 steps for how small nonprofits can assess impact affordably.

  7. Measurement is particularly challenging in the arts and culture arena because, as Natasha Bloor of The Old Vic Theatre explains, “There is an understandable reticence within the cultural and creative industries when it comes to proving the social value of art. For many, the arts have an intrinsic worth that cannot be mapped or measured, with the primary benefit found in creative self-expression itself, rather than the longer-term effects experienced afterwards.” But she offers a new approach that they have found very effective.

  8. And for a completely free way to assess the social value of building low-cost housing, child-care centers, and health clinics there is the Social Impact Calculator, developed by the Low Income Investment Fund. They developed the tool to measure the effect of their own work and then decided to share it.

  9. Stephanie Jacobs of the Nonprofits Assistance Fund offers some tips to turn your board into the financial leaders they need to be.

  10. And finally, there were some interesting examples of partnerships between local government and philanthropy aimed at strengthening cities. Rona Jackson from Living Cities described 5 ways philanthropy and local government can work together. And the Kalamazoo Promise, a partnership between local philanthropists and city schools that pays tuition at a Michigan college for any student who graduates from a Kalamazoo school, shows these ideas in action.

Photo Credit: Valerie Everett

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Why Nonprofits Must Stop Being So Grateful

gratitudeThe other day I was talking to a nonprofit executive director who was delighted because he finally convinced a reluctant board member to become board chair. Over the past year, this board member had been delinquent in his meeting attendance and fundraising requirements. But since the executive director had no other viable candidates for the chairmanship, he was incredibly grateful that this board member finally relented and agreed to become chair.

What kind of crazy is this?

Gratitude is being thankful when someone performs a helpful act. But in the nonprofit sector there is such a pervasive power imbalance that misplaced gratitude, or gratitude for acts that are actually NOT helpful, often gets in the way of real work.

If a nonprofit leader acts grateful when she should actually voice frustration or disappointment, she is cutting off authentic conversations that could result in more effective partnerships.

Nonprofit leaders could stand to be a little less grateful for:

Board Members Who Aren’t Thrilled to Serve
If a board member doesn’t want to be there, and they are making that blatantly obvious (by not showing up to board meetings, not meeting their give/get requirement, or derailing board meetings with self-serving tangents) then take them at their word. Stop thanking them for serving and instead have a conversation about their poor performance. Ask them to change or resign. Don’t be grateful that you have 15 warm bodies listed on your letterhead. Each ineffective board member takes up space that could be filled by a committed and productive member. So take a hard look at the actual performance of each board member and build a board for which you can actually be grateful.

Donors Who Don’t Fund Real Costs 
There is (I hope) a growing recognition in the sector that you cannot have high-quality, results-driven solutions without the appropriate staff, technology, systems and infrastructure behind them. Not every donor is there yet – by a long shot – but when a donor wants to fund the programs they love, you need to educate them about all of the costs involved in those programs. And if they want the “program” without the “overhead,” explain that the two are inextricably bound and an inferior investment will yield an inferior result.

Superfluous In-Kind Gifts
Nonprofits cannot be the dumping ground for the things companies want to get rid of while they enjoy a fat tax write-off. If a donor wants to give your literacy program boxes of age-inappropriate books, or your food bank out-of-date Halloween candy, or your management team old, slow computers, just say “No”. You shouldn’t be grateful for something that makes your job harder. Take the opportunity to educate the potential donor about the work you do, how important it is, and the most effective ways to support that work.  And if they just want the tax write off, suggest which more appropriate gifts (including money) would earn it.

An Inexperienced Fundraiser
I see this all the time. A nonprofit won’t pay a market rate salary for a high-calibre fundraising director so they recruit an inexperienced person who eventually fails. Instead of being grateful that your board will let you hire an underpaid fundraiser, or grateful that someone is willing to take the position, talk to the board about what is really going on. If you don’t make fundraising part of everyone’s job and hire someone to truly lead those efforts, you are simply setting the organization up for failure. Make your financial model a key part of your overall strategy and then hire (and pay appropriately) the right person necessary to lead that financial strategy.

Rise from bended knee with confidence in yourself, your staff, and your social change work to articulate what you really need. To be truly successful, a nonprofit leader needs a board that will move mountains, donors who fully fund and believe in the organization, and a staff that can knock it out of the park. And you get there by being honest about, not grateful for, the roadblocks in your way.

Photo Credit: Victor Bezrukov

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Investing in Nonprofit Leadership: An Interview with Rick Moyers

Moyers-PortraitIn this month’s Social Velocity interview, I’m talking with Rick Moyers, vice president for programs and communications at the Meyer Foundation in Washington DC – a regional grantmaker that is nationally recognized for its capacity-building programs. Rick is a co-author of the Daring to Lead 2006 and Daring to Lead 2011 national studies of nonprofit executive directors, and has written and spoken extensively on executive and board leadership. He currently serves on the boards of BoardSource, the Alliance for Nonprofit Management, and the Community Connections Fund of the World Bank Group.

You can read other interviews in the Social Velocity Interview Series here.

Nell: You write a lot about nonprofit boards of directors. As a general rule, because they are volunteers, nonprofit boards tend to be pretty ineffective and disengaged from truly leading their organizations. Can the current structure of nonprofit leadership be made more effective? Or is there a better structure, and if so, how would we undertake such a fundamental shift in the sector?

Rick: We can’t give up on boards just because many boards are ineffective, any more than we can give up on public schools just because so many are struggling. And the fact that board members are volunteers doesn’t necessarily account for their disengagement—some of the most passionate and productive contributors to the nonprofit sector are volunteers.

But just because I’m not ready to give up doesn’t mean we can just keep doing the things we’ve been doing to improve boards, hoping our efforts will produce better results, and wringing our hands when they don’t. We’ve heaped so many expectations and roles onto the backs of boards that I’m not sure it’s possible for any board to fulfill all of them all the time. A good place to start improving things would be to become much more focused and pragmatic about what we expect from boards. A clear set of expectations – one that’s not simply a laundry list of everything we wish boards would do – would be a start. Along with the recognition that organizations need different things from their boards depending on their circumstances.

We need to recruit board members with at least as much thought and effort as we put into recruiting employees, if not even more given that board service is a multi-year and often multi-term commitment. I know board members who have been invited to join the boards of organizations with which they were completely unfamiliar after a 15-minute conversation with the chair of the nominating committee—or a casual lunch with the executive director. And then we wonder why they have a hard time engaging. If we recruited board members as if the job mattered and their selection was an important decision, perhaps they would start taking the job more seriously. We can’t give up on boards without doing a better job of trying to help them function better.

At the same time, there would be enormous value in trying out alternative structures and talking openly about whether they worked any better than the current model. My hunch is that alternatives are being tried out quietly, but we don’t talk about them much. I’d be interested in learning more about very small boards (four or five carefully chosen people), the impact of compensation on board member performance, boards with greater staff representation, and boards that are more democratic and representative of the constituencies and communities being served. I’m not confident in suggesting any of these as an alternative to current practice because I don’t think we know enough. But we don’t know enough because most organizations don’t believe they have permission to experiment (and maybe they don’t). There’s enormous pressure for “normative” behavior in governance, even though we know that normative behavior often produces mediocre results.

I don’t have a good answer for how we break this cycle, but I think we need a “learning lab” for governance practices. We need to be bolder in our experiments, and more open in sharing the results, even when they are unsuccessful.

Nell: The Daring to Lead studies that you co-authored with CompassPoint demonstrate a deep leadership crisis in the nonprofit sector – nonprofit leaders are burned out, planning to leave, and lack support for leadership development. Is more money for leadership development the answer, and if so, how do we get funders to understand the need and fund it?

Rick: More money is the answer, but not necessarily more money for leadership development. My take-away from this body of work is that chronic under-capitalization is at the root of executive director burnout and dissatisfaction. The problem is not just that organizations don’t have enough money for leadership development. They don’t have enough money for anything.

While I applaud funders that invest in leadership development—and the Meyer Foundation is among them—there’s also a danger that funder-driven leadership development programs become simply another demand on already overextended executive directors. Funders need to recognize the importance of leadership development, but also need a keen understanding of the financial and organizational constraints that have a profound impact on executive directors who may already be accomplished leaders. One of the lessons from my foundation’s experience is that large grants for leadership development can be hard to use when executives are facing so many other challenges and distractions, many of which are related to finances and fundraising.

Nell: Why is leadership development taken as a given in the for-profit sector, but taboo in the nonprofit sector? Why do we assume that nonprofit leaders should be able to go it alone? And how do we change that attitude?

Rick: In the for-profit sector, there are more vehicles for ensuring adequate capitalization and leaders have greater discretion over how they can use that capital, with the mandate of producing the greatest return for owners, investors, and shareholders. That said, it’s very telling that so many large companies spend freely on leadership development without questioning the return on investment, while nonprofit leaders are conditioned to question every penny spent on anything other than program delivery. Boards can be especially shortsighted in this regard, under-investing in current executive directors without considering the costs—in money, organizational reputation, and lost momentum—of an untimely transition. We need more evidence, both anecdotal and quantitative, of the ROI for leadership development in the nonprofit sector. Producing that evidence and telling that story will require resources, but I’m concerned that without that investment we’ll never be able to make a convincing case to boards and funders that are increasingly focused on evidence-based approaches.

Nell: Do you think as Millennials age into leadership positions in the nonprofit and philanthropic sectors they will fundamentally change nonprofit leadership? And if so, how?

Rick: While not wanting to sound cranky, I object on principle to making generalizations about a group of 80 million people as if they were a single thing. And as a member of Generation X, I also must point out that we’re the ones who are currently aging into leadership positions. What about us, damn it?

Crankiness aside, as someone who works with younger leaders every day, I have noticed some differences that hold promise for the future. Many in the rising generation are much more socially aware, passionate about social change, and optimistic that they can make a difference than I was at their age. They are choosing careers in the nonprofit sector with more thought and intention than previous generations. The dramatic increase in the number of academic centers and degree programs focused on the nonprofit sector and philanthropy over the past 20 years is producing accomplished young leaders with broad skill sets and considerable insight into nonprofit work.

I do notice a more conscious commitment to work-life balance, and more intentionality around achieving it, which I hope will help reduce burnout and abrupt departures of nonprofit executives. Just within the last six months, I’ve watched three younger executive directors transition out of their jobs because they were seeking greater work-life balance. The difference from what I’ve seen in the past is that these executives decided to leave after successful tenures of more than five years, and after working intentionally to develop a strong board and staff leadership team that could handle the transition. These leaders stepped down before they burned out, and handed off strong organizations that were prepared for the change. That’s very encouraging, and I hope it’s a trend.

A committed and talented cadre of younger leaders is already in the nonprofit leadership pipeline – not by accident, but because they want to be here. Daring to Lead and many other studies have highlighted the challenges inherent in being an executive director, so these younger leaders know what the role entails. And they still want to do it. I think that bodes well for the future, and I’m optimistic.

Photo Credit: Meyer Foundation

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5 Questions Every Nonprofit Leader Should Ask

nonprofit leaderOne thing the nonprofit sector desperately needs is more people asking hard questions. A lot of time is spent skirting issues or sugar coating situations. If nonprofit leaders instead forced some challenging conversations, with hard questions as the impetus, the sector could become more effective.  And the place to start is with a nonprofit leader questioning herself.

I’ve written before about questions to ask your board, and questions to ask your nonprofit, and questions to ask before you pursue a new opportunity, but there are also some key questions a nonprofit leader should ask herself.

On a fairly regular basis a nonprofit leader should ask:

  1. Am I Leading or Managing?
    A manager shuffles resources around, waits to be told what to do, and focuses on checking things off her list. But a leader crafts a larger vision for her organizationarticulates what her nonprofit is  trying to accomplish, and then marshals all the resources at her disposal (board, staff, funders, partners) toward that vision. And when some of those resources won’t align to the vision (board members who aren’t performing, donors who want to veer off course) she confidently tells it like it is. A manager will deploy resources, but a leader will ensure that the deployment results in social change.

  2. How Can I Address My Weaknesses? 
    A great leader recognizes when he is falling short and where he needs complementary abilities. A leader who doesn’t know how to fundraise hires a rockstar Development person, or gets fundraising training. A leader who struggles with strategic decisions finds a leadership coach. A leader who can’t build an effective board, asks fellow nonprofit leaders for counsel. Most importantly, if there are costs associated with addressing his weaknesses, a leader raises the money he needs, instead of doing it on the cheap.

  3. Am I Selling Myself (and My Nonprofit) Short?
    I see so many nonprofit leaders not fighting for what their organization really needs. From not articulating the true costs of their nonprofit to funders, to allowing the board to shirk their fundraising responsibilities, to addressing capacity constraints with a band-aid, to burning out from long hours with not enough staff, nonprofit leaders are constantly giving their organizations, and themselves, short shrift. A true leader finds the confidence to stand up for herself and her organization and demand what is truly required to achieve the vision for change.

  4. Which Other Leaders Should I Align With?
    It amazes me how many nonprofit leaders exist in a bubble. They may collaborate with others on a programmatic level, but they are not regularly analyzing the larger marketplace in which they operate (emerging competitors, new technologies, changing needs) and figuring out with which other leaders impacting the field (policymakers, organization heads, advocates, influencers) they should forge alliances. Social change requires much more than any single organization can accomplish. It is critical that nonprofits become fully networked in their area of social change. A nonprofit leader makes that happen.

  5. Am I Still The Right Person for The Job?
    This is such a hard question. But if you simply don’t have the skills (or the energy) to lead the right road ahead, then you must step aside. Don’t hold your organization and the vision back because of your ego. If you are a true leader, you have assembled a whole army of board, staff, supporters and allies that can continue to move forward in your wake. It’s not easy to recognize or admit, but if you really care about the cause and want to see real change happen, then you should regularly be assessing this.

A true nonprofit leader drives the vision, marshals resources, forges alliances, inspires support, and, ultimately, leads the charge toward social change. Because now more than ever we need real social change leaders. People who are willing and able to find the best way forward and the confidence, smarts, and humility to lead us there.

If you want to learn more about nonprofit leadership, download the Reinventing the Nonprofit Leader book.

Photo Credit: iwona_kellie

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New Webinar: How to Build a Fundraising Board

moneyI’ve been conducting a lot of Financial Model Assessments lately (where I analyze how a nonprofit raises money and show them how to do it more effectively) and, not surprisingly, the board of directors often comes up as an impediment to greater financial sustainability.

There are so many reasons why a nonprofit’s board is not helping to bring money in the door. Often board members:

  • Don’t know who or how to ask for money
  • Can’t articulate why someone should give to their nonprofit
  • Are unable to figure out where they can be most helpful
  • Don’t understand how money works in the sector
  • Can’t connect their individual actions to the larger financial engine of the organization

…and the list goes on.

But instead of pleading with, chastising, or complaining about your board, you need to take a big step back and get strategic.

By figuring out your nonprofit’s long-term goals, determining who you need on your board to get you there, tapping into their unique strengths, and creating a system for involving each one in the financial engine, you can transform your board into a money-raising machine.

They can become a board that no longer drags their feet about fundraising, but rather acts as a team to fully finance the nonprofit in which they believe so strongly.

The newest Social Velocity webinar, How to Build a Fundraising Board will show you how to get there.

How to Build a Fundraising Board Webinar
On-Demand Webinar

This webinar will help you:

  • Analyze what kinds of board members you need
  • Create a system for getting each individual member involved
  • Give them clear money raising responsibilities
  • Create a message they are excited about delivering
  • Give them many options for bringing money in the door
  • Get them excited and engaged in the future of the organization

Download Now

And remember, all Social Velocity webinars are available On-Demand.

Photo Credit: Dennis Skley

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Fundraising’s Shiny Object Syndrome

shiny objectI have to be honest. I am so sick of hearing about the ice bucket challenge that I am loathe to write about it. But I wonder if many in the nonprofit and philanthropic sector are falling victim, yet again, to shiny object syndrome, so I feel compelled to say something.

To me the ice bucket challenge is yet another example of what happens so often in the world of fundraising. Nonprofit board members and staff hate fundraising, so they desperately search for a magic bullet to make it all go away.

Sometimes that magic bullet is “an endowment,” sometimes its “earned income,” more recently it has been “crowdfunding.” This month it’s a form of crowdfunding taken to the extreme, the ice bucket challenge. Some have been so swept up in the hype that they have gone as far to say that the challenge is “rewriting the charity model.

Oh boy.

The reality is that if you want to create social change you need to develop a sustainable financial model that aligns with your long-term goals. It’s not sexy, it’s not easy, and I’m probably one of the few people on this planet who thinks it’s fun. But there it is.

While many nonprofits are scrambling to figure out how to create their own ice bucket challenge, and some thought leaders are offering tips along the way, maybe we should all just take a step back.

Let’s be very clear. ALS’s close to $100 million windfall is not a revenue stream. It is a one-time infusion of money. Yes, ALS may try to replicate the ice bucket challenge on a regular basis, but the stars will never align in quite the same way, people will move on to the next shiny object, and the money will eventually fade.

Because this pile of money is not a revenue stream, ALS can’t and shouldn’t add long-term staffing or programming because the money won’t be there next year. At the same time, they probably can’t create an endowment because the donors’ intent was not for the money to sit in a bank account. Regranting the money is also tricky, again because donor intent was for it to go specifically to ALS. In all of this ALS will be under the microscope, because as Ken Berger of CharityNavigator cautioned, a year from now everyone will be asking where the money went.

One of the few paths that I see for ALS is to treat the money like capacity capital. This could be an opportunity to invest some of the windfall in building a stronger organization by investing in technology, infrastructure, and systems. And they could do the same for their affiliates. They could require capacity building plans and budgets and invest in those plans accordingly. They could, in essence, create a $100 million capacity capital investment fund for the ALS system.

But the point is that far from being a great thing that all nonprofits should strive to emulate, the ice bucket challenge creates a complex and potentially damaging problem.

So instead of spending board and staff time trying to dream up the next ice bucket challenge, please, please, please spend that time and those resources building your financial model, by creating a long-term financial strategy, raising capacity capital to build your revenue-generating function, developing a compelling strategic plan in which people will want to invest, and growing and educating your board.

These are the ingredients for a robust, sustainable financial model. Not a bucket of water, a video camera, and a social media stream.

Photo Credit: StoiKNA

 

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The Value of Quiet for the Nonprofit Leader

QuietAs summer draws to a close and my own downtime ends, it occurs to me that there is a real need, in our increasingly always-on world, for leaders to find time for quiet reflection, to reconnect with their core.

And particularly in the nonprofit world, where a leader is constantly bombarded with suggestions – from funders, board members, staff, fellow leaders, Facebook friends – it is critical that she find regular solitude to analyze and plan the best way forward.

Indeed true leadership lies not in finding the lowest common denominator among a disparate group of supporters, volunteers and staff, but rather in analyzing all options and then driving the most effective way forward (even if it is unpopular). Real leadership is not about giving the people around you what they want. It is about doing what is best and what is right. And often you find that path through time alone to think.

Perhaps thoughtful, reasoned leadership has taken a hit in recent years. Our push toward social technology has created a culture of extreme extraversion and constant noise. Dave Eggers 2013 novel, The Circle, describes a world where companies like Google and Facebook have taken over. He offers a chilling view of social media taken to the extreme with destructive group think and no room for solitude.

Don’t get me wrong, I’m a big proponent of social media, but I also think there is tremendous value in regular, silent retreat.

And I’m not alone. Amid the broad adoption of an increasingly social way of life, we are, in certain pockets, beginning to realize that quiet has its place as well. Some politicians, finally turned off by the constant screaming of our increasingly partisan political system, have begun turning toward inner reflection to find a better way. Steven Pressfield describes the importance of getting away from it all and “letting the well fill up overnight.” And even social media mavens, Beth Kanter and Arianna Huffington have both recently begun promoting solitude and reflection.

Could it be that we are realizing that while new tools to make us more social have their place in the work of social change, individual reflection is also quite necessary. While crowdfunding and crowdsourcing and crowdthinking all have an important role to play, there is also tremendous value in a leader spending time, alone, to process the world around her and then emerge with a plan.

Nonprofit leaders are often working on large, intractable social problems. Those problems require the right way forward, not the most popular way forward. As a social change leader you must claim your very real need to turn off the noise. Amid the quiet you may just discover the necessary path. And perhaps also, the will to lead us there.

Photo Credit: Sebastien Panouille

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