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Board of Directors

When Nonprofit Collaboration Actually Makes Sense

Let’s talk about nonprofit collaboration for a second. Funders and thought leaders often extol the virtues of collaboration among nonprofit organizations as a way to maximize increasingly limited resources. But pushing nonprofits to blindly collaborate, just for the sake of saving some money (“Can’t you all just work together?”), is really doing no one any favors.

Peter Panepento’s recent article in the Stanford Social Innovation Review, is among the latest of these calls for more collaboration. In fact he explains a sort of magic he sees in collaborations that are forged between quite disparate groups. He argues:

“At a time when nonprofits are getting squeezed by government budget cuts and facing increased need among those they serve, many groups are realizing that they cannot achieve their missions without building new alliances…Interestingly, many of the most successful collaborations have been between groups working on very different missions, or between nonprofits and groups outside the nonprofit field.”

Indeed, innovative collaborations can be very exciting. But we must make sure that when collaboration happens, it follows a thoughtful, strategic approach, otherwise it can come at quite a cost. We can’t just encourage nonprofit leaders to “collaborate more” and call it a day. There are very specific times when, and very specific ways to approach, collaborations that make sense.

First, it’s important to make a distinction between two very different types of collaboration:

  1. Little “c” collaboration where a nonprofit coordinates with other organizations to deliver programs and services and/or share best practices, vs.
  2. Big “C” Collaboration where nonprofit leadership analyzes their external marketplace and forges organization-wide, strategic alliances with other entities that can help move the nonprofit’s social change goals forward.

In their article “The Networked Nonprofit,” Jane Wei-Skillern & Sonia Marciano articulated this difference:

“Many traditional nonprofits form short-term partnerships with superficially similar organizations to execute a single program, exchange a few resources, or attract funding. In contrast, networked nonprofits forge long-term partnerships with trusted peers to tackle their missions on multiple fronts.”

Collaboration with a Big C is a strategic way for nonprofits to operate, but it necessitates that nonprofit leaders have a clear understanding of their individual nonprofit’s core competencies, target audiences, and desired social change outcomes (through a Marketplace Map and Theory of Change), so that they can be very clear about which entities they should Collaborate with in order to move those outcomes forward. And instead of viewing their nonprofit as a single organization, nonprofit leaders can begin to think of their nonprofit’s work as part of a larger network of social change.

So to Collaborate effectively, nonprofit leadership must embark on a 3-part process:

  1. Get clear about the nonprofit’s core competencies (what you do better than anyone else), target populations (who you seek to benefit or influence), and desired social change outcomes (the change you’d like to see in the world). This can be done by creating a Theory of Change.
  2. Map your external marketplace to determine the potential Collaborators out there and where and when it might make sense to forge strategic alliances.
  3. Finally, because these need to be organization-wide alliances, you must engage your board, not just your staff, in creating high-level relationships with those with whom you’d like to Collaborate.

In other words, in order to move your mission forward through Collaboration, you must better understand both your nonprofit and your external environment. By figuring out exactly what your nonprofit brings to the table that is different from and additive to what potential Collaborators bring to the table, you can more successfully develop partnerships with more high-level decision-makers in the nonprofit, government, and/or private industries that affect the social change you seek. And isn’t that what it is ultimately all about?

I’m all for Collaboration — when it makes strategic sense. But the only way Collaboration works is when a nonprofit gets very clear about what change they want and which entities out there can help achieve it.

Photo Credit: Joseph Stalin, Franklin D. Roosevelt, and Winston Churchill on the portico of the Russian Embassy during the Tehran Conference to discuss the European Theatre in 1943, Wikimedia.

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3 Mistakes Nonprofits Make in Fundraising Staff

Before a nonprofit can achieve financial sustainability, the nonprofit leader has to figure out how to staff their money raising function effectively. When I conduct a Financial Model Assessment for a client, one of the sections of my final report is always focused on the nonprofit’s staffing structure and how that contributes to or detracts from the nonprofit’s ability to attract money. More often than not, a nonprofit that is struggling to bring enough money in the door is not thinking effectively about how they staff the money function.

And it typically boils down to three particular mistakes that a nonprofit’s leadership is making. These are:

1. There Is No Financing Strategy
You can’t expect to effectively staff your money raising function if you are not thinking about money in a strategic and holistic way. The very first step in structuring an effective money-raising staff is for a nonprofit’s leadership to figure out their organization’s financial model — how money should flow into and out of the organization. First you must assess what money-raising strategies fit best with your mission and core competencies. And then you need to develop a long-term financing strategy that is directly tied to the goals of your strategic plan. You can’t expect to hire people who will magically make money appear. Effective fundraisers must be driven by a smart money plan.

2. No Single Person Is In Charge of Money
Once you figure out your long-term financing strategy, you need to find (or promote from within) a person to oversee the entire money function of the organization. To truly use money as a tool, you can’t hire someone who can just write foundation grants, or someone who can just work with individual donors, or someone who can just secure government contracts. You need a single person who is thinking 100% of the time about all the ways money flows to your nonprofit. And make sure you offer enough salary to attract and retain a rockstar. It amazes me how many nonprofits expect to entice a great fundraiser by offering a salary that is comparable to someone with only a few years of experience. If you don’t have the current budget to pay a market rate, raise capacity capital to fund the first 1-2 years of the position. Once you have a great money raiser up and running, he will not only raise his own salary, but also grow your nonprofit’s overall financial engine.

3. Money Doesn’t Pervade Everyone and Everything
Finally, once you have a financing strategy and the right person to lead that strategy, then you need get everyone in the organization bought into and contributing (even in a small way) to its success — this is sometimes called creating a “culture of philanthropy.” But I would instead call it creating a “culture of mission financing,” which means every single person in the organization embraces the fact that in order to succeed in your mission, you must effectively finance that mission.  Money troubles often happen when nonprofit leadership offloads all money-raising responsibility to the Development Director. You must make sure that everyone in the organization (board and staff) understand their role in bringing money in the door. Create a culture where a staff member who doesn’t have dollar goals in her job description understands that giving donor tours, providing program outcome data, or writing thank you notes are critical to keeping the organization going. And make sure your board is trained in fundraising, has countless ideas for how each of them can contribute to the financial engine, meets a give/get requirement, and achieves specific individual and full board money goals.

How you staff your nonprofit’s money-raising function is directly tied to how much money you will bring in the door. Therefore you must create a smart financing strategy, hire a staff leader to execute on that strategy, and create a culture of mission financing that ensures everyone plays a role in the financial engine.

If you need help figuring out what’s holding your nonprofit back from financial sustainability, check out the Financial Model Assessment I provide my clients.

Photo Credit: Tax Credits

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Understanding The Full Costs of Nonprofits: An Interview with Michael Etzel

In this month’s Social Velocity interview, I’m talking with Michael Etzel. Michael is a partner in The Bridgespan Group, a global nonprofit organization that consults to nonprofits and philanthropists, provides leadership development support, and develops and shares insights — all with the goal of scaling social impact.

Since joining Bridgespan in 2006, Michael has focused on effectiveness across the full spectrum of social innovation financing, advising corporate, institutional, and family philanthropists and investors. Much of Michael’s work explores what it takes to use tools of innovative finance and impact investing to solve pressing social problems. His work and research in philanthropy also focuses on the question of what it takes to deliver results as a new approach to ending the nonprofit starvation cycle.

You can read other interviews in the Social Velocity interview series here.

Nell: In your research and writing you have focused a lot on what you call “Pay-What-It-Takes-Philanthropy,” the radical idea that different nonprofit solutions have different business models and thus require different costs and investments. This concept is so accepted in the for-profit world that it is a truism, but why is it a radical idea for nonprofit and philanthropic leaders?

Michael: It’s worth pausing for a moment to reflect on why business models and capabilities matter. Every nonprofit operates with an underlying business model and set of capabilities critical for program delivery. Failure to understand an organization’s business model frequently leads to underinvestment in core capabilities, and, as one program officer put it, “a hollowing out of civil society institutions.” We can’t have resilient, durable civil society organizations that deliver successful programs unless they operate from a position of financial strength.

As you highlight, segmentation and analysis of comparable performance data is common practice in the for-profit world. Leaders like Clara Miller, president of The Heron Foundation and former CEO of the Nonprofit Finance Fund, have long called for this kind of thinking in the social sector. But this type of comparison requires transparent and consistent data, something hard to come by. As one nonprofit executive reminded me, “If you think you can analyze a nonprofit through IRS 990 filings, you are in outer space.”

Yet, I wouldn’t say this a radical idea. Organizations like DataArts and CoMetrics show how this is possible. For example, DataArts gathers a variety of comparable revenue, cost, and performance data for arts and cultural organizations, and provides tools for reviewing that data. This provides grantees and grant makers with actionable data to inform management or funding decisions with an eye to effectiveness and efficiency. CoMetrics addresses a more diverse set of enterprises, providing software platforms and tools that enable those enterprises to collect, display, and compare financial, operational, and impact data against their peers. This bottom-up approach gathers data across organizations running the same type of business in the same field to form groups relevant for comparative assessment and learning.

Bridgespan’s preliminary analysis to date has shown that different types of nonprofit organizations have different cost structures based on their business model. Segmenting nonprofits by business model can help us compare similar organizations. When it comes to indirect costs, for example, nonprofit research labs have a median indirect cost rate of 63%, nearly two and a half times the 25% median rate of direct service organizations.

We plan to push ahead this year to refine and deepen our understanding of segmentation and how it applies to nonprofit cost structures and capital needs. Having this information will benefit funders and grantees alike when it comes to funding discussions.

Nell: You work with both nonprofit and philanthropic leaders, so you likely see both sides of this dysfunction. What do you think it will take to move the field to a place where those with potential solutions to social problems have enough and the right kinds of money to see their solutions come to fruition?

Michael: Nonprofits exist in a complicated marketplace, seeking capital from a broad range of funders. As in any marketplace, some influential market makers set the rules. The practice of setting limits on indirect costs in project grants to nonprofits/NGOs has its antecedents in the US government’s approach to funding R&D at universities during the post-World War II era. The federal government has changed practice dramatically since 1958, embracing the “fair share” approach—that federal agencies pay their fair share of true costs, including indirect costs.

Among private foundations, indirect cost rate policies have been common for decades. A RAND report from the 1980s captured the variety of policies at that time: “many foundations customarily pay full indirect cost as budgeted in a proposal. Other foundations may pay only a portion of… or specify a cap on the support of indirect costs.” More recently, our research has shown that many large foundations set a cap of 15% or lower on indirect costs. Yet, among the 20 large nonprofits we sampled, indirect costs comprised between 21% and 89% of total costs, with the median at 40%.

I offer this history because I see the indirect cost conversation changing. For decades, much of this conversation has been driven by nonprofit and NGO leaders’ concerns about caps on indirect cost reimbursement. But funders have begun to engage more deeply in this conversation over the last several years. In 2013, Forefront (formerly Donors Forum) convened a cross section of staff from smaller Midwest foundations to discuss barriers and potential solutions to funding indirect costs. In 2015, the three California Regional Associations of Grantmakers launched the Real Cost Project (now the Full Cost Project) with the dual goals of increasing the number of funders providing real-cost funding and building the skills and capacity of grantmakers.

Having philanthropic leaders at the table is important to overcoming the reality of power dynamics. In the same breath, it’s also important to see this issue for what it is—a complex systems issue. Acknowledging this complexity helps approach this issue from a place of empathy for funders that want to do the right thing, and nonprofits that want to own and manage the costs of delivering impact.

Funders have the opportunity to ask grantees their true costs of programs and to be prepared to pay their fair share of the operational and financial support it takes to deliver those programs. Meanwhile nonprofits can focus on knowing their costs and advocating for them. Funders cannot pay their fair share if grantees don’t tell them what it is!

Nell: Beyond researching and consulting on these topics, you also serve on the board of two nonprofit organizations. What has been your on-the-ground experience as a board member trying to put these concepts to practice?

Michael: Creating space for a conversation among peer board members has been important in establishing a shared understanding of the issues—and why sometimes the executive director very rightly chooses to say “no” to a grant that doesn’t cover true costs.

The reality of this “complex marketplace” also hits home—there is no one-size-fits-all solution. That puts a big burden on the executive director and finance team to effectively report and manage costs.

Photo Credit: The Bridgespan Group

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Do Your Programs Contribute to Mission AND Money?

There is a tool that I think is incredibly helpful to nonprofit leaders trying to figure out where to focus their resources and how to plan for the future. Indeed it is typically one of the first activities in the strategic planning process I use with my clients.

The Program Matrix helps a nonprofit board and staff analyze their portfolio of programs to understand their overall mission and money mix.

Because those two elements — mission and money — are inextricably bound in an effective nonprofit organization. You simply cannot achieve your mission without an operation that attracts and uses money sustainably.

The Program Matrix looks like this:

And, here’s how to fill out yours.

List Your Programs
A nonprofit leader makes a list of all their mission-related programs and initiatives. But don’t include organization-building work, like pure fundraising activities, or board development. While those activities are absolutely critical to your success, they are a means to an end. For example, conducting a fundraising appeal has the goal of raising money to plow into programs. So in Program Matrix, we want to look at just the mission-related programs.

Plot Your Programs on the Matrix
Once you have that list of programs, plot each individual program on the matrix based on that program’s ability to contribute to:

  1. Social Impact: The social change outcomes you are working toward, which are found in your Theory of Change (on the x axis), and

  2. Financial Returns: The financial sustainability of the organization (on the y axis). A program that can attract enough money not only to cover its own direct and indirect costs, but also to subsidize other programs would be above the line (“positive”), whereas a program that cannot attract enough money to cover its own costs would be below the line (“negative.”)

Analyze the Results
Once you have plotted your entire portfolio of programs on the matrix, take a look at where they fall in the four boxes. These are:

  1. Worthwhile: The program significantly contributes to the nonprofit’s mission and desired outcomes, but it drains financial resources from the organization. A nonprofit will always have programs in this box, and that’s fine.

  2. Sustaining: The program doesn’t appreciably contribute to the nonprofit’s mission and desired outcomes, but it does provide a surplus of financial resources to the organization, which is great.

  3. Beneficial: The program contributes to the nonprofit’s mission and desired outcomes AND it provides excess money that can be plowed into “Worthwhile” programs — this is the best of both worlds.

  4. Detrimental: The program doesn’t contribute to the nonprofit’s mission and desired outcomes, AND it drains financial resources from the organization — this is the worst of both worlds.

Once filled out, the Program Matrix helps to surface issues that a nonprofit must address. First, any “Detrimental” programs should be significantly reconfigured, given to another organization to run, or abandoned. Second, in order to ensure financial sustainability, make sure that there are enough “Sustaining” and “Beneficial” programs to subsidize the “Worthwhile” programs. If not, you need to get strategic about developing programs that can offset the financial drain of the “Worthwhile” programs.

Repeat the Analysis Often
Once you’ve completed the Program Matrix analysis, rinse and repeat. On a regular basis (at least annually) board and staff should take a look at an updated Program Matrix and make any necessary programmatic adjustments. And any time you are thinking about adding a new program, redo the Program Matrix to include your best guess of where this new program will fall, so that you can understand its impact on the overall social impact and sustainability of your new portfolio of programs.

Armed with the power of the Program Matrix, nonprofit leaders can create a mix of programs that ensure achievement of their social change goals in a sustainable way.

Photo Credit: ParentingPatch 

 

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How Effective Is Your Nonprofit Leader?

In an ideal world, one of the things a nonprofit board of directors does is annually evaluate the performance of the executive director. But let’s be honest, how often does that actually happen?

I once had an executive director so desperate for feedback about her job performance from a board who refused to evaluate her that she hired me to interview board and staff and write her performance review.

Perhaps boards are uncomfortable with reviewing the CEO, or they don’t know how to manage it, or they are simply unaware that it’s their responsibility. Whatever the reasons, effective evaluation of nonprofit CEO performance doesn’t happen enough in the sector.

But for a nonprofit to be effective and sustainable there must be a system in place for regularly evaluating it’s chief staff member (not to mention the rest of the staff and the board of directors itself, but those are for another day).

As I’ve said before, the head staff member (CEO or executive director) is the most important position in a nonprofit organization. She affects the level of engagement of  the board, the financial sustainability of the organization, the productivity of the staff, and ultimately the organization’s ability to achieve it’s mission. She is the chief spokesperson, chief fundraiser, chief cheerleader and so much more. At the very least, she deserves to know, on an annual basis, how well her board and staff think she is doing.

The CEO evaluation is an opportunity for the board to discuss the performance of their lead staff person, whether the organization is going in the right direction, and what, if any, adjustments need to be made. The discussion can offer a real point of organizational self-reflection that can re-energize and re-orient all involved.

So in order to inspire your nonprofit to create an annual system for evaluating the performance of your CEO or executive director, I’d like to offer some suggested questions to guide your board’s process. Ideally the board’s Governance or Board Affairs committee would be charged with managing the CEO evaluation each year. These are the types of questions they would want to answer (by surveying, compiling and analyzing staff and board feedback):

  1. What does the CEO do really well? What are his/her strengths as the leader of our nonprofit?
  2. Where is there room for improvement? What are his/her weaknesses as a leader of our nonprofit?
  3. How well does she/he recruit, manage and develop the board?
  4. How well does she/he recruit, manage, and develop the staff?
  5. How well does she/he guide the overall strategy of our nonprofit?
  6. How well does she/he serve as a spokesperson and external relationship builder for our nonprofit?
  7. How well does she/he ensure the financial sustainability of our organization?

It is critical to mention that the data gathered in the review process should be kept anonymous. You want board and staff to feel free to be honest in their responses and not fear reprisal or embarrassment for their candor. And when the board delivers the final evaluation to the CEO, they should do it in a way in which the CEO feels appreciated for the things she does well and supported in addressing any areas of concern. Ideally both board and CEO come away from the process feeling that the CEO has a clear path for the coming year and the tools and support she needs to get there.

If you need help getting your board moving forward on this process, or help coaching your leader to become more effective, check out the Leadership Coaching services I provide.

Photo Credit: Packer, poster artist, U.S. National Archives and Records Administration

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Goodbye to a Mentor and a Friend

I have a heavy heart today. I found out yesterday that my first boss, long-time mentor, and most influential teacher of all things nonprofit management died over the weekend.

Mary Jubitz was the CEO of SMART (Start Making a Reader Today), a statewide early literacy nonprofit in Portland, Oregon. I met Mary when, as a new college graduate, I responded to a classified ad (yes, that is truly how we used to find jobs) for an office manager at a startup nonprofit. I had never worked at a nonprofit, but I was hungry to learn. And Mary proved to be an excellent teacher. So much of what I write, speak and consult about in the nonprofit world today was born out of what I learned at Mary’s side over the first two years of my career.

She was first and foremost an excellent fundraiser. Over the course of her 12 year tenure as CEO, she grew the budget by 400% and built a highly engaged donor base. She did that through an amazing mix of charisma, drive, organization, and exceptional relationship-building skills. I have never met someone who was so incredibly skilled at making a donor or potential donor feel that their involvement was absolutely critical. She rarely walked away from a meeting without the prospect wanting to be part of the exciting, game-changing partnership she described.

From her tenacious ability to find a connection to a prospective donor, to her skilled mastery of the meetings and conversations necessary to entice them to get involved, to her eloquent and (always!) grammatically correct letters and proposals, to her beautiful hand-written thank you notes, to her ongoing invitations to keep the donor invested, she was a thrill to watch.

But it was not just her exceptional fundraising ability — she also translated that relationship-building acumen into deft management of her board of directors. She made a habit of regularly meeting one-on-one with each board member to ensure that they were continually engaged. And it worked. Every single board member was not only personally giving, but also introducing their own networks to the organization. And beyond ensuring the board’s active money role, Mary made sure that they were all completely engaged in board meetings and decisions.

The board was so engaged certainly because SMART was a great cause, but also — and maybe even more importantly — because they simply didn’t want to let Mary down. No one wanted to let Mary down. As a true leader, she set the bar high making those around her want to give their best and then a bit more. She created and continually inspired a winning team of board, staff and donors who truly believed they were changing the future of the children of Oregon.

And they did. Over the course of SMART’s history the organization has reached almost 200,000 children who were found to be 60% more likely than other students to reach state reading benchmarks.

20 years after I left her employ, Mary continued to be a tremendous mentor to me. Throughout my career she was always available for advice, recommendations, words of support. She took real joy in watching the progression of my career, which is as it should be since she built its foundation. As a female leader, she took great interest in other women who were doing their best to rise through the ranks of the nonprofit world and devoted time and energy to helping groom the next generation of nonprofit leaders.

She was an amazing leader. She will be missed.

Photo Credit: Adrian Kingsley-Hughes

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Guest Post: The Rebirth of Nonprofit Advocacy

Note: With a current political climate which is arguably more challenging for many nonprofit social change efforts, I believe (along with many others) that now is the time for nonprofits to move more actively into advocacy. But many nonprofit leaders don’t know how to get started. So I asked the expert on all things nonprofit advocacy — Tim Delaney, President & CEO of the National Council of Nonprofits — to write a guest post describing how nonprofit leaders can move into advocacy. Here is his post.

Given the new realities at the state and federal levels of governments, nonprofit leaders (board and staff) are recognizing that nonprofit advocacy is more important than ever before. They suddenly feel compelled to engage in advocacy. Yet many admit privately that their advocacy know-how has either atrophied or never gotten off the ground. As we witness a re-birth of interest in nonprofit advocacy, this article offers initial steps along a pathway to effective advocacy.

Nonprofit advocacy is a lot simpler than most people realize, with easy steps involving the heart, mind, body, and soul.

Heart Steps

Care. The very first step in advocacy is to care deeply about something. For nonprofits, this means caring about your organization’s mission. When you really care, then you will see the barriers blocking your way … and be motivated to remove or overcome those barriers to advance the organization’s mission. Consider this mom who worried that she would be ineffective as an advocate, yet when motivated to protect her child’s safety, she championed changes to federal and state laws.

Know you are not alone. If you start to get weak of heart, know that you are part of a community that includes more than one million organizations, employs ten percent of the American workforce, and contributes billions to the economy. Your nonprofit’s mission is unique, but your organization is part of an expansive ecosystem of nonprofits working in every community across the country. We are all stronger if we honor the Three Musketeers’ motto of “All for one and one for all, united we stand, divided we fall.”

Mind Steps

Realize that you are already advocating. People sometimes fret that they don’t know how to advocate. But it’s so easy that first graders do it! So do you, every day. Did you share an update with your nonprofit’s stakeholders (such as donors, board members, or reporters) recently, so they know about the impact your organization is having in the community? Congratulations, you are already advocating! We like to say that the definition of advocacy is answering the question, “Who can I talk to today to advance my nonprofit’s mission?”

Lean into the news to stay informed. It’s too late for action when reading that the Governor signed a bill to regulate nonprofits or the city council voted to pass an ordinance to tax nonprofit property. Nonprofits need to pay attention to the news so you’re ready to speak up for your communities. To help nonprofits make sense of the swirling policy issues in Washington, DC, we wrote this analysis in the Chronicle of Philanthropy identifying six sector-wide issues that we foresee impacting all nonprofits in the coming months. Your local state association of nonprofits can help keep you up-to-date on what is happening, and you can subscribe to our free policy newsletter, Nonprofit Advocacy Matters.

Focus. One danger of paying attention to the news is most people suddenly will see multiple things that motivate them to action. Yet there is only so much time in each day. When taking the Heart Step of identifying what you deeply care about with your nonprofit’s mission, define and then refine the topics on which your nonprofit agrees in advance that it will devote some of its limited resources to advocate for or against. Reduce that in writing as part of your Public Policy Agenda. (Here’s a link to our Public Policy Agenda, which you can use as a rough draft to start your own.)

Work smarter, not harder. The old Fram oil commercials used to say, “You can pay me a little now … or a whole lot more later.” So it is with advocacy. If you invest a little time now to lift your voice instead of sitting silently while your local government imposes new taxes on nonprofits, then you can avoid the added burden of trying to raise additional money. If government contracts impose mindless administrative burdens and costs, then you can either keep paying people to do wasteful acts or band together with other nonprofits to ease the burdens of government and nonprofits. Our hallmark as nonprofits is that we solve community problems. Advocacy is a powerful leveraging tool to do just that.

Take the (h) election. Sometimes called the best, easiest, and cheapest (free!) insurance in America, filling out IRS Form 5768 can simplify life for most 501(c)(3) charitable nonprofits advancing their missions through advocacy. Taking the “(h) election” doesn’t cost anything, and gives many benefits for nonprofits.

Soul Steps

Build relationships. The poet’s line that “no man is an island” underscores not only a universal interconnectedness that feeds our souls, but also a basic tenet of advocacy: relationships are fundamental. You will be more effective when those you are advocating already trust you and know the impact your nonprofit is having. Whether you are advocating to a potential funder or to an elected official (or a member of their staff), relationships matter. Take the time now, before you have a distinct ask to make, to make friends before they are needed. They will come in handy later, for you and for them. Even without further advocacy, informing officials of the work your nonprofit is doing can pay dividends as they consider proposals down the road.

Body Steps

Stand for Your Mission. No matter who is in office or which party is in control, nonprofits can’t afford to sit silently on the sidelines on issues that affect their ability to serve their community and advance their mission. The nonprofit community is at its strongest when every nonprofit, and every person associated with that nonprofit, raises their voice. To help board members in particular, check out this website on steps your nonprofit can take to stand for your mission.

Use Your Voice. Advocacy takes many forms. You can write or call your representatives or attend a Nonprofit Day at the Capitol. You can make a video demonstrating the effects (or potential effects) of an issue. Even social media has become a part of the advocacy toolkit. Read more stories of nonprofit advocacy in action to learn about the other ways you can engage.

Be a Team Player. Nonprofit advocacy is a team sport. Most funders and nonprofits focus on their narrow issue area. But some policy issues affect all nonprofits and thus require collective action. The current federal attempt to erode trust in nonprofits and foundations by removing or weakening the 60+ years of protection against politicizing nonprofits during elections, and local attempts to impose taxes, fees, or payments in lieu of taxes (PILOTs), are attacks on all nonprofits.

Be Vigilant. My football coach used to say, “Keep your head on a swivel,” meaning always be on the lookout, watching everything on the field. Public policy is even wilder than football because it’s played on a three-dimensional chess board, with activity happening up and down the local, state, and federal levels of governments and across the executive, legislative, and judicial branches. While many want to focus on the new President, the White House is only one source of policy action. Federal legislative priorities this year will likely flow down to hit the states to implement. Domestic spending cuts are a near certainty, and with states currently receiving, on average, 30 percent of their revenue from the federal government, it’s important to see the interconnections. The White House might dominate the nightly news, but life is lived at the local level and not in faraway DC.

Just as Plato wrote that “necessity is the mother of invention,” policy threats can spark inspiration for advocacy action. Although dismayed by the cause, I’m heartened by hearing how many nonprofit leaders are now seeing the value and power of advocacy. Let this be the re-birth of nonprofit advocacy, which is deeply rooted in our collective DNA.

Photo Credit: National Council of Nonprofits

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Nonprofit Leaders Have More Power Than They Think

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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