There was a really interesting interview last week in the Nonprofit Quarterly with Bill Ryan, author of Governance as Leadership, who recently led a study on coaching in the nonprofit sector. Coaching is a form of management consulting where a leader is given one-on-one strategic guidance.
An executive director can be coached to grow an organization, to build a stronger board, to revamp their financial model. Or as Ryan puts it, coaching answers the question: “If my organization wants to get to Point X, what do I, as a leader, need to do to build on my strengths and manage my weaknesses to help it get there?”
The concept of coaching is fascinating to me because, as Ryan points out, in corporate America coaching is much more commonplace than in the nonprofit world. If a CEO needs management counsel, they are encouraged to find a coach, whereas coaching for nonprofit leaders is often deemed a luxury. But, I think coaching is even more necessary in the nonprofit world. Nonprofit leaders, unlike their for-profit counterparts, often lack a management background having made their way to the top through program expertise.
The reality is that coaching for a nonprofit executive director can be absolutely transformative. It can make the difference between a program that is just getting by and a program that becomes financially sustainable and grows dramatically, with an engaged, committed board behind it.
Such is the case with ACE: A Community for Education, a nonprofit early childhood tutoring program. I have coached ACE Executive Director, Mary Ellen Isaacs for over a year since we completed an ambitious strategic planning process. They are now working to triple the number of students they serve and diversify and grow their financial model.
Here’s what Mary Ellen has to say about the coaching experience (or if you are reading this in an email click here to watch):
I believe coaching can be hugely transformative for nonprofit organizations, helping their leaders build the skills they need to grow their solutions far and wide. If you’d like to learn more about how I coach nonprofit leaders, check out the Coaching page of the website.
Photo Credit: wikimedia
I started a new blog series in March about overcoming the many fears that cripple the nonprofit sector, the first one being the fear of investment. Today I want to talk about the nonprofit fear of money. Because the nonprofit sector is focused on mission, as opposed to profit, money is often ignored at best, or feared at worst. Many nonprofit boards and staff find money distasteful, burdensome, and avoidable.
But money can be used as a powerful tool to create more social change. In order to overcome the fear of money and start using it effectively, nonprofit boards and staffs must:
Embrace Its Power
Without money, your compelling, inspiring, world-changing mission is only a sentence on paper. As much as we might like to deny it, nonprofits very much exist in a market economy. So instead of trumping all, mission is merely one of the things nonprofit leaders need to be thinking about as they are working toward social change. Because without a smart strategy for how you will secure and use money you are sunk.
Really, Really Understand It
Of course money is scary if you don’t understand it, and most nonprofit leaders don’t have a finance background. So learn all you can about money. Find an accountant who speaks English and can explain how money flows in and out of your organization. Make sure you are receiving and sharing with your board monthly financial statements that are understandable. Ensure board and key staff all have basic nonprofit financial management training so everyone speaks the same language and understands the key ratios they should be analyzing. This common understanding should serve to generate substantive conversations about the best use of money to further the work of the organization.
Involve Everyone in Raising It
I know I sound like a broken record, but EVERYONE at a nonprofit should be involved in bringing money in the door in a way that fits well with their skills and experience. Every board member should have a money responsibility. Be strategic about putting each individual to their highest and best money-raising use. And every staff member, even program staff, can be enlisted to explain the program to potential donors, gather client stories, or provide data about the program so that you can garner more support. No one at the organization should be allowed to say “I don’t do the money thing.” Money is everyone’s job, because with no money there is no mission, remember?
Budget for Having Too Much of It
It is unseemly for a nonprofit to operate a surplus. Funders don’t like to see an organization too far into the black, and board members become uncomfortable when “too much” money sits idle. But money sitting in a bank account means the organization no longer lives hand to mouth, continually putting out fires, and focusing only on keeping the doors open. Operating reserves allow an organization to think strategically, take some risks, streamline the business model, innovate the solution, and weather economic uncertainty all in the name of delivering bigger, better social impact. So overcome the taboo and budget for a surplus that creates operating reserves.
Talk About It. All. The. Time.
Because money is so central to mission you cannot make decisions about the organization, about programs, about staffing, really about anything without understanding the financial implications of those decisions. Therefore, you must be talking about money all the time. Not just when the finance committee of the board meets, or when you are reviewing the monthly financial statements, or when your latest fundraising event falls flat. Money must be a constant conversation. It must be fully integrated into everything you do.
The key to financial sustainability, and ultimately significant social change, is being smart about managing money. But you cannot be smart with money if you are afraid of it. Money can be a beautiful, powerful tool for creating social change. Embrace it.
Photo Credit: orudorumagi11
There is something pretty interesting going on in Illinois around nonprofit overhead costs. I have written many times (here and here for example) about how the distinction between “overhead” and “program” costs in the nonprofit sector is meaningless at best, and destructive at worst.
I’m really excited to see that the Donors Forum in Illinois is starting to host real conversations between nonprofits and philanthropists about the Real Costs (including administrative costs) necessary to create effective social change.
With the help of the Bridgespan Group, in March the Donors Forum brought nonprofits and philanthropists together for a one-day discussion about real costs in the nonprofit sector. They want funders to understand that it is not enough to fund only nonprofit programs. In order to create effective social change, nonprofits must also be able to fund the infrastructure, staffing, space, tools, and research costs of their work.
The image above is a graphic facilitation of the March session. The Donors Forum has also developed a great website with resources for nonprofits and philanthropists about real costs, including Ann Goggins Gregory and Don Howard’s seminal article in the 2009 Stanford Social Innovation Review “The Nonprofit Starvation Cycle,” reports and resources about nonprofit fiscal fitness, Grantmakers for Effective Organization’s study on how philanthropy is changing, and much more.
As part of their efforts, the Donors Forum has also put together this video that helps to explain, in very clear terms, the critical importance of funding ALL of a nonprofit’s costs:
I’m excited to see where this conversation goes and whether more nonprofits and philanthropists start having open, honest conversations about what it really takes to create lasting social change. I’m hoping to interview Valerie Lies, President and CEO of the Donors Forum, later this year about this initiative and where they hope to go from here. So stay tuned.
In this month’s Social Velocity blog interview, I’m talking with Monisha Kapila. Monisha founded ProInspire to develop the next generation of nonprofit leaders by expanding the talent pipeline, developing professionals, and increasing diversity in the social sector. She has created partnerships with leading nonprofits like Global Giving, Share Our Strength, and Year Up. Monisha’s vision to start ProInspire stemmed from her own experience transitioning from business to nonprofit, and her passion for helping organizations and individuals achieve their potential for social impact.
You can read past interviews in the Social Innovation Interview Series here.
Nell: One of the things ProInspire does is train business professionals about how things are different in the nonprofit sector. Can you, and how do you, teach people about fundamental cultural differences between the business and nonprofit sectors?
Monisha: Through our work with the ProInspire Fellowship, we recruit and train business professionals to spend one-year working full-time at a leading nonprofit. Fellows have the opportunity to use their skills for social impact, and gain an entry path into the nonprofit sector. Over the past five years, we have learned that it is less important to focus on differences between business and nonprofit sectors, and more important to focus on how to be successful at a nonprofit. We also help our Fellows think abut how to translate these skills to be effective in the social sector.
Before starting the Fellowship, we send Fellows articles on transitioning (some great ones from Bridgespan) and The First 90 Days book. During orientation, we have Fellows develop their transition strategy and their learning agenda. We also discuss the phases of culture shock that people typically feel when they move to a new country, as we have seen Fellows go through similar emotions as they move through sectors. Finally, we have our alumni share their experiences in moving from business to nonprofit. Just having a common language and a peer group helps Fellows with the transition.
Nell: In the past there has been a backlash in the nonprofit sector against people with a business background entering the sector and ignoring the complexities that differentiate the nonprofit sector from the for-profit sector. How do you address these tensions?
Monisha: We do this in a few ways. First, we have a very competitive selection process and evaluate candidates’ ability to be successful in the nonprofit sector before they are selected to be a Fellow. Things that we look for include humility, flexibility, initiative, and managing up. These are skills we believe are critical for anyone to be successful in the nonprofit sector.
Second, we talk about the challenges many business professionals face when moving into the sector and the Fellows think about how they will address them. The top ten we focus on are:
- Avoiding the “white knight” syndrome
- Proving that you are passionate about the mission
- Working with less resources
- Making decisions in a more complex environment
- Wearing many hats
- Learning to self-manage
- Getting feedback about your performance
- Finding professional development opportunities
- Creating your own career path
- Working hard for less money
Third, we emphasize that the Fellowship is a learning experience. Our partners are looking for Fellows to bring their business skills to the nonprofit, but they must first learn about the organization and then figure out how to adapt their skills in that context.
Nell: What is your view on arguments (like Dan Pallotta’s) that nonprofit leaders are sorely underpaid. Do we need to address social sector salaries in order to attract top talent or are there other more important hurdles to attracting talent to the sector?
Monisha: I think that compensation is definitely a factor in attracting and retaining nonprofit leaders. It will become even more important as we start to see convergence in the social sector, with leaders having opportunities to make social impact in nonprofits, for-profits and government.
I have no doubt that talented people are willing to get paid less to do work that is meaningful. Every year we have hundreds of talented professionals from consulting, banking and corporations who apply to our Fellowship program and take pay cuts to work in the nonprofit sector. But as we see Fellows grow in their careers, compensation becomes a bigger issue.
Nonprofits have a lot of assets they can use to offset the lower compensation. Namely the level of responsibility that leaders get at nonprofits is often higher than they would get in a similar role at a for-profit. When I came out of Harvard Business School, I spent a year as an HBS Leadership Fellow at Accion International. I managed product development, marketing, and partnerships for micro-insurance products. Over time I developed strategic alliances with major companies like Visa. After my Fellowship, I joined Capital One in a product development role, but my responsibilities were more narrow. I was supposed to primarily focus on the product – there were other teams for strategic partnerships and for marketing.
So while I think compensation is and continues to be an issue, opportunities for nonprofit professionals to contribute to multiple aspects of the organization’s success are extraordinary. I always tell ProInspire Fellows that one of the benefits of being at a resource-constrained organization is that you will rarely be told “no” if you want to take on more responsibility. This is particularly exciting when you feel very strongly about an organization’s mission. These opportunities to wear many hats, especially near the beginning of one’s career, might not make up for a lower compensation, but we cannot ignore their importance.
Nell: Since ProInspire’s model is based on working with individuals (“Fellows”) how do you reach a tipping point that will address the approaching leadership shortfall for the entire nonprofit sector?
Monisha: ProInspire’s focus is on helping individuals and organizations achieve their potential for social impact. With our Fellowship program, we partner with nonprofits to bring in Fellows who address critical organizational needs. We work closely both with the organizations and the Fellows who are part of our program. The Fellowship demonstrates the ways that nonprofits can expand their talent pools and shows business professionals paths into the sector.
I don’t think we will address the leadership shortfall just by recruiting more people to the sector. Our next area of focus is on how do we support emerging leaders to grow and increase their impact at nonprofits. This summer we are piloting “Managing For Success”, a leadership development program for first-time managers at nonprofits. Our goal is to develop a high quality, cost effective program that can be scaled nationally and reach many more people.
Finally, we think it is important to show thought leadership around the issue of talent and leadership in the nonprofit sector. This is an issue that many organizations have put on the back burner and we are working with other partners to make it a priority. I recently participated in the White House Forum on Cross Sector Leadership and was excited to see this is a priority for our government, corporations, nonprofits, and foundations. We will only reach a tipping point when we have multiple players in the nonprofit sector thinking about developing talent to drive forward these important organizations that make a difference in the world.
Nell: ProInspire was launched at a time when record numbers of college graduates have an interest in social issues. What do you think makes this generation different in terms of their approach to social change and their approach to organizational structure?
Monisha: Millennials commitment to social change is unlike any generation before. This generation has been taught that they can do anything, and they feel drawn to doing work that has an impact. Communication and social media have played a big role in making them more connected to world events and causes they care about. We see this with the high level of interest in our Fellowship program. Young people who have great jobs at places like Bain, JP Morgan, and Microsoft tell us that they have been waiting for this opportunity to do work that has a purpose.
I have seen that Millennials are also “sector agnostic” – they want to make a difference and don’t care what sector they are in. This means that nonprofits will start to compete more and more with tech start-ups, social enterprises, and the public sector for talent that cares about social issues.
April was all data, all the time. From big data, to performance data, to how donors use data to improve programs, to whether donors even care about data. It’s enough to make your head spin. But many people were cautioning to keep the end goal in mind. Data is only data, its ultimate use is to create social change.
Below are my 10 favorite social innovation reads in April. But let me know in the comments what I missed. And if you want to see my expanded list, follow me on Twitter, Facebook, LinkedIn, or my newest addition, Google+.
You can see the 10 Great Reads lists from past months here.
- Writing on the Full Contact Philanthropy blog, David Henderson argues that we must understand the limitations of data, as he says “Decisions we make should be informed by data, but data does not make decisions for us.”
- Daryn McKeever from the Gates Foundation seems to agree arguing that we need to move from Big Data to Big Wisdom, using data to make better decisions. And David Brooks writing in the New York Times seems to fall into the same camp.
- The Stanford Social Innovation Review is celebrating their 10 year anniversary and as part of the festivities are running a series of essays about how social innovation has evolved and where it’s going. Part of that series is Tim Ogden’s controversial (I think) post claiming that contrary to growing belief donors don’t care about impact any more than they ever did.
- As a counterpoint, the recent NextGen study from the Johnson Center on Philanthropy found some pretty significant changes in how the newest donors, Millennials, do philanthropy. Michael Moody and Sharna Goldseker, authors of the report, break down how they think donors are changing.
- And adding to the conversation about whether donors care about outcomes, a debate raged between William Schambra from the Hudson Institute and Ken Berger from Charity Navigator. William argues that moving the nonprofit sector to outcomes measurement would lose other, more important and less tangible benefits (civic engagement, social bonds) that the sector promotes. But Ken argues that measuring outcomes is absolutely critical to helping the nonprofit sector create more change.
- During April’s annual Skoll World Forum a new Social Progress Index launched, a measure for comparing different countries abilities’ to “provide for the social and environmental needs of their citizens.” The hope is that the index will help guide social investment decisions. It will be interesting to watch how it evolves.
- For a really interesting case study on use of data, The National Center for Arts Research interviews Kate Levin, Commissioner of the New York City Department of Cultural Affairs about how they use data to make the case for investments in culture.
- I have been fascinated to watch New Orleans’ renaissance via social innovation in the years following Katrina. Two recent articles (here and here) highlight exactly how the city is coming back and the role social innovation is playing in that comeback.
- Albert Ruesga, Chair of Grantmakers for Effective Organizations and editor of the White Courtesy Telephone blog, writes a fairly scathing (but in a nice way) post about how philanthropists need to start having more difficult, honest conversations in order to move the sector forward. His post was in response to Caroline Preston’s February Chronicle of Philanthropy article in a similar vein and the impetus for a panel discussion in DC along the same lines. They promise to keep this conversation going. Let’s hope, because we need more cruelty, or at least honesty, in the sector.
- As I said last month, crowdfunding is apparently the next new shiny thing. And April continued the drumbeat with many more articles, the most interesting of which was Dowser’s list of 10 New Platforms for Crowdfunding.
Photo Credit: o5com
As I mentioned in an earlier post, I am leading a Financing Not Fundraising E-Course for nonprofit leaders who are ready to create a more sustainable financial engine for their nonprofit. I would like to give one nonprofit that can’t afford the registration fee the opportunity to participate in the class for free.
But because this E-Course requires not only a financial investment, but more importantly an investment of time and mind-share, I want to select a nonprofit leader who has a compelling case for why they are ready to move their nonprofit from fundraising to financing. So I am introducing this contest.
To recap, the Financing Not Fundraising E-Course will take a small group of nonprofit leaders who are ready to chart a more sustainable financial future for their nonprofit from fundraising to financing.
Over the course of two months under my guidance you will:
• Undertake a comprehensive fundraising assessment of your nonprofit
• Gain new money-raising ideas
• Create a detailed financing plan
• Hear from other nonprofit leaders in your shoes, and
• Learn how to move your organization forward
To watch a video that describes the Financing Not Fundraising E-Course in more detail go here.
If you’d like to enter to win a free registration to the Financing Not Fundraising E-Course, fill out the form below. The nonprofit leader who makes the most compelling case for why they are ready to take their organization to the next level will be selected this Wednesday, May 1st. So submit your entry soon.
Update: A contest winner was selected so the contest is now closed. However, registration for the September-October 2013 E-Course is new open. You can register here.
Photo Credit: Library of Congress
I’ve had a lot of great questions about the upcoming Financing Not Fundraising E-Course for nonprofit leaders. So I created a video that breaks the e-course down and explains exactly how it will work.
The Financing Not Fundraising E-Course is an excellent opportunity for nonprofits stuck in the starvation cycle to figure out what they can do to more effectively raise money and then create a plan for a more sustainable financial engine. The registration fee is per organization, so if you would like your executive director, development director and a board member, for example, to participate, they all can for one fee. You will just simply appoint one person as representative of the organization to participate in the coaching calls, and the others are free to “listen in” and help you with each step along the way.
The total time commitment over the course of two months is approximately 10-15 hours, which includes the webinars, coaching calls, Google Hangouts and homework assignments.
This E-Course is truly an investment in the future of your organization. By making the investment of the time and cost you will transform the money engine of your organization and recoup that investment many, many times over.
I hope you can join us!
A big topic of conversation lately has been whether donors really care about impact, or whether they simply just give based on less scientific things like their emotions, or their friends recommendations. Which is why I’m excited to announce that I’ll be participating in a Google Hangout April 30th about using data to attract donors.
Writing in the Stanford Social Innovation Review, Tim Ogden claims that donors have never really been interested in impact. And Ken Berger from Charity Navigator and William Schambra of the Hudson Institute debate (here and here) whether moving the nonprofit sector toward performance management helps or hurts social change efforts.
To add to this conversation, David Henderson and I are hosting a Google Hangout, “How to Use Real Performance Data to Raise More Money,” on Tuesday, April 30th at 2pm Eastern. David is a super smart guy who runs Idealistics, a consultancy that helps nonprofits learn from their outcomes data, increase impact, and demonstrate results to funders and stakeholders. David’s professional focus is on improving the way social sector organizations use information to implement higher impact poverty interventions. He has been quoted in the Chronicle of Philanthropy and has written for Change.org and the Huffington Post. You can read my interview with him from a year and a half ago here.
David and I thought it would be interesting to host a conversation with nonprofit leaders about how nonprofits can use real performance data to raise more money. We’ll kick off the hour-long conversation with a couple of points and a case study or two of nonprofits that are using data to raise more money, but then we’ll open it up to you for questions. You can send us your questions ahead of time (via email to email@example.com or firstname.lastname@example.org) or simply post them to the Google Hangout here as you watch.
I hope you’ll join us!
How to Use Real Performance Data to Raise More Money
A Google Hangout with David Henderson and Nell Edgington
Tuesday, April 30th, 2013
Can nonprofits that use real performance data to raise more money? Are donor increasingly interested in impact data? How can nonprofits communicate their program data to donors? And how should nonprofits respond to questionable performance claims by other organizations? Join David Henderson from Idealistics and Nell Edgington from Social Velocity in a Google Hangout on Tuesday, April 30th at 2pm Eastern to discuss these and many more questions about how nonprofits can use real data to raise more money. We’d love to have you participate in the discussion, so send your questions ahead of time to Nell or David, or leave a comment at the Google Hangout here.
Photo Credit: 401(K) 2013
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