Note: As I mentioned earlier, I am taking a few weeks away from the blog to relax and reconnect with the world outside of social change. But I am leaving you in the incredibly capable hands of a rockstar set of guest bloggers. Next up is Kathy Reich. Kathy is Organizational Effectiveness and Philanthropy Director at the David and Lucile Packard Foundation where she helps grantees improve their strategy, leadership, and impact. Here is her guest post…
Philanthropy pundits often exhort nonprofits to “act more like businesses.” Usually I disagree; in fact, I think there’s a great deal that businesses could stand to learn from nonprofits.
In at least one area, though, I admit that all too frequently nonprofits lag their for-profit peers. Nonprofits simply do not invest enough time or money in talent assessment, development, and management.
Major national surveys provide a helpful snapshot of the nonprofit sector’s talent troubles. In the Bridgespan Group’s Nonprofit Management Tools and Trends 2014 survey, which polled almost 500 nonprofit organizations about their current management practices, nearly 60 percent of respondents agreed or strongly agreed that “hiring, training, and retaining staff is one of our greatest challenges.” Yet the survey found that only 40 percent reported using talent assessment and development tools, and just 38 percent said their organizations engage in leadership succession planning.
Similarly, in the Nonprofit Finance Fund’s 2015 State of the Nonprofit Sector survey, which included responses from more than 5,400 nonprofits nationwide, respondents were asked to name the top three challenges facing their organizations. “Ability to offer competitive staff pay and/or retain staff” was ranked in the top three by fully 25% of the respondents, behind only “achieving long-term financial sustainability” as one of the top three challenges facing nonprofits. Yet the same survey found that just 37 percent of respondents had invested money or time in staff professional development in the past year. Only 28 percent had given cost-of-living raises, and 18 percent had given raises beyond COLA.
At the Packard Foundation, program officers tell me that they see signs of this underinvestment almost every day. Some problems that our nonprofit grantee partners routinely report:
- Executive turnover is frequent, and often traumatic.
- Nonprofits have a hard time finding appropriate candidates for senior management roles, including CEO, program executives, development directors, and communications directors.
- The leadership many nonprofits have is not reflective of the leadership that they need, or the communities they serve. In most of the fields in which the Packard Foundation works, nonprofit leadership remains predominantly white, male, and middle-aged, even as our country becomes younger, more diverse, and hopefully, more committed to racial and gender equity.
- Emerging leaders under age 45 report high levels of career dissatisfaction, driven in part by lack of professional development and advancement opportunities. In a 2011 Young Nonprofit Professionals Network survey, only 36 percent of respondents said that their organization invested in “bench strength” to develop emerging leadership. Of that group, less than 47 percent said their organization implemented these investments effectively.
Nonprofits and foundations both have critical roles to play in ensuring that the nonprofit sector has a robust, diverse talent pipeline now and in the future. First, foundations need to step up their financial support for leadership. The private sector spends $12 billion annually, an average of $120 per employee, on developing leaders, investing in their management and technical skills so that they can move up the ranks or excel in their current jobs. In contrast, philanthropy’s investment in nonprofit leadership development totals an average of $29 per employee annually.
Foundations can do much more. Some concrete ways that they can help:
- Fund nonprofit overhead so that nonprofits have enough money to pay their people competitively and can have the operations in place necessary to support their staff and manage their talent. Depending on their size and talent needs, some nonprofits may need to hire a Chief Operating Officer, a Human Resources Director, or a Chief Talent Officer.
- Support nonprofits to develop “right-sized” performance assessment and management systems, as well as meaningful succession plans for key leaders.
- Include funds for staff professional and leadership development in project support grants.
- Incentivize nonprofits to develop cultural competency in hiring and management so that they can attract and retain diverse employees.
But foundations cannot tackle this issue alone. No matter what their size, nonprofit boards and executive leadership need to focus on talent issues and ensure they have appropriate plans in place to manage and develop staff for their organizations. They need to implement thoughtful, intentional strategies and process to ensure that they are identifying their own talent needs, assessing the strengths and growth areas of their staff, and providing ongoing development and feedback to all employees, particularly those with high growth potential. And they need to make the case for talent to their funders, along with concrete examples of how investing in leadership capacity will improve outcomes.
In the nonprofit sector, as in business, leadership matters. Let’s be sure we’re all investing our time, and our money, where it counts.
This spring I have been trumpeting the Performance Imperative, a detailed definition of a high-performing nonprofit released by the Leap Ambassador community in March. Today I continue the ongoing blog series describing each of the 7 Pillars of the Performance Imperative with Pillar #2: Disciplined, People-Focused Management.
With this second Pillar, the Performance Imperative obviously makes a distinction between “leaders” in Pillar 1, and “managers” in Pillar 2. There is a note in the Performance Imperative that “leaders” and “managers” are typically two separate people in nonprofits with budgets over $1 million. So this distinction, and perhaps this Pillar, applies only to larger nonprofits.
But I think there is actually application to any nonprofit. In any nonprofit there are leadership tasks (creating the vision, being the cheerleader, marshaling resources) and there are management tasks (making sure the trains run on time, putting each resource to its highest and best use). In smaller organizations both sets of tasks fall to the same person, yet they both still need to be performed well. So I think it behooves any size nonprofit to analyze whether they are BOTH leading and managing well.
Effective managers put organization resources to their highest and best use. They recruit, train and retain the right talent, they use data to make good decisions, they manage to performance, and they are accountable.
You can read a larger description of Pillar 2 in the Performance Imperative, but here are some of the characteristics of a nonprofit that exhibits Disciplined, People-Focused Management:
- Managers translate leaders’ drive for excellence into clear workplans and incentives to carry out the work effectively and efficiently.
- Managers…recruit, develop, engage, and retain the talent necessary to deliver on the mission.
- Managers provide opportunities for staff to see…how each person’s work contributes to the desired results.
- Managers establish accountability systems that provide clarity at each level of the organization about the standards for success and yet provide room for staff to be creative about how they achieve these standards.
- Managers acknowledge when staff members are not doing their work well…managers are not afraid to make tough personnel decisions so that the organization can live up to the promises it makes.
The Center for Employment Opportunities (CEO) is an example of how strong management is necessary to create a culture of high-performance. CEO employs people entering parole in New York State in transitional jobs at government facilities while helping them access better paying, unsubsidized employment. CEO Chief Operating Officer, Brad Dudding described to me how CEO management created, over the past 10 years, a culture and system of high performance.
Here is his story:
In the early years, CEO focused program performance on meeting individual contract milestones, not a set of unified organizational outcomes. They were proficient in collecting data and reporting it to funders, but did not use data to track participant progress, to make course corrections, and to manage to short-term outcomes.
In 2004 the Edna McConnell Clark Foundation provided CEO with a multi-year capital investment to:
- Create a theory of change as a blueprint for program intervention and outcomes measurement.
- Develop a performance measurement system to track progress toward those outcomes.
- Nurture a performance culture that uses data to understand program progress, build knowledge and correct performance gaps.
First, CEO management had to agree on a theory of change and the specific outcomes for which the organization would hold itself accountable. Next, management shared the theory of change with staff and demonstrated how each staff member contributed to its achievement through an all staff event, follow-up trainings and consistent messaging that the organization was entering an exciting period of change. CEO then adopted a new performance measurement system to reinforce the theory of change.
But reorienting the organization was not easy. Not everyone was ready to embrace a new culture of performance accountability and data tracking. CEO management was initially surprised by staff resistance and responded impatiently with compliance measures. Looking back, not enough time was invested in staff training and promoting the value proposition of new changes. At times it was an enormous effort to get front line staff to track and use data everyday to ensure participant goals were being met.
But the tipping point came when CEO promoted early adopters of the data system to management positions. These new managers were comfortable operating in a data-driven environment and holding others accountable to use data to track program participants’ progress. Once there was a group of strong managers in place, CEO’s performance culture started to take hold and program outcomes improved.
By 2010, CEO was managing to annual performance targets and short-term outcomes through staff’s real-time documentation and data analysis.
In 2012, the results of a three-year randomized control trial showed that CEO’s program resulted in a reduction in recidivism of 16-22%. But the evaluation also uncovered a need to improve CEO’s strategies for advancing long-term employment and for connecting individuals to the full-time labor market. In response, CEO created a job retention unit and developed innovative job retention strategies, including training programs and financial incentives for participants.
In 2013, CEO entered the New York State Social Impact Bond, the first state-sponsored transaction, through which CEO will serve 2,000 high-risk parolees in New York City and Rochester between 2014 and 2018. If CEO hits benchmarks and reduces the use of prison and jail beds by program participants, investors will be repaid their principal and will receive a return of up to 12.5% by the U.S. Department of Labor and New York state.
The tenets of a performance based culture — supportive leadership, disciplined managers, goal setting, data collection and analysis to track and improve outcomes — are now fully accepted by CEO staff and reinforced by management. CEO now has a highly developed system of tactical performance management, which allows the organization to know on a daily basis if it is delivering on its promise to its participants.
Photo Credit: Australian Paralympic Committee
In today’s Social Velocity interview, I’m talking with Linda Wood, Director of the Haas Leadership Initiative. Over the past decade, the Haas, Jr. Fund has invested over $20 million in strengthening the leadership of more than 75 grantees in its key priority areas– immigrant rights, education equity, and gay and lesbian rights—through the Flexible Leadership Awards program. In that time Linda has become a leading voice on the topic of leadership in the nonprofit and philanthropic sectors. Prior to joining the Fund, she advised senior leaders on strategy, organizational performance and change management at Cap Gemini Ernst & Young.
You can read past Social Velocity interviews here.
Nell: The Evelyn and Walter Haas, Jr. Fund has put a lot of investment behind the development of nonprofit leaders, but you are quite an anomaly in the philanthropic world. Support for leadership development is taken as a given in the for-profit world, but rarely recognized, let alone funded, in the nonprofit world. Why do you think there is that discrepancy in leadership development between the nonprofit and for-profit worlds?
Linda: It really is striking to see how differently the business sector and the nonprofit world view the issue of leadership. I went to business school myself, and spent eight years working as a management consultant in the private sector where it’s basic good practice to invest in the people you’re counting on to move the work forward. Strengthening leadership is seen as part and parcel of what it takes to fuel innovation and success.
On the other hand, in the social sector, a lot of foundations think of leadership development as a luxury–a nice-to-have that’s not linked to impact. That’s reflected in recent estimates that less than 1% of total foundation spending is going to strengthen leadership in the nonprofit sector.
Why? Well, I think we’ve got a lot of myths about leadership in our sector.
One myth is that leadership development is simply not a priority for nonprofit leaders because most don’t ask for it. And, when grantees don’t ask, many foundations assume that there’s no need. But we have not yet created a culture in the nonprofit sector that says it’s ok to invest in yourself and in other senior organizational leaders. We place a high value on self-sacrifice. Given the choice, nonprofit leaders will almost always direct general support to critical services and programs. That’s why actually I think it’s important for foundations to earmark funds for supporting leadership.
Another related myth is that leadership is part of overhead, and overhead should be minimized at all costs. From this perspective, investments in the organization’s leadership are cleaved off from the work and seen as wasteful overhead rather than intrinsic to achieving the organization’s goals.
Nell: You recently curated a blog series on the Stanford Social Innovation Review where funders who have supported nonprofit leadership development articulated its value. How helpful do you think that step was in getting the broader philanthropic community to understand the value of leadership investment? And do you have additional plans to help move leadership development forward among your peers?
Linda: Our goal in putting together the SSIR blog series was to help build momentum around the idea of investing in leadership being a core grantmaking strategy that can catalyze diverse programmatic goals and not just a boutique strategy that only some funders can afford. By featuring perspectives from top-level executives from a half dozen foundations of very different sizes and with very different funding priorities, ranging from the Omidyar Network to the Women’s Foundation of California, we hoped to offer examples that would inspire more foundations to see possibilities for their own work.
To be honest, it’s hard to know whether we are moving the needle. But it does seem like there has been mounting attention to philanthropic underinvestment in leadership lately. Just over the past couple of months GEO and then NCRP have both released major reports making the case for more attention to leadership and talent development. And the Talent Philanthropy Project held a meeting in New York in March that attracted over 60 people including nonprofit leaders, funders, consultants, and intermediaries.
I think the real question is whether increased interest will translate into significant increases in investment—the kinds of sustained, strategic investments in leadership that advance the capacity of organizations, networks and movements to achieve better outcomes. The danger is that we foundations will sprinkle a little leadership development funding here and there, perhaps send a handful of our grantee leaders to a training, and call it a day.
Nell: You recently announced a new initiative to seek solutions to the challenges, which you uncovered in your 2013 UnderDeveloped study with CompassPoint, facing nonprofit fundraising. What are your long-term plans with this initiative and what do you hope to find?
Linda: The UnderDeveloped report caused such a stir across the country. I have heard from so many people—funders, grantees, consultants, board members, etc.—that the report gave voice to concerns they’ve held for a long time. It clearly hit a pain point. And the big question it begs is what to do about it?
At the Haas, Jr. Fund, we’ve decided our next step is to try and refine concrete strategies that will help our grantees, and hopefully others, achieve breakthroughs in their fundraising.
One of our goals is to help organizations be more strategic about their approach to fund development. There’s so much out there. The nonprofit fundraising industry is full of consultants, speakers, large trade associations and technology providers. They offer costly, sometimes contradictory advice, patented approaches, one-off success stories, and a dizzying array of technology tools and platforms for raising money. As a result, our work in fundraising may be less about innovating and more about separating the wheat from the chaff, helping grantees chart a coherent, fruitful course through the thicket of possibilities.
Right now, we’re in the R & D phase. Here are some of the questions we’re exploring:
- What fundraising success stories can be replicated by our grantees? To answer this question, we will conduct “bright spots” research focused on small- to medium-sized organizations who have had sustained success with individual fundraising.
- How can we address the fundraising talent gap? To answer this question, we are conducting a scan of fundraising training and exploring the feasibility of a “fundraising fellowship.”
- One fund development approach that’s attracting attention is developing a “culture of philanthropy.” But what does that mean? And what difference does it make?
- Are there ways to help an entire field of grantees? To identify potential investments that might help a field of grantees, we are testing whether and how donor research can help LGBT grantees with fundraising.
As we tackle these questions, we are sharing what we’re learning along the way through a series of blogs on our website. And we’d love to hear from other people. What questions are missing? What can a foundation’s role be in supporting fundraising capacity?
Ultimately, this isn’t just an intellectual exercise. Our goal is to get better at supporting grantees around fund development, and to that end, we anticipate beginning to pilot some new strategies starting in 2016.
You asked what we hope to achieve with this work over the long term. I think if I could fast forward a couple of years, I would hope we will have made a dent in strengthening the talent pipeline for development directors, and that we are helping organizations bring more skill, focus and success to their fundraising, especially in tapping individual donors.
Nell: Philanthropy has traditionally been less interested in funding capacity building (like leadership development and fundraising). Do you think that’s changing? And/or do you think we will have more hope of changing that as generational shifts take hold in philanthropy?
Linda: Yes, I often feel like there’s a real divide between the folks in philanthropy who are focused on the what and those who are focused on the how.
Obviously, we’re all in this work for the what—to help create a more just and sustainable world. But often in philanthropy, conversations about things like capacity and leadership are disconnected from the conversations about the content of the work. We hold separate conferences; we belong to different affinity groups; we read different articles…
So, as someone who’s a member of the how club (as we sometimes jokingly refer to it among ourselves) I think we need to keep strengthening the connection between building leadership and capacity and delivering programmatic wins. No matter what a given foundation seeks to achieve programmatically–whether that’s community health, environmental justice or education equity–it’s important to ask how they will get from where they are today to where they want to be. What is our responsibility as funders to support the people and organizations who are advancing this work? What kind of staff, board and community leadership will be needed to get where we all want to go? And how can we transmit in words and in concrete actions that we are in this together and that we want to provide them with the resources to do their best work.
Photo Credit: Evelyn & Walter Haas Jr. Fund
As I mentioned last month, the Leap Ambassadors (of which I am a member) recently released the Performance Imperative, a detailed definition of a high-performing nonprofit. Because I think the Performance Imperative is so important and every nonprofit leader should understand it and begin to use it, today I am kicking off a series to describe, one-by-one, each of the seven pillars of the Performance Imperative.
I think the Performance Imperative is so exciting because it can serve as a north star to the nonprofit sector, helping organizations analyze their own performance and create a clear roadmap for improvement.
As Lowell Weiss, one of the leading architects of the Performance Imperative, explained in my interview with him last month:
High performance is all too rare in our sector today. In fact, we don’t even have a commonly accepted definition of the term “high performance.” The Performance Imperative is our attempt to create that common definition and then start the process of creating guideposts to help nonprofits who are motivated to improve their performance for the clients and causes they serve.
So, first up in this series on the Performance Imperative is Pillar #1: Courageous, Adaptive Executive and Board Leadership.
Without true leadership, at both the board and staff level, you will achieve little as a nonprofit. This pillar is about asking hard questions, pushing the organization toward excellence, continuously improving and taking nothing for granted.
You can read the full description of Pillar #1 in the Performance Imperative, but here are a few key elements present in nonprofits that exhibit this pillar:
- Boards “ask probing questions about whether the organization is living up to its promises and acknowledge when course correction is needed.”
- Executives and boards “know that great talent is a huge differentiator between organizations that are high performing and those that aren’t.”
- Executives and boards “know that they haven’t figured it all out and acknowledge that they still have a lot of work to do.”
- Executives and boards “are constantly assessing not only what the organization should be doing but also what it should stop doing…redirecting scarce resources to the highest opportunity areas.”
In other words, nonprofit leaders who embody Pillar 1 of the Performance Imperative, ask hard questions, build a stellar staff, seek continuous improvement, and put resources to their highest and best use.
There is no doubt that there are many examples of this courageous, adaptive leadership in the nonprofit sector. One of those, I believe, is Molly Baldwin, founder and CEO of Roca.
Molly founded Roca in 1988, and by 2004 it was a multi-million dollar teenage pregnancy and violence prevention program. But that year, Molly began asking some hard questions about the results Roca was achieving. She forced board and staff to take a huge step back and examine what they were doing and the ultimate effect that work had. She led her board and staff through a rigorous refocusing and pruning effort to limit their target populations and use data to drive their interventions. Instead of continuing a laundry list of services to many different populations that had limited effect, she helped her organization refocus resources on where they could create real change — transforming the lives of young men in the criminal justice system.
It was a challenging transition to lead, but the results are impressive. An internal study overseen by Harvard’s Kennedy School of Government in 2013 found that Roca reduced recidivism 65% and increased employment by 100% for the men in the program. And Roca was chosen as the lead provider in Masschusetts’ first pay for success effort.
Ten years ago Molly could have continued on Roca’s then current path, continuing to do “good work,” but failing to ask hard questions about whether that work was really resulting in change. But instead, Molly brought everything to a halt and forced board and staff to grapple with some fundamental and incredibly risky questions. In the end Molly’s leadership transformed Roca into an organization that is truly delivering solutions.
That’s the kind of social change leadership we need.
If you want to learn more, download the Performance Imperative and read additional case studies here.
Photo Credit: William B. T. Trego painting depicting George Washington’s army at Valley Forge.
I’m really excited to announce today’s launch of the Performance Imperative. The Performance Imperative is a detailed definition, created by a community of nonprofit thought leaders, of a high-performance nonprofit. The hope is with a clear definition of high-performance we can strengthen nonprofit efforts to achieve social change.
As we all know, we are living in a time of growing wealth inequality, crumbling institutions, political divides, and the list of social challenges goes on. The burden of finding solutions to these challenges increasingly falls to the nonprofit sector. So “good work” is no longer enough. We need to understand — through rigor and evidence — which solutions are working and which are not.
The Performance Imperative was created by the Leap Ambassadors Community, a network of 70+ nonprofit thought leaders and practitioners of which I am a member. The group emerged from the 2013 After the Leap conference, which brought nonprofit, philanthropic and government leaders together to create a higher-performing nonprofit sector. The group is determined to lead the fundamental, and critical, shift towards a more effective nonprofit sector.
The Performance Imperative defines nonprofit high performance as “the ability to deliver—over a prolonged period of time—meaningful, measurable, and financially sustainable results for the people or causes the nonprofit is in existence to serve.”
The Performance Imperative further describes seven organizational pillars that lead to high performance:
- Courageous, adaptive executive and board leadership
- Disciplined, people-focused management
- Well-designed and well-implemented programs and strategies
- Financial health and sustainability
- A culture that values learning
- Internal monitoring for continuous improvement
- External evaluation for mission effectiveness.
Each one of these 7 pillars is fully explained in the Performance Imperative.
Over the next several months I will write a blog series that digs into each of these 7 pillars to understand what each one means for a nonprofit organization and to examine case studies of how other nonprofit leaders have approached the pillars. And next week on the blog I’ll interview one of the founders of this movement toward high performance.
Although the Performance Imperative is targeted toward $3M+ nonprofits, it can also be a benchmark upon which any social change nonprofit can measure itself. Nonprofit boards and staffs can use the Performance Imperative as a north star to guide their journey toward higher performance.
The critical necessity of a high performing nonprofit sector is clear. We no longer have the luxury of benevolent good works that sit aside the business of our country. Now is the time to find solutions that really work and develop the leadership and sustainability to spread them far and wide.
As Mario Morino, founder of the Leap Ambassador Community has said, “If we don’t figure out how to build high performing nonprofits, nothing else matters. This is the last mile. Our nation depends on it.”
Today I am in Sacramento (it’s a busy travel month) speaking at the Nonprofit Resource Center’s 2015 Conference “Building a Mission Focused Community.” I am honored to share the stage with amazing nonprofit sector visionaries like Jan Masaoka from the California Association of Nonprofits and Blue Avocado, Jeanne Bell from CompassPoint, and Robert Egger from LA Kitchen (and past Social Velocity interviewee and guest blogger).
My topic for today’s conference is “Reinventing the Nonprofit Leader.” Amid growing competition, decreased funding sources, and more and increasingly complex social challenges, nonprofit leaders must reinvent themselves. They must unlock the charity shackles, embrace strategy and impact, use money as a tool, refuse to play nice, and demand real help. We need a new kind of nonprofit leader.
Below is a Slideshare synopsis of my talk today, and it joins the growing library of Social Velocity Slideshare presentations.
As the year draws to a close, and you (I hope) make time to relax, reconnect with friends and family, and reacquaint yourselves with some much-needed quiet, you may also want to reflect on your role as a social change leader. Effective leadership is really, really hard work, but it is also incredibly necessary and needed.
So if you find time over the next few weeks to take a look at your role as social change leader and you want some help along the way, download the Reinventing the Nonprofit Leader book.
Here is an excerpt:
Chapter 3: Refuse to Play Nice
As a by-product of the charity mindset, nonprofit leaders often suffer from being too nice. The thing I love most about nonprofit leaders is that, for the most part, they are truly good, decent people. They are trying to make the world a better place, so by definition they are considerate of others. But sometimes you can take being nice too far. Being nice to the donor who leads your nonprofit the wrong way, or the staff member who is not performing may work for the individual relationship, but is detrimental to the larger organization and ultimately your mission.
Indeed, according to a 2010 study by researchers at Stanford University, nonprofits are perceived as “warm, generous and caring organizations, but lacking the competence to produce high-quality goods or services and run financially sound businesses.” In other words, we think nonprofit leaders are nice — but not competent.
But this reality is often imposed on nonprofit leaders. Nonprofit leaders are encouraged to collaborate instead of compete, hold onto under-performing staff, accept martyr-like salaries, smile and nod when funders push them in tangential directions, and keep quiet when government programs require the same services at a lower price.
This demand that the nonprofit sector play “nice” is the result of (at least) three aspects to the sector:
- A Focus on the Social. The sector exists to address and (hopefully) solve social problems. Thus, by definition, it is socially oriented and has an inclusive, consensus-based approach to doing business.
- More Customers. Nonprofits have two customer groups, as opposed to the single customer for-profits have: 1) those who benefit from the services a nonprofit provides (clients) and 2) those who pay for those services (funders).
- Multiple Players. In addition to their customer groups, nonprofit leaders must corral their board of directors, which often includes individuals with competing interests, and external decision-makers (policy makers, advocates, leaders of collaborating organizations) who have an impact on the change the nonprofit seeks. The end result is that multiple players must somehow be brought together and led in a common direction.
But in order to work toward real solutions and get out from under consensus-based mediocrity, you need to break free from the niceness trap. Rest assured, I am not asking you to get mean and ugly. But there is a way to politely, but assertively, make sure you get what you need to succeed.
In other words, the reinvented nonprofit leader needs to:
- Say “No” to funders who demand new programs or changes to programs that detract from your nonprofit’s theory of change and your core competencies.
- Diversify revenue streams so that you are not beholden to any one funder or funding stream.
- Demand that board members invest significant time and money in your nonprofit, or get out.
- Fire under-performing staff. This is such a taboo in the sector, but with limited resources and mounting social problems to be addressed, we do not have time to invest in people who cannot deliver.
- Be brutally honest with funders and board members about the true costs of running operations effectively and stop apologizing for, or hiding, administrative expenses.
- Create a bold strategic plan that will drive your nonprofit toward social impact and sustainability, not mediocrity.
- Make an honest assessment of your nonprofit’s core competencies, competitors and consumers so that you understand and can articulate where you fit in the marketplace — and act accordingly.
- Stop waiting for your board chair, or a big donor, or a government official to allow you to do something that you know is the right way forward.
- Refusing to play nice is not easy. And it often culminates in a difficult conversation, perhaps with an underperforming staff member, an ineffective board member, or a time-consuming funder.
In order to manage these difficult conversations for success, you need to approach them in a thoughtful and strategic way. Here are the steps…
Photo Credit: Satish Krishnamurthy
I love this time of year. Not just because of the approaching space for relaxation, friends and family, and great food, but more importantly because it is a time for reflection. The end of the year offers a natural analytic marker between what was and what is yet to come.
And as is my end of the year tradition on the blog, it’s a time to look ahead to what the coming year might bring for the nonprofit sector. I’ve always said when I create my Trends to Watch lists that I am less clairvoyant and more optimist. I am always hopeful that the nonprofit sector is growing more effective, more sustainable, more able to create lasting social change. That’s the trajectory that (I freely admit) I am predisposed to see.
So here are 5 things I’m really hopeful about the nonprofit sector as we head into the new year.
- Growth of the Sharing Economy
The emerging “sharing economy,” where a good or service is shared by many instead of consumed by one and managed largely through the use of social technologies (think AirBNB, Netflix, TaskRabbit and countless others), will have wide implications for the social change sector. The sector that employed “sharing” long before it was cool will need to understand this changing environment and the implications for their work. Nonprofits should figure out how to navigate this growing interest (and increasing for-profit competition) in the realms of community and goodwill. It will be fascinating to watch.
- More Focus on Crowdfunding
One element borne out of the sharing economy is crowdfunding, and there is no doubt that it is everywhere. I have written before about my skepticism. But my hope is that crowdfunding will move away from ALS Ice Bucket Challenge-like hype and become another financing tool that nonprofits can use strategically. We need to get smarter about what crowdfuding is, and what it isn’t. A Kickstarter campaign makes sense for startup and other capital needs, but not for ongoing revenue. And while Giving Days are exciting, I’d like to see more analysis of what’s new money and what is cannibalized money. There is no doubt that crowdfunding is a force to be reckoned with, I just hope we turn it into a useful, strategic tool that contributes to — not detracts from — sustainable social change financing.
- Decreasing Power of the Overhead Myth
The Overhead Myth, the destructive idea that nonprofits should spend as little as possible on “overhead” expenses (like infrastructure, fundraising, and administrative costs) was laid bare in 2013 when GuideStar, CharityNavigator and BBB Wise Giving Alliance wrote their famous Letter to the Donors of America. This year they wrote a follow up Letter to the Nonprofits of America, arguing that both nonprofit leaders and donors must stop judging nonprofits by their overhead rate and instead focus on a nonprofit’s outcomes. It’s exciting to see this most detrimental of nonprofit myths beginning to crumble, but there is still much work to be done. Not least of which is helping nonprofits articulate and measure their outcomes so that they have a more effective measure with which to replace the overhead rate.
- Growing Emphasis on High Performance
Which brings me to the growing movement for creating more high performing nonprofits. Over the past several years there has been an emerging effort to move nonprofits toward this outcomes approach to their work. The idea is that if nonprofits can better articulate and measure the social change they seek, more resources, sustainability and ultimately more change will follow. In the coming year, a group of social sector leaders (of which I am a member) will release a framework for what practices constitute a high performing nonprofit. But that is just one example of a growing emphasis in the social change sector on results.
- Greater Investment in Nonprofit Leadership
Nonprofit leaders have long traveled a lonely road with inadequate support and resources. Funders and board members often assume that a leader should go it alone, even while for-profit leaders benefit from on-going coaching, training and development. But that is starting to change. A few savvy foundations have invested in nonprofit leadership, and they are beginning to trumpet the benefits of such investments. As more funders understand why investing in the leaders of the nonprofits they fund makes sense, I am hopeful that nonprofit leadership support will become less of an anomaly. And with stronger, more effective and supported leaders comes — I firmly believe — more social change.
Photo Credit: slorenlaboy