Nonprofit University Blog

Though President Obama (that feels so good to say and write!) wasn’t specifically addressing members of nonprofit boards of directors in his inaugural speech, I hope they were listening.   “The question we ask today is not whether our government is too big or too small, but whether it works …. Where the answer is yes, we intend to move forward. Where the answer is no, programs will end. Those of us who manage the public’s dollars will be held to account — to spend wisely, reform bad habits, and do our business in the light of day — because only then can we restore the vital trust between a people and their government.” Nonprofit boards would be wise to heed his advice.  The size of the organization is not what matters; rather, it is the quality of work it does on behalf of its stakeholders.  And when programs are not helping to fulfill the promises of an organization’s mission, they should end, even if “nice” dollars will be lost; where programs are doing well and making those promises happen, they should be supported with all of the resources an organization has to bear.  And as managers of others’ dollars, nonprofit boards must be held to account if the sector is to receive the respect and trust it deserves.  “Spend wisely, reform bad habits, and do our business in the light of day.”  Sound, sound advice.  Had the members of boards of directors who got involved with Bernie Madoff or Jack Bennett heeded that advice, it would be hard to imagine any takers, and thus no organizations struggling with huge losses of funds as a result.  Something about if it sounds too good to be true, or if you can’t understand the documentation?  Something about due diligence that is required in the execution of the job of a board member?   One the one hand, I applaud Connecticut’s Attorney General Richard Blumenthal for investigating the boards of directors of nonprofits taken in by Madoff and promising legal action if he finds that any individuals or the collective board failed to do their/its job properly.  (On the other hand), I worry that such law suits might scare off good, smart individuals from wanting to do real work and service on a nonprofit board. Like anything called a job, it takes work to be a good nonprofit board member.  For many organizations, financial viability is a constant struggle.  (Estimates are that one out of three nonprofits is in “perpetual financial distress.”)  Quick get rich schemes will never be the solution.  Assessing the strengths and weaknesses of programs, cutting out what works and doesn’t and who works and doesn’t, getting actively involved in fundraising, and fully understanding the whole financial situation of an organization—these are the things that work.  These are also the things that take time, energy, attention—and commitment—to execute well.     

What makes a nonprofit a nonprofit?  There are so many ways that people answer this question, most of which are incorrect.  There is, however, little argument that for many, it is the IRS 501(c)(3)designation is the determinant. Technically speaking, I’d agree:  IRS approval  is essential in  announcing yourself as a nonprofit.  But does that really make a nonprofit a nonprofit? I’d have to say no.  All it means is that you have passed the paper review by the IRS.  Theoretically, in order to be approved by the IRS there is a crucial test that an applicant organization must pass:  it must prove to the IRS’ satisfaction–on paper –that it will be working on behalf of some portion of the public good.   Public good; not personal gain.    Over the last four or so months, much media attention in the greater Philadelphia area has indirectly been paid to an organization that passed the IRS paper review–Citizen’s Alliance for Better Neighborhoods.  This nonprofit was started by State Senator Vincent Fumo who is currently on trial for improper behavior in relation to both his job as state senator and Citizen’s Alliance.  An outgoing governor has her next job all lined up:  she’ll work at a center that bears her name in office space that will bear her name and that received a $1 million state bond allocation last year.  The Philadelphia Inquirer, citing Senator Fumo and other Pennsylvania politicians and their favorite nonprofits–all of which had passed the IRS paper test–suggests that “charities tied to elected officials raise ethical questions.”   You think?  They also raise the very important question, despite the IRS “stamp of approval,” of whether they really are nonprofits, doing work on behalf of that all important public good. And so you don’t think this is just about “nonprofits” with close ties to politicians, I’ll switch gears. Guidestar reports that approximately ½ million nonprofits could lose their nonprofit status because the IRS hasn’t heard from them in a while.    They haven’t filed their 990-N for at least three consecutive years!   What have they been doing all of these years?  Nothing?  Or working for that public good?  Both are possibilities.  And maybe those that have been working haven’t had the resources–or understood the importance–to file the 990-N.   A nonprofit should not be defined by its IRS status but by the real work it does, the real company it keeps, the real impact it has with that portion of the public for which it is working hard.    

It seems like such a platitude to start out the new year with a blog about new year’s resolutions.  So, I’m putting out a suggestion, planting a seed for folks to consider.  And that is this:  get over yourself!  You are only hurting your organization and the client base you profess to want to serve. No exaggeration, but conservatively, 80% of nonprofits we work tell us they are unique.  Their challenges are unique, their situation unique, their issues unique, etc.  “It is hard for us to do ____________ (fill in the blank) because we aren’t like other nonprofits.”   We hear this all the time.  Get over it.  You really aren’t unique. Claiming uniqueness here is really an excuse for the things you aren’t doing at all or aren’t doing well.  Your difficulties in fundraising, in recruiting board members, in evaluating the impact of your programs have nothing to do with being unique.  But thinking so does give you permission to not address the real problem, and overcome the real reasons why you are having difficulty fundraising , such as not having a proper compensation package for your development person—or not having a development person at all—instead of “our mission is unique and hard for people to understand.”  Or having difficulty recruiting good board members because you aren’t being strategic and/or people don’t know why they should serve on your board or what is being asked of them, instead of saying we are different so we can’t do things the way everyone else does.  And the list goes on.  And all this does is prevent an organization from doing what it should be doing to make it the best it can be.   Claiming uniqueness as your status is simply false.  Your issues—staffing, fundraising, sustainability, board development, etc.—are not rare by any stretch of the imagination; they are the same issues facing every other nonprofit.  There is nothing different, exceptional, distinctive here.  Where, however, you should look to claim that difference is in your positioning—a positioning that needs to differentiate, truthfully, your organization from the over 1.4 million nonprofits in the United States, and the even larger number in the world.   So, in the new year, make the switch:  turn “we are unique” from a whining excuse into a badge of distinction.