Nonprofit University Blog

Dateline Vermont:  if you work at a nonprofit that receives more than 50% of its funding from the state and you earn more than $60,000, there is a bill pending that would require you to take a 5% salary reduction.  (This money would go to a good cause:  it would stave off cuts so that seniors could continue to get their needed medication).

Dateline Maryland and the U.S. Congress:  there is a suspicion that nonprofit hospitals are not providing sufficient free care to those in need.  So, the Maryland General Assembly, as well as the IRS (along with a threat from Senator Grassley, the highest ranking Republican on the Senate Finance Committee, that if the IRS doesn’t do it he’ll introduce legislation) are considering ways to define how much charity medical care a hospital must provide in order to maintain its tax-exempt status.

Dateline Nevada:  The Nevada legislature is considering a bill that will require all nonprofits to register with the state and report how their money is being spent:  programs and services or other?  Oh, you mean like what we do on the Form 990?  Yes; and in fact, should the bill pass, you would need to include two pages from the 990.

At a time when many nonprofits are massively struggling–struggling to meet a growing demand with diminishing resources; struggling to stay alive; struggling through Chapter 11 bankruptcy–why are governments thinking about ways to nickel and dime nonprofits? thinking about ways to spend money to correct a problem that is, by most  estimations, found in less than 5% of nonprofits? spending money to duplicate the existing services of another oversight organization?

Let me focus on Vermont, as Patty O’Donnell’s bill is the first of these three proposals that I saw, and the one that had me seeing that jerking knee.  I’ve done the math and based on March 2008 data, Vermont legislators make $614.30/week during sessions, and an additional per diem of $54 for meals and mileage for commuters, while non-commuters (those who stay in Montpelier during the work week) get $137 for meals and lodging.  The Vermont legislature works Tuesday through Friday, anywhere from five to six months out of the year, bringing the salary of a non-commuting Vermont legislator to just under $28,000 for a six month session.  Now, before you go feeling sorry for these legislators, this is, after all, a part-time job.  And part of the reason it is part-time is because the legislators don’t want to work year-round so that they can get back to their real jobs!  Yes, a legislator’s state salary is only one piece of the income pie for many Vermont legislators.  Perhaps they are the ones who should be giving back to the taxpayers a chunk of their dollars.

My point here is not to bash Vermont legislators–or Maryland or Nevada or any of the other states looking at equally ridiculous ways to save money.  My point is to ask all legislators–whether federal, state or local–to really look at the implications of their suggestions to see what the value of the return will be and what the cost will be.  As I have said so many times, nonprofits for the most part were already running pretty lean and mean before the economy tanked.  But if there was an ounce of fat left to trim, they’ve already done that–and then some.  There just is no more skin to give and still have the ability and the energy to provide their services.

Patty O’Donnell said that at time when folks are losing jobs in the state, when people are so vulnerable, everyone must make sacrifices.  Nonprofits know what sacrifice looks like–in the eyes of their staff and their clients.  They’ve been making sacrifices for their entire existence.  Now is not the time to skin them again; rather, it is the time to set them up as a role model for all–for-profit companies, state legislatures, government offices–to follow.

Last week, we sent out an e-mail blast with the subject line:  Does your board want to be the best?  While we always receive responses, there was an immediate one that was unique in both content and brevity.  It read, simply:  “No!”

After I stopped laughing, my concern kicked in:   I stopped and thought:  oh, maybe the writer was being serious.  Maybe he, let me call him Bob, and the board had zero interest in doing things right.  As opposed to how I read it, which was he was frustrated beyond belief by his failed efforts to get the board to be its best, and all he had left in him was that no.  (Again, not an uncommon story we hear from that lone wolf on a board.)  Fortunately, as I truly don’t like to laugh at people unless they are laughing with me, it turned out that I had read his response correctly.  There was no doubt I had to contact him and find out what was behind his one word response.

Behind his no was the tale of a struggle to get the several boards on which he’d served to step up to the plate and do their real work, to be strategic in their decision making, to remember that the function of boards is to serve the mission not the reverse, to do what is best for the organization’s ability to fulfill its mission and not what is most expedient, etc.  Does the fact that fewer people opened this particular email message than any other one The Nonprofit Center has sent in the past two years underscore his conclusions about a lack of commitment to board excellence? 

I couldn’t help but think of Bob and his frustrations as I heard the same scenario, though from two different groups, for the second time in that many weeks.  In each case, the board replaces its departed executive director (one was let go as a cost saving, the other resigned) with a board member who will be the volunteer executive director.  For one organization, this will be the permanent “solution”; for the other, it is not clear whether it will be interim or permanent.   One of these organizations, according to the most recent 990 on Guidestar, has total assets over $3 million; the other just under $34 million. Hardly mom and pop operations.

What were these boards thinking?  Or rather, were these boards thinking?  Clearly, they are boards akin to those in Bob’s past.  When it came time to answer the question “do you want to be the best board you can be?” these two boards took no time to say, “Hell, no!”  Let’s be the expedient boards; let’s be the illogical board; let’s be the board that truly doesn’t understand return on investment!  We will impress people with our swift action, they must have said. 

Did either of these boards take the time to think through their decisions?  think through the repercussions?   Did either board bother to “interview” the board member candidate? to see whether the board member brings the skills that the organization needs going forward?   to determine if this board member candidate was truly the best for the job at this point in the organization’s history?

While the selection of an executive director should never be a decision driven by convenience and ease, that logic rings even louder during the tough times in which we are currently operating.  Now is the time when nonprofits need executive directors with the clearest vision, the strongest set of skills, the best track records, etc.  Now is the time when nonprofits needs boards that answer the question, “Do you want to be the best?” with a profound and resounding “Yes!” 

 Earlier this week local public radio’s Radio Times featured a columnist from the Philadelphia Business Journal and an editor and senior writer for Business Week.  The topic was the value, potency, impact, etc., of President Obama’s mandate of a cap on the compensation of senior executives at companies receiving federal bail out money. 

It took the first comment of one of the guests to have me fuming.  He was discussing how executive compensation consultants are already advising people on how to get around the cap!  (This point was affirmed by the second guest.)  As an example, apparently the cap is associated with job titles not salary.  So, compensation consultants (who, may I ask, is paying their hefty fees?) are apparently going to look at ways to re-title positions and avoid the $500,000 cap.  Apparently, it is just way too difficult to live in New York City on $500,000—especially if you need a nanny, and a large apartment, and private schools for your children.  (But, let’s be fair:  you’ve got a car, a plane, an entertainment budget, your taxes covered by an additional bonus your company gives you, etc.  A second house might be out of the question.  And, of course, you do have to go into work every day knowing the head of the company not having been bailed out by the government is making $30 million.  And I am only citing things I learned on this radio show.)

The whole time I am driving and listening to this, I’m thinking:  what is wrong with these people?  The average compensation “package” for a nonprofit executive director in the greater Philadelphia region was just over $94,000, when we did our Wage and Benefit Survey in 2005, with a range of just under $60,000 to just over $111,000.  And while we do grumble about making a livable wage, we also understand that our job isn’t about us but about serving our customer base.  And why should that be any different for us than for the CEO of a bank or an insurance company or an automobile company?  We understand that a huge part of our compensation comes from the very work that we do, the help we are bringing, the enrichment we are providing, the learnings we are sharing, etc., all for the benefit of our customer.  And why should we differ here from our for-profit peers?   We are not simply working a job; we are working for a purpose and doing so with a passion that sustains us in ways money—no matter how many zeros follow the first number—could.

The for-profit sector could learn another valuable lesson from us, as well.  For example, we understand completely the need to be respectful of the gifts we get from others, and to treat them appropriately.  We know that if we are not good stewards of those gifts, they will not be coming to us in the future.  We know that if we do not use them as the donor intended us to use them, we do not deserve to keep that money or receive a gift again.  (And here intent matters as much as explicit directions.)  We know that we cannot indulge ourselves with other people’s money, but must spend it wisely and carefully to the benefit of our stakeholders.  We know that it is not our money, but money that others have worked hard to earn and yet have decided to share it with us.  Thus, we must honor their wishes and do the good work we promise.

One of the mantras of the nonprofit sector for about the past 20 years has been that the nonprofit sector has to be more like the for-profit sector:  we have to become more business like, pay more attention to our bottom line, focus on outcomes, etc.  Perhaps it really is the other way around:  the for-profit sector needs to be more like the nonprofit sector. 

It is one thing when you say something and someone actually listens.  It’s even neater when you say something and discover that others, whom you don’t even know, are saying the same thing.   But when the President of the United States says what you were saying, well, that’s just way too cool!  (And I am very jaded when it comes to Presidents of the United States.)

President Obama is urging Americans–whether employed or not–to volunteer, pitch in, give back, help out.  Others have been encouraging that as well, especially those find themselves laid off from their for-profit jobs.  But if they weren’t listening to the rest of us, I hope they listen to President Obama.   But I’m worried that nonprofits just aren’t ready to handle the demand. What is feeding my worry?  Far too many nonprofits do a poor job of handling the volunteers who already have been knocking on their doors.  And until recently, most nonprofits were only getting a trickle. But that trickle adds up to about 4.7 million volunteers nationwide, across the entire sector.  (As an interesting aside:  did you know that nonprofits employ 9.4 million people?  And that when you add in the number of volunteers mentioned above, that’s  10% of the American workforce?  And that, ladies and gentlemen, is more than the combined workforces of the auto and banking industries!)   So, what if everyone listens to the President and the floodgates open?  Are nonprofits prepared to make use of the skills and talents and good will of the volunteers?  Are they prepared for how to integrate the work of the paid staff with the work of the volunteers?  Are they prepared to deal with volunteer expectations and needs?  That seems unlikely. Thus, if you are hoping to use some of those people being urged to volunteer, get busy now.  Here are some of the bare minimums that you should do.  

1. Identify someone to be your volunteer coordinator because, yes, there needs to be someone who will be the volunteer point person (for both the volunteers and the paid staff), manage the volunteers, cajole the volunteers, stroke the volunteers, etc. 
2. Identify those jobs that can be done by volunteers and write the job descriptions, including number of hours expected to work and qualifications needed to do the job.  Only create a volunteer position if there is real work that needs doing and a competent person willing to supervise that volunteer.  Volunteers want their work to be needed and valued.  Volunteering isn’t simply a matter of killing time; it is about helping to do important work and, maybe, learning a new skill or two along the way. 
3. Create a “hiring” process for your volunteers.  The more you do up front to demonstrate the professionalism of your volunteer program, the more likely you will be to get professional, dedicated performance from your volunteers in return.  (Yes, volunteers need to be hired–which implies a screening process.  Not every volunteer who comes knocking needs to be accepted.  If you have specific jobs with specific qualifications that you need to have done, there won’t be a position for everyone who comes looking.  That is okay.  And while we are on this subject, remember:  not every volunteer works out, just as not every employee works out.  Which means that, yes, volunteers may need to be “relieved” of their volunteer duties.  It is okay to say, “No thank you.”  Or, “Thank you very much, but things aren’t working out as we had hoped.”)
4. Determine how you will appreciate your volunteers.  Will it simply be a thank you?”  (Do not under estimate the value of a sincere and appreciative thank you.)  Whatever you do, make sure you know how you will nurture and thank your valued volunteers on whom you want to rely.

 Successful volunteer programs, whether of one or of thousands, do not run themselves or operate successfully by happenstance.  But a good volunteer program can be invaluable, and well worth the investment. The President has made the call to the volunteers.  I’m calling you to be ready now to receive them.