Nonprofit University Blog

So how’s that recovery treating you?     I am NOT a crepe hanger, trust me.  But I am concerned that nonprofits aren’t being so smart smart about this “Great Recession.”  While economics experts  tell us that the recession has begun to recede, they are also telling us something even more important for nonprofits.    Economists are now calling this a “double-dip recession”—meaning that the recession “technically ends” but then, before we get into true and real sustained recovery, there is another economic downturn.

According to CNNMoney.com, the 1980 “minor” recession was followed by “a more pronounced downturn that lasted from the middle of 1981 throughout the end of 1982.”    This phenomenon of a double-dip recession only magnifies the recovery difficulties facing the nonprofit sector.  I and others have been saying since the beginning, that nonprofit recovery will lag behind recovery of the rest of the economic engine of the country.  Thus, if recovery starts in 2010 for the rest of the country, it will take until 2012 or even 2013 for the nonprofit sector to really begin recovery.  Now with these pronouncements of being in a double-dip recession, recovery could be even further out than 2013.

In the 9/14/09 issue of Newsweek, Robert Samuelson called the recently past Labor Day “the bleakest since at least the 1980s”—and unemployment hadn’t yet topped 10%.  He shares other little tidbits that don’t bode well for the nonprofit sector.  For instance:  in 2014, unemployment will average 7.6%; over borrowed households will first look to repay debt, making any other spending “sluggish”; and, the one I find the most scary for already tapped social service and education nonprofits—“the child poverty rate could jump from 18 percent in 2007 to 27 percent.”

Switching to an equally potent set of data points, “The Chronicle of Philanthropy” (6/18/09) had the following sub-header to an article titled “When Will It End?”:  “If this recession turns out to be like the one in the mid-1970s, donations won’t rebound until at least (emphasis added) 2012.”  The article points out two other key points of information which nonprofits must heed.  First, it took three full years for giving to nonprofits to bounce back after the recession of the 1970s (which, by the way, is not one I’ve seen flagged as a double-dip recession), which means it took three years for giving to reach the level at which it had been when the recession started.  Three years to get us back to three years ago!  And second, “[e]very 100-point drop in the Standard & Poor’s 500 stock index causes contributions to fall by $1.85 billion….”

Add this all up and what do we have?  An important warning for nonprofits:  do NOT breathe a big sigh of relief when announcements are made that the recession is over.  We’ve got years to go before we recover to where we were when the whole thing started, and years after that to move beyond.  During this time, many in our sector will likely see the demand for their services explode.  Organizations—from boards to staff—cannot proceed with “business as usual,” as usual is no longer.  We must work smarter than we ever have if we want to be here serving our clients in 2020.

When I started blogging, I was told it was ok to be provocative and controversial and I was prepared for flak and feedback. But I am not going for controversy or provocation here; here, I’m venting. Numerous recent experiences have led me to conclude that the nonprofit sector that I truly love has become down-right rude. I’ve got a collection of experiences to whine about, but I’ll share two recent ones with you that painfully contrast our sector with the for-profit world.

I was invited to give a talk—for free—to a group of executive directors of nonprofits located in a specific geographic region. Not a problem. So what if when they first invited me I was told the event was at a location that was no more than a 40 minute round-trip for me but in the end they held the event at a location that was a 40 minute drive—each way. No biggie! I’m used to driving. And I was being a good collaborator.

No problem that despite sending me directions to the location three times, not one of them indicated that the one road leading to the location was under construction and there was a massive detour. Ok, it was a little bit of a problem, and a little bit more when once I got to the physical location there was only one sign at the entrance to the parking lot and it pointed at three different buildings. After that, no signage. So, I had to keep asking and asking, but eventually I got there.

But once I arrived at my destination, I assumed all would be good. Hah! I was warmly greeted at the “registration” desk. That was nice. But the executive director of the organization who invited me to speak NEVER came over and said hello, pleased you are here, thank you, etc. NOTHING! He was too busy yucking it up with his board member who he was introducing to this group of executive directors of his member organizations. (I won’t even go into the HUGE conflict of interest this presented, as I’ve only touched on the tip of the iceberg. Besides, I am talking about rudeness here, not conflicts of interest.) I follow his board member’s little talk; I’m nicely introduced by the leader of the meeting, and I start talking. I’m in the middle of a sentence when the executive director and his buddy get up, walk behind me and the executive director says, in booming voice, to the audience, not to me, “Got to leave. Have another appointment to get to.”

Could it get any worse? You bet. At any given time, of the approximately 25 people in the room, there were at least two people texting on their phones (and frequently there were more than two). And those two people were texting fairly consistently throughout my talk. Now, let me be clear: there was not one executive director in that room who worked at an organization with a life and death mission. Not one executive director texted and immediately left the room because s/he had just been informed of some emergency situation that had developed back at his/her organization or in her/his personal life. No, life went on as usual: phone would go down for a few minutes, then be picked back up, text/email sent, down, back up, etc. A few did try to “hide” it under the table, but come on! Others made no pretext of hiding.

Yesterday was not a first or only occurrence. What I experienced yesterday is all too commonplace at meetings—formal, informal, big, small, etc. And, quite honestly, I think it among the rudest things people can do. But I was comforting myself by thinking that this was not a phenomenon unique to the nonprofit sector; it crosses the sector.

And then I attended a meeting of 15 leaders, where I was the only nonprofit person at the table. The other 14, of whom all but one was male, were CEOs, vice-presidents and managing partners of some of the biggest, well-known companies, banks and law firms in this region. And you know what? Only one even put his phone on the table, and he had it in the flip-case, so he couldn’t even see the screen. Not one of them pulled a phone out once during the 90 minute program. Not one text or email was sent.

My bet is that if I asked the group of executive directors at the meeting if they have a core value at their organization that addresses the concept of “respect,” 100% of those who have explicit core values would say yes. Being respectful of all is important to them, they would say. But as I know all too well, too many organizations reserve their core values for their clients, failing to apply them to their entire community of stakeholders—including invited guests.

I have had a song swirling in my head for a couple of days now.  It is a song from “Bye Bye Birdie” which the parents, and one younger brother, sing when they believe their teenagers are off doing the kinds of nefarious things teenagers might have done in the days (1958) of “Bye, Bye Birdie.”  It is titled “Kids!” and the lines in my head are (and be glad you can’t hear me singing):  “Why can’t they be like we were, perfect in every way? What’s the matter with kids today?”

Fast forward to late 2009 and my song is a bit different.  “Why can’t they be like other regions, perfect in every way?  What’s the matter with Delaware Valley executive directors today?”

When we talk to our sister organizations in other parts of the country, or read what is happening in their service areas, we see innovative, exciting offerings to help executive directors—and other senior managers—stay fresh, supported, inspired, and work as effectively and as efficiently as possible.  So, why don’t things like that work in the greater Delaware Valley?  Surely, our executive directors and other senior managers are just as smart as those elsewhere?  surely, they are as interested in capacity building—both their own and that of their organizations—as those elsewhere?  So, what gives?

We offer CLEAR (Cultivating Leadership Excellence and Responsibility) Circles, small groups of executive directors who meet once a month for two hours of facilitated, peer-to-peer problem solving.  Over the last six years, we’ve gone from having eight circles to two.  We listen to what executive directors want—ways to learn in groups of just other executive directors about things that we as executive directors really need to know, understand and about which we should be thinking.  So, we created EDU—Executive Director University—and end up cancelling the vast majority of sessions because we had one or fewer people registered.  So, what gives?  In our  follow-up research, where we probed what we should have done differently, we were repeatedly told, “It sounded great.  You didn’t do anything wrong. “

We frequently hear a couple of things.  First, “Oh, I couldn’t ask the board to pay for that and I can’t afford it on my own.”  Say what?  Of course you can ask the board to pay for the executive director’s professional development.  What develops the executive director develops the organization.  Does the board provide for professional development for other staff?  (Meaning, is there a line for professional development in the budget?  And I certainly hope the answer is yes, though we know it is the first line in the budget to disappear during tough economic times, though it should be the last.) And do you use that line when you—or another supervisor—identifies an individual who could benefit from—and/or be rewarded  with—professional growth opportunities?  I certainly hope so, as that only makes good management sense.  So, why not the executive director?

And we hear, “I couldn’t ask the board; it would reveal my weaknesses!”  Well, who thinks you are perfect anyway?  Human, yes; perfect, probably not.  Besides, seeking out professional growth and stretch opportunities is a sign of strength, not weakness.  For one, it shows that you are an evolving leader, open to new ideas and opportunities, which is what boards should want of their organization and, therefore, of their leader.  And they should be willing to support that evolution.  (After all, my bet is that many, if not all, on your board have taken/are taking advantage of professional growth opportunities at their day jobs.  At least I hope so.)  Does it increase the chances that the newly enlightened and evolved leader may move on?  Perhaps.  But for the time that s/he remains in the organization, the organization will benefit.  For another, it models the correct and best behavior for staff.  By engaging in growth behavior, the executive director says:  stretch; move; evolve.  And for another, it says to the board “I’m worth investing in.”  That is a message antithetical to the opening fear of exposing weaknesses.

Finally, they will say that they simply don’t have the time.  This speaks volumes about why executive directors burn out and why the millennial generation doesn’t want to become executive directors.  How can executive directors think they are effective leaders if they don’t invest in their own capacity?   

Logic absolutely points to executive directors seeking out growth opportunities right and left.  Yet, that is not what we are seeing.  Now, I recognize that not everyone finds evolutionary and growth opportunities in the same format.  Just as some people are visual learners and others verbal, some people like group experiences while others prefer the solitude of reading. But with few exceptions, I’m not hearing executive directors chatting up their latest great professional read anymore than we are seeing them storm the halls of organized professional development opportunities.

And yet, we know that happens elsewhere.  So, I remain stumped:  what are Delaware Valley executive directors doing for support, rejuvenation and stretching?

I was never a big Judy Garland fan, but recognize that she had an incredible voice. But her classic, “Let’s put on a show!” comes screeching into my head every time I hear of someone wanting to start a nonprofit For reasons that are beyond fathoming, I would think, to anyone who has been in this sector for more than several years, people think operating a nonprofit is a cakewalk. And truth be told, it is not.

Starting one, as I’ve said before, is the easy part. Sustaining one, hard before the current economic situation, has become exponentially harder. (And, as we all know, just because the “recession” is being labeled as “over” by financial experts, it ain’t over for the nonprofit sector. So far, I’ve made reference to movies and dance, so why not sports? It ain’t over ‘til the fat lady sings, and she won’t be singing for the sector for at least two to three more years.)

Two “stories” that I heard today just have me scratching my head. First, is the misleading headline from the news story on centraljersey.com: WEST WINDSOR: Township mulls nonprofits to ease tax burden My immediate thought was that West Windsor has gone the route other jurisdictions have been toying with: let’s pull the property tax exemption for nonprofits. Well, I was wrong . This article is about West Windsor’s Township Council considering whether it should create a nonprofit to fundraise for the Township in order for the Township to reduce the tax burden on the citizens of the Township. (There was also a presentation to the Council that somehow nonprofits could be used as a source of income to help defer the tax burden from the citizens to the nonprofits, but this idea was not fully explained.) It appears that West Windsor, like so many of its sister townships around the country, is having a hard time covering its expenses, and rather than simply raise taxes and put the burden on its citizens, it is looking for alternatives. So, naturally, nonprofits came up. Let’s put on a nonprofit, compete with the other nonprofits in the township for raised dollars, and sprint to the finish line of raising an easy $600,000 to 5 million annually.” Development personnel, are you jumping out of your seats yet?

So, let’s now switch gears to another story. We get a call from a founder of a young nonprofit that is financially floundering, and she wants free help and guidance. Her proposal is that she merge with a for-profit, the owner of which is very supportive of the nonprofit’s mission. For a variety of reasons that are unimportant here, we suggested that that is not the best route, and she should consider instead merging with another nonprofit that has a similar or complimentary mission. We even go so far as to suggest a few organizations she should consider approaching. She gets quite angry with us, saying she thought we were going to help her. Well, we thought we were helping her. She’s done the easy part of nonprofits—she started it; now she’s at the hard part of nonprofits—sustaining it. And that is exceptionally hard to do with a nonpaid staff of one and a board of four.

Nonprofit organizational performance expert Paul Light said at the end of last year, that due to current economic conditions, we would see 100,000 nonprofits close this year. He has now recalibrated his prediction: we will not see a “winnowing” of the sector but rather a “withering”. Tough economic times or not, the sector would benefit from a winnowing. But unfortunately, pride, arrogance, emotion over reason—and I could go on—seem not to have withered, and as such, the sector will neither wither nor be winnowed.

I love the New York Times.  I’m not one of those snobs who thinks that if you aren’t reading the NYT you aren’t reading a paper, though.  It just does good journalism—and more.

The Times recently announced that the application for its fourth annual Nonprofit Excellence Awards[1] (to be awarded in June 2010) is now available.  (By the “fourth annual” I figure this isn’t a fly-by-night deal, but something that is really here to stay.  So, it is safe to sing its praises.)  But this isn’t your normal “nonprofit excellence” awards that just highlight the good work that nonprofits do.  No, this is recognizing the good operations that allow for the even better work to happen. 

Just take a look at the application.  First, well, actually, the first question is a problem.  It asks the applicant to provide the organization’s mission statement but then says if the mission statement doesn’t “make clear what your organization aims to do—its core purpose,” then provide one to two sentences that do.  Oh, no!  If the mission doesn’t do it, that organization should automatically be disqualified.

But the remaining eight questions? Oh my, be still my heart!  Here’s what they ask the applicant to describe.

1. How is the organization getting at measurable results that show the organization is advancing its mission?
2. How does the board add value (concept!), help the organization perform better and lead “in concert with management?”
3. What is the role of the board and senior staff in creating and monitoring the annual budget?
4. What is the organization doing to ensure that it is “diverse, culturally competent, and responsive to emerging issues or communities?”
5. How does the organization use and care for its human and technological resources?  (Not sure I like that they put these two in the same question—sort of equating them—but that is truly insignificant in the larger scheme of what the Times is doing.)
6. How do they communicate with their external and internal stakeholders?
7. How do they “effectively and ethically develop resources?”
8. Provide three examples of how they incorporate best practices for management excellence.

How good is this?  Would that all funders paid attention to how the organization was being run instead of just what the organization did.  Nonprofits serving the needs of the community are a dime a dozen.  Nonprofits abiding by best practices for excellence in management and governance are few and far between.  And yet they are the ones that are most likely to use a donor’s money effectively and efficiently; they are the ones most likely actually getting the results they promise in their fundraising literature; and they are the ones least likely to end up as tomorrow’s headlines.

Unfortunately, because the dollar prize is very nice but the honor worth even more, these awards are only open to nonprofits in the New York City metropolitan area.  But I’m hoping for a spillover effect:  other award-giving organizations and funders may take note and follow suit.

Kudos to the Times and its collaborators.

[1] The Times isn’t doing this on its own; it has two key collaborators:  Nonprofit Coordinating Committee of New York and Philanthropy New York