Nonprofit University Blog

I recently ran into a funder I hadn’t seen in a while.  In response to the standard question of “How are you?” she responded with a roll of the eyes and “This is ‘death by gala’ season.”  We both laughed, but it is so, so true.  Name the time of day you wish to eat, and there is a gala waiting—breakfast, lunch, drinks, dinner, dessert?  It is all there.  And it isn’t just killing funders; it is driving executive directors and staff over the edge.

There are simply too many events.   In the last year, I haven’t had a conversation with a group of executive directors where galas (or other events—big or small, for this discussion they are all the same) haven’t come up and always with wails of exasperation, and that is putting it mildly.

Staff of nonprofits understand the magnitude of work and money that go into pulling off a successful event; board members not so much.  Staff realize that the vast, vast majority of these events are not really fundraisers at all; board members not so much.

Far too often, organizations “forget” to figure in the cost of staff time in calculating their net gains; when they do, the little net gain quickly becomes a deficit.  But board members aren’t so quick to see it that way; they figure pulling off an event is part of a staff members job, anyway, so it really is a fixed cost to the organization and not a cost to be charged to an event.

But unless an organization is large enough to have a dedicated event planner or two on staff, events pull everyone in—from those on the org chart receiving the highest pay to those receiving the least.  Staff recognize the true benefit of most events is that they can raise friends—but only if the board and staff are willing to work the event; boards not so much.

So, why, then, does this happen?  Why, year after year, do we start in February and go through early June with event after event, from dances to drinks to golf to dinner and beyond?  A two-fold, interrelated answer:  executive directors don’t know how to say, loudly and clearly, “No!” to their bosses and bosses (boards) don’t listen to what they say.

There is the issue of pronoun confusion.  Too many board members apparently never learned the difference between you and we.  One of the things that really, really irks me in general is when I hear board members talking about “you” as opposed to “we.”

“You should be doing this,” the board member says, when s/he should really be saying “We–this organization of which I am a board member and I–should be doing this.”  But to give credit to this board member, s/he is at least being truthful as s/he really means everyone else should do this but don’t count on me to do any work.  Whenever I hear this “you” instead of a “we” I know I am listening to a board member who feels no ownership and I have to wonder why s/he is on the board.

But then there are board members who do say we when they really mean you.  And that is the first step in having so many events.  It often comes out something like this, “You know what we should do? We should have a _________!”  (Fill in the blank with dinner, golf tournament, silent auction, bingo night—whatever you want.)  Everyone gets excited and says, “Yes, let’s do that!”

And after lengthy discussion where it is made clear that staff has no room on its plate to take on this latest suggestion for how to raise money, the board says, “No problem; we will do it!”  A date is selected, but the board does nothing; eventually, a little planning may start to happen but regardless, the event is announced to the public.  No movement is made; more time goes by, and still nothing happens.  The date continues to march closer and closer and the board is doing nothing.  Staff starts to get worried, things need to get done if this event is to be a success–and we cannot risk a failure as that will unquestionable reflect badly on the organization.  So, staff does a little of the work, then more and more, until staff is doing it all.  Whether there really ever was any intention by the board that this event would be done by we—the board or we the board and staff together—is almost beside the point.

The fact is that the board said we—and it really meant you.  The executive director tried to say no at the beginning, by pointing out that staff plates were too full to take on anything new; but it was a soft no and, as a result not heard.  And I’ve yet to meet an executive director who is willing to put her/his foot down and say no once an event has been announced, or willing to take the chance of a failed event because the “we” who said they would do it never stepped up to the plate.

I’ve also rarely met an executive director who wants to dampen the enthusiasm of a board collectively or an individual board member.  Hence, too often events of disproportionate magnitude (for the organization’s capacity) or frequency (for the organization’s calendar) become part of an organization’s fundraising repertoire.  Too many executive directors are afraid even to suggest that an idea be “slept on” until the next meeting—which more than likely means it will be dropped.  And the thought of saying “You say it, you own it!” and holding fast to that is out of the question for 99.9% of executive directors.

The solution?  First, the board creates a policy that says “We will hold no ‘fundraising event’ that does not reasonably project a net of at least x% of its costs.”  Second, no “fundraising” event may even be considered by the board unless it comes with a detailed and reasonable budget demonstrating that if everything is done right that x% goal will be met—or better yet far surpassed.  In other words, let’s look at all of the costs of doing this event—from publicity to linens to food to staff time—and all of the income—from sponsors to ticket sales to the sale of auction items—and see if it is really worth it to us (this pronoun refers to board, staff and organization) to do the event.  (Unfortunately, none of these budget calculations can get at the cost of the drain on good will and energy that events bring nor the cost of the other work—the work on staff’s job descriptions–that isn’t getting done while doing the pre-, day of, and post-event work.)

Nice ideas, enthusiasm, a sense of obligation (every nonprofit should have a gala), etc. are not sufficient justifications for hosting an event.  We—board and staff–must be sure that the benefits truly and significantly outweigh the costs.  And we absolutely must be clear about our pronouns.

On my drive into work one morning this week (all of 25 minutes), I heard three stories about cutbacks as the result of struggling economies.   Some are done deals, others still in the proposal stages.  There was the elimination of school bus service in a school district in Colorado (done), slashing the number of prisons in New York State (proposed) and the withdrawal of support staff in the courts of Florida (proposed).  I particularly liked one person’s comment in the Florida story:  would you send a surgeon into the operating room without any assistance?  Good point!

But increasingly, as I’ve written before, we are sending executive directors and the rest of the staff of nonprofits into the OR without any help.  And boards just don’t seem to mind, at least as exhibited by their lackadaisical approach to fundraising.  I’ve got two totally unrelated approaches for trying to address what I see as a huge problem.

Approach one:  rethink the consequences of having an over-extended and exhausted executive director at the helm of the organization directing an over-extended, exhausted and shrunken staff.  A light bulb went off  for me this past weekend when a participant in an all-day workshop I was doing on the executive director-board relationship played back for me a point I had made earlier.

I had been explaining the difference between the roles and responsibilities of the board versus the executive director versus the staff—a point that regularly seems to confuse, if not downright confound, board members.  His playback was so crystal clear and simple in language that it made the point absolutely pop—at least for me.

He made the distinction that an executive director‘s primary responsibility is to work on the organization while the responsibility of staff and volunteers is to work in the organization.  Bingo!  Unfortunately, that distinction gets lost when the executive director goes into his/her “operating room” everyday with little to no assistance.  Working in the organization—the very work that delivers on the mission—takes priority and the work on the organization gets pushed aside or back or off.  So the programs get done but there is no stewardship of donors.  The annual appeal letter goes out (just barely) but the strategy for building a stronger program is never developed.  The supply order goes in but the professional conference goes unattended.   The immediate is addressed; the pathways to sustainability are not.  Work in the organization gets the attention; work on the organization falls by the overextended wayside.

Rethink what may happen to an organization that doesn’t allow its executive director to work on the organization.

Approach two:  board members take a load off the executive director and start fundraising for that additional staff!  And here is an amusing tip:  whenever you fundraise, wear designer brands with visible logos.  You will raise more money!  Vestis facit virum—clothes make the man—the very first Latin phrase I learned in 8^th grade Latin.

According to new research out of Tilburg University in the Netherlands, it isn’t the clothes that make a difference but the prestige—and visibility—of the label of those clothes that make the man—or woman.  Not only did this study show that people who were wearing noticeable status brand clothing and accessories get rated as of higher status and deserving of a larger salary and cooperation, they raise more money for charities.  Those individuals wearing designer shirts with logos raised almost twice as much money when doing face-to-face solicitations than those wearing a logo-free, non-designer shirt.   It is, according to the researchers, all about the peacock’s tail:  the more perfect the tail the more female peacocks he attracts.  So, put on your designer labels, signal that the nonprofit you represent is of high quality and go raise some money for your over-worked and overextended executive director and staff.

The second phrase I learned in my Latin class was Manus manum lavat—one hand washes the other.  So boards, go out and fundraise to give your executive directors the time to work on the organization to strengthen its performance and reputation which, in turn, will make you look very, very good.

“Is this personal or professional?” asked the executive director of a multi-million dollar nonprofit of his direct report as he questioned a check request for less than $100 for a multi-session professional development program she planned on attending.   The announcement of the series had been sent to  to executive directors who were asked to share it with appropriate staff, and was offered by a very well-recognized management support organization dedicated to improving the operations, management and governance of nonprofits so that those organizations  can become stronger and better at delivering on their mission promises.  Hello, Executive Director? What don’t you get?  Where do you see personal in an effort to become a better organizational leader.

Contrast that with the executive director of a small organization who has sent three different employees to participate in this series of programs over the last three years,  and you see those who get it and those who don’t.

Effective professional development cannot help but lead to personal growth and development, no doubt about that.  But I know very few people who select professional development opportunities expressly to obtain personal development, as the options for the latter far outnumber—and truth be told, far out-excite–the former.   So, how would you disentangle the professional from the personal?  Better yet, why would you even bother?

Far too many leaders at nonprofits see professional development as a risk they aren’t willing to take as opposed to an opportunity to empower and enable their employees and to show appreciation and respect.  Time and time again, I hear senior managers explain their unwillingness to provide professional development opportunities to staff this way:  “Why should I spend money to send a staff member to a professional development event when she’ll  just use to get a better job?”

What does this say about the culture of the organization or the sector as a whole?   It says we are not a learning community, we don’t value our employees, we don’t believe in growth and new perspectives, etc.  It says we are a scared little (having nothing to do with size and everything to do with mindset!) organization that doesn’t believe our employees are here for the mission but simply for the pay check; thus, they are always looking for better compensation and will leave at a drop of a hat.  And yet everything about the nonprofit culture says that is hardly how most of us behave.

Most of us in the sector chose our place of employment because of its mission; it is the mission that holds our loyalty, not the paycheck.  How many of those people do you think would run just because the organization had the audacity to invest in them? to show appreciation by giving them the opportunity to grow, to learn new and/or better ways of doing their mission work, of thanking them for their work?

The Nonprofit Finance Fund just released its 2011 State of the Sector  Survey that finds that 85% of nonprofits surveyed anticipate a slight to significant increase in demand for their services in 2011.  This is on top of 77% having already experienced a slight to significant increase in demand for their services in 2010.  How will these organizations take care of its overtaxed staff?   A bit fewer than twice as many (32%) are planning on giving raises in 2011 than are planning on freezing or reducing salaries (18%), while essentially equal amounts (9% and 8%, respectively) are planning on improving benefits as reducing them.  One-third is planning on increasing the use of volunteers to pick up the slack.

In these tough economic times, where employees are overworked and underappreciated, giving them opportunities for professional development might just be the best the best thing you can do for the organization.  It isn’t personal;  it’s business.

Last week’s blog led to a reader sending me a series of thoughtful questions (see comments).  The first question, however, generated a swift and blunt reply.

His question asked how I would classify a nonprofit organization “whose only revenue stream is governmental grants.  Are they a ‘non-profit’ or just a ‘quasi-government’ agency…?”  I love easy questions like this.  My answer?  I classify this as a “nonprofit flirting with death!”

Forget the debate on nomenclature and focus on the big picture:  long-term sustainability.  Any nonprofit that is funded through a single stream, as opposed to having as diversified an income strategy, is on shaky ground, to say the least.

I hear the Greek chorus in the background:  “Our only funding stream is government grants, and we are just fine.  We only get grants from multiple foundations and we are surviving.  Why are you scaring everyone?”  To which I respond:  “That is not a long-term, viable strategy!”

It is possible for a nonprofit to survive—which to me is not the same as “be sustainable” or, better yet, thrive–funded solely by grants from multiple foundations.  But at some point, foundation priorities may change and your mission is no longer within that new framework.  Then what?  Better to have a diversification of some foundations, some corporations, some government grants (if available), and a healthy dose of individuals.

Surviving just on government grants, however, is even trickier, given that much government money that funds nonprofits is generally trickled down from the tier above.  Thus, local government dollars are frequently tied to the health and well-being of the state which, in turn, is tied to the health and well-being of the feds.  So, while it looks like you’ve got multiple sources within the one stream of “government”, they are so intertwined, you don’t really.  Danger! Danger!

But to return to the reader’s question:  is this a nonprofit or a quasi-government agency?  Again, easy answer:  it is a nonprofit.  Even the American Red Cross, created through an act of Congress and which some think of as a quasi-government agency is, in the end, a nonprofit.  And as a nonprofit dependent upon government dollars, should an organization benchmark its employee compensation against nonprofits or the government?

I am just thrilled benchmarking is happening!  Seriously, though, compensation should be benchmarked against the market in which you compete for employees.  For some nonprofits, there may be no competition in government or the for-profit sector, while for others, their employees can seek jobs in any sector, their skills are in that much demand.  For example, a CFO needs the same skills and knowledge to be a CFO at a for-profit as a non-profit.  These days, a social worker or physical therapist can find work in a nonprofit or for-profit.  And while we all know mission is a huge draw—and psychic compensation–for those of us working in the nonprofit sector, the times in which we are living may force people to forsake mission for money.  So benchmark wisely and not according to what box is checked, so to speak.

His last questions raises the matter of to whom are we accountable.  I may have misread his question, but I read accountable and heard beholden.  We absolutely are accountable to our donors, and all of our other stakeholders—staff, volunteers, clients, public, etc.

In accounting to our donors, we must let them know that we have used their dollars as promised to achieve those specific results; but we never should be beholden to them, for then we run the risk of losing sight of our mission and raison d’etre.  What defines a nonprofit, in the eyes of the IRS, is that it is an organization that is working on behalf of some portion of the public good.  Working on behalf of the public makes nonprofits beholden to the public—not a donor, not a founder, not anyone.  They are beholden to do what is best for that part of the public it serves.  A successful nonprofit, therefore, should be best at determining what that portion of the public it serves needs and then finding a donor willing to support that endeavor.  It should not work the other way around, unless the idea the donor brings is one that is truly, truly needed and adds value to delivering on the mission.  A nonprofit that becomes beholden to a donor—be that donor the government, an individual or a foundation—and is doing the donor’s bidding and not serving the mission has lost its focus.

I invite you to weigh in on this – but be careful what you wish for because you’ll likely get my no- punches-pulled response.

Maybe it is time to have a new nonprofit classification.  I’d call it “the really large ones that operate more like a for-profit than a nonprofit and give the rest of the nonprofit sector a bad name and make all nonprofits suspect in the minds of the public, the media and too many legislators.”  But I’d call them “pseudo nonprofits” for short.

The current impetus for this thinking is Blue Cross/ Blue Shield of Massachusetts.  The company revealed earlier this month that it paid its former CEO, who resigned in March 2010, severance totaling $8.6 million dollars!  On top of that, he will be paid $1.8 million in 2011 and almost another $1 million in 2012.  Not to worry, folks.  The Blues say this kind of severance package won’t happen again, as it was a result of an employment contract signed in very different economic times.  Phew!

That isn’t all.  Some days after the above revelation, The Blues announced that it would suspend paying members of its Board of Directors.  But this came as the result of pressure from Massachusetts Attorney General Martha Oakley, who is asking that all of the non-profit insurance organizations in the state reassess the practice of paying members of their boards of directors.  Seems that in Massachusetts, the practice of paying nonprofit board members isn’t common.  Didn’t know it was common anywhere.

The Blues explanation for this practice is that it is a complex, $13 billion dollar organization that competes with many for-profit, as well as nonprofit, organizations.  And the point?  There are few, if any, nonprofits these days who aren’t competing with other nonprofits and, increasingly, with for-profit organizations.  And monitoring and maintaining the financial health and well-being of a nonprofit, regardless of how complex or seemingly straightforward (though I doubt there is such animal), should be of the highest importance to each and every board member.  Do we get better, smarter board members when we pay them?  That has not been my experience.

Don’t get me wrong.  I am not begrudging the former CEO’s severance package.  Running a $13 billion dollar organization has got to be much more complicated than running a small $1 million dollar organization; thus, the person doing the former job can demand, and receive, the big bucks.  And such a complicated organization can only get hardworking, qualified board members   if they pay them.  So, no begrudging there, either.  I get it.  Nope, the only emotion I experience upon hearing this is anger:  how dare you do this under the name of nonprofit.  If this is what they need to do in order to make their business sustainable—the same goal shared every other nonprofit executive director/ceo and board of directors—then so be it.  But don’t call yourself a nonprofit.

Hence the push for the status of “pseudo nonprofit.”  Let’s separate the wheat from the chaff in the sector, as the one is harming the other.  It is the deep pockets of these pseudo nonprofits—the hospitals, large educational institutions, mega, mega nonprofits—that afford them the option of paying such nice salaries, severance packages and stipends to board members.  It is the same deep pockets that local governments are eying when they rescind the nonprofit property tax exemption.   Yet all nonprofits who own property, regardless of the richness of their coffers, suffer, as do the rest, as the exposure of the lack of paying taxes just affirms the far-too-wide thinking that nonprofits are always “getting away” with something.

So, let’s make it fair to everyone.  Why should a nonprofit that plays in the financial stratosphere of the big for-profit companies be pilloried because its pays a competitive salary and generous compensation package.  Truth told, if the Blues had been a big for-profit company revealing the severance package paid its former CEO, it would not have been headline news—or news at all, any more than paying its board members would be. It made news only because somewhere in its files, it has a letter from the IRS saying it is a nonprofit.

But just because an organization has that letter doesn’t mean it is like its neighbor with the letter down the street, around the corner, on the other side of town. Doesn’t mean it is like itself twenty or thirty years ago.  Increasingly, it is the operating culture, not the finances, that truly differentiates a nonprofit from a pseudo nonprofit.  And the expectations and presumptions that apply to one culture should not cross over to the other.

Let us have our real nonprofits and the pseudo–“the really large ones that operate more like a for-profit than a nonprofit and give the rest of the nonprofit sector bad press and make all nonprofits suspect in the minds of the public and too many legislators.”  And let each group be judged by its own set of best practices rather than letting the pseudos ruin it for us all.

Now is clearly not a popular time to suggest that nonprofits should think carefully before accepting a gift—as gifts of dollars or those things that can easily translate into dollars—are such desperate commodities these days.   But the reality is that now—and always—is the time.

Earlier this week, The Wall Street Journal published an article identifying a number of American and British nonprofits—institutions of higher education and think tanks—that had, knowingly, accepted gifts from the Gaddafi Family Foundation and/or the Libyan government.   The prestigious London School of Economics lost its director when he resigned earlier this week following the revelation of the School’s accepting almost $500,000 from the Gaddafi International Charity and Development Foundation, stating that accepting the gift “backfired.”  I’ll say it backfired!  It made LSE an international headline and a week-long story—and not for positive reasons.

One of my regular urgings to boards of directors is the need to protect the reputation of the organization.  There are so many things over which we have no control that can taint or ruin our reputation—such as the client who gets injured on our property or the employee who unpredictably goes amuck in any number of ways, etc., why allow something over which we have control to do such harm?  I have said this very thing here before in talking about the importance of having a good conflict of interest policy, not one that simply meets the letter of the law.

And so it is with a gift acceptance policy.  Every nonprofit needs one, and yet I repeatedly get the “deer in the headlights” look when I ask boards about this policy.  The time to create this policy is not when a gift is being dangled in your faces, but rather in the vacuum of nothing but values, mission and ethics—and no tantalizing gift.  Many people when they think of a gift acceptance policy think only of the “what” not the “from whom.”  So, that is a start.  Will be accept only cash or will we accept other things, such as stocks or land or art?  Will we get into the vehicle acceptance business?  Some of these questions may become moot depending upon what Congress does with the federal budget before it.  Nevertheless, for at least a little while longer, boards must stipulate what it is they will and will not accept as gifts.

The trickier component in a gift acceptance policy—and too often ignored, perhaps because of that very trickiness—is the who.  But boards must ask themselves that tough question:  from whom (or from what organization) will we accept gifts?  Will we accept anyone’s or any company’s gift or are there some gifts, no matter how desired or needed, that we simply will not accept?  Should an anti-violence group accept gifts from manufacturers of weapons or alcohol, the latter because of the role alcohol plays in a significant number of violent interactions?  Should they accept gifts from the CEOs of such companies?  Should a community center that promotes physical fitness programs for youth accept gifts from a soda or candy manufacturer, or their CEOs?

Should an educational or social justice institution—or any organization–accept funds garnered through theft, violence and destruction, whether the gift is from a country, a company or an individual?  While to some, answers to these questions—and the many others like them—are easy to answer; things appear very black and white.  These discussions, however, never go that simply.

The answers to these questions lie in the complex intersection of organization mission and core values, desire for survival and the hovering disquiet that goes with the prospect of turning money away.  As a result, too many boards shy away from tackling this conversation.  And this cannot be.

Boards must engage in this dialogue that at times might seem more philosophical than practical and other times more waste than valuable.  Either that or be comfortable knowing you may be tomorrow’s ugly headline.

I like to think that I am a very tolerant person, and that I can listen to people complain again and again, even about the same thing.  But I have reached my limit with one group of people and one of their constant complaints.  I am tired, and I mean really, really tired (think Madeline Kahn as Lilly Von Schthupp in Blazing Saddles), of hearing otherwise capable and competent executive directors—and I am only talking about them, not the others– complain about being over-worked, never getting to the bottom of their lists, stretched too thin, and so forth.   Truth is, they have no one to blame but themselves, (and perhaps their boards, to a degree).

When I hear a capable and competent executive director repeatedly, month after month, year after year, offer up this refrain of “I have too much on my plate; I am not getting to it all,” I immediately think one of two things:  either you are doing things wrong or you love wearing a hair shirt?

If you love the shirt, I cannot help you with that.  That is a psychological issue, and I am no shrink.  If, however, the hair shirt is not your style, perhaps the following can help.

More often than not, an overworked executive director is an indication of an organization trying to do too much with too little.  A wise and smart executive director will opt to rectify that situation rather than denying the reality and continuing to tread in the rat wheel.   Rectifying the problem generally requires choosing between two options:  hiring more staff or cutting back on programs, services and/or clients served.  For nonprofits, neither is an easy choice.  Hiring more staff means finding money to pay for the new position(s), and boards rarely like to go out and find more money, preferring, instead, to ask the executive director to do so.  This adds to her/his full plate, the stress, etc., which means nothing will change, and the executive director will continue to complain—but never to the board.

Cutting back on programs, services or numbers served means making some tough choices about what and who to let go, and accepting the fact that doing less isn’t, in and of itself, a bad thing.  In fact, in this case, it is a very good thing.  If an organization cannot ramp up staff to fit the work being done, then it must scale back the work to fit the staff it can afford.  There is no glory or benefit in having a staff standing on their last legs.  (And, yes, if the executive director is at her/his limit, odds are very good that so is the rest of staff.)  In fact, a staff that is that tapped out will struggle to deliver a quality product or service.  So while on paper it may look like the organization is impressive, running multiple programs with so few staff, reality is quite different.  Balls are being dropped, employee satisfaction is poor and quality of services is hurting.  And, truth be told, the future of the organization is at stake, because who in his or her right mind would want to work in an organization such as this?

And before you say, “Oh, plenty, let me caution you against that position.  While campus proclivities do seem to have shifted a little in the direction of college students of the ‘70s and early ‘80s, there is yet a strong interest in decent compensation and work conditions.  There are not as many with the prehistoric mindset of giving it all to the mission, who are willing to have their work priorities change day to day or week to week based on the most urgent need of the organization.  They like mission-based work, but they also want the ability to have a life.  And the same holds true for those who graduated a decade plus or so ago and who are our leaders of the future.  Fewer of them think a hair shirt is a good fashion statement or are willing to accept the perpetual dysfunction of trying to do too much with too little.

You don’t get kudos for being constantly overwhelmed by what your job asks of you.  In fact, if that is your state of being, then my opening qualifier of “otherwise capable and competent executive directors” does not apply to you.   You do get kudos, however, if you take charge and change the dynamic.  So, stop complaining!  Use the energy to take control of the situation, make the tough choices and do the hard work.

A  few weeks ago, Daniel Rubin of The Philadelphia Inquirer wrote a column about a woman who had spent a year tracking all of the charitable solicitations she had received – those she’d given to, those she hadn’t; how many solicitations she received from each; the “giveaways” she had received, etc.  Naturally, she, and many of the readers of Rubin’s column expressed dismay over the volume of solicitations received and, more importantly, the money that nonprofits were “wasting” sending out all of these requests for donations.

Rubin received a lot of feedback on this column.  Nothing that those of us in the nonprofit sector and who know anything about fundraising hadn’t heard before.  There was, of course, the anger and annoyance that nonprofits should spend their money more wisely, the lament of how much money is wasted and, of course, the usual “this is the problem with nonprofits.”  Rubin, however, decided to do a follow-up, and see if the grumbling was well-deserved or misinformed.

In being interviewed by Rubin for this follow-up column, I asked him, rhetorically, of course, why is it that in the for-profit world we accept as de rigueur that you must spend money to make money but we can’t abide by it in the nonprofit sector?

This is a cliché that we hear again and again and that manifests itself in so many different ways:  you must spend money to advertise in order to bring in business and make more money; you must spend money to buy stocks and bonds in order to reap the dividends and share splitting that comes with ownership; you must buy clothes that allow you to dress for the job you want, and make more money, than dress for the job you have, etc., etc., etc.

And when, in the for-profit world, this truism is trotted out to encourage people to buy that larger building, hire more staff, buy more advertising, or whatever, no one blinks an eye, says a scurrilous word or sentence, thinks twice.  It is the way of that world.  But let a nonprofit embrace that same axiom, and the defamatory comments rain down.

This message really hit home for me today, when I received a personal-sounding e-mail from a temp agency with which I have never had prior contact.  Naturally, they were trying to sell me their services, though I don’t know why The Nonprofit Center would need a copy editor or a production artist.

When I shared it with a colleague, pointing out that no one is railing against this for-profit for this solicitation—which did not work on me—she told me she’d been contacted three times last week by this same company, including telephone solicitation.  And, wait, the approach wasn’t working on her, either.  While we may occasionally use temporary staff of some kind, this is not how I want to be solicited when I am ready for this product.  And I did wonder whether the prices they charge for this product couldn’t be lowered if they weren’t spending so much money on unwelcomed and ineffective advertising.

But, you know what? There isn’t going to be a column written about the number of unwelcomed solicitations I get from for-profit companies; or how many charities got my name because a magazine I subscribe to or a company I deal with sold my name.  Those solicitations will just get shrugged off, deleted or thrown into the trash and that’s the end of that.  Because that is simply the way they do business.  But while those unwanted solicitations from nonprofits get deleted or tossed, that’s where the similarity ends.

The negative taste and harsh criticism left behind by this “waste of money, money that is not going to deliver the mission” will malinger and fester.   And the next solicitation received from a nonprofit, whether it is a mission of interest or not, will prompt a stronger, more visceral reaction.  It might cause epithets to be uttered, nasty letters written and promises not to waste money by supporting that nonprofit that squanders its money trying hard to raise more money to fulfill its mission promise.

Yet another double standard for the nonprofit world!

How do I love thee, nonprofit sector?  Let me count the ways.  Well, first:   Are we not a collegial sector;  one tempered by mutual respect? By the presumption that we are a team, working in partnership to achieve mutually defined and shared goals?

No, I am not naïve. I’ve worked and volunteered in this sector for decades.  I know the reality.  And I know that those who come into the sector truly understanding and valuing the presumption I outlined above, execute that presumption–fully.  Those who come in with a different frame of reference or who give lip service to the presumption or whose egos are bigger than they deserve to be, they are the ones who undermine the presumption and taint us all.

Increasingly, I’ve seen a lack of buy-in to this presumption and as a result, the ouster of some very accomplished executive directors, more often than not because a board has suddenly awakened from its slumber and decided it needed to be board-like.  It presumes that being board-like means taking control and acting top-down instead of valuing the partnership between board and executive director.  Don’t get me wrong, there are times—and I’ll be the first to champion and encourage it—where a board needs to take control and remove an executive director who has been under-performing.  But that, too, is a different blog.  This is the board that ousts an executive director seemingly on whim, for example merely months after a positive review, with no change in the executive’s behavior to warrant such a radical turn of events.  The board’s prerogative?  Absolutely.

So, what is an executive director supposed to do?  Obviously, the best defense is a good offense, so maintain a strong, honest and open a relationship with all board members, not just the board president. Insist on a comprehensive, annual performance review that is conducted in the open and according to an agreed upon and set process and timeline, and one that includes formal check-ins at quarterly of bi-annual intervals.  Encourage the creation of a learning culture within the board, beginning with a thorough orientation for all board members that addresses both the organization and the role of a board member and that stresses, among other things, the partnership between board and executive director and the differences between a traditional corporate culture and a nonprofit culture.  If not already there, adopt a learning culture of your own, so that you are always honing your skills and on top of your game.  Do not operate in your own silo, but remember and nurture the partnership of board and executive director that leads a nonprofit.

And absolutely have an employment contract. Not new to the nonprofit sector, it is something that has been very slow to catch on.  But its time has come.  As there are seemingly more and more boards that are acting capriciously instead of methodically and rationally, executive directors need to have some degree of protection.  What are the terms for contract renewal and termination? compensation while employed and if terminated? conditions of continued employment? and more.  As we watch the NFL enter into player negotiations, the trading of NFL and MLB players, coaches and managers, the pending drafting of new NFL players, there are lessons to be learned for the nonprofit executive director.  And I don’t mean holding out for eight figure contracts, but rather ensuring the fair and just treatment of highly skilled and trained talent recruited to do an important job and help ensure a team victory.  After all, that is exactly what a nonprofit board should seek in its hiring of an executive director:  a highly skilled and trained individual to help ensure organizational victory—the nonprofit’s mission.

I was recently asked, by a group of executive directors, how do you contain a rogue (my word, not theirs) board member.  (Not a new or uncommon question at all.)  A few days later, I got an email from a wonderful board president seeking time to speak with me for advice on how to deal with—you got it—a rogue (again, my word, not hers) board member.

If you have ever seen footage of the impact of a rogue elephant, you know the damage that one lone member of a herd can do.  The same is true of a rogue board member.  Left to do his/her “thing”, the very insidious seed of dysfunction and disruption is planted, and chaos surely follows.  Rogue board members, like their elephant equivalent, must be stopped — and quickly.

Obviously, the ideal is not to bring a rogue onto the board in the first place, but that can’t always be prevented.  The best prevention, though, is a strong recruitment process that brings new board members into a strong board culture.    The achievement of both is a joint process of board and executive director, led by the board, not the executive director.  Some things to which you should pay particular attention.

• Make sure that before anyone comes on to the board, s/he understands and fully embraces the mission, first and foremost, and second, understands and embraces the organization’s core values; if your organization doesn’t have core values, define them immediately, and live by them.
• How a board ultimately behaves is, to a very great extent, determined by how individual board members are recruited; do your recruitment process thoroughly, carefully and well and you decrease the chance of a board member, or a collective board, going off the deep end as s/he will know why s/he is there and what is right and wrong.  Once recruited, orient well to the organization and the role of the board, and evaluate individual and collective board performance annually.
• Before any candidate is eligible for board service, s/he must understand management versus governance and which is the responsibility of the board and which of the executive director.  Naturally, current board members must understand this difference and be operating accordingly.
• In recruiting, absolutely pay attention to the personality of the recruit.  It is not enough that you simply look to bring on skills, expertise and connections needed; you absolutely must pay attention to the persona that you are adding to the group that currently exists.
• Consider requiring service on a committee for six months to a year before someone is even eligible to be considered for board service.  This gives you the opportunity to see who they really are and how they really operate.  This puts the probation period before the “hire”.
• Have term limits for board members and for officers and enforce them; do not allow any one person to be there so long or in a position of “power “(board president, governance committee chair, etc.) so long that s/he and others see that person as the leader”.  Nonprofits are not governed by a leader; nonprofits are governed by a group of leaders—the full board.
• Selection of a board member (or any officer) should never be a popularity contest, or a decision to settle.  Selection of board members (and leaders) must be strategic based on what is needed in on the board (in a leadership position) at that point in the organization’s life cycle and aligned with the organization’s strategic plan.
• Create a culture that truly embraces strategic planning—by which I mean an organization that doesn’t just do strategic planning in order to be able to say “oh, yes, we have a plan,” but that gets that the plan must be used and guide all decision making by the board, from whether there is a good fit with the current executive director to how to raise money to what do we need on the board, etc.

But there is, as noted above, the chance that you did everything right, above, but that rogue snuck in.  What then?  Obviously, the first step is to talk to the board member, see if s/he understands what is doing, the impact of his/her behavior, the nonalignment between his/her goals and the needs of the nonprofit.

Sometimes, such a conversation can lead to behavioral correctly.  Sometimes not.  If the latter, do not make the mistake of dragging the process out, of trying again and again to right the ship.  Do not rationalize:  s/he means well; we need his/her skill; we don’t want to offend him/her.  Boards must never be hesitant or afraid to enforce the procedures outlined in the bylaws for removing a board member.  Being on a nonprofit board isn’t about being nice to fellow board members; it is about ensuring the fulfillment of the mission.  Doing that requires the right board members, working together, with each pulling her/his weight.

It is no easy task to manage a rogue board member or to be his/her peer on a board.  But more importantly, it distracts people from the reason they joined the board:  to steward and shepherd the organization’s mission.