Nonprofit University Blog

“Teach your children well.”  A big Crosby Stills Nash and Young fan, I sang that line hundreds, if not thousands, of times in my “youth”.  I sang that line thousands of time to myself as I raised my son.  And it has flashed through my brain thousands of times more as I witnessed parents doing well and not so well with teaching their children and it has inspired some previous blogs

It had been rolling around my head a lot of late as I continue to think about the challenge of raising new philanthropists.  But it was at an intolerable decibel level yesterday as I learned of some parents at a Philadelphia suburban school district who had allegedly planned on “sickening” their children while on a field trip on the cruise Spirit of Philadelphia, and then turning around and suing the cruise company. Talk about teaching your children!  There is an “evil force” out there, beyond immediate gratification and excessive consumption and the world of “me”, with which we must contend as we seek our future philanthropists.

Understand that I define a philanthropist not by how much s/he gives, but by the fact that s/he gives at all of his/her money and/or time, and by the fact of caring to bring about a better world for all.  As I have confessed before in the pages of this blog, it was a concern that loomed especially large for me when my son was born:  how would we, his mother and father who are deeply committed to giving back and helping others, make sure that our son, who was growing up in a society where children expect to be given so much and in a community of relative affluence, would become a philanthropist?  He is 22 now, and I am happy to report that we succeeded, and quite well, if I say so myself.  But my worry moved on, quite some time ago, well beyond my son, to his generation and those that followed.

How do we teach children to be engaged in the communities where they will live and work, to want to help improve the quality of life, not just for themselves but for all of those around them?  As nonprofits everywhere are working harder and harder to raise money for the now and the next year, what are we doing now to ensure that there will be donors ten, twenty or thirty years from now?  And we must start now, for if we wait until we need them, they won’t be there.

We each take our own path to becoming a philanthropist.  For some, it is what our parents taught us, directly with speeches and indirectly by example.  For others, it is a life-changing moment as you confront a life-threatening illness or watch an animal or human being abused or see your life in color for the first time while seeing a painting or a theatre, music or dance performance. For others, it is requirement to do community service that turns out to be fun and enriching rather than the anticipated dread.

As parents, grandparents, aunts, uncles, older siblings, we have clear options in our role as teachers and examples.   But nonprofits that need these philanthropists, what are we doing to ensure that the cart to our horse will be there for us in the future?  What are we doing for the collective children of our communities?

Teach your children what you believe in.
Make a world that we can live in.

Strategic planning just may be the most important policy a board of directors, executing its governance responsibilities, may create.  And yet, far too often, it isn’t done “right”.  Why?

Let me be clear about two things.  First, a board does not create a strategic plan by itself.  And second, there is no one “right” way to do strategic planning; there is, however, a “right” cast of characters and order of appearance.

When I say a board doesn’t create a strategic plan by itself, I mean just that.  A strategic plan, because it is such an important organizational policy, must be driven by the board with deep board involvement at every step of the process.  But staff, from executive director all the way down to the last rung on the organizational chart, must also be included.  Depending upon the size of the organization, this inclusion may look different and different for the various boxes on the organizational chart, from attending meetings and retreats to completing a survey to participating in focus groups, to any combination of the above.  Ultimately, the work this group creates must be approved by the board of directors before it can become official policy.  Hence, my wording that the board creates a strategic plan.

And when I say there is no “right” way to do strategic planning, I mean just that.  Line up 10 strategic planning consultants and you will likely get 10 (okay, maybe only seven) different ways of doing it.

But you should get only one cast of characters list—as here there is a “right list.”  As suggested above, the key player is the board—and not a subcommittee of the board, but the full board.  It must lead the charge, support the charge, and take their leadership role of the charge.  Well, you get the picture.  Next comes the executive director, and the rest of staff.  Then there are all of those external stakeholders, from clients to collaborators to competitors to funders to key thought leaders.  All of those voices have to be tapped and thrown into the mix that the board and lead staff members distill and use in identifying the organization’s strategic priorities.  Too often, however, this cast of characters is topped by the executive director, who takes the lead, takes charge and uses the board only after the fact, to get its buy in and, of course, its vote to make it all official.

Why are these two fundaments of strategic planning so ignored and violated?  Two common reasons:  one, the executive director wants to control and two, the board doesn’t want to be bothered.  The former is the more common explanation and results from the executive director who thinks s/he knows best, wants to drive the planning work, turning to the board almost after the fact, looking for its buy in and, of course, the needed approval to transform hopes into policy.  In so doing, though, the planning process has been robbed of the diversity of minds and perspective that the board represents and board members have been robbed of the opportunity to learn, grow and make the contribution they wanted to make in originally joining the board.

We do often hear statements to the effect that the board doesn’t want to be bothered with strategic planning.   This generally is heard from two groups of nonprofits:  those with both a good executive director and an engaged board and those with a controlling executive director using a lazy board as explanation for why s/he is controlling.  To the engaged board that doesn’t want to be bothered, I challenge them, if given the chance, to see the centrality of strategic planning to the delivery of mission promises and their execution of their responsibilities as a board.   They generally turn around relatively easily.  Unfortunately, that same opportunity doesn’t normally present itself with a lazy board, as the last thing the controlling executive director wants is an awakened and enlightened board.

In ignoring the right process and cast of characters, no one thinks of what is lost; they only think of getting my way, it is easier and quicker, etc.  But the loss to the organization and ability to push forward that mission is huge.  First, the learning experience that happens for board members during a strategic planning process is lost, and not replaceable by any other experience.

Board members learn more about the mission, clients, the organization, the environment, etc., in going through a planning process than in years of board meetings.

Second, there is a community of “we” that is created during a planning process, as all levels of staff and board members work together over the course of the multiple-month planning process, as opposed to the culture of us versus them that too often prevails in nonprofits.  No “right” planning process, no community of we, as no other activity creates, as a serendipitous byproduct, that community of we.

Third, board members get to do what they thought they were going to do when they joined the board:  use their skills, talents, brain power to help move the organization and its mission delivery forward.  Far too many board, unfortunately, think they need to reserve strategic thinking to strategic planning retreats instead of bringing it to every board meeting.  Thus, that once every three year opportunity to engage the strategic brains of board members is lost.  And fourth, the opportunity to recharge and reinvigorate everyone’s commitment to the mission is absolutely lost, as it is concentrated in the hands of a few.

Instead of running from strategic planning, boards should embrace it.  Instead of “protecting” boards from “having to do” strategic planning, executive directors should hold their feet to the fire and sing the praises of their involvement.  If you are truly committed to the organization’s mission, be you staff or board member, there really is only one “right” way to do strategic planning.

I have no time for an executive director who intentionally shuts out the organization’s board.  Putting it succinctly:  you are a self-aggrandizing, stupid and, might I even go so far as to say evil person?  You know who you are.

Whenever you think it necessary, you say all of the things you think you are supposed to say:  all the different variations of “Woe is me.  My board doesn’t do anything!” You make all of the right noises and say how hard you’ve tried to get them to step up and do their job, blah, blah, blah.  But inside you are rejoicing, as you accomplished your goal.  You have moved your board right to where you want it:  marginalized and staying out of your way!  You want to run the show—all by yourself.

You think you are smarter and better than the board.  But that’s really just another indicator of your foolishness and why the board should immediately let you go.  By failing to recognize the value-add a board can and should bring to a nonprofit and intentionally circumventing it, at best, and castrating it, at worst, you are willfully sacrificing the ability of the organization to maximize the full power of its mission. You deserve to be fired.  Unfortunately, if you are really good, you’ve got the board so far removed it doesn’t realize you work for it rather than the other way around.

On the other hand, I have a tremendous amount of respect for the executive director who works tirelessly to try to engage the board, to get the board to step up and fulfill its responsibility, to do its job–the executive director who really yearns for that partnership between her/him and the board.  You, truly, have tried everything to get the board to step up.  You’ve suggested classes to attend or trainings to bring in.  You’ve told them about books and websites and articles to read.  You’ve invited them to meetings and receptions and still more meetings.  And frequently, they take you up on all of your offers—the classes, the readings, the meetings.  But you still aren’t getting what you want.  You’ve done all that you think you are supposed to do, except for one important thing:  you don’t leave them any room.  Only if you shrink a little will there be room for them to squeeze in.

In other words, you need to dummy up and take a back seat.  All too frequently when I am working with a board and an executive director, I’ll ask a question, unmistakably of the board, and one of two things happens:  either board members—almost in unison as if it were “the board”—turn to the executive director to answer or the executive director just answers immediately, neither getting a signal from the board nor giving individual members time to respond.  Very frequently, if I haven’t already provided instruction in advance of the meeting and asked the executive director not to speak unless I directly address him/her, in the very same breath of asking the question I tell the executive director not to answer.  This always provokes laughter—laughter that starts out as an indication of amusement and quickly turns to discomfort when board members realize I am serious, the executive director will not speak and no board member knows the answer to the question.  The board wants to know the answer, wants to be able to shine, but for so long the executive director has done all of its work, it never learned the answer.  All too frequently, when I am having a brainstorming session with a board, or subset of the board, and the executive director, the executive director is always first to respond to a question, a musing, a suggestion.  Instead of sitting back and giving board members the opportunity to take the lead with their thinking, to flex their mental muscles and creative talents, the executive director is effectively silencing them in the rush to justify him/herself.  You’ve brought them to the table; now give them the opportunity to perform.  They might stumble at first, miss a few beats; eventually, though, if you give them room, they will find their stride and you will have what you wanted:  a partner instead of a dishrag.

If you are an executive director who truly wants a partner in the board, stop answering and doing for the board.   Shut up and count to 100.  Try letting it stand on its own two feet and grow into its position.  You just might be pleased by what happens.

When it comes to reading, I often come intentionally late to the party.  I figure if everyone else is talking about it, I don’t need to be reading it right then as the word is getting out.  Which is why I find myself now, five years after its publication, reading Three Cups of Tea.  It is, as everyone said, a nice read—at least as far as I’ve gotten.

There are many things that one can take away from this book and Greg Mortenson’s story; the one that has me currently thinking might seem inconsequential.  It is the serendipitous path (no pun intended, but those of you who have read the book know that it was losing the path that landed him in Korphe) that turned him from mountain climber to philanthropist.

I have, for a long time, wanted to bottle that thing that makes some people philanthropists while leaving others behind.  And to be clear, the definition of philanthropist in my book does not rest on how much you give, but rather that you give—be it time and/or money—on a regular and consistent basis.  Why do some people make philanthropy a central part of their life, while others barely give it a nod and still others ignore it completely?

There is no doubt that growing up in a philanthropic family is a key factor in creating future philanthropists.  Research tells us that.  And Greg Mortenson had that example.  His parents were responsible for building the first teaching hospital in Tanzania when he was growing up there.  He witnessed the power of philanthropy first hand.

And yet it wasn’t until he stumbled into the remote village of Korphe, Pakistan, whose people took him in and nurtured him back to good health, that he, himself, became a philanthropist.  Impressed by the group of students who sat in the open air and practiced their studies, most doing so in the dirt with sticks, and despite the absence of a teacher, that he knew he wanted to build a school for Korphe, and specifically a school where more than just four girls attended.  But had he been on the path he was supposed to be on, had he not gotten separated from his guide, might he not have become a philanthropist?

And now I learn that there are serious suspicions that Mortenson’s story is fabricated.  He didn’t stumble, lost and confused, into Korphe; there was no nurturing him back to health.  There was, instead, an intentional visit by a healthy Mortenson to Korphe sometime later; a school was built.  It made for a nice story; it sold a lot of books.  But if true, does it change the fact of Mortenson as philanthropist?

Does it matter that he fabricated a story that pulled sufficiently at people’s heartstrings that they gave money to his cause to build schools throughout Pakistan, with a particular emphasis on educating girls?  The suggestion that he has mismanaged and misappropriated funds, if true, absolutely does matter, but that is not the question here.  The question here is whether there is a right or wrong path to becoming a philanthropist?  Is there good and bad philanthropic money?  Boards of directors often laugh at me when I say they need a gift acceptance policy (see “Dirty Money post,” 3/11/11) that is about more than just what kinds of gifts their organizations will accept—stocks, bonds, property, art, cash only?  The idea that gifts might be turned down because of the stock in trade, the ethics, the morality of the donor seems funny to most.  Why, when funds are so tight, would we turn a gift away?

Philanthropists don’t have a lock on moral and ethical behavior just because they want to do good with their time and/or their dollars.  The motivators for doing that good vary greatly:  some do it just to do good, others do it for self-aggrandizement; still others do it for a combination of reasons.

Are there right and wrong kinds of philanthropists?  And if so, how do we leave the replenishment of “the right kind of” philanthropists to chance?

I feel sort of shallow saying this, but don’t judge me until you read it all:  what boiled my blood in reading The Philadelphia Inquirer article reporting on the Board of Directors of the Philadelphia Orchestra voting to declare bankruptcy and file for Chapter 11 reorganization was not the fact that the Board was risking losing this city—and the world—a world class orchestra.

Very, very sad, but it wasn’t what revved my juices.  It wasn’t the fact that the Orchestra was in the position of needing to file for reorganization, despite $140 million in endowment funds (restricted funds, according to the Board).  Again sad, as they hadn’t tried or been able to convert some of those endowment gifts to unrestricted operating costs.  And it wasn’t even the fact that the Board has hired Brian Tierney to do its public relations, something that will be sorely needed in this post-bankruptcy era as it undertakes a $160 million fundraising-campaign.  This is same Brian Tierney who brought The Philadelphia Inquirer to its bankruptcy knees when he was publisher and CEO of that paper and did such a fabulous job handling the PR there.   Incredulous and infuriating, but I think I know why.

No, what boiled my blood was a statement by John Koen, chairman of the players committee.  He voiced what so many nonprofit staff members think:  that management “has not turned over every stone—they haven’t gone to any donor outside their comfort zone—to get the broad-based support” needed to survive.  I read “outside their comfort zone” and the blood just started boiling.  And what about the board?

Honestly? Fundraising, in general, is not in most board members’ comfort zone.  But with time, education and training, practice, and, most importantly, a deep, passionate belief in the mission of an organization and the benefit it brings to society, we can move board members out of their discomfort and they can become decent if not great fundraisers.  After all, fundraising is simply talking.  Talking about your memory of the first time you hear Appalachian Spring by Aaron Copeland or Dvorak’s Symphony No. 9 and how your life was changed forever.  Talking about the transformation of a child who goes from flunking to passing a test, the family living shelters and cars moving into its first home or the homebound elder who now receives healthy meals and regular conversation with the delivery of those meals.  Through that talking you are ultimately allowing people to share your passion and be part of your solution.  If we believe and can communicate, we can raise funds that will allow that mission to continue long past our own service on that board.  Only after you have done all of this talking over a good period of time, do you actually ask for money.

That is the first movement out of your comfort zone.  But for too many board members, even this is too difficult or too much trouble or something, because it isn’t getting done.  Recently, I was speaking with a board president who 150% leads by example; he is exceedingly frustrated (and that is putting it nicely!) with the rest of the board members’ refusal—if failure to do something can be interpreted as a refusal—to fundraise.  When I said he has seven months before the organization’s annual gala and suggested he should challenge every board member to start identifying ten new people to invite to that gala, giving him the names as they are identified, he sighed with great disgust.  Last year he asked for names from that first circle—family, friends, colleagues—and got nothing.  He realized he had a very big problem:  h was he going to move them yet further out of their comfort zone?

The second is step out of your comfort zone is moving to the next ring of familiarity from those we know well, who may give because they know and like us as people, to cultivating relationships with others you don’t know so well but who actually believe in the organization’s mission as demonstrated by a variety of things, from having attended the gala for four years running to having made a $25 gift for the 15 years to having made a six figure gift to a like organization where she previously lived.  To do this, however, you, yourself have to a) truly believe in the mission and the social good that mission seeks to accomplish and b) you have to understand that one of your many responsibilities as a board member is to ensure there are sufficient funds to deliver on those mission promise.  Don’t get that, I can guarantee no one will ever move out of their comfort zones.  And more and more staff of nonprofits will find themselves in John Koen’s position:  facing bankruptcy—or worse, going directly to closing—with board members never having moved out of their comfort zones.

While not wanting to make light of the Orchestra’s situation, as I am personally mourning the tarnishing of its luster and coping the disquiet I feel at the thought of its possible disappearance, there is an important lesson here for the tens of thousands of other nonprofit staff and board members who regularly dream about having a board like the big guys—the world recognized orchestras, ballet companies, art museums, etc.  The dream is fueled by the mistaken thinking that they have it easy:  they have rich people on their boards who know rich people and, therefore, all their money needs are answered.  The reality, as demonstrated here and so many other places as well, is very, very different.  Board members are board members are board members, regardless of how much money they purport to have.  At the end of the day, a good board member is one who is passionate about the organization’s work, understand all aspects of her/his job as board member, executes fully that job, and is absolutely willing to move out of her/his comfort zone.

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.