Business? As usual....

As we start on a new year, still smarting from scary economics and shaky financial futures, the old argument about why so many nonprofits are so poorly run is getting a lot of play.

“We need to be run more like businesses,” one camp asserts.

“Like Enron, GM, (fill in the blank)?” another group scoffs .

We are—are not—businesses, which are—are not—a good (or bad) model.

We are getting too hung up, I think, on nomenclature.

The question that is too often asked is: Why is it so hard for organizations to understand that they must be run as a business? Rather, I think, we should questions why is it so hard for them to understand that they must be well run with careful oversight and clarity as to what is needed to accomplish their mission? We would then get closer to the issue at hand for many (not all) nonprofits.

The biggest problem I see is a lack of balance in organizations who do not want to invest in building the infrastructure (which includes IT, Accounting and yes, Advancement—marketing, fundraising, government relations) to support the programs that are their purpose. And by investment I mean money, resources and commitment.

Too often, administration and fundraising are seen as orthogonal to the organization rather than as true partners who can ensure that the programs have a strong foundation on which to rest. And way too often, we look at our funders and donors as the enemy rather than our partners.

There is also, it seems, a willful “know-nothing” attitude rampant in the nonprofit sector.

Over the years, I’ve been shocked at how many nonprofit professionals don’t know the first thing about the law of gifts; have not clue what is required in order for a donor to take a (legitimate) tax deduction for a contribution, or even when it is a contribution. I have sat at way too many Board meetings, where the chair of the finance committee drones on about the financials, which no one else seems to understand.

I’m thrilled that Charity Navigator and other charity watchdog organizations are stepping back from a rating that focuses only on percentages of revenue spent on programs versus administration and fundraising. I’ve been around too long not to see that while turning on the lights may not be sexy, it is necessary in order that we can run our programs.

Clearly there needs to be a focus on outcomes but we also need to understand what those outcomes are. And that ties back to mission.

In this new year, whether you’ve already made your New Year’s Resolutions or not, let me suggest that we all focus less on how much good we think we do, and concentrate instead on how much better we all could be.

Whether you are staff or Board member, learn about the laws that govern your nonprofit. Commit to good governance as well as good programs; be part of the solution rather than simply cursing the problems.

One important way to do is to take off the blinders, open the doors to the silos and understand that, truly, we are all in this together. Plan strategically for the coming year (rather than simply doing yet another strategic plan).

Start with your clients—what do they need? Let me repeat that: What do they need? Then think about what the organization needs in order to provide that.

Sit down with staff and volunteers, find out what they think is needed. How does it mesh with the needs of your clients? Do all these needs match your mission? If not, why not? What would need to change here?

Your budget is an important part of planning strategically. Is yours realistic or did you just roll over what you’ve done in past years? Has your Board been truly involved with budgeting or have they been kept out of it, relegated to approving a fait accompli?

While I don’t believe that Boards should scrutinize every expenditure, I do think they cannot be good stewards for you if they don’t understand truly what it takes to run the organization. If your Board hasn’t been involved, involve them now—you may be surprised at some of the good ideas that can generate.

Budget, remember, is not only about expenses; it’s also about revenue. If you charge fees, when was the last time you looked at them? Really looked at them. Has your Board ever been part of that process? What about other sources of revenue? Are you tapping into everything you can?

All organizations (and individuals) sometimes suffer from the “this is the way we do things because that’s the way we’ve been doing them.” And sometimes, those ways actually are the best ways. But this year, challenge yourself to look at things through a new prism, mindful of history but not totally bound by it. Yes, those who don’t study the past are often doomed to repeat it. But by the same token, if you don’t ever dare to try something new, you may find that you are caught in past mistakes, missteps and are missing the boat completely.

Janet Levine is a consultant who focuses on increasing productivity for nonprofit organizations, their staff and volunteers. She can be reached at janet@janetlevineconsulting.com.

Boards, Management and It All

Over the years, I’ve had my fair share of employees who, for one reason or another, just didn’t work out. Once I actually left a job because two of my staff—one inherited and one who I inexplicably hired—were driving me to imagine inflicting unconscionable violence against them. Worse, the only grounds for firing at this organization would have been for them to be caught engaging in acts of public bestiality.

All that aside, whenever one of my staff didn’t perform at an acceptable level, I always felt it was as much a failure of management--mine—as it was their own failure.

Ditto with Boards. Volunteers are to some degree unpaid staff, performing vital jobs for the nonprofit. Or they would if only they knew what those jobs should be.

Too often potential Board members are recruited by being told that there is “not much” they will have to do…if they have to do anything at all. I’ve been asked to serve on Boards where the Executive Director tells me that my only responsibility will be to show up to at least one of the four quarterly meetings. Really? What, then, is the purpose of having me (or anyone!) on the Board?

Most likely it has something to do with financial support. There’s always a lot of discussion about whether nonprofits should have a “give and/or get” policy for the Board. Questions range from whether this is a good idea at all to should there be a specific size contribution expected from the members or just a “generous gift?”

This issue seems a wrong thing to focus on. It fragments the real job of your Board.

What is that real job? Let’s start by identifying what it is NOT. It’s not fundraising or attending at least 3 out of 4 Board meetings a year. Nor is it “serving on a committee,” though all these things are part of what you should reasonably expect from a good member of your Board.

A Board’s main responsibility is one of governance—ensuring that the organization is both well-run and running well . A big piece of that is the Board’s fiduciary responsibility.

As a Board member, you must help to guarantee that the organization is fiscally sound: Are programs effective? Are any fees that may be charged appropriate? Is there a net gain at the end of the year? If that doesn’t happen—and it often doesn’t—and if there is a gap between money needed and money on hand, then every member of the board has a responsibility to do what is necessary to bridge that gap.

Give and get in action.

A really well-run organization, however, focuses not on gaps but on what is needed to run the programs you want and be the organization you desire. There must be a clear understanding of what it takes to run the organization as you wish it to be. In other words, the goal is to support your vision as well as your mission.

The next step is a discussion and agreement on what funds are on hand for use, what is expected to come in and what is needed to get where you want to go (all this is called the budget process). Then, once that magic number--how much do we have to raise so that we can run the organization as we want it this year, with reserves and investment for next year and beyond—is known, we can intelligently discuss what the Board's responsibility for that number is.

So yes, I come down firmly on the side of a Board give and get policy. All Board members need to understand that there is cost to be on the Board. It is divided into two parts--the part the Board member personally brings to the table and the amount that the member helps the organization to get. What I don’t agree with is a size gift that has been arbitrarily chosen sometime in the past.

Each year, at the meeting where the budget is adopted, I believe Boards should agree with how much the give and get is--and define what they mean by "Get." Do they actually solicit for gifts by themselves or do they help in the cultivation of prospects who they have brought to the table; help with continuing stewardship of the donors who had been their identified prospects, and generally help to create that culture of philanthropy.

And that brings us back to management. Good management, I believe, all boils down to two things. The first is that those you are managing buy into what you trying to do. That segues nicely to the second—that those you are managing know what needs to be accomplish and what their role is in getting there.

Regardless of what give or get policy is on the books at most nonprofits, the reality is that few enforce it. Therefore, only a minority of board members comply. Far better to open the discussion up and let the Board decide what it will take this year to fulfill their fiduciary responsibility.

In my experience, not only does the Board take a greater role than what they merely accept, they are far more rigorous in meeting their target when have been part of defining it.

And just as poor performance can indicate a failure of management, when staff—paid and unpaid—exceed expectations, management can give itself a pat on the back for a job very well done.


Janet Levine is a consultant who works with nonprofits and educational organizations. She can be reached at janet@janetlevineconsulting.com. Her online grantwriting class is available at www.janetlevineconsulting.com/classes.html.

Defining the Problem

My friend Ruth is a prodigious seminar taker. A few years ago she took one that taught how to solve a problem by first defining the problem. I think that is a seminar most nonprofits should take.

To me it has always seemed obvious that you cannot solve a problem if you are unclear about what problem you are trying to solve.

Most of my clients would define their problem as a lack of money (or, as nonprofits love to whine, “not enough resources”). But perhaps it would be more accurate to say that is the cause or, more likely, the result of the problem and not the problem itself.

Defining the problem often means accepting responsibility for what is going on. If lack of money is the problem, well, that’s not necessarily anyone’s fault. If, on the other hand, the real problem is how the money is allocated and spent, that’s a whole different kettle of fish.

For many organizations, the problem seems to be circular: we don’t have enough money or resources so we cannot invest in a program to develop money and resources, which means we don’t ever have the money and resources. This in turn generally leads to a paralysis that ensures that there will be no money and/or resources and that means that your mission doesn’t really move forward.

From where I sit, it feels like I am watching a comedy of errors. Once, a client paid me good money to write a direct mail piece. Several weeks after they approved the package, the Executive Director sighed that they just didn’t have time to get it done. I said I would get the printing and mailing quotes, and then once a vendor was chosen, I would follow the mailing through. First, however, I needed to know how many pieces they would be mailing.

Well no one, it seemed, had time to check out how many records there were on the database and numbers like 2,000, 5,000 or maybe around 8,000 flew. Not helpful. I couldn’t go into the database to check because it was held on one computer and I guess that computer was in use 100% of the time every day of the week. Must have been.

I took my best shot, got a quote, and eventually got an okay to move forward. Except—yep, no one had time to export a list. And so, the mailing never happened.

An extreme case? I’d like to think so, but I’m not entirely convinced.

Whether or not your organization resembles this, being clear on the problem will make a positive difference. If your organization writes grant proposals, you already know how important the problem or need statement is. The clearer and more precise you can be about why what you want to do is necessary and important, the better your chances are of actually getting funded.

More importantly to my way of thinking, a clear need or problem statement helps to ensure that you are going after a grant that will move your mission forward. Likewise, identifying the right problem ensures that you look for the right solutions. This is turn will help to make sure you are getting where you actually want to go.

Janet Levine is a consultant who focuses on increasing productivity for nonprofit organizations, their staff and volunteers. She can be reached at janet@janetlevineconsulting.com. Gets Grants!, an online grantwriting class is is available at www.janetlevineconsulting.com/classes.html.
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