Nonprofit Economic News Can Be Confusing

Lately the news we are seeing on how the economy is impacting the sector can be confusing. My advise is that executive leaders need to examine information given by the various writers of the nonprofit sector. Check out the screen below from the nonprofit Reddit site:

Quick Post: Cool Article

Friend and great consultant, John Corwin, has posted an article about his findings in the Interim Executive Director field. Here is the link:

http://www.corwinconsulting.com/images/leadershiptransition.pdf

Happy reading.....

The Safety School Notion

I am a little steamed and it is a common subject that is getting my blood boiling. It seems like an everyday occurrence that I see an article the discusses the move for for-profit professionals into the nonprofit world. Now, I am in favor on corporate-nonprofit partnerships, in fact I train on it and have developed models for it that are in place in various communities around the United States.

My blood pressure is high because at where the articles state the executives are looking to be placed. I do not believe a for-profit executive equals a nonprofit executive, or even worse and where many of the articles suggest, a for-profit executive equals more than a nonprofit executive and therefore the nonprofit should be so lucky. Both ideas are severely flawed, although I am in favor of the movement for those to learn about the DNA of nonprofit organizations.

The assumptions that get my hairs crossed are:

• The notion that anyone with five years experience and an MBA can run a nonprofit. I have been in this work for over 20 years and believe me I need all of that experience to do what I do. This insults our sector.
  
• That 3-6 month crash training will amply get someone up to speed on becoming a nonprofit executive. Yes, understanding the flow of programs that serve our most at-risk populations only requires this amount of time. This is also an insult.
• The "social entrepreneurship" movement often pushes the idea of a young-MBA type coming in an starting a new program that will replace the old, tired work of those who worked on the issue before. I see more innovation in the work of these everyday heroes than I have seen by these TIME magazine individuals everyday. In fact, these individuals are the webbing that is saving this country during these hard times.
• Foundations and funders are often often so swayed by the jargon of these groups and individuals that the older groups lose out without much inspection other than the words "new" and creative strategies to create buzz.
• The same individuals who may have occupied the board rooms of nonprofits and have led many of these nonprofits down terrible paths are now the same hiring pools that are being drawn upon to hire for these nonprofits. I have the first question of an interview: "tell me your experiences on a board and ....(Question 2,3,4)....This should be a good FIRST start.
  

In all of this I feel like the non-profit sector is being reserved as the "Safety School" for those who have been so lucky to be in the other sectors, while it is those in the other sectors who have done so much damage. If they have respect for the sector, let them work from the ground up. When they get to the top, they will better for it and so will the organization.

Susan Boyle Nonprofits

The Susan Boyle phenomenon has been interesting. Here is someone who some have described as an individual who is not what one reporter called "magazine cover" material getting her chance and really shining. Now I am not sure who is magazine cover material or that we should be a world that titles people in such a way, but I do know that Susan Boyle is a great singer and when she was able to showcase her talent, she did so admirably. I also respect that she fought off the ridiculous requests for her to get a make-over, stating she was happy how she looked.

Now, I can't help it but I frequently find how popular media stories like this are equal to the nonprofit world and I see one glaring me in the face. It relates to the work to obtain funder relationships. I often see the work to woo funders similiar to American Idol or other reality show based on pomp and circumstance. Groups with glitz and buzz are often over resourced while the organizations with talent but not as flashy, the Susan Boyle Nonprofits (SBNP), are often overlooked. When the SBNP's get their chance, they almost surely shine. Also, they are often asked to become glitzy once they are revealed. Most have trouble doing what Susan Boyle did and turning this request down. They almost always take the money and the growth.

A friend told me of a glitzy and over-resourced organization that is much pomp and circumstance that has recently lost some funding. Some funders have teamed together to make sure this group had money while many Susan Boyle-like groups nearby continued to struggle to get their chance.

As I think of this, I have a big worry about Susan Boyle and the situation I listed above. I worry that Susan Boyle gets an agent, gets big and loses the "thing" that made her great. I also worry about this with nonprofits in a similar stage. SBNPs often want the agent and the fame but yet in the end lose their voice. Funders often become the agent to Susan Boyle Nonprofits and then when the voice is gone, so are they.

Let's hope Susan Boyle stays the way she is, a beautiful person with a beautiful voice. Fine just the way she is.

In Nonprofit We Trust

I thought an interesting read this week was the paper by the Center on Philanthropy at Indiana University and School of Public and Environmental Affairs entitled, "Are Nonprofits Trustworthy". Find here: (http://www.indiana.edu/~nonprof/results/trustsurvey/trustsurvey2008.pdf) The study basically states that between the three levels of government, business and the non-profit sector, non-profits are the most trusted of the sectors. Nothing new to my colleagues and would have loved to see if the field work for the data would of been done during the AIG mess.

I know my fellow practitioners are so tired of confronting the question of nonprofit trust, as they spend hours and money completing the endless grant reports and organizational performance evaluations needed to show how well they are spending a dollar. The answer from them on whether nonprofits are trustworthy, after the eye-rolling, is almost always a "Yes".

I would say that in regard to trust, nonprofit organizations are the safest bet in the trust realm. Sure, you have heard of stories of ministries gone awry or a nonprofit executive mishandling resources. I once saw an nonprofit leader try to justify to me the need to have his dry cleaning paid as part of a homeless services grant. He stated, "I must project an image that the homeless will aspire to". I told him the homeless did not crave heavily starched, cuff linked shirts.

But this is nothing in comparison to the highlighted stories we have seen from the business and government sector in recent months. With that, here are four reasons why the nonprofit sector is a more trustworthy partner than the other sectors:

1. Try following your money through each of the sector's financial systems. For government and business, it literally cannot be done. Pay your taxes on April 15th and then call the IRS on the 30th and ask where your money went, they will have no idea. Paying for a Sponge-Bob night light, try following the purchase all the way to the hands of the Sponge Bob headquarters. Might be fun to do, but won't happen. In the nonprofit world, this is much easier. Donate to the community garden, in many cases you can follow your check all the way to the balance sheet.
   
2. When a nonprofit has a financial impropriety, the sum is almost always lower than the monthly scandal on the government or business side. This is not because the sector is not big, it is because the control systems, like governance, put in place may prevent. There would be no way for an AIG mess in the nonprofit world, mainly due to size. The Aramony scandal in DC, notably one of the largest scandals in the nonprofit world was about $1.2 million dollars, a fraction of a penny compared to the scandals we see today.
   
3. The impetus for belonging to the sector is driven by a different creed. A major factor in business, outside of innovation or belief in the product, is to make money. In government, there is a feeling of altruism that is attached, but can often quickly lost when the individual cannot find there way back to their cubicle due to the size of the agency or government effort. In a non-profit, even big ones, you did not arrive with the notion of making a fortune and you can often feel the vibration of subtle change as it happens.
4. There is competition attached to the reporting structure of nonprofits. While there could be an argument that this happens in business, no business really loses that much if there are overhead irregularities in their annual report. I placed the purchase of a pencil in the travel line, oh well. And tell me the last time you read the federal budget. (I did, it is a bear!). If misreporting happens in the nonprofit world, a grant or contract would probably be in serious jeopardy. This is why the nonprofit practitioner spends so much time on reports, because they mean something.

The above outlines the position that nonprofits are in and why they must and do act in a different way than the government and business sector. The recent exposed looseness in the government and business sector has a direct relation to the trust statistics seen in the above report and it is nice to see the nonprofit sector coming out on top for once, its rightful place.

Folding Tables Should Be The Table of Choice!

I was sitting in my car today and listening to Bloomberg News talk about the AIG mess, the $10 million dollar office upgrade and the CNBC statement that executives making under $250K cannot run a Wall Street firm. It is easy to see the populist sentiment that would erupt from this and I am working hard at staying away from AM talk dial to avoid my blood pressure from rising.

The one statement I thought it was interesting in all the "hub-bub" was some animated pundit in support of the business office upgrade stated, "What are they supposed to do, sit at folding tables?!!!!". This immediately made me think of all the clients I have or the site visits I have done where the table of choice for the organization is a folding table. Let's call these organizations, "Folding Table" organizations.

I think corporate groups like AIG and others could really learn a great deal from "Folding Table Organizations, (FTO's if we need another acronymm). FTO's could impart the following:

• FTO's really make a dollar out of 15 cents. These groups, in many instances, have helped stave off and improve conditions in our most distressed communities. I think corporate CFO's should shadow FTO financial people for a day. I am sure they would learn a great deal about how to use resources.
• FTO's are often the best are forming real win-win partnerships on a shoe string. For all we hear from foundations on how CBOs should partner more effectively, which is a goal that should always be perfected, follow a participant from a social service agency for a day. See how one participant will receive ESL classes one hour from one organization, a job counseling session from another organization the next hour and a physical check-up by a health clinic in hour three. This is through great partnerships and is often brushed off or not talked of.
• FTO's could teach corporate america on a variety of subjects including diversity, organizational loyalty and non-financial reward best practices. Spend a day observing an FTO from a human resource perspective and you will quickly realize that the level in which groups are able to acheive in motivating their employees, many long-serving and from many different areas, to reach their difficult missions.

Now I am not suggesting that FTOs do not have their troubles, as they do and they are often immense. But, I do think that the often loud notion that FTO's should feel lucky to be in the presence of corporate america is flawed. It should be a reversed belief as I think the AIGs of the world could certainly learn from FTOs.

Riding Out The Storm

This article entitled "Riding Out The Storm" is from my good friend, Pat Nichols, a transition management consultant in the Washington D.C. area.

"Many organizations around the world, for-profit and non, will not survive the current economic storm. Some of those that do not will be of substantial size and repute. Many will be doing good work. All will employ good people whose lives will be painfully disrupted.

Some will die because decisions already made left them too vulnerable to survive, no matter what their leaders do in response to the crisis (Countrywide Financial and some of the nonprofits who invested with Bernard Madoff are examples). More, however, will have some chance of survival and that survival will rest upon the wit and wisdom of their leadership.

Having led or advised nearly 20 organizations through major, often life threatening transitions, I would like to offer four observations on the kind of “transition leadership” that might help other organizations survive. (I will discuss two here and two in a subsequent memo.) These thoughts, I suspect, transcend the sectors, though they will require adaptations to each.

Put the mission first: First, transition leadership requires that we put the mission first, always first, building a renewed sense of teamwork around the values it implies. People live and work, in large part, for meaning and for values; they work to add significance to their lives. Some, sadly, find that significance largely from the status that money brings and the adornments it can provide. Most, I am convinced, do not; or would not if their leaders were offering a sufficient opportunity to find broader social or spiritual value in their work.

Creating such meaning is, on the surface, easier for a civic sector and government organizations, to which people are drawn explicitly by mission. However, I would predict that for-profits that engender a sense of mission (I think immediately of Southwest Airlines and Apple Computer) will perform better, on average, than their more mercenary competitors.

One challenge for nonprofits, on the other hand, is remembering that, when tough choices must be made, mission should triumph even over loyalty to colleagues. People work to serve the mission, not to have the mission serve them; so the organization must sometimes face the severing of important, and personal, ties in order to advance that mission.

Character and integrity: Second, we commit ourselves to the highest standards of character and integrity, listening to and valuing diverse perspectives and talents. Some of these standards will vary with the values of the organization. (Teach for America or a biotech company will value experimentation and risk taking more than a hospital or an accounting firm). Some, though, will have broad application in a crisis. For instance:

· Be transparent and engage everyone—Crises are inherently unsettling. Leadership cannot guarantee an outcome. What we can do is ensure that information and participation are widely shared.

· Move quickly but systematically—In the absence of a known destination there is comfort in knowing how we will chart it and that no time is being wasted.

· Be hopeful in style and rigorous in analysis—This is a very difficult balance to strike. As leaders we must both set a hopeful tone and acknowledge, to others, and ourselves the magnitude of the challenge. To do otherwise undermines our credibility at the time we need it most.

· Live with ambiguity, acknowledge uncertainty—The need to acknowledge uncertainty doesn’t end with the description of the situation, it extends to the limitations of the choices we make. In crises, especially, we will be acting on incomplete and imperfect information. We will make assumptions and decisions that will prove mistaken. Acknowledging this is crucial not only to our credibility but to our ability to see our mistakes and adjust our course.

· Let it hurt; salve the hurt of others—As leaders in a crisis we must make decisions that are painful to us and to our colleagues. Those decisions should be painful to us. It is a mark of our caring about our colleagues. We must focus our attention on making and explaining them in ways that are sensitive and responsible.

The other two elements of transition leadership are that the organization should move forcefully and, at the same time, experimentally and that we share and celebrate success. I will soon send a second dispatch offering further thoughts on these elements.

In the meantime, best wishes to your organization in remaining sea worthy. "

Well said, Pat!