A Nonprofit Executive Director, Foundation Director, and a Consultant with a Chihuahua walk into a conference…

So begins my first blog of 2012.  I have never been good at telling jokes. Timing is everything in telling a joke well and my children tell me this sense of timing eludes me. On the other hand, I have been told I have a good sense of timing when it comes to dancing which my children endure.   As with joke telling, when it comes to making predictions, my sense of timing and accuracy leaves something to be desired.   With the rapidly changing pace of our world and the tendency of multiple scenarios rubbing together to yield unpredictable results (2+2=5), predictions can easily become dust or fodder for debate and rejection.  (Just ask Newt Gingrich on the day after the Iowa Caucus following his low placed finish after predicting he was the frontrunner Republican nominee.)

Alas with the turning of the calendar to a new year, media is full of resolutions, retrospectives and predictions.  Here’s what is on my mind in this new year which I offer in the form of reflections more than predictions.  I do so using the old joke format of the bar joke.  A Foundation Director, a Nonprofit Executive Director, and a consultant with a Chihuahua walk into…   Here is what I believe some of the top concerns of donors, nonprofits, and consultants will be in 2012.

1. Focus upon survival alone is not a sustainable goal for a nonprofit in 2012.  It is going to be another tough year for nonprofits.  The pain of government spending cuts will continue to be deeply felt, both directly as many nonprofits rely on money from government, and indirectly as cuts to government services will increase greater demand for services among nonprofits.    I was talking with CEO Nancy McGee of the Alliance for Nonprofit Excellence about this reality yesterday.  Recently they posted their Downstream and in Demand III Report on the health of Mid-South nonprofits in light of the Economic Crisis.  Their report reflects what we are seeing and will continue to see nationwide:  shrinkage in workforce, services, and dollars needed to fund its people and programs.  In many cases, we will see extinction.   The data generated by our own ORG Assessment Tool shows that nonprofits have less days of cash in 2011 than in 2010.  Data we are collecting indicates they have stopped the bleeding and they are holding their spending in line with budgets…but that often means at the expense of providing services.  What will unfold in many communities is the degree to which donors will get involved and try to manage the culling and encouraging mergers and partnerships so that the most vital service(s) nonprofit offers is preserved or made stronger. 
2. Tough…but an exciting time. Adaptation and growth are key. Yes, it’s a tough time to be working in the nonprofit and philanthropic community, but it is also an exciting time.  More than ever, we need to think creatively, build innovative solutions to social problems, and grow, grow, grow what’s working.  Increasingly in 2012 nonprofits and foundations are turning to smart tools and technology to help them adapt, measure, and grow. I have on my calendar to attend the Nonprofit Technology (NTEN) Conference this year to be part of the conversation on how technology is being used by nonprofits for social change movements.
3. This is a time of growing skepticism about the effectiveness of government, international aid, and even of giving.  The effective nonprofit leader sees this as a time of challenge, but also as opportunity for her nonprofit…provided they can show clear evidence of results.  In 2012 look for the rising influence of philanthrocapitalism and its use of leverage to influence policy, practices, and drive social change.  I encourage you take a look at Matthew Bishop and Michael Green’s recent article, The Year of Controversial Giving in the Huffington Post.  They have documented this growing skepticism. What will be key in 2012 is that nonprofits are able to show results and tell their impact story clearly and in ways that are easily accessed by all.  Building upon this is another observation…
4. ...Measure, measure measure…but be sure to measure what matters most.  William DeKrey makes this same point in his Community Wealth Ventures blog and he says it well as he writes: “The surging call within the social sector for more data-driven decision making, evidence-based practices, and setting measureable objectives is an important step in the right direction.” It is critical that nonprofit leadership is careful about what it is paying attention to and the metrics used are critical.  DeKrey continues  “Facebook could measure its success in its number of users, the number of items shared on the platform, or the amount of advertising revenue… Importantly, each of these different definitions of success would lead to different priorities, incentives, decisions, etc. We have to be careful to choose metrics that best help us measure our progress toward achieving our organizations’ missions, but we also have to be careful not to let the metrics overtake the mission in importance.  Increasingly, nonprofit boards will be – or should be – paying attention to and measuring the dual focus of mission impact and financial sustainability. 
5. Think twice before undertaking a full blown strategic plan in 2012…it may not be wise.  The good old days of spending hour after hour hammering out a trusty 3 or 5-year Strategic Plan is on the out.  Strategic Plans are long on planning and are often short on action and exhaust precious time. This is not to say that “strategy” and/or “planning” are dead.  Both are absolutely necessary tools for transforming limited resources of money and human capital into improved social outcomes. The pace of change in what we have come to know as the new normal is only accelerating and our capacity to see into the future is declining. Organizations that plan, step-by-step, how they can best reach their goals in five years and then follow that plan, step-by-step, without frequent adaptation, are going to be left behind.  Mind you if you need a full-blown strategic plan we can take your time and your money.  Nimbleness, adaptability, opportunism, combined with aligned strategic thinking and action planning  are the traits that organizations must develop.

For board members and staff who lead nonprofits, you will agree with me that it’s a tough time for nonprofits.  It’s also a thrilling time.  More than ever, we need to think creatively, build innovative solutions to social problems, and grow, grow, grow what’s working.  You may also agree with me that I am not good telling a joke.  As to the Chihuahua, he doesn’t really contribute to the conversation, but I recall the best bar joke I have heard involves a blind Chihuahua.  (I once had a Chihuahua named Stickley I inherited from my parents.  The dog wasn’t blind - nor did he wear a toupee- but he had lots of spunk and attitude!)  Here’s to hoping what I have posted will be of help to you as you navigate the challenges and opportunities with great success – and with spunk and attitude!  Happy New Year!

“Brand Pairing”: Corporate Giving Strategies Meet Nonprofit Needs and Vice Versa

“Businesses step up tie-ins with charities” was a front page story this morning in my local newspaper here in Nashville, The Tennessean.  From car dealers to global companies to local mobile food trucks, business owners are passing on portions of their sales to targeted charities.  The article reads: “The concept of linking sales to charitable contributions is a growing phenomenon, and it is especially active during the holiday season as everyone… looks for an edge to close deals with consumers who care.”

Now, first out with the disclaimer: I am not a marketing guru. I will leave that for Jeff Buntin and his outstanding team over at The Buntin Group who was quoted in the article. I do, however, focus a good bit of our work at Patmos and MyGamePlan.Org on helping nonprofits survive, adapt and grow.  And, what I do know is that diversification of funding sources is key to the financial sustainability and resiliency of a nonprofit.  And I know that nonprofits need to be more intentional in harnessing corporate giving in helping them address the important issues in their communities.

Recently I heard a presentation by Dr. Patrick Rooney, an economist, and Executive Director of The Center on Philanthropy at Indiana University on “Who Gave, How Much, and To Whom in 2010?” He is one of the funniest economists (“funny economist” is that an oxymoron?!) that I have met; but is also one of the most knowledgeable on the giving habits of Americans. He and his team are responsible for producing the most comprehensive annual report on U.S. charitable giving.  As the Tennessean article looks at corporate giving, here’s what we know from The Center on Philanthropy's at Indiana University's Giving USA 2011: The Annual Report on Philanthropy for the Year 2010:

•  Corporate giving = 5% of total estimated contributions ($15.29 billion) in 2010
• Corporate giving rose 8.8% adjusted for inflation in 2010, which was driven by an increase in total giving by donations of cash and from in-kind support over the turbulent economic  year of 2009. Yet, ...
• Corporate giving has remained at or below 1.0% of corporate profits since 2004 (0.9% in 2010).

Many businesses strive to maintain their giving at a fairly consistent level, but many charitable organizations are experiencing changes in the amount received from corporations due to changing focus. That is: corporations are giving to charities strategically in ways that pairs well with the marketing priorities of the business.  Savvy nonprofits, like Second Harvest Food Bank, that can establish a tie-in are beneficiaries; nonprofits that are not aware of these shifts and be more proactive in reaching out to corporations in the right way will increasingly be left behind and may become more vulnerable.  Lower your expectations of success if your only strategy for corporate dollars is table sponsorships at your upcoming fundraiser.

Eat_Drink_Smile has its finger on the pulse with food pairings

This brings me to what I am calling “brand pairing.” It is not uncommon to visit a restaurant and be greeted with an invitation to attend one of their “food and wine pairings.”  I suspect that behind the pairing idea is for restaurant owner and wine distributor to sell more product by helping the consumer feel a greater sense of control when it comes to the countless choices of wine and bring satisfaction that she is maximizing the value of her hard-earned dollar by guaranteeing the “perfect match.”  

Many Executive Directors are focused upon their end of the year fundraising efforts. Others, at year-end are reflecting on how to raise the profile of their charity.  All would do well to think about this notion of brand pairing and to take stock of what businesses and corporations might “pair” well with their charity. You can be sure that most of the companies with significant giving programs are thinking about this. Corporations increasingly are shifting their dollars to charities who they believe best strategically pair with their brand. 

So over the holidays, when you might be at a restaurant and see their offering to enlighten you on how to match food and drink, think about what businesses your nonprofit’s brand might best match with as you seek to better serve your community..  Next year, corporate giving is not likely to grow over 2011 levels and corporate strategies will continue to trend towards strategic giving and brand pairing.

Paying attention to this and executing on an intentional strategy will have pay-offs. But, don’t forget the value of the individual donor to your charity; after all, collectively individuals by far represent the largest piece of the giving pie as they gave over $211,770 billion last year, representing 73% of total giving as compared to 5% from corporations.

P.S. Hats off to Bob Bernstein of Bongo Java.  Years ago, he recognized the value to his business of aligning his coffee’s brand with the brand and efforts of area non-profits.  A lot of good came out of that thinking!

Featuring a Resilient Nonprofit: The Minnie Pearl Cancer Foundation - Building Organizational Capacity to Reach More People Living With Cancer

With odds such as 1 out of 2 adult men being diagnosed with cancer, it's a good thing there are friends out there such as The Minnie Pearl Cancer Foundation! 

Read our case study of a nonprofit that is improving its health and resiliency so it can help those living with cancer make better and informed decisions about their health. 

Despite a challenging economic climate, The Minnie Pearl Cancer Foundation made the decision to invest in staff expansion and operations and infrastructure improvements, and is well underway with reaching reach more people and maximize its impact as a result.  Click here to read our case study about how the following core elements of their culture and infrastructure enabled it to achieve this success:

•  An engaged and committed Board of Directors. MPCF’s Board demonstrated a strong commitment to raising the needed resources for implementing the new model successfully, and continues to identify and cultivate potential partners for long-term engagement. 
• Strong executive leadership.   Executive Director Susan Hosbach played a crucial role in both the organizational assessment and the capacity-building efforts that followed.  Her eagerness to make MPCF a learning organization initiated the entire process, and her leadership made it possible to turn the recommendations into a reality.  
• Greater emphasis on developing, tracking, and assessing program goals.  MPCF pushed for greater clarity around program goals, outcomes and measurements.  This involved a review of their current program objectives in light of the new model and creating a more intentional focus upon metrics and tracking through staff use of the organization’s content management system.
• Effective use of technology to deliver programming.  MPCF adapted technology it had already invested in to create the platform for its new online system and will make it possible for people living with cancer to access MPCF”s.  Adapting the existing technology rather than investing in a new platform kept down costs and leverage existing staff knowledge.

Organizational Resiliency – the importance of focusing more attention on the means (resiliency) than jumping to the ends (sustainability)

Resilience is a key trait of effective, high-impact organizations in today’s constantly changing environment. I have been thinking about its importance, particularly in nonprofit organizations ever since the economic downturn began being directly felt in 2008 by the nonprofit CEOs with whom I worked at the time.  We began putting in place disciplines such as scenario planning in the event of funding constraints and strategies to engage board members in fundraising efforts and governance. We examined what programs to draw in and which to expand, and what would be the staff needed as we refocused on programs that best aligned with core mission. We quickly worked to increase the seaworthiness of the organization plying the choppy waters.  Since then conditions have improved in the financial markets and nonprofit leaders are a bit more optimistic this year over last.  But the reality remains among many nonprofit leaders, as they hustle to close the financial gap as they approach FYE at the end of this month, that they are facing the potential of booking yet another deficit. What is more, many are fatigued and are asking: “when will it be over?"

It seems that the Virginia G. Piper Charitable Trust in Phoenix, AZ has also been thinking about how important resiliency is in nonprofit organizations and for the leaders who staff them.  They believe -- and I agree – there’s no going back to what it used to be and that we are looking at a new reality. That new reality is a changed world for nonprofits and focus now needs to be on skills and disciplines that will help them find a way to thrive in this new world.  "We're not economic forecasters," said Judy Jolley Mohraz, Piper Trust president and CEO. "But it is fairly clear that economic restructuring has changed reality for nonprofits as well as other sectors of the economy. This new normal requires each of us to develop the resilience and stamina of a long distance runner."  Betting that nonprofit leaders are ready for personal and organizational boosts, Piper Trust will launch a full year's programming focusing on resilience in leadership and board governance called 2011: A Year of Resilience.  Hats off to their work at strengthening their nonprofits in this way!

Resilience is defined as the capacity of a system to survive, adapt and grow, particularly in the face of unforeseen changes.  Survive that is what most nonprofits have been doing and are continuing to do since the downturn, focusing on what is core to their mission.  Adapt is part of an organization’s resiliency, whether it is how nimble its board of directors is in their decision making or how board and management is diversifying revenue streams and focusing upon liquidity concerns. Grow is another aspect that flows out of an intentional focus upon practices such as the alignment of processes and structures, leading to greater mission effectiveness or taking advantage of opportunities through forming effective partnerships. 

I’ve been listening around the Web for conversation threads on “organizational resiliency” in the nonprofit and foundation sector but am finding little mention of and discussion on the importance of resiliency, especially organizational resiliency. A lot has been written on personal resilience and on the resiliency of ecosystems and in technology.  For instance, I just finished using a nifty social media tool being beta tested called Storify to capture conversations across the web on organizational resiliency.  (Click here to see my storify capture.)  Far more prevalent is the discussion upon sustainability of organizations.  Regardless of the sector, the definition of sustainability tends to be elusive and changes based upon who is using it.  Overall, the United Nations definition is a good one: doing what is required “to meet the needs of the present without compromising the ability of future generations to meet their own needs.” Within such a definition, the scope involves nature, the economy and, society. Sustainability, rather than resiliency, tends to be the preferred word of choice and focus in the nonprofit sector. Here, sustainability’s encompassing and broad definition tends to be reduced down in understanding to an organization’s ability to generate enough money to keep the organization afloat. For most organizations, that becomes an all encompassing focus and an elusive destination, especially for nonprofits who tend to operate in a perpetual state of recession no matter the health of the economy.  No wonder the fatigue among nonprofit leaders. This limiting understanding of sustainability became clear to me earlier this week while sifting through grant applications as part of my serving on our Mayor’s Community Enhancement Grants Review Committee.  As part of the grant application, nonprofits were asked to write about their sustainability plan.  Almost to a one the responses centered upon getting more money.  Absent was mention of addressing ineffective operational practices, program analysis, and strategies for greater board engagement. Thankfully for nonprofits, Jeanne Bell and her colleagues, with their new book, Nonprofit Sustainability: Making Strategic Decisions for Financial Viability has drawn back the limiting understanding of sustainability with their book. The understanding of sustainability Bell advances encompasses programmatic sustainability (develop, mature, and cycle out programs in responsiveness to community needs) and financial sustainability which involves financial management disciplines in addition to raising more money.  Thankfully for the field, the authors advance a notion of sustainability as an orientation and not a destination.

Now it could be said the words are interchangeable and my teasing out the distinction between resiliency and sustainability is splitting hairs.  But I think it is important to look at organizational “resiliency”, as there is often too much focus upon the end goal (sustainability) and too little focus upon the means (resiliency).  Denise Lach, a professor of Sociology at Oregon State University says "sustainability is like love and democracy”, having multiple meanings in the minds of the beholder, not always perfectly realized, but struggled for. We basically agree on what it is; we disagree when we must make specific choices in our lives in how to reach it.  Resiliency’s focus is upon that space where the decisions are made and attention is given to the practices.   If Piper Charitable Trust’s Judy Jolley Mohraz is right that the times we are in requires us to be more like a long distance runner, then the focus needs to be less upon the destination but upon the skills and stamina of the runner and upon the specific choices she or he makes and the running efficient practices honed long before the finish line is reached.  For the nonprofit, these specific choices are played out in our practices and core capacities in: leadership and governance; financial and organizational management; operations and infrastructure; effective programs. This is where practices focused upon resiliency make or break an organization and lead to sustainability.  Resilience is increasingly a essential trait of effective, high-impact nonprofits, and improving an organization’s resilience will help it better achieve its mission.  In our complex and changing environment, the sector would do well to spend more time understanding resiliency and its practices that leads to the end game of greater sustainability.

John Hilley is the Founder and President of Patmos LLC (www.patmosconsulting.com).   With their MyGamePlan.Org (www.mygameplan.org) suite of services to the nonprofit and foundation sector, they strengthen the organizational capacity of nonprofits.  Patmos has created the Organizational Resiliency Gameplan Assessment software which measures resiliency levels that can be used in the evaluative process for effective grantmaking and can facilitate dialogue between grantors and grantees.  The software and report provides nonprofits with important feedback mechanisms in order to help them take decisive action to resolve challenges and drive innovative thinking.  Our approach facilitates conversations within organizations and between grantor and grantee, offering important data, effective strategic direction, and tangible steps to help increase a nonprofit’s organizational capacity leading to greater sustainability.

Developing a Succession Plan for Your Organization - 5 Tips to Consider

National studies by entities such as The Annie E. Casey Foundation indicates that the nonprofit sector is undergoing leadership transitions at a rate never before experienced.   

A nonprofit leader plays a key role in an organization’s ability to serve its community and is a critical puzzle piece in an organization’s sustainability.  What happens when the organization loses a key leader?  Lack of a succession plan can cause havoc in the organization, as an organization cannot function without a leader.  For example, one nonprofit organization hired, in a rush, an executive who could not establish positive relationships with the existing staff members.  Shortly after hiring this new executive, the organization lost five of its seven key program managers.  Likewise, another nonprofit corporation went through three executives in a year before finding the right person for the job.  This mishap led to the corporation losing a quarter of its funding, laying off multiple staff members, and reducing its services.  Making quick, poorly planned leadership decisions in times of emergency often create more problems for an organization than they solve.  A succession plan is key for organizations who want to survive the unexpected loss of a leader.  Yet, according to the Federal Reserve Bank of Kansas City, only 68% of nonprofits have a succession plan in place.         

On his Donor Power Blog, Jeff Brooks, creative director at marketing consulting firm Merkle|Domain, writes, “The retirement of an effective leader can be hard on any organization. It can also be a time of renewal and positive change. But there won’t be much good if there’s no plan for succession…This problem is basically invisible. Until it hits, and nonprofits are reeling from a loss of leadership.”  Thus, in order to avoid such disasters as the aforementioned organizations experienced and to take advantage of the situation, a nonprofit must have a leadership succession plan in place. 

Succession planning is a key planning need for non-profits in any climate, but it is particularly important in challenging economic times. Planning steps such as board approved procedures for filling the director's position, cross-training staff and/or board members, and having a clear understanding of roles and responsibilities are all important planning steps to take BEFORE there is a leadership change.  Consider these best practices in the creation of your succession plan: 

1. Develop a clearly identified chart of authority and responsibility for the organization, and designate staff and board leaders who are prepared to step up in the event of planned or unplanned leadership change.
2. Have an annual organizational work plan including expected outcomes, and an annual operational calendar, identifying key activities and funding and contract deadlines.
3. As part of your communications plan, outline who is contacted when and why during a leadership change.
4. Maintain up-to-date statements of financial position.
5. Ensure that at least 1 board member and 1 staff member has access to an accurate, up-to-date, comprehensive contact list of stakeholders (board members, donors, partner organizations, clients (where appropriate), active volunteers, key community leaders).

Check out the link below to the Federal Reserve Bank of Kansas City’s outstanding – and fairly exhaustive – toolkit on succession planning.  We believe that it is so important that an organization have – no matter its age or size – a succession plan for key leaders that it is one of our assessment questions in our Organizational Resiliency Gameplan Assessment software.  Click here to find out more.

Sources:

 “Charities Falling Short on Succession Planning”, Peter Panepento, http://philanthropy.com/blogs/giveandtake/charities-falling-short-on-succession-planning/9337

Executive Transitions: Nonprofit and Grantmaker Opportunities , Don Crocker, http://www.supportcenteronline.org/images/executive_transitions.pdf

Nonprofit Executive Succession-Planning Toolkit, the Federal Reserve Bank of Kansas City, http://kcfed.org/publicat/community/Nonprofit-Executive-Succession-Planning-Toolkit.pdf