posts – Page 82 – The Healthy Non-Profit

Canned cranberry sauce and donor mistrust

November 23, 2011 DonorDreams Fundraising

Last week I read a great blog post from Meredith Hilt titled “Driving Me Crazy: Canned Goods for Cash“. She laid out three great reasons to give cash instead of canned goods. I was totally convinced, and the most effective argument for me was that food networks can buy food in bulk which makes the dollar you use to buy a can of green beans stretch much farther.

So, yesterday I was driving to Dallas to spend Thanksgiving with my in-laws, and I was listening to NPR’s “Talk of the Nation”. One of the stories was exactly the same topic as Meredith Hilt’s post. As the miles passed, Neal Conan asked all the right questions of all the right guests. I was starting to tune out until Neal opened the phone lines and a caller surprised me by saying something like this:

I like to donate canned foods instead of a check because I know the non-profit organization cannot use my food donation to pay for overhead costs like staff salaries.

Well, I am happy to report that I kept my car on the road and arrived in Dallas safely many hours later. I am also happy to share with you that the next caller responded beautifully. She pointed out that overhead is necessary to pay the people to distribute the food, pay the utility company to heat and cool the area where the food is stored, and pay for the insurance on the building. Well done!

However, my mind has fixated on this exchange of thoughts, and I’ve come to the conclusion that people don’t trust non-profit organizations the same way they did before. Additionally, trust in the non-profit sector feels like it is eroding more and more every year.

I suspect part of the trust-gap is directly related to executive salaries. I only say this because it is usually the first thing out of people’s mouths.

I suspect that as long as unemployment remains high, people will question how and why non-profit boards can justify paying their executive director what might be perceived as a substantial salary. This is an emotional argument on the part of most people. I say this because if they looked at how large many of these agency budgets have grown, then an executive salary between $70,000 and $120,000 doesn’t look so inflated. Of course, when the average household in America is earning approximately $45,000/year and they’re working harder and harder for less and less, these arguments tend to fall short.

For those donors who are freaked out and afraid of non-profit organizations with high overhead, I think we have an obligation (in all circumstances and even in passing conversations) to educate the public about resources like Guidestar and Charity Navigator. These sites are far from perfect, but they are the only resources that exist to help skeptical donors feel like they are getting impartial information to help them make smart charitable investment decisions.

Personally, I wouldn’t stop here as I outlined in my blog post “Nothing Up My Sleeve! What About Yours?” a few weeks ago.

How does your agency deal with the “overhead question”? What about the question of executive compensation and defusing the issue with ‘average Joe’ donors? What are your thoughts about third-party accountability websites? Please take a moment to weigh-in with your thoughts on this Thanksgiving-get-away-day. We can all learn from each other.

Here is to your health!

Erik Anderson
Founder & President, The Healthy Non-Profit LLC
www.thehealthynonprofit.com
erik@thehealthynonprofit.com
http://twitter.com/#!/eanderson847
http://www.facebook.com/eanderson847
http://www.linkedin.com/in/erikanderson847

Does your non-profit have a soul?

November 22, 2011 DonorDreams Uncategorized

A few weeks ago I facilitated a values exercise for an organization that is in the process of trying to build a powerful and functional new team. After the exercise (which was contentious but very productive), some of the feedback I received from participants as well as others is that a values discussion is just one big waste of time.

I made a conscious decision to hear thes folks and not respond immediately. I wanted to marinade on it for a few weeks. Well, I’m done soaking and I am ready to confidently say “Organizational values are NOT a joke!”

Don’t believe me? You don’t have to . . . just listen to Jim Kouzes and Barry Posner who stated the following in their book “The Leadership Challenge“:

“Shared values make an enormous difference to organizational and personal vitality. Research confirms that firms with strong corporate culture based on a foundation of shared values outperform other firms by a huge margin. Their revenue grew 4-times fast; their rate of job creation was 7-times higher; their stock price grew 12-times faster; and their profit performance was 750-percent higher.”

Before your non-profit organization can craft of vision of who it wants to be, it must address the values questions. The reasons for this are well laid out in Stephen Fairley and Bill Zipp’s book “The Business Coaching Toolkit“. Here are three reasons they believe this to be true:

Values give your people a cause to life for instead of just a job to do.
Values give your associates principles to apply instead of just policies to enforce.
Values produce leaders with relational authority and not just positional authority.

Still don’t believe me? OK . . . think about a time that you weren’t living your life in alignment with your personal values. For example, you might value something like “balance” because your family is very important to you, but the demands on your time at work forces you to make decisions that don’t allow for “balance” in your life. How does living out of alignment with your values make you feel? I suspect there is tension and pressure.

Now take this example and extrapolate it to the people you work with, the donors who contribute to you, and the board volunteers who serve selflessly with you.

As part of your organization’s next strategic planning initiative, I encourage you to start with mission-focus and before you transition to talk about “organizational vision” facilitate a collaborative discussion with all stakeholder groups around organizational values.

I promise you won’t be disappointed. You will find that your organizational values act as a catalyst for all kinds of things and refocuses your hiring decisions, recruitment decisions and can even affect how you solicit and steward donors.

Does your organization have values? Are they real or just something plastic? How do you see your agency using its values? When they developed those values did they include donors in that discussion? Please use the comment box to share your thoughts. We can all learn from each other.

Here is to your health!

Gobble Gobble … pass the stewardship please?

November 21, 2011 DonorDreams Board development, Fundraising, volunteers

This non-profit professional loves Thanksgiving! Yes, as you can tell from my picture, I love the epicurean delights that grace my table for this holiday. However, what I really love has almost nothing to do with food . . . it is the idea of taking time to simply say “thank you” that really appeals to my inner non-profit soul. It is for this reason I believe Thanksgiving is quintessentially a non-profit holiday.

What are you doing this Thanksgiving holiday to reach out to your donors and volunteers and express your thanks and gratitude?

When I worked for the Boy Scouts more than a decade ago, I found tremendous joy in cooking a full-blown Thanksgiving meal for my District Committee. Mmmmmm . . . I remember it as if it were just yesterday. Turkey, ham, stuffing, mashed potatoes, beans, rolls, dutch oven cobbler . . . prepared and served with my own two hands in the church basement we used to meet every month.

After feeding 50 of my best donors and volunteers, I relished the opportunity to take 2- or 3-minutes and tell them how thankful I was for their help and support. I also highlighted a handful of our collective successes from the last year.

Years later, as I worked with local Boys & Girls Club affiliates throughout the Midwest region, we worked on developing “thank-a-thon” events to steward donors around the Thanksgiving holiday. This was simply a handful of board volunteers who were armed with a list of donors, short script, and telephone. The message was short and sweet . . .

thank you for your support,
your support made a difference,
we accomplished X/Y/Z and couldn’t have done it without the support of caring and generous people like you,
we hope we can continue to count on your support in the future, and
this Thanksgiving we give thanks for people like you. Enjoy the holidays!

There was no solicitation for money. There was no guilt. It was an expression of simple gratitude. It demonstrated that donors and volunteers were part of a larger family — our “non-profit family”.

What are your personal plans to steward board volunteers, donors and volunteers this holiday season? I see many non-profits doing something. So, please take 30-seconds and share your favorite Thanksgiving stewardship activity of all time. If you’re a volunteer or donor, please share the best Thanksgiving stewardship activity that your favorite non-profit has ever included you in. We can all learn from each other . . . but that requires using the comment box below to share. Please?

Here is to your health! Enjoy your Thanksgiving with both your immediate family as well as your non-profit family. 🙂

Erik Anderson
Founder & President, The Healthy Non-Profit LLC
www.thehealthynonprofit.com
erik@thehealthynonprofit.com http://twitter.com/#!/eanderson847
http://www.facebook.com/eanderson847
http://www.linkedin.com/in/erikanderson847

When donors cry (literally)

November 18, 2011 DonorDreams Donor-centered fundraising, Fundraising

Have you ever been engaged in conversation with a donor and they spontaneously erupted into tears? This had never happened to me until recently, and I need to talk about it because it really shook me right down to my resource development foundation.

While I need to be sketchy with the details as not to embarrass anyone, I can provide some conversational context and set the scene. The conversation was about a specific non-profit organization that they had been donating to for a very long time. Long story short . . . the non-profit organization is now talking about going out of business and the newspaper is covering the story.

We talked for a long time as the tears flowed, and I was given one of the greatest gifts that any resource development profession could ever be given. I was allowed a glimpse inside the soul of a donor. Here is what they were saddened to tears over (this is their thoughts and not my analysis):

They believed in their heart in the mission of that organization and were mourning the possible death of something they loved.
They believed that their financial contributions had been making a difference in the lives of people. Now they have doubts and feel deceived
They personally solicited friends and asked them to also make a contribution to this organization. Now they feel like they perpetuated a fraud against their friends and aren’t sure they can face their friends.

I was given a gift when I was allowed to bear witness to the raw power of philanthropy. It affects me, and I wanted to share this with you because there are some important lessons that all non-profit professional need to take away from this story:

What we tell donors regardless of whether it is during cultivation, solicitation or stewardship efforts is like a sacred promise. Many donors take it to heart and deposit it in their emotional bank account. We need to remember this at all times.
There are people who “go to bat” for those non-profits that they love. They leverage personal relationships all in the name of mission. They are out there making promises to their friends, and we need to do a better job of recognizing that investment. They tell their friends that your agency is a wise investment, and we owe it to them to make sure that is true by always focusing on sustainability and organizational capacity building efforts. Just focusing on programs for our clients that our mission calls us to serve is simply not enough.
We need to be very careful about what we say publicly in the press about the present state of our agency. Donors take those things to heart. It can affect them deeply. Cavalierly talking about the possibility of closing your doors is the equivalent of playing with someone’s emotions. It isn’t nice and will cost you donors.

I decided to write this blog post because this tearful conversation was impactful. I can’t get it out of my head. It made me profoundly sad and even a little angry. I had hoped that sharing this with others would make me feel better and get beyond it because of my belief that we can all learn from each other. While I do believe this, I am also not feeling any better about things. In fact, I think I am a little sadder as I fight back some tears and a little angrier as I clench my teeth to get through this post.

There can be no doubt that I am physically experiencing the power of philanthropy, and I hope I become a stronger more donor-centered fundraiser because of this experience. My holiday wish for you is that you walk away from this blog post feeling the same way and use this story to become more donor-centered, too.

Have you ever had a similar experience? Has any donor interaction ever affected you in a way that you’ve embraced it and used it to become a better professional? If so, please use the comment box below to share because we can all learn from each other.

Here is to your health!

Working for boards is tough stuff

November 17, 2011 DonorDreams Board development

We all have friends who work for bosses who are absolute nightmares. As a matter of fact, I was on a business trip a few months ago driving in my rental car listening to a call-in radio program all about horrible boss stories. While I sympathize with friends in those situations, I can honestly say they have no idea what real workplace pain is like until they’ve had to work for a cantankerous non-profit board of directors.

I believe in my heart of hearts that working for a board has got to be one of the most difficult things I’ve ever had to do in my life. Here are just a few reasons I’ve come to this conclusion:

If a board has 15 members, then the non-profit CEO is working for 15 different people.
15 different board volunteers have 15 different personalities.
15 different board volunteers can have 15 different ways of wanting to do something.
Have you ever tried to appease 15 different egos? OMG

Don’t get me wrong . . . working directly for a board has also yielded some of the best experiences in my life. However, I’ve seen too many of my non-profit friends reduced to a puddle of tears recently as a result of “politics” in the board room and “personal agendas” run amok.

So what is the solution? Where is the silver bullet? What can a non-profit professional do to make working with a board of directors less difficult?

Let me start by saying: not everyone is cut out for this kind of work. So, get your feet wet early in your career possibly by helping your agency’s CEO with a board project. Take this time to assess whether or not you like it not. If it doesn’t feel right, then chalk it up to a learning experience and decline future opportunities to interview for non-profit executive leadership jobs.

If you currently sit in the big chair and are looking for tips on how to work with boards more effectively, then here are just a few quick thoughts:

Get in front of your board volunteers regularly. If you are just seeing your board members at monthly board meetings, then you’re doing yourself a tremendous disservice. Set a goal of being in front of every board member at least once in between board meetings (and I go back on forth on whether or not committee meetings count). During these meetings, do more listening than you do talking. Gandhi told us to be the change we want to see in the world. So, if you want the board to listen to you, then you better listen to them.
Respect boundaries. Too many of us want to befriend our board members, and I think this blurs boundaries. These people are your boss. Being social is one thing, but partying all night with them might cross a line. Establishing boundaries is tough stuff, but they always need to see you as a classy professional. These people can become part of your “extended non-profit family,” but never forget how dysfunctional families can get. Are you sure you want to bring “dysfunction” into your employment situation? Carefully thinking through boundaries makes a lot of sense to me and it will probably look different for each of you.
Use planning tools to build consensus. There is nothing more challenging than having to work with 15 people who have 15 different ideas about how to do something. So, a good non-profit leader needs to possess “consensus building” and “facilitating” skill sets. If these are things they are good at doing, then their leadership toolbox needs to include planning strategies and tactics. Guiding a divided board through a strategic planning, resource development planning or marketing plan process can produce consensus and direction. Ahhhhh . . . happy days!
Get serious about every part of your board development process. Approach board building like you would a chemistry experiment.

What do you believe is the most difficult thing about working for a board of directors? What strategies do you use to help make this a little easier?

Please share your thoughts using the comment box below because we can all learn from each other.

Here is to your health!

Nothing personal but you’re fired?

November 16, 2011 DonorDreams Board development

With the economy being what it is, I’ve sensed a very strange undercurrent in the non-profit sector recently. Fundraising is challenging for those agencies that have used fear tactics and guilt to raise money. Government dollars are drying up. Boards have been cutting-cutting-cutting and now there is close to nothing left to cut in their agency budgets. In a nutshell, things feel like they’re coming to a head and it feels intensely personal.

In the last 6-months, I’ve personally witnessed/heard about a few different staff-board encounters that has me very concerned:

A board president putting their finger in the face of the executive director during a heated discussion over budget cuts involving salaries and benefits.
An executive director flat-out yelling at the board (it was described to me as a temper tantrum) during the board meeting because they didn’t think board volunteers were raising enough money and were too focused on cutting-cutting-cutting.
A board volunteer yelling at a donor and leveling personal and hurtful accusations.
A group of board members coordinating their resignations and then running off to the newspaper to tell their story.
A board president secretly plotting to fire their executive director.

I get it . . . tough times lead to tough decisions and these decisions are intensely personal which mean they are riddled with emotion. However, the one thing everyone needs to keep in mind is that we all have FIDUCIARY RESPONSIBILITIES when we agree to work or volunteer for a non-profit corporation.

This means acting in the best interest of those who our organization’s mission calls us to serve. It means exercising the highest standard of care. It means putting personal interests to the side (which I think also includes setting aside personal agendas).

Exercising your fiduciary responsibilities does not mean engaging in emotional battles all in the “name of mission” with those whom you disagree . This slash-and-burn strategy is dangerous, destroys working relationships, and eats at the very foundations of our organizational. In the end, the people who really get hurt are those that we aim to serve — the client.

Here is a some advice that I recognize is easier said than done:

Board volunteers: Please remember that staff are people, too. They have families, mortgages, and a personal life just like you. You are charged with making tough decisions around finances, but a little compassion goes a long way and adding more emotion on top of an emotional bonfire only makes matters worse.
Non-profit CEOs and staff: Please remember that board volunteers are exactly that — volunteers. You were not hired into a lifetime position. Different situations call for different types of leadership, and this might be a time for a different leadership style at your agency. Don’t take it personal. A little bit of professionalism goes a long way.
Board volunteers: Times have changed and the economy we once knew blew up many years ago. There is a “new normal” that we need to get used to. This means changing your non-profit business model. It means rolling up your sleeves, fundraising, and asking people in your social circles to be philanthropic rather than sitting back and watching staff beg for non-existent government dollars. GET INVOLVED!
Non-profit CEOs and staff: Fundraising isn’t just a board responsibility. You play a huge role in supporting these efforts. It also isn’t something you can usurp from the board and do by yourself in hopes of making yourself indispensible. You are responsible for engagement of board volunteers. START ENGAGING!

Focusing on collaboration and consensus building is a start. Taking the personalities, egos and emotion out of decision-making is important. Keeping mission-focused is imperative in order to avoid hurting those we care about most — the clients.

What do you do as a staff person or board volunteer to keep emotions from getting too high during these difficult times in the board room? How do you keep perspective? Is it possible to extricate ego and personality from these discussions? How do you keep everyone focused on the client and mission?

This is an unusual blog post for me because it involves emotions and feelings; whereas, I normally write more fact-based stories blended with opinions. However, there are many of you and your non-profit friends going through some very difficult times, which is why taking 1-minute to answer some of these questions using the comment box below is so important. We can all learn from each other!

Here is to your health!

Why are non-profits adverse to executive coaching?

November 14, 2011 DonorDreams Uncategorized

The for-profit sector discovered long ago the value of executive coaching. There have been studies that show coaching boosts job performance. There are studies that show coaching increases company profitability. There are still more studies that show coaching increases competitiveness and helps with leadership development and succession planning.

So, why is it that so many non-profit organizations seem to be reluctant to invest in executive coaching for their employees?

My first knee jerk reaction to this is to simply say most non-profit agencies are under-resourced and unable to pay for those kinds of services. However, I think I’ve recently changed my mind after attending a conference as an exhibitor. As with most exhibitor booths, I ran a fish bowl giveaway in an attempt to capture people’s business cards. At the end of the day, I pulled two names and gave away from FREE coaching services. As you can probably guess, I haven’t received a phone call from either individual. So, can the answer be as simple as money?

After spending more time contemplating why non-profit organizations seem to be reluctant to invest in executive coaching, I think I’ve come up with a different answer . . .

Non-profit leaders don’t truly understand the idea of “return on investment” (ROI).

For all the recent talk about ROI in non-profit circles when it comes to measuring outcomes and stewarding donors, this idea originates from the for-profit sector and is a relative newcomer to non-profit circles. So, quoting a study that shows coaching yields a ROI 5- to 7-times the initial investment gets quizzical looks from many non-profit leaders who I know. This response improves only slightly when you’re able to quantify the dollars and sense like Fortune magazine did in this quote:

“Business coaching is attracting America’s top CEOs because, put simply, business coaching works. In fact, when asked for a conservative estimate of monetary payoff from the coaching they got… managers described an average return of more than $100,000, or about six times what the coaching had cost their companies.”

I suspect that executive coaching won’t been seen by board volunteers as a viable performance enhancement tool until we start talking differently about it and point to improved job satisfaction and employee retention.

I also suspect that executive directors won’t start looking at executive coaching for their fundraising professionals until we start pointing to how little time non-profit CEOs seem to have and how that results in minimal time spent coaching resource development professionals.

I don’t know . . . I can be talked off the ledge. Please take a moment and use the comment box below to share your thoughts.

Has your agency used executive coaching services? Has it be beneficial? Did you measure ROI? If so, what was the return? If your agency doesn’t use coaching services, what do you suspect the reasoning is?

Here is to your health!

All non-profits are Penn State?

November 14, 2011 DonorDreams Board development, Fundraising, Planning

It has been a week since the Penn State child rape scandal broke, and I’ve been stewing in my emotions like most of you. There are so many aspects to this story, and it never dawned on me that any of these many storylines fit within the context of this non-profit blog until I read this quote from Moody’s in Forbes on Friday:

“Over the next several months, Moody’s will evaluate the potential scope of reputational and financial risk arising from these events. While the full impact of these increased risks will only unfold over a period of years, we will also assess the degree of near and medium term risks to determine whether to downgrade the current Aa1 rating. We will monitor possible emerging risks emanating from potential lawsuits/settlements, weaker student demand, declines in philanthropic support, changes in state relationship and significant management or governance changes.”

OMG . . . this story is so big that it blinded me to the fact that Penn State is a non-profit organization belonging to the higher education portion of the sector. Once this realization hit me, I saw the story from a whole different perspective. Here are some of the thoughts that ran through my head:

I wonder what it must be like for a board volunteer to sit on that board right now with all that liability hang over the university’s head?
I wonder what the fundraising professionals must be doing to prepare for and mitigate the impact this scandal will likely have on its resource development program?
I wonder what university staff must be doing to minimize the impact this scandal will likely have on volunteer, booster and alumni program recruiting?
How does a scandal like this affect the university’s strategic plan, and what are they doing to adjust their plans and factor in this new head wind?
How much money will this scandal cost the university in lawsuits, increased insurance premiums, philanthropic losses and an adjusted bond rating?

After processing all of these questions, it dawned on me that ALL NON-PROFIT ORGANIZATIONS ARE PENN STATE and this is a “clarion call” for all non-profit agencies to take action immediate!

Take action? Huh? What are you talking about Erik?

Regardless of how big or small your agency is, this scandal should strongly motivate you and your board to immediately take action on development of a crisis management plan. No one ever thinks that tragedy will strike. It is always something that happens to other non-profit organizations. And when it happens your world changes in a blink of an eye.

Penn State administration didn’t see this coming. One day they were on top of the non-profit world, and in a flash they are looking at a financial catastrophe (not to mention the human collateral damage done by the action and inaction of just a few men).

The non-profit organizations in Joplin, Missouri couldn’t have predicted a devastating tornado. One day their agency was there, and the next day they were gone.

The non-profit sector is naturally chaotic because most agencies are under-resourced. One person is typically asked to do multiple jobs. There never seems to be enough time to do those necessary capacity building things like preparing for future crisis. In a word, most non-profits are “reactive” and not “proactive,” which is typically our undoing when disaster strikes. So, take a moment to ask yourself these questions:

Is my agency’s Director & Officer insurance up-to-date? When is the last time we looked at whether or not we have enough coverage?
Who is our organization’s spokesperson in the event of a crisis?
Do we have a “crisis team” that can be activated in the event of tragedy? Are there a diversity of people on that team (e.g. lawyer, psychologist, PR professional, board members, staff, etc)? Do they know they’re on that team? When is the last time this group went through an orientation looking at the “what if” types of questions?
When is the last time staff reviewed your agency’s disaster contingency plans? Do you even have those plans in writing?

I encourage you to read this great blog post by Joanne Fritz at about.com titled “Top 5 Tips for Effective Nonprofit Crisis Planning“. It is a good to place to start as you use this national news story to motivate your board of directors to take action around developing a plan and putting systems in place to deal with whatever lurks ahead for you on the path of life.

Look at it this way . . . developing a crisis management plan could be a great cultivation or stewardship opportunity for certain fundraising prospects or existing donors to your organization.

If you look at this project as “one more thing that you don’t have time to do,” then it will be a burden and likely something that sinks to the bottom of your task list. If you look at it as an opportunity, then I suspect good things will happen for you and your agency.

Does your agency have a written plan? What is in that plan? How often do you review that plan? Is your plan posted online? If so, would you share that hyperlink with other readers of this blog so they can see a sample?

Please take a moment to answer one or more of these questions using the comment box below. It will only take a minute or two out of your very busy schedule and it could make a difference for another agency. If you don’t have time to comment, then click the forward button on your email and send this post to another non-profit professional who you care about and tell them that it isn’t too late to prepare for the apocalypse. After all, we can all all learn from each other.

Here is to your health!

Nothing up my sleeve! What about yours?

November 11, 2011 DonorDreams Fundraising

I started this week off by talking about government funding for non-profit organizations and how it might not be all that it appears to be. We transitioned mid-week into a discussion about executive compensation and now we’re ending the week totally focused on non-profit transparency. These topics are all related and go together as well as peanut butter and jelly. However, the issue of non-profit transparency still seems to be a murky subject for many of us including me.

What is transparency? How far should a non-profit organization go with transparency (e.g. should the executive director tatoo their salary on their forehead)? What are the best ways to share a large volume of organizational information if it wanted to be 100% transparent? I don’t know about you, but the more I think about this topic the more questions I seem to end up with.

I recently ran across a great blog post by GuideStar that dates back to November 2006. They asked their readers to define transparency, and I found a number of very interesting ideas. You should click the aforementioned link and read the post. Here is one of my favorite thoughts on this subject from one of their readers:

“. . . everything we do must be clearly understood and open to review and thoughtful discussion by all stakeholders to gain their complete confidence and respect.”

While getting a clear idea of what we’re talking about is important, it becomes equally important to wrap your arms around how to achieve organizational transparency. I’ve had a number of random thoughts about what I might do differently if I were on the frontline again as an executive director. Here are just a few of those ideas:

I would create a “transparency corner” of the agency’s website and post documents such as:
– most recent 990 tax return
– most recent financial audit and management letter
– a list of the agency’s Top 5 highest paid employees with their salaries and value of their
benefits package published
– board roster with contact information for each volunteer and a copy of the agency’s
whistleblower policy
– regularly updated program outcomes data and impact report
– updated financial dashboard that illustrates the current financial health of the organization
– most recent copy of the strategic plan along with a regularly updated scorecard that reports
on progress towards implementation
– if the organization is accredited, then a copy of the documentation from the last accreditation
visit (or if you’re a Boys & Girls Club a copy of the Club’s most recent SOE assessment from the national office)
– a list of government grants, program deliverable associated with those grants, program
outcomes data linked to those deliverables, and a way for the average citizen to contact the governmental agency
administering that grant to report questionable activity
Everyone seems to have a newsletter nowadays with an “Executive Director’s corner. I would focus every one of those “corners” on a different aspect of organizational transparency.
I would publish an “annual report” every year (even it is wasn’t glossy) and include a wide variety of transparency topics such as a list of people who support your agency; a thumbnail picture of how revenues and expense breakout; a snapshot of who the agency serves, a list of the organization’s biggest accomplishments in the last year; and much more.
I would produce and mail a quarterly “Community Impact Report” to ALL donors that answers the big picture questions of: “What are you doing with my money? What results is my charitable investment achieving? What have you learned and plan on doing differently?”

I am confident that this list can endlessly go on and on and one. So, I am going to stop here. However, I would encourage you to use the comment box below to answer one or both of these questions: 1) How do you define “transparency”? and 2) What additional transparency idea do you have that should be added to the list above (or what idea from this list should be removed)?

Please take a moment to weigh-in with your thoughts and opinions. It is just 60 seconds of your time and it could make a difference in another readers’ agency. Remember, we can all learn from each other.

Here is to your health!

The case for transparency and non-profit salaries

November 10, 2011 DonorDreams Uncategorized

The President of the United States makes $400,000 per year not including benefits. A member of the Illinois House of Representatives earns $67,836 per year in addition to receiving a $132 per diem for every day they are in session. The CEO of Fifth-Third Bancorp earns $3,144,823 per year and has another $1,572,411 in restricted stock awards and $40,779 in other compensation.

Dale Lonis is the Executive Director of the Elgin Symphony Orchestra (ESO) in my hometown of Elgin, Illinois. According to his agency’s 2009 990 tax return, his 2009 salary was $122,850 and his benefits package was valued at $8,594.

OK . . . I can hear many of you wondering why is it necessary to post this kind of information. After all, many of us learned at a very early age that talking about money-related topics is taboo in polite society. Well, the reason why a segment of our society has fought so hard for transparency in government, publicly traded corporations, and non-profits is as simple as this:

Those who make a living with ‘other people’s money’ should be held to a higher standard.

Still not sure you agree? Please consider the following:

Public servants are paid by “We The People” and we’re entitled to know what they are paying themselves to do “the people’s business”.
Publicly traded corporations owe “the market” accurate information about how they transact business because without that information we end up with situations like ENRON, MCI WorldCom, and Tyco. When companies ask for public investment and act in less-than-transparent ways, people can’t make smart investment decisions . . . the free market fails to work efficiently . . . people unfairly lose money.

Can’t the same be said for non-profit organizations? Aren’t donors trying to make wise investment decisions with their charitable dollars? How many donors are happy when they learn their charitable contributions were misused by a nonprofit organization? I suspect that no one is every happy when that happens, which begs the question about the need for increased transparency in this sector. Doesn’t it?

Let’s circle back to the Elgin Symphony Orchestra and look at the facts (which I simply gathered from the organization’s 990 tax return):

The board made a decision to pay their executive director $122,850 in 2009
This agency brought in $2.5 million in revenue in 2009

$696,179 in membership dues
$162,269 in government grants
$642,528 in direct contributions from donors
$1,026,023 in ticket sales
$22,000 in program book advertising
$19,848 in performance fees

This organization didn’t “balance its books” and ended 2008 with a deficit of $471,214 and ended 2009 with a deficit of $322,616

Thanks to laws that require non-profit tax forms to be public information and websites like guidestar.org that publish 990 tax forms, donors are able to easily secure this information and make wise investment decisions. Even though the aforementioned information is just a small slice of what you can pull from an organization’s 990 form, a donor can make a number of judgement calls from it. For example, a donor can weigh how they feel about:

this agency’s revenue model (fees vs. fundraising)
this agency’s fiscal health
this board’s track record with key management decisions around budgeting, executive compensation, business model, etc

Disclaimer . . . I am not suggesting that Dale Lonis is being overpaid (in fact, I would guess it is in line with similar sized organizations in similar communities). I am also not suggesting that the board has made any poor decisions. I will leave all those judgements for each individual reader of this blog. All I am trying to do is make the case for the value of transparency in the non-profit sector.

Do you still think I am off-base? You may want to check-out what is happening in New York’s non-profit community. You might also want to look at what frogloop blog says about a Guidestar study that illustrates how little transparency exists in the non-profit sector.

I started this discussion with yesterday’s blog post by invited you to weigh-in with your thoughts and start a dialog about non-profit executive compensation and transparency.

Do donors deserve this kind of information? If not, then how can they make informed charitable giving decisions and how can they hold agency’s accountable for they promised during the solicitation call? What is your organization doing to become more transparent? Where are yours thoughts on transparency with executive compensation? Do you think a non-profit organization should be required to put its annual 990 tax form on file at your local library or on their website? Is the 990 form too obtuse? Does a non-profit need to be required to publish a small handful of key organization metrics on their website?

Here is to your health!