board of directors – Page 18 – The Healthy Non-Profit

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!

Erik Anderson
Founder & President, The Healthy Non-Profit LLC
www.thehealthynonprofit.com
erik@thehealthynonprofit.com
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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!

Capping nonprofit CEOs salaries and bonuses?

November 9, 2011 DonorDreams Board development, Fundraising

For the last two days, I have blogged about the impact of government funding on non-profit organizations’ fundraising programs. All of this talk about Uncle Sam and the non-profit sector got me thinking about government funding and the for-profit sector (e.g. bank bailouts, farm subsidies, Occupy Wall Street, etc). So, it wasn’t a big leap in my head when I jumped from for-profit corporations taking public funds to limiting CEO compensation and then back to how this all relates to compensation of non-profit CEOs who accept public funds.

LOL … yes, my mind has been wandering a lot lately. I blame the sugar rush from Halloween. 😉

You only need to go back a few years in the news cycle to recall that segments of the public were incensed by the federal government’s TARP program, which was our country’s bank re-liquidation and bailout program. Part of that public debate (and it is being rehashed by the Occupy Wall Street protesters) is that for-profit corporations that accept public funds subject themselves to a different level of accountability and regulation by “We The People”.

Well, if you buy into this argument, then don’t you need to logically do the same for non-profit organizations who accept government funding?

While the IRS is currently charged with monitoring 501(c)(3) non-profit organizations’ executive compensation to ensure it is in line with similar size agencies in similar sized communities through a provision called the “private inurement rule,” the question I pose goes a little bit further. The aforementioned question asks if local city councils, state legislatures and Congress can or should legislate concrete rules around non-profit executive compensation for those who accept public funding. For example, if “non-profit agency X” accepts a grant from their local city council, then that board of directors of “non-profit agency X” agrees to abide by a local ordinance that defines what the city council sees as reasonable and acceptable compensation.

This debate was well frame by two individuals who I saw commenting on a Charity Navigator blog post.

Here is how one side of the coin sounds:

“I would suggest that we put some of these salaries in context (just as you did with the American Red Cross). Some of these CEO’s are managing organizations that are multi-million dollar “businesses.” As such, their salary compensation is reflective of the size of the organization’s revenue and project stream.”

Here is how the other side of the coin sounds:

“Comparing these salaries to “for-profit” salaries is just ridiculous. These organizations exist out of the goodness of the people who contribute. We give under the impression that we are Helping others….NOT Helping CEOs to get rich.”

Of course, neither of these points-of-view deal with the issue of what to do with non-profit organizations who accept public sector funding like the for-profit banking sector did when they accepted TARP funds.

So, here is the deal . . . I sometimes write blog posts with a very specific point of view. Other times I’ll approach a subject without any idea of what my opinion is and organically let things unwind. I am approaching this subject with a very open-mind, and I’ll use tomorrow’s and Friday’s blog posts to focus on this subject.

What this means is that I would like a spirited discussion among the readership of this blog. Please use the comment box below to weigh-in with your thoughts. You are even encouraged to post questions if you’re as undecided as I am.

If you want to read more on non-profit compensation best practices, our friends at “Nonprofit Law Blog” did an outstanding job with their posts titled: “Compensation Strategies and Best Practices for Non-Profit Organizations” . . . click here for Part One and here for Part Two.

How does your agency currently ensure that its compensation is in-line with community standards and in compliance with IRS rules? Does the acceptance of public funding “change the math” in your head when you look at this issue? Do you see similarities or differences between the comparisons I draw between for-profit corporations accepting public funds and non-profit organizations doing the same? What role does the donor play in all of this? Should donors expect total transparency for the non-profit organizations they support?

Please take a few moments to weigh-in using the comment box below. It will only take a minute or two out of your day, and doing so will enrich the discussion tomorrow and Friday. Besides, as I always say, we can all learn from each other.

Here is to your health!

Don’t blame the donor for the “crowding out” effect of govt funding

November 8, 2011 DonorDreams Fundraising

Yesterday’s blog post — “Does Government Funding Destroy Philanthropy” — was about the University of Notre Dame’s “Science of Generosity” initiative and the concept of “Crowding Out” when it comes to government funding and its effect on non-profit organization’s resource development programs. Since I posed more questions than I stated opinions, I’ve had this topic on my mind for the last 24 hours and engaged a number of people in this discussion. Not surprisingly, I’ve also been combing through the internet looking for some answers. Here is what the question boils down to :

Does accepting government funding impact a non-profit organization’s resource development program because: a) donors don’t see the need to contribute to an agency that appears to have adequate resource via federal, state or local government grants OR b) non-profit staff and board volunteers relax their efforts once these dollars are added to their revenue budget?

Joshua Benton wrote a great post at the Nieman Journalism Lab blog that examined this question by looking at a study done by Jame Andreoni and A. Abigail Payne. Joshua Benton did a great job boiling it all down when he wrote this:

“The paper finds that for every $1,000 given through a government grant, nonprofits reduce their spending on fundraising by an average of $137. But that decrease leads to a drop of $772 in donor gifts. (The paper found that, contrary to the fears of some, government grants encourage outside donors to give instead of discouraging them — but the impact is small, only about $45 per $1,000 in government grants. In other words, adding it all together, $1,000 in government money only nets out to $410 in the end, on average.”

At first, I read this and thought . . . “Oh, the return on investment is still on the positive side and not something non-profits should worry about.” However, after thinking about it for two seconds, I believe non-profits SHOULD BE concerned.

I believe non-profit folks need to think about it this way:

$1,000 of government dollars really isn’t adding $1,000 to your revenue budget when you look at what you end up losing. So, for every $1,000 you are only “up” by $410.
The donors that stop contributing do so because non-profits (probably subconsciously) reduce their financial investment and focus on engaging donors.
Once these donors stop contributing and disengage, they can’t be easily “reactivated” once they’ve lapsed for 12 to 24 months. This essentially means the financial investment to reactivate a lapsed donor starts to look like the investment a non-profit makes to cultivate cold prospects.
When the government money dries up (which happens during tough economic times), a non-profit who has been dependant on public sector funding and under-invested in their resource development program is poorly positioned to survive. I liken this phenomenon to a human being who turned into a couch potato, stopped exercising, lost muscle mass and is suddenly called upon to run a marathon.

The bottom line is that non-profits cannot blame donors for the position they’re in today . . . many non-profit professionals and board volunteers took their foot off the accelerator and eased up on their fundraising efforts.

While assigning fault and blame is a common human reaction, the better question is what should non-profits who find themselves in this position start doing today if they want to survive this current economic downturn and the impact associated with shrinking government funding? Here are just a few of my thoughts:

STOP applying for “new” government funds as a strategy to make up for what you are losing from other government revenue streams.
START engaging board volunteers and donors in a conversation around how to reduce dependency on government funding and boost revenue from foundations, corporations and most importantly individuals. Make sure it isn’t just talk because talk is cheap. Put it down in writing and make sure action plans answer tactical questions pertaining to who, what, where, when, why, and how.
ENGAGE your current government funding agencies is honest conversations around the state of the funding programs your non-profit organization currently participates in. Do they anticipate cuts? If so, how large do they project those cuts to be. BE PROACTIVE.
RE-INVEST in board development efforts and start building a board with amazing “fundraising acumen”.

I believe government funding is damaging to your non-profit mission and suggest you get out of it as soon as possible. If you want help, you know how to get a hold of me. 😉

Have you done an analysis of your non-profit organization’s government funding trends and compared it to your investment in fundraising efforts and systems? If so, what do you see? What is the state of your government funding? Do you feel comfortable with where you are or do you have that infamous “knot in your stomach”? Where are you steering your agency’s resource development efforts as you look ahead to the next 3-years?

Please share your thoughts to one or more of these questions by using the comment box found below. We can all learn from each other!

Here is to your health!

Calling all wing nuts! Want to join my board of directors?

November 2, 2011 DonorDreams Board development, volunteers

A few weeks ago I received an odd email in my inbox. It was so foreign to me that I marked it “unopened” and let it sit there as I marinated on it. It wasn’t until just today that I felt willing to re-open it and share its contents with you. Here is how the first paragraph of this jarring email started (and I’ve changed the names to protect the innocent):

The board of directors of the XYZ non-profit agency is looking for leaders to help drive our further development. If interested, please contact John Doe, Board Secretary jdoe@gmail.com to receive an application /board questionnaire which is due by November 4, 2011; for terms that will run from January 1, 2012, through December 31, 2013 (2-year term limits).

The email went on to provide details about this organization’s goals and advertise its upcoming conference in downtown Chicago.

At first, I was flattered to be asked and then I realized that it was a eBlast and I was not special. So, I closed the email and went into “stewing mode” and here is what has been coming together in my head over the last few weeks:

Why is there a “general call for applications”? Why not target supporters and donors?
How did I get on this email list in the first place?
How desperate must this group be for quality board members?
Can they possibly learn enough about me from a paper application that would help them conclude whether or not I’d be a quality board member?

While many people will tell you there is a right way for a non-profit organization to set-up its board development process, I know that I’ve seen many different variations throughout the years. However, every process regardless of how it is set-up should probably include elements of the following: prospect identification, prospect evaluation, prospect ranking, prospect recruiting, orientation, training, annual evaluation, and celebration/recognition. There are many different ways to do each of these steps, and I suppose a “general cattle call” could be one way. Needless to say, I am skeptical.

Building your non-profit organization’s board of directors is like building a family. Perhaps, a better analogy would be it is like baking a soufflé. You need to be deliberate and careful. Here are just a few considerations I suggest your board development committee look at during the prospecting phase:

What does the prospect’s social network look like? Does it overlap too much with existing board volunteer’s circle of friends and influence?
Does the prospect’s network provide fertile ground for new fundraising efforts and provide opportunity for the organization to expand its donor base?
Does the prospect have the skill sets and experiences that you are looking for to fill gaps on your board to be an effective fundraisers?
Is the prospect a “wing nut” whose personality will upset the balance of personalities who already sit around your board room table?
What general skills sets and interests does this person bring to the table? How are they willing to leverage those things on behalf of the organization? What committee, task force or project(s) will the prospect bring value and are they willing to do so?
Is the prospect a donor? If not, are they willing to be a donor who is open-minded to “sacrificial giving” every year to your organization?
How many other boards does the prospect serve on? If they have other board commitments, do they have a firm grasp on the concepts of “fiduciary responsibility” and “conflict of interest”? How do they plan on mitigating their conflicts and how have they done so in the past?

If you’re not careful from the very beginning of your board development process with identification, evaluation, and ranking, then you run the very real risk of your board soufflé falling. In real world terms, this typically means dysfunction and the worst case scenario using ends with some sort of board room conflict (with “someone” possibly getting fired).

If you want to read more about board development, please read my recent blog post titled: “Don’t put Dorothy on your board of directors“.

What does your non-profit organization’s board development process look like? How do you keep the conversation from naturally drifting to: “I know this person who would just be great on our board. Let’s just go ask them before someone else grabs them!”? Do you use a committee to do your board development work? If so, what does that committee look like? What are your thoughts about the aforementioned non-profit’s “cattle call” application process? Are you skeptical like me or am I missing something?

It only takes 30 seconds to scroll down your computer screen and weigh-in with a quick comment to one of these questions. Please take a moment to do so because we can and should all learn from each other.

Here is to your health!

Don’t put Dorothy on your board of directors

October 27, 2011 DonorDreams Board development, volunteers

September 15, 2008 . . . do you remember where you were and what you were doing? It was the day the world changed. It was what some people have called an “economic 9-11”. Regardless of how you characterize the day that Lehman Brothers filed for bankruptcy and the stock market started its crash, it is hard to argue the following: 1) the economic paradigm we all used to live in shifted and 2) nothing will ever be the same again.

This week I have used characters from “The Wizard of Oz” to talk about current challenges facing the non-profit sector. Today, we will spend a moment talking about Dorothy.

Dorothy is an iconic character who has been described as a “level-headed, plucky, resourceful, determined, all-American, populist”. However, I’ve always seen her as a traditional “conservative”. Don’t believe me? Refresh your memory with this quick YouTube clip. Of course, I don’t mean this in any kind of political way, but more of the traditional meaning of “holding to traditional attitudes and values and cautious about change or innovation”.

You cannot afford to have Dorothy on your board of directors during these tough and turbulent economic times!

Mentally take a look around your board room and see if you can identify how many Dorothy-like volunteers occupy chairs. They are kind folks (dare I say friends) who look and sound like the following:

They are frightened by the economic “tornado” whirling throughout the world. They talk about economic news constantly.
They wish for yesteryear and reminisce about times when your non-profit was facing a different set of circumstances. They fixate on making things better . . . just like they “used to be”. They’re focused on making that formerly kick-butt special event awesome again. They’re insistent that you can hold onto all of your government grants if you just tried a little harder. After all, there is no place like home.
They are visibly closed to new and innovative ideas that have not been tried. They believe ePhilanthropy is a passing fad. They won’t entertain ideas around merger, acquisition, or strategic alliances that share back office functions. After all, that is not the Kansas they so fondly remember.

Don’t get me wrong. I am not suggesting a “witch hunt” to root out these folks and fire them. Dorothy serves an important role on your board. She is that cautious voice that keeps you from getting into trouble. She will stop you from pulling the plug on your annual campaign and direct mail appeals and “going all in” on ePhilanthropy efforts. Valuable? YES! However, what happens when you have too many Dorothy-like board members? Or what if you have those well-intentioned people serving in the wrong roles (e.g. board president, annual campaign chair, strategic planning committee, etc)?

My best two pieces of advice for non-profit staff and board volunteers this morning are:

Be especially strategic and thoughtful about where you ask these people to serve in your organization. This means that you need to: a) identify who these folks are and b) have a clear understanding of which volunteer opportunities are acceptable for conservative personalities.
Focus your board development efforts over the next year on recruiting people in your community who don’t resemble Dorothy to serve on your board. This is not the time to pine for Kansas! This means your board development committee needs to double down on the “prospect identification” and “prospect evaluation” elements of the board recruitment process. Gone are the days when everyone sits around a table and tosses out names of good, kind and resourceful people. BE STRATEGIC!

I suggest that the type of people your board development committee should look for exhibit some of the following characteristics:

They don’t appear to be “personally” economically impacted by the Great Recession
Their business or line of work seems to be doing fine
They are naturally positive and have a decent outlook on the future
They seem to be open to new ideas (as evidenced in their personal and professional lives)
They are “outside-of-the-box thinkers (as evidenced in their personal and professional lives)

Remember, if you want to keep the flying monkeys away from your non-profit agency, STAY AWAY FROM DOROTHY.

OK — if you aren’t buying into my cheesy “Wizard of Oz” analogy, then please go to the library and borrow the book “Who Moved My Cheese“. You’ll thank me later.

How has your agency adapted to the new realities? Have you changed your resource development model or are you still trying to do things the old way? Do you see your board development efforts changing or focusing on different types of prospects? Please use the comment box below and weigh-in. Please remember that we can all learn from each other. In fact, it is probably the most effective way many of us learn.

Here is to your health!

If I only had a heart . . .

October 26, 2011 DonorDreams Board development, Donor-centered fundraising, Fundraising, resource development, volunteers

There are 9-keys to “inspiring and managing yours board for fundraising success”. In fact, the reality is that these 9-keys are the same nine things you need to do to “engage” anyone in anything. However, I believe that these nine concepts are not all equal. While all are important, I have come to realize that the most important and most difficult engagement tool was best summed up by the “Wizard of Oz’s” Tim Man in this YouTube video.

The most important engagement tool in your nonprofit toolbox in my humble opinion is “MISSION-FOCUS”.

I personally learned this lesson more than 7-years ago when one of my more influential board volunteers (I’ll omit his name for privacy purposes, but let’s just say he was really good with other people’s money) resigned from the Boys & Girls Club of Elgin’s board of directors. While he resigned for personal reasons and still supported the Club, I didn’t see the train wreck coming until it was too late.

This board volunteer was infamous for taking 15+ prospects’ pledge cards as part of the annual campaign every year. His reasoning seemed sound: 1) they were clients of his, 2) they were friends of his, and 3) he had always solicited these donors. I’d be lying if I tried to tell you that I ever tried to talk him out of being such an overachiever. However, in hindsight I wish that I had.

The first year this individual wasn’t on our board, we tried to redistribute his annual campaign prospects to other volunteers. I finally understood how big of a fool I had been when my phone rang a few weeks after our annual campaign kickoff meeting. The call came in from one of our more steady donors who had always been solicited by this former board volunteer.

The call started off nice enough. “Hi . . . how are you . . . how are things down at the Club?” However, pleasant conversation quickly turned into a cross-examination: “why is so-and-so calling me for my annual campaign pledge this year . . . what happened to he-who-I-loved-to-get-solicited-by . . . is there something wrong at the Club whereby he just walked away from your board of directors?” And as if that wasn’t enough to cause me to run to the restroom and vomit, most of the calls ended with the donor talking to me like I was a kindergartener and telling me that they didn’t donate to the Club because of our mission but because of who had been asking.

The lesson I painfully learned was that stewardship was very important in the resource development process. Successful stewardship and relationship building meant transitioning a donor-relationship from their the volunteer-solicitor connection to a love affair with the organization’s mission. While it might not happen overnight, working on it symbolized a commitment to sustainability and a donor-centered paradigm. The Tin Man was 100% correct when he sang about the value of his heart.

Being “MISSION-FOCUSED” goes beyond stewardship . . . here are just a few ideas for infusing mission in everything you do at your non-profit organization:

Host your board meetings, committee meetings and fundraising meeting at your service facility as a way of reminding everyone what their volunteer time commitments are all about.
Focus newsletter content on return on investment messaging and all things related to your agency’s mission. Skip the boring advertisements for the next opportunity to make a contribution.
Don’t let your annual campaign volunteer solicitors go on important solicitations by themselves. Staff should do everything possible to get invited on important solicitations and ensure: 1) the ask is not being done in a “quid pro quo” manner and 2) mission-oriented reasons are infused throughout the solicitation call.
Find ways to bring the idea of your clients into important meetings. For example, ask agency clients to participate in an essay contest about what they value most about your organization, its programs and mission. Share those essays with board volunteers, fundraising volunteers and donors.
Incorporate a “mission moment” into ALL MEETINGS as a way to keep the focus on why you’re asking others to do what they do.

Failure to inject “MISSION-FOCUS” into all of your meetings and fundraising campaigns can be disastrous. It can lead to volunteer-fatigue and donor turnover. It can create a sense of disengagement that results in staff doing everything. Do I need to go on? Come on . . . if a Tim Man can get it, then surely we all understand the importance of this concept. Right?

I can go on and on, but I’d rather you share with your fellow DonorDreams blog subscribers what you do to maintain a healthy dose of “MISSION-FOCUS” in everything you do. Please use the comment box below to share your example because we can all learn from each other. There are no right or wrong answers. Please jump in.

Here is to your health!

Are you King of your nonprofit forest?

October 25, 2011 DonorDreams Board development, Fundraising, Planning, volunteers

As a new business owner who just opened up a nonprofit & fundraising consulting practice, I’ve made it my business to “get around”. In addition to visiting with many of my oldest and dearest non-profit friends in Elgin, Illinois, I recently attended a regional Boys & Girls Club conference and engaged countless staff and board volunteers from around the country through a very aggressive social media strategy including Twitter, Facebook, LinkedIn and this blog. While I don’t want to exaggerate, I was surprised at how many conversations looked and sounded like this “Wizard of Oz” YouTube clip.

Here were some of the things heard I nonprofit CEOs, fundraising professionals, and board volunteers saying that leaves me wondering “King or Coward”:

“Erik, I am so sick and tired of my board volunteers passing the buck on fundraising and expecting staff to pick-up the pieces. I’m just gonna tell them ‘how it is’.”
“Erik, our staff has let us down and not provided the necessary leadership during these tough economic times. I’m afraid the board will just need to look at making draconian cuts and muddle through these tough times.”
“Erik, donors are cutting their charitable giving during these tough economic times. So, the only thing left to do is tell donors and anyone who will listen that our agency is on the brink of closing its doors if people don’t start stepping up.”
“Erik, I know we need to invest heavily in capacity building activities during this economic down turn if we have any chance at making it out the other side. However, I just know that the board isn’t up for this kind of work at this time, and I won’t use my influence to push for something that doesn’t have legs.”
“Erik, I refuse to invest in ‘planning’ activities because they just don’t work. We once wrote this amazing plan, and it just ended up on the shelf collecting dust.”
Erik, fundraising is the board’s job, and I am hesitant to offer my opinion on what needs to be done because then it becomes ‘my idea’. And if ‘my idea’ falls short, then it just becomes one more reason for the board to fire me. Remember . . . board volunteers don’t fire themselves, they always fire the executive director.”

I understand that tough economic times has a chilling effect on leadership, but your only chance at surviving these strange and new times is by eating an extra bowl of Wheaties in the morning and showing up for work ready to take some smart risks and actively lead. Here are a few observations and suggestions I have for the non-profit community as my “listening tour” comes to a close:

My kindergarten teacher always taught me that “telling people” isn’t very effective if you want them to be your friend. I suggest sharpening your listening skills and do more asking than telling when it comes to engaging donors, volunteers and board members.
The “blame game” is an old and tired game. If the board is unsatisfied with the agency’s performance and is feels inclined to play this game, my advice tot hose board volunteers is skip it, save your breath, fire the executive director (because you know you’re going to do it regardless of what anyone tells you), and get on with the business with digging out of your hole. Brutal? Sure it is, and I’m uncomfortable with the recommendation. However, how many times have you seen board and staff struggle through tough times with lots of finger-pointing and it all worked out “happily ever after”??? Never! So, be decisive and move on to what is important — survival. By the way, after the hatchet job and search for a new leader, it is probably important the board turn the mirror on itself, dust off the guillotine and quickly get rid of non-performing, poor fundraising members. I suspect many of those soon to be headless board volunteers were leading the charge to fire the executuve director. Vive Le France!
Pointing the finger at donors is the quickest way to lose a finger. I don’t care if it is an individual, corporation, foundation or government agency. I’ve seen “the little boy who cried wolf” fundraising strategy work once, but it gets more difficult to fundraise the more you use this tactic. Of course, the reason for the fast diminishing return is because no one likes to invest their charitable giving in what they perceive to be a “sinking ship”. Stay positive and double down on stewardship efforts. People like to see the good things their contributions helped produce. So, show it to them.
Written plans that fall short are most likely the result of: a) a poorly designed planning process that did not appropriately ‘engage’ those you needed to step forward during the action plans part of the process, b) thin-skinned leadership who didn’t like what they saw during the evaluation phase and dismissed the call to action by putting their heads in the sand, or c) a poorly designed implementation tools (e.g. committee work plans, staff performance plans, dashboards, scorecards, etc). Don’t toss one of your few ‘engagement tools’ out the window. Instead, double down on do it differently and better!
Attention agency staff: If you find yourself treading water and paralyzed by fear of failure, then please do the honorable thing and resign. I don’t say this to be mean, but board volunteers need strong leaders who know how to LEAD. With leadership, sometimes comes failure. Right? So, don’t be the “Emperor who walks into the room without any clothes on“. (Please accept my apology for this last YouTube link. It was salty and unprofessional, but it was sooooo funny I just had to share it because this uncomfortable and funny video is exactly the same feeling we all share when a non-profit staff person is paralyzed and unwilling yet pretending to lead)

I could go on and on, but I’ve gone on too long. Please use the comment box below and share a story on how you are “king” of your non-profit castle and not a “coward”. How are you investing in capacity building efforts? How are you engaging others who seem to be stuck in neutral during these tough times? Please weigh-in because we can all learn from each other. Your words can also serve as inspiration to others who are struggling.

Here is to your health!

If I only had a brain . . .

October 24, 2011 DonorDreams Fundraising

So, last week was an amazing week for my blog. It appears that I struck upon a topic of interest for the non-profit community when I focused on special events and how some agencies make poor decisions around return on investment (ROI) decisions and volunteer utilization. While I promised myself that I would end that discussion thread about zombies, I decided this morning over coffee to continue down “the yellow brick road” a little further by changing metaphors. It is Halloween season after all. LOL

Interestingly, approximately 97-percent of all the emails, comments and discussions last week were very supportive of the positions I staked out in the blog. However, in spite of the support I still periodically heard things like this:

Erik, I totally agree with you that non-profit leaders too often invest money and energy into special events that provide a poor ROI. We really need to do a better job. However, my agency runs this one event that has a bad ROI but we just LOVE IT. We just need to give it a little more time and it will be one of this community’s signature events. What do you think?
Erik, as a board member I am not an expert on non-profit operations and fundraising. I rely on our agency’s staff to make good decisions, and I do as I am told. I agree with everything you’ve written and would never run my business that way, but it just isn’t my call.
Erik, we knew this event wasn’t a good idea for non-profits, but what were we supposed to do? Non-profit agencies pushed us to include them in our event plans.

Again . . . let me attach this disclaimer before saying anything else. 1) Not all special events are bad. 2) Some special events can have a decent ROI. 3) There are non-monetary objectives and benefits to planning and running a special event (e.g. awareness, prospect cultivation, volunteer engagement, etc). 4) I believe all non-profit organizations should include one or two well-oiled special events in their annual written resource development plan.

With that being said, I found this iconic song from the Wizard of Oz’s Scarecrow running through my head after each of the aforementioned comments. I am not sure how you feel, but here were a few of my reactions and conclusions:

It is probably common for agency staff and board volunteers to “fall in love with” their own special event ideas. Finding perspective is not an easy thing to do with anything in life including evaluating events and resource development programs. With this in mind, I recommend that non-profits involve external people in their evaluation process. What is so wrong with recruiting local business people to volunteer for a critique meeting or evaluation session? Ask donors to participate. Heck . . . spend a few dollars and engage an external consultant to help.
The mysterious world of “non-profit” business models probably seems a bit strange to board volunteers who live in the for-profit world, but fiduciary responsibility is the same on both sides of the fence. I have a few thoughts here: 1) board volunteers must be engaged and cannot abdicate oversight and evaluation to staff, 2) while there are differences between for-profit and non-profit corporations, you should stop and think hard about something your agency is doing if you find yourself thinking “huh, I would never do that back at my shop,” 3) we don’t need zombies serving on our boards . . . we need leaders, and 4) non-profit staff really need to do a better job supporting their board development committees throughout the prospect identification, evaluation, recruitment, and orientation processes or they will get what they deserve which is a board room full of “yes men (and women)” who serve in an echo chamber.
Eeeeeek! You knew it was a “bad idea,” but you did it because they asked for it? This comment almost sent me into orbit. So, answer me this question please: would you hand an addict a crack pipe? Or even better . . . do you give your kids everything they ask for? Now, please don’t get upset. I don’t mean to say that non-profits are addicts or children, but I make these analogies to get your attention. The answer is OF COURSE NOT! If you love someone (or in this case that someone is a non-profit agency and its mission), then you don’t enable them to do harm to themselves.

I believe that donors are more than just ATMs. I believe donors are leaders and accountability agents for the non-profit organizations they support. However, non-profit CEOs and fundraising professionals need to play a major role in empowering donors and volunteers. In the movie, “the wizard” bestows a diploma upon the Scarecrow as proof that he has a brain. What can agency staff bestow upon volunteers, donors and board members that will help them suddenly realize that their thoughts and wisdom are so desperately needed as part of the process?

Non-profit staff — Do you engage donors and external volunteers in the evaluation process? What about engaging them in the planning process? Do you have any examples of where you stopped doing something or changed it because of feedback from donors?

Donors — What stops you from sharing your thoughts and opinions about questionable things you see your favorite non-profits doing? Have you ever just stopped contributing to a charity as a result of a poor business decision that you saw a non-profit undertaking?

Board members — What can agency staff do to better empower you to speak-up and engage?

Please use the comment box below to share your thoughts and opinions because we can all learn from each other.

Here is to your health!

Huh? Fundraising zombie volunteers cost money?

October 20, 2011 DonorDreams Fundraising, volunteers

As most of you know, I’ve been talking this week about the City of Elgin’s upcoming Nightmare on Chicago Street special event and the role that area non-profits have been asked to play. While I won’t re-hash the story for you here, I encourage you to go back and read Monday’s post titled “Beware of Fundraising Zombies” and yesterday’s post titled “Fundraising zombies ‘doing the math’.” These posts along with what I write today focus on special events and how non-profits need to be especially careful about measuring “return on investment” (ROI) and thinking through how many events are too many.

So, while emailing back and forth with a very smart and dear friend of mine yesterday about this topic, they said:

“Come-on, Erik! What is the big deal with non-profits recruiting some of their volunteers to help the city out with their day-of-event operations? Sure, the ROI is poor, but there really isn’t any cost related to doing this. Right?”

As you’ve guessed, my response was “No, you’re wrong. There is a cost that no one is considering.” and thus the final chapter of my zombie fundraising posts was born. Here is the explanation:

When a person agrees to volunteer, they are making a contribution of time to that particular non-profit agency. Right?
Most people consider “gifts of time” to be more valuable than their “gifts of money”. I’ve heard people say this often, and I know you have, too.
There are studies that show the “value of a volunteer’s time” is calculated to be $21.36 per hour. Don’t believe me? Click here to see the research for yourself.
The cost for a non-profit organization to build the necessary infrastructure to run a volunteer management program is calculated to be $300 per volunteer per year according to a study by Pubic/Private Ventures titled “Making the Most of Volunteers”. For some organizations like Big Brothers Big Sisters, these costs go up to $1,000 per mentoring match. Click here to review the evidence yourself.
In my experience, a person’s volunteer hours are not an endless pool that non-profits can keep tapping over and over again. While it isn’t set firmly in concrete, most people have a limit to how much time they are willing to give. If you follow this logic, then recruiting a volunteer to work the zombie event means the non-profit is possibly forgoing future “contributions of time” from those volunteers for the charity’s projects back home.
Applying the concepts of ROI and “opportunity cost” that were discussed in yesterday’s blog post, let’s look at this entire thing from a different angle. Each charity receives 100 tickets that they sell for $5.00 each, resulting in $500 gross income. Let’s just say a participating non-profit recruits FIVE VOLUNTEERS who each contribute FIVE HOURS on the day of event. To put this into financial terms . . . 5 volunteers multiplied by 5 hours each and then multiplied by $21.36 per hour equals $536.00. This doesn’t even include allocating the costs associated with maintaining the agency’s volunteer management infrastructure. It also doesn’t include the time associated with ticket selling if the agency asked volunteers to help sell its share of tickets to this event.

Drumroll please? My conclusion here is that non-profit agency gross $500 in ticket sales, but invest $536.00 of volunteer time as part of this special event collaboration. While I won’t go so far as to say the agency just lost $36.00 (even though I am really tempted to draw that conclusion), I think you can agree that this investment is looking less attractive by the second. Right?

Let me just be clear. I support this event and think everyone should attend. Who can’t agree that zombies and Halloween are fun. For the third time this week, I am encouraging everyone to buy their tickets at the door. By doing so, you’ll send a message to your favorite non-profit organization that you love them and won’t support this kind of counterintuitive fundraising behavior.

Let me doubly clear. I don’t think the City of Elgin is trying to hurt the non-profit sector. I know that this idea of involving non-profits in revenue sharing for this event was borne out of the desire to be collaborative and helpful during tough economic times. Additionally, it is the city’s economic development mission to drive foot traffic downtown to benefit its downtown merchants. This event should do exactly that, which is why I tip my hat to the city for trying to do “something”.

All I am saying is that non-profit organizations need to start looking at fundraising in a different light because their decision-making on these issues can and does have a real impact. Everyone — including the non-profit agencies, the city, donors, agency staff and bord volunteers — plays a role in doing this.

How does your non-profit organization evaluate its fundraising and resource development activities to ensure what you’re doing makes sense? Do you have a real and engaged resource development committee? What does that committee do? What efforts and considerations go into creating your agency’s annual written resource development plan? Do you have one? What does it look like? How much of these activities are ‘put on staff’ compared to collaborating with board volunteers, fundraising volunteers and donors to help find these hidden facts and answers?

There has been decent activity over the last few days with regards to usage of the “comment box” for this blog. Let’s keep up that awesome effort. It will take you less than 30-seconds to type your thoughts into the comment box below. Please do so because we can all learn from each other!

Here is to your health! (And I hope this will be the last zombie inspired post for a while . . . Have a Happy Halloween! In the spirit of Halloween fun, my gift to you is this YouTube video of President George W. Bush talking about zombies. LOL Enjoy!)