So, be honest

Read the news on nonprofits from around the country and you’d know our sector is struggling.  But I fear that a good portion is our own doing, which makes the part which we don’t control even more threatening and scary.

Headlines of employees embezzling signals lax financial oversight by the executive director and the board.  Stories of nonprofits struggling to make payroll and keep their doors open forewarns a variety of behaviors, from poor management to failure to balance mission fulfillment and the bottom line, to not asking the right questions, to name a few.

And the news of nonprofits closing their doors with little advance warning indicates the most abhorrent of these wrongs:  a failure of leaders—paid and volunteer (meaning board members)–to care about anyone but themselves as they coast along receiving their pay checks until the very end and/or shirking their responsibilities—being lazy—until the very end, and then walking away, while the clients, remaining employees and communities served are left to deal with the aftermath.

There are a number of things that nonprofits can and should do to help themselves.  None of this is out of the ordinary realm of smart practice—or even best practice.   These suggestions are neither fancy nor, perhaps more importantly, costly.

1. Learn to be honest with yourselves about your capabilities and capacity, and then learn to say no. I am tired of those who control the purse strings—the donors—telling the service providers—the nonprofits—to “do more with less.”  It simply isn’t possible if you care about the quality of service provided.  And, theoretically, donors do care about the quality of care, the achievement of promised goals, etc.  The new funding models of Pay for Success, Social Impact Bonds and Values Based Purchasing, are all based on the premise of meeting very specific, measurable goals, goals that the investors and buyers think are the minimum standards to be met.  Meet them, or even with the former two, exceed them, and you get your money; don’t meet them, and you don’t get paid.  Trying to meet those goals with less is a recipe for losing money.  So, be honest and say no.

Further, without understanding the true state of affairs at the potential grantee—and too few donors do, as in the mindset of not being honest with yourself about the state of your organization, you aren’t being honest with potential donors—donors should not be telling nonprofits what to do:  what to do about their structure, their marketing, their programs, their future, etc.   So, be honest with yourself, your donors and learn to say no.

2. Have a well-developed strategic plan and follow it. One of the things that many donors will tell nonprofits is to have a strategic plan.  This is, absolutely, a great piece of advice—but only if the organization has the capacity to engage in strategic planning.  And not all organizations do at the time they are being told to produce a strategic plan.  Those with non-functioning boards don’t have the capacity; those in crisis don’t have the capacity, be that a financial crisis or a crisis in paid leadership, to mention but a few examples; those that don’t understand why they need a strategic plan—beyond a funder wants us to have it in order to get a grant —don’t have the capacity to use the strategic plan, and there is no point in wasting resources to create a strategic plan only to ignore it.

All of that said, organizations fare better overall, and particularly in uncertain times, when they have a strategic plan to follow.  A strategic plan is the result of a data-informed, reflective process using all of the great minds of the board and staff, and other key folks, to chart the best course for the immediate (three years) future of the organization in light of the environment of that time.  Organizations get into trouble when they ignore the output of that process—the plan—and wing it.  Rather than jettisoning the plan, revisit and revise the scope, timeline, etc., in light of whatever factors have changed.  Ignore it at your own peril.

3. Ensure an independent, engaged board with the “right” people. The failure to ensure a functioning board at all times is one of the most costly mistakes that organizations make.  The board with too many members who are friends with the executive director is a board that lacks one of the key hallmarks of a strong board:  its objectivity and independence.  A board that is more concerned with not hurting its friend and demanding that a job be done well and right, rather than protecting the mission, is a board that will not look at or see the financials, the state and quality of programs, the morale of staff, etc.  A board that fails to, first, understand its job and then, second, to do that job is a board that makes an organization vulnerable to disorder.  Recently, a board president shared that they were considering paying board members in order to get the best people.  When I protested, I was told that, as a large nonprofit, it needed “smarter, more strategic” board members than other nonprofits, and the only way to get that was to pay board members.  My protest got more vehement as I assured this board president that every board, regardless of the size, mission, age, etc., of the nonprofit, needed “smarter, more strategic” and engaged board members if they want to lead a sustainable organization.

4. Do not hire quickly, as that almost guarantees making a mistake. This applies to hiring for the positions of executive director all the way down the org chart, though it is most costly at the executive director level.  Time and again, we see boards making the mistake of being lazy in their hiring of a new executive director, taking the easy, quick(er) route instead of the right and more time-consuming route of careful and intentional hiring, beginning with being clear as to what is needed in the next executive director to align with the goals of that strategic plan, to ending with not settling for what they can afford as opposed to what is truly needed.  When boards hire too quickly, trying to minimize the work that a real search entails, they are almost guaranteed to be doing a second search within 12 to 18 months.  This is a waste of resources that no nonprofit can afford, not even taking into account the harm caused by too quick turnover at the helm.

5. Do not continue to hang on by a thread. Year after year of barely making it through is not an indicator of a sustainable organization.  A tenacious one, yes!  But sustainable? No.  In part, we find many organizations doing this nail-biting routine because funders have encouraged them to do so, year after year giving them dollars to continue to eke through.  But this is no smarter on funders’ part than it is on the organization’s.  If an organization truly believes in the necessity of its mission, it serves it much better by aligning with a stronger, more sustainable organization than continuing to struggle on its own.  It is a better use of scarce resources—better for itself and for the sector as a whole—to have fewer but stronger (notice, I did not say bigger) organizations spending the bulk of their time and energy on pushing out the mission.

If we want to be ready for the uncertainties that seem to be our present—those things over which we do not have control—then we best make our organizations as strong as possible by addressing those things which we should control.