News to Use

This list of readings on nonprofit management offers a range of articles, posts, stories, reports, data and more that we hope will be of interest to and useful for nonprofit organizations.

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Human Services Providers Shared Services Study

Human Services Providers Shared Services Study – December 2018 (PDF)

Prepared for the Southeastern Connecticut Council of Governments by Interim ExecutiveSolutions, Inc.

Executive Summary

In 2014, the Southeastern Connecticut Council of Governments (SCCOG) was awarded a grant from the State of Connecticut’s Office of Policy and Managements’ Regional Performance Incentive Program to develop recommendations for how the region’s human services providers can improve service provision and/or reduce costs through increased coordination and sharing of staff and services. The aim of the project is to enable service providers to make informed decisions about which services are most needed so that there can be a coordinated approach to the delivery of such services. In January 2017, SCCOG selected IES, a Boston-based consulting firm, to complete the study.

The southeastern Connecticut region is home to a diversity of socio-economic conditions, which vary from one municipality to another. Poverty is the primary human services challenge in the region. The most requested services relate to housing and shelter as well as mental illness and addiction. While metropolitan centers in the region, specifically Norwich and New London, host a disproportionately high number of human services providers, they also have the highest number of service requests and unmet needs. However, top-level data is insufficient and improperly formatted to gain a deeper and more nuanced understanding of the state of the human services sector in the region.

In depth interview and survey data collected by the IES team indicates that the human services sector in southeastern Connecticut is characterized by synergy and collaboration, as well as intense competition for resources. Organizations in the region are committed to serving their clients and achieving impact in the most efficient manner possible. However, there has been a decline in resources to fund human services provision in recent years. This shortage results in competition for funding, and unclear communication about funder priorities and allocations strains the existing connections and relationships in the sector.

This study identified four key contributing factors to the state of collaboration and competition in the human services sector of southeastern Connecticut:

  1. Rising costs;
  2. Dependence on declining sources of funding;
  3. Lack of strategic and transition planning; and
  4. Lack of service coordination across the region.

In order to address these challenges facing human service providers and the sector overall, IES has developed a set of recommendations for nonprofits, municipalities, funders, and sector conveners such as SCCOG that will support more sustainable models for service provision in the region.

Nonprofit service providers were most enthusiastic about exploring cost-saving opportunities and revenue diversification strategies. Our suggestions seek to produce bottom-line savings for each organization and ensure that incoming funds are consistent and sustainable in an era of increasing costs and changing funding and policy priorities. IES also suggests several operational and strategic maneuvers, largely distilled from participants in this study, that nonprofits can take to ensure their vitality and expand their impact.

For nonprofits and municipalities in the region, we suggest a more integrated approach to human service provision. While many organizational leaders are familiar with the organizations within their geographic or mission-related network, they hoped to learn more about the broader services system in the region and expressed that they wished to have a better understanding of available community services for their at-risk populations. IES asserts that increased knowledge about potential partners above and beyond existing relationships could create an explicit continuum of care services model to more effectively serve clients and support their staff in making timely referrals. We have also suggested some ways that nonprofits, by forming associations, or municipalities, by supporting pay for success models, can be of collective benefit to all human services providers in the region.

For funders and sector conveners such as SCCOG, there is a need to facilitate and coordinate collaborative processes. Promoting shared spaces and services can include creating new forums for sharing human service provider best practices and facilitating conversations around shared service models that will work for the region. It can also take the form of providing training, serving as an information warehouse, and advocating for human service providers in southeastern Connecticut.

The complete report can be viewed or downloaded here: Human Services Providers Shared Services Study – December 2018 (PDF)

 

Are Donors Solving Problems—or Creating New Ones

from  “Gospels of Giving for the New Gilded Age”,  by  ,  New Yorker, 8-27-18

Skeptics fear philanthropies have gained undue influence on public policy.

In the spring of 1889, Andrew Carnegie published an essay on money. If possession confers knowledge, then there wa

s no greater expert on the subject: Carnegie was possibly the richest American who ever lived. The essay, which was printed first in the North American Review, then in Britain’s Pall Mall Gazette, and later reissued in a pamphlet, became known as “The Gospel of Wealth.”

The “Gospel” opened with a discussion of inequity. This was the Gilded Age, and, even as most Americans were struggling to get by, the one-per-centers were putting up “cottages” in Newport. The disparity was, in Carnegie’s view, unavoidable. It was the price of progress, and progress, ultimately, benefitted everyone. “The ‘good old times’ were not good old times,” he observed. “Neither master nor servant was as well situated then as today.”  

Having dealt with accumulation of wealth, Carnegie then turned to his real concern: what to do with it. Passing on riches to one’s children was a mistake, he argued, for inheritances “often work more for the injury than for the good of the recipients.” Handing out money to the poor was similarly ill-advised, since “neither the individual nor the race is improved by almsgiving.” Rather, the best way to dispose of a fortune was to endow institutions that would aid “those who desire to rise.” Universities were a good cause; so, too, were public libraries, music halls, and swimming baths. The “man of wealth,” Carnegie advised, should consider himself “the mere trustee and agent for his poorer brethren, bringing to their service his superior wisdom, experience, and ability to administer.”assing on riches to one’s children was a mistake, he argued, for inheritances “often work more for the injury than for the good of the recipients.” Handing out money to the poor was similarly ill-ad was as well situated then as today.”

Having dealt with accumulation of wealth, Carnegie then turned to his real concern: what to do with it. Passing on riches to one’s children was a mistake, he argued, for inheritances “often work more for the injury than for the good of the recipients.” Handing out money to the poor was similarly ill-advised, since “neither the individual nor the race is improved by almsgiving.” Rather, the best way to dispose of a fortune was to endow institutions that would aid “those who desire to rise.” Universities were a good cause; so, too, were public libraries, music halls, and swimming baths. The “man of wealth,” Carnegie advised, should consider himself “the mere trustee and agent for his poorer brethren, bringing to their service his superior wisdom, experience, and ability to administer.”

“The Gospel of Wealth” has been called the “ur-text of modern philanthropy.” It advocated a new kind of giving, a form of charity that wasn’t charity but something more pragmatic and, at the same time, more ambitious—a giving aimed, in Carnegie’s words, at improving “the general condition of the people.” Acting on his own advice, Carnegie went on to endow Carnegie Hall, the Carnegie Foundation, the Carnegie Endowment for International Peace, the Carnegie Institute of Technology (now part of Carnegie Mellon University), and more than twenty-five hundred local libraries. His contemporaries financed the Rockefeller Foundation, the Russell Sage Foundation, the Field Museum, and the University of Chicago.

The “Gospel” also prompted the ur-critiques of philanthropy. In 1890, the Reverend Hugh Price Hughes, a Methodist minister, wrote that, while he was sure Carnegie was “a most estimable and generous man,” his “Gospel” represented a “social monstrosity” and a “grave political peril.” William Jewett Tucker, a professor of religion who would later become the president of Dartmouth, was no less horrified. What the “Gospel” advocated, Tucker wrote, was “a vast system of patronage,” and nothing could “in the final issue create a more hopeless social condition.” To assume that “wealth is the inevitable possession of the few” was to evade the essential issue: “The ethical question of today centres, I am sure, in the distribution rather than in the redistribution of wealth.”

Carnegie made his money from railroads and steel. Three years after he wrote “The Gospel of Wealth,” he decided

to break the union—the Amalgamated Association of Iron and Steel Workers—at one of his company’s largest plants, the Homestead steelworks, outside Pittsburgh. Employees were presented with a new contract with pay cuts up to thirty-five per cent. When they rejected it, they were locked out. Carnegie Steel brought in Pinkerton agents to guard the plant, and in the resulting melee at least sixteen people were killed. In the end, the union collapsed.

To critics, the Homestead strike made explicit the inconsistency of Carnegie’s position. How could a person ruthlessly exploit his employees and, at the same time, claim to be a benefactor of the toiling masses? The Saturday Globe, a Utica-based weekly, published a cartoon showing two Carnegies, conjoined at the hip. One, smiling, handed out a library and a check; the other held out a notice telling workers that their pay had been slashed. “As the tight-fisted employer he reduces wages that he may play philanthropist,” the caption read.

We live, it is often said, in a new Gilded Age—an era of extravagant wealth and almost as extravagant displays of generosity. In the past fifteen years, some thirty thousand private foundations have been created, and the number of donor-advised funds has roughly doubled. The Giving Pledge—signed by Bill GatesWarren BuffettMichael BloombergLarry Ellison, and more than a hundred and seventy other gazillionaires who have promised to dedicate most of their wealth to philanthropy—is the “Gospel” stripped down and updated. And as the new philanthropies have proliferated so, too, have the critiques.

Anand Giridharadas is a journalist who, in 2011, was named a Henry Crown Fellow of the Aspen Institute. The institut

e is financed by, among other groups, the Carnegie Corporation, the Rockefeller Brothers Fund, and the Gates Foundation. The fellowship, according to its Web site, aims to “develop the next generation of community-spirited leaders” by engaging them “in a thought-provoking journey of personal exploration.”

Giridharadas at first found the fellowship to be a pretty sweet deal; it offered free trips to the Rockies and led to invitations from the sorts of people who own Western-themed mansions and fly private jets. After a while, though, he started to feel that something was rotten in the state of Colorado. In 2015, when he was asked to deliver a speech to his fellow-fellows, he used it to condemn what he called “the Aspen Consensus.”

“The Aspen Consensus, in a nutshell, is this,” he said. “The winners of our age must be challenged to do more good. But never, ever tell them to do less harm.” The speech made the Times; people began asking for copies of it; and Giridharadas decided to expand on it. The result is “Winners Take All: The Elite Charade of Changing the World.” “I hadn’t planned to write a book on this topic, but the topic chose me,” he writes.

“Winners Take All” is organized as a series of portraits: of a young, idealistic Georgetown graduate who goes to work for McKinsey; of a former McKinsey consultant who goes to work for George Soros; of various wealthy and generally liberal-leaning social entrepreneurs. What these figures all share, by Giridharadas’s account, is a desire to do good without questioning too deeply how it is they came to do so well. At one point, he sits down with Laurie Tisch, an heir to a family fortune estimated at twenty-one billion dollars and the benefactor of a philanthropy—the Laurie M. Tisch Illumination Fund—whose stated mission is “to improve access and opportunity for all New Yorkers.” Tisch describes herself as racked by guilt. “It’s my compass,” she tells Giridharadas. But when he asks her whether she thinks inheritances like hers ought to be taxed more heavily, thus leaving her with less to feel guilty about, she won’t answer the question. “You’d have to be a better student of history than I am,” she says.

Perhaps aptly, a good deal of “Winners Take All” is set in a limousine. One day, Giridharadas rides in a black Lincoln with Darren Walker, the president of the Ford Foundation. The two are headed to the offices of K.K.R. & Co., the investment firm made famous by “Barbarians at the Gate,” where Walker is scheduled to give a lunchtime talk.

Like Giridharadas, Walker has expressed skepticism about changing the world one glitzy gala at a time. Not long after Giridharadas delivered his speech in Aspen, Walker published a short essay that he titled “Toward a New Gospel of Wealth.” In his “New Gospel,” Walker argued that it was time to take a fresh look at the “principles of philanthropy” set forth by Carnegie—“to openly acknowledge and confront the tension inherent in a system that perpetuates vast differences in privilege and then tasks the privileged with improving the system.” The essay was posted on the Ford Foundation’s Web site and, according to Giridharadas, immediately “began to ricochet around the philanthropic world, some people receiving the same email from three or four different people.”

The “New Gospel” would, you’d think, make Walker a hero to Giridharadas, and, as the limousine inches north—midtown traffic is barely moving—it seems that it has. Walker, who is African-American, grew up poor in Texas, and he tells Giridharadas that he plans to use his position as the head of a major foundation to “deeply interrogate” the “systems and cultural practices” of privilege. But then, where the butter meets the roll, Walker, too, disappoints. At K.K.R., he makes no move to “interrogate” the culture of private equity and leveraged buyouts, and he celebrates one of the firm’s founders—the legendary corporate raider Henry Kravis—as a “philanthropist.” A few months after the limousine trip, Walker joins the board of PepsiCo, a step that, Giridharadas relates, brings his annual compensation to more than a million dollars a year.

Just about everyone who appears in “Winners Take All” comes out looking the worse for it. This includes former President Bill Clinton—who tells Giridharadas that he doesn’t think giving speeches to financial-industry groups at two hundred thousand dollars a pop has in any way influenced his outlook—and Giridharadas himself. “There’s almost no problem probed in this book, no myth, no cloud of self-serving justification that I haven’t found a way of being part of,” he acknowledges. “This is a critique of a system of which I am absolutely, undeniably a part.”

Inside Philanthropy is a Web site devoted to high-end giving; its tagline is “Who’s Funding What, and Why.” David Callahan is the site’s founder and editor. If Giridharadas worries that the super-wealthy just play at changing the world, Callahan worries they’re going at it in earnest.

“An ever larger and richer upper class is amplifying its influence through large-scale giving in an era when it already has too much clout,” he writes in “The Givers: Wealth, Power, and Philanthropy in a New Gilded Age.” “Things are going to get worse, too.”

Part of the problem, according to Callahan, lies in the broad way that philanthropy has been defined. Under the federal tax code, an organization that feeds the hungry can count as a philanthropy, and so can a university where students study the problem of hunger, and so, too, can a think tank devoted to downplaying hunger as a problem. All these qualify as what are known, after the relevant tax-code provision, as 501(c)(3)s, meaning that the contributions they receive are tax deductible, and that the earnings on their endowments are largely tax-free. 501(c)(3)s are prohibited from engaging in partisan activity, but, as “The Givers” convincingly argues, activists on both sides of the ideological divide have developed work-arounds.

As a left-leaning example, Callahan cites Tim Gill, who’s been called “the megadonor behind the L.G.B.T.Q.-rights movement.” A software designer, Gill became rich founding and then selling a company called Quark, and he’s donated more than three hundred million dollars toward promoting L.G.B.T.Q. rights. While some of this has been in the form of straight-up political contributions, much of it has been disbursed by Gill’s tax-exempt foundation, which has financed educational efforts, message testing, and—perhaps most important—legal research. “Without a doubt, we would not be where we are without Tim Gill and the Gill Foundation,” Mary Bonauto, the attorney who argued the 2015 Supreme Court case that legalized gay marriage, told Rolling Stone last year.

On the right, Callahan points to Art Pope, the chairman of a privately held discount-store chain called Variety Wholesalers. Pope has used his wealth to support a network of foundations, based in North Carolina, that advocate for voter-identification—or, if you prefer, voter-suppression—laws. In 2013, pushed by Pope’s network, the North Carolina state legislature enacted a measure requiring residents to present state-issued photo I.D.s at the polls. Then the North Carolina Institute for Constitutional Law—another Pope-funded group—led the effort to block challenges to the measure. (The I.D. law was struck down, in 2016, by a federal appeals court that held it had been “passed with racially discriminatory intent.”)

It is difficult to say what fraction of philanthropic giving goes toward shaping public policy. Callahan estimates that the figure is somewhere around ten billion dollars a year. Such an amount, he says, might not sound huge, but it’s more than the annual contributions made to candidates, parties, and super-pacs combined. The result is doubly undemocratic. For every billion dollars spent on advocacy tricked out as philanthropy, several hundred million dollars in uncaptured taxes are lost to the federal treasury.

“It’s not just that the megaphones operated by 501(c)(3) groups and financed by a sliver of rich donors have gotten louder and louder, making it harder for ordinary citizens to be heard,” Callahan notes. “It’s that these citizens are helping foot the bill.” That both liberals and conservatives are exploiting the tax code is small consolation.

“When it comes to who gets heard in the public square, ordinary citizens can’t begin to compete with an activist donor class,” Callahan writes. “How many very rich people need to care intensely about a cause to finance megaphones that drown out the voices of everyone else?” he asks. “Not many.”

is a professor of political science at Stanford and a co-director of the university’s Center on Philanthropy and Civil Society. He begins his forthcoming book, “Just Giving: Why Philanthropy Is Failing Democracy and How It Can Do Better,” by noting that for every foundation that existed in 1930 there are now five hundred. The growth in foundation assets in that time has been even more staggering, from less than a billion dollars to more than eight hundred billion dollars.

Meanwhile, the losses to the U.S. Treasury keep mounting. In 2016, the tax deduction for charitable contributions cost the federal government at least fifty billion dollars. Is there any justification for this arrangement? Reich considers several possibilities. One is that the government, by encouraging giving to private philanthropies, is fostering participation in civic affairs. This rationale he discards, since, if anything, the correlation seems to be negative. “The rise of nonprofit organizations in the United States and the use of the charitable contributions deduction coincides with the decline of civic engagement and associational life,” he observes.

A second possibility is that giving promotes equality. Once again, Reich is skeptical. The deduction for charitable contributions is available only to taxpayers who itemize their returns, and these people tend to be relatively affluent. And the more affluent they are the more the deduction is worth: families in the highest tax bracket get a much bigger break than those in the lowest.

How about all the needy families that are being assisted? Here the figures are harder to come by, but, even so, they don’t look very good. A recent study suggests that, at most, a third of all tax-deductible giving goes toward aiding the poor. And the donors who are getting the biggest tax breaks are, it turns out, the least likely to be aiding the indigent: Reich cites research that suggests “the inclination to give to help meet basic needs declines as one rises up the income ladder.”

Instead of promoting equality, Reich worries, tax subsidies for philanthropy may actually be doing the reverse. He cites, in particular, local-education foundations, or lefs. These are, essentially, souped-up PTAs, formed to supplement public-school budgets, and they’ve grown dramatically in recent years. Some lefs raise only enough money to buy paint sets or musical instruments, but some, in more affluent districts, raise thousands of dollars a pupil. In the town of Hillsborough, California, just north of Stanford, Reich reports, parents of public-school students get a letter at the start of the year asking for a contribution of twenty-three hundred dollars for each child enrolled. While the contributing parents can’t dictate exactly how the money will be spent, Reich writes, it’s easy to imagine groups of parents pressing the district to hire specialized teachers or to purchase sophisticated equipment that “can be targeted to benefit their own children.” This arrangement, in his view, exacerbates existing inequities in school funding, and, since contributions to lefs are tax deductible, rich districts are, in effect, receiving a subsidy from other taxpayers.

“Just Giving” takes up only legal forms of self-dealing, not the illegal sorts that the Donald J. Drumpf Foundation has recently been accused of engaging in. But, as Reich observes—and as the Drumpf Foundation case demonstrates—regulation of charitable organizations is extremely lax. “The current practice of state-supported philanthropy, especially in the United States, is indefensible,” he concludes.

Critiques of “The Gospel of Wealth” didn’t have much impact on Andrew Carnegie. He continued to distribute his fortune, to libraries and museums and universities, until, at the time of his death, in 1919, he had given away some three hundred and fifty million dollars—the equivalent of tens of billions in today’s money. It is hard to imagine that the critiques of the new Carnegies will do much to alter current trend lines.

The Gates Foundation alone, Callahan estimates, will disburse more than a hundred and fifty billion dollars over the next several decades. In just the next twenty years, affluent baby boomers are expected to contribute almost seven trillion dollars to philanthropy. And, the more government spending gets squeezed, the more important nongovernmental spending will become. When congressional Republicans passed their so-called tax-reform bill, they preserved the deduction for charitable contributions even as they capped the deduction for state and local tax payments. Thus, a hundred-million-dollar gift to Harvard will still be fully deductible, while, in many parts of the country, the property taxes paid to support local public schools will not be. It is possible that in the not too distant future philanthropic giving will outstrip federal outlays on non-defense discretionary programs, like education and the arts. This would represent, Callahan notes, a “striking milestone.”

Is that the kind of future we want? As the latest round of critiques makes clear, we probably won’t have much of a say in the matter. The philanthropists will decide, and then it will be left to their foundations to fight it out.

Interim Executive Management: Seven Benefits to Consider

from an article in The Bridgespan Group newsletter

Summary

A nonprofit that loses a top leader faces an anxiety-producing situation even under the best circumstances. But losing an executive without a succession plan in place can be particularly agonizing. Nonprofits are increasingly engaging professional transition consultants as interim executives, which can help them fill the short-term gap to give them time to consider the organization’s longer-term future.

A nonprofit organization that loses a top leader (e.g., chief staff officer, CEO, executive director, executive vice president) faces an anxiety-producing situation even under the best circumstances. But losing an executive without a succession plan in place can be particularly agonizing. In such a situation, a nonprofit’s board may feel forced to begin an immediate search for a new executive without reflecting on how it might best fill the short-term gap to give it time to consider the organization’s longer-term future.

To help bridge these gaps and create the necessary pause, organizations increasingly are engaging professional transition consultants as interim executives. These consultants offer nonprofits a viable alternative to entering recruitment mode immediately or to appointing a staff or board member simply to “hold down the fort.” Transition consultants have chosen interim management as their careers, preferring to help organizations bridge gaps in time or talent rather than running for the long-term top job. As a result, they can provide the board with more time to choose the best leader for the organization’s future. Organizations that employ transition consultants also can find numerous other potential benefits.

Here are seven of the most common that I have seen through my work with organizations experiencing leadership transitions.

Benefit #1: Rich set of experiences. Organizations often look for interim executives who bring specific expertise and/or a rich set of experiences from working with multiple organizations. These consultants’ long careers as nonprofit executives let them be leaders on Day 1 and often provide them with specific skills to solve organizational challenges. For example, someone with the proper experience or technical skills could help an organization quickly solve infrastructure issues or provide sage advice on exploring processes and tools.

Benefit #2: Independent assessment. Professional interim executives don’t have a stake in the organization and can assess it objectively, reassuring stakeholders (e.g., donors, clients, and members) that results won’t be subject to internal or external political influences. For instance, an interim executive could provide objective advice on how to improve financial training and reporting to help the organization best communicate financial standings to stakeholders.

Benefit #3: Board and staff development. Many board and staff members learn on the job. While experiential learning can work, it also means that people learn different information at separate times based on current circumstances and who did the teaching. Interim leaders, meanwhile, can have conversations with the staff and the board, learn what they know and don’t know, and then help the organization determine development priorities. The interim executive even can help the board determine whether proper development might let it hire the organization’s next leader from within.

Benefit #4: Determining needs. Executive departures are inevitable, and an interim executive gives the board time to consider the organization’s goals and determine what type of executive will help it achieve its imagined future. The board knows that pausing long enough to answer these questions will help ensure that its new executive doesn’t become an unintentional interim.

Benefit #5: Calming emotions. Regardless of circumstances, an executive’s departure causes anxiety among staff members, who suddenly find themselves forced to make sense of new ways of working, their new status, and what the future might hold for them. During the transition, staff members often jockey for position, burrow in, or disengage. There can be a loss of morale, discord, and organizational entropy. Board members may feel abandoned, disappointed, relieved, or even angry. An interim executive can provide much-needed ballast during the transition and quell the organizational turbulence.

Benefit #6: Trying on a new style. Every leader has a particular style that becomes woven into the fabric of an organization’s culture, especially if the executive has had a long tenure. Over time, the board and staff become accustomed to the way the executive works. They create workarounds and may even offer excuses for an executive who is tardy, overly gregarious, conflict averse, disorganized, or prone to micromanagement. An interim executive can give the board and staff an opportunity to try on a new executive style before the wedding.

Benefit #7: Time for a break. Sometimes boards labor unsuccessfully for months or years to try to make their executive relationships work. They coach, they cajole, they threaten, and finally, they terminate. This effort is very hard work for the board and staff. Sometimes the organization has just gone through an extremely turbulent period of change capped by the executive’s departure. Or when an organization has had one executive for many years, it can just be time for a break. Regardless of the reason for the termination, an interim executive can step in to work with the board to make sure it knows how to develop and support the next executive relationship in a way that is beneficial to the organization, its new executive, the board, and staff.

When an Interim Executive Works Best

In many ways, interim executives provide much-needed support when an executive leaves unexpectedly or when the board and staff need fresh perspectives on how to take the organization forward. The relationship often is most beneficial when an organization is ready to look critically at the organization and willing to make necessary changes. This allows the board, staff, and interim leader to apply their collective talents preparing the organization for regular long-term leadership. It also is advisable that the interim doesn’t have a stake in the organization and isn’t a candidate for the full-time position, so he or she can objectively help the organization navigate any potential issues, such as internal political challenges, and offer an honest assessment of the organization and its potential to reach short- and long-term goals.

Guidelines for selecting an interim executive

  • Interview references. Speak to at least three recent client references.
  • Ask probing questions about his or her work style. For example, what is the interim executive’s measure of success? How has he or she helped other nonprofits in transition? How does he or she handle conflict? What is his or her decision-making style?
  • Determine cultural fit. What are his or her values and beliefs? As you listen to an interim executive’s language and stories, do they seem congruent with your organization? A “numbers person” in a highly interpersonal organization might not be the best match, for example. But, on the other hand, an interim might help an organization become more numbers oriented.
  • Consider personal characteristics. Ideally, your interim will be self-aware, a quick learner, and a good listener. He or she should also ask probing questions about your organization and its needs, and be willing to readily share his or her knowledge to address them.
  • Explore experience and knowledge. A professional interim executive is well versed in the nuances of the nonprofit world. Do you believe he or she can help with the organization’s particular issues? Does the person sound and seem credible? The decision is largely intuitive.
  • Clarify logistics. Your interim’s attention should be on your organization. If he or she has a busy consulting practice, it will be difficult to focus on your needs. Inquire about scheduling and flexibility. The average interim assignment lasts 9 months, with a range of 4 to 22 months.
  • Clarify the terms (purpose, duration, fees, and prohibitions) and execute the contract. Consider hiring a firm with a network of interim executives, giving you easy access to colleagues who can provide support, recommendations, and fill in, if necessary.

Jackie Eder-Van Hook, PhD is president of Transition Management Consulting, Inc., a national consulting firm providing interim executives, executive search, and consulting services to associations and nonprofits. Jackie may be reached at 202-244-3163 or
 jeder-vanhook@TransitionCEO.comwww.TransitionCEO.com.

YEAR UP Nonprofit Demonstrates National Success in Job Training

Economically disadvantaged young adults trained in a Year Up program, earn 53 percent more than economically disadvantaged young adults who did not participate in the program. The findings said Year Up increased total hours worked by three to four per week and graduates earned nearly $4 more per hour than members of a control group that were part of the study.

In 1982 the Job Training Partnership Act budgeted about $3 billion in annual funding for the program.  Since then with repeals and replacements of the law (1982 federal Job Training Partnership Act to 1998 Workforce Investment Act of 1998 to  the 2014 Workforce Innovation and Opportunity Act), the federal budget for these programs has dropped about 90%.

According to Gerald Chertavian, Year Up’s founder (2000) and chief executive, critics claimed the federally funded programs failed to demonstrate that they made a difference in the employment of the trainees. This new study clearly demonstrates a difference can be made with the right training and execution. Job training can increase socioeconomic mobility in lower-income communities.

Under Year Up, young adults from low-income backgrounds — ranging in age from 18 to 24 — with a GED or high school diploma can earn college credit while gaining skills in areas such as information technology, quality assurance, and testing applications to assess functionality. Upon completing the yearlong program, graduates earn on average $17.41 an hour, which amounts to $34,000 per year and triumphs over the state’s $11 minimum wage.

Year Up students spend six months learning an array of skills such as time management, networking, and leadership. The next six months are devoted to an internship with one of Year Up’s corporate partners, which include 40 Boston-based companies every year. The money that affiliated corporations pay to get interns covers 59 percent of the program’s operating costs, according to Year Up. Combined with sponsorships and private donations, that leaves only 2 percent of the national program’s $150 million budget to public funding.

It “absolutely shows that we can enable people to lift themselves out of a situation of poverty and into a good job, and therefore should be investing in people and seeing them as assets instead of social liabilities,” he said.

From Article By Allison Hagan GLOBE CORRESPONDENT  AUGUST 04, 2018

When Gerald Chertavian started Year Up in 2000, the nonprofit set out to help 22 young adults from low-income Boston neighborhoods earn a decent wage.

The organization has come a long way from that modest beginning. A new study has found that 4,100 Year Up participants from 21 cities across the country are benefiting from the largest earnings gain associated with any workforce program in US history.

The research on this program’s effectiveness was part of the Pathways for Advancing Careers and Education project sponsored by the US Department of Health and Human Services’ Administration for Children and Families. It reported that Year Up group members earn 53 percent more than economically disadvantaged young adults who did not participate in the program. The findings said Year Up increased total hours worked by three to four per week and graduates earned nearly $4 more per hour than members of a control group that were part of the study.

Under Year Up, young adults from low-income backgrounds — ranging in age from 18 to 24 — with a GED or high school diploma can earn college credit while gaining skills in areas such as information technology, quality assurance, and testing applications to assess functionality. Upon completing the yearlong program, graduates earn on average $17.41 an hour, which amounts to $34,000 per year and triumphs over the state’s $11 minimum wage.

Bottom of Form

Researchers analyzed Year Up alongside eight other workplace development programs.

The $3 billion in annual funding for the program — through the 1982 federal Job Training Partnership Act — was reduced by 90 percent by 1995 because, Chertavian said, critics claimed the programs failed to demonstrate that they made a difference. Chertavian, Year Up’s chief executive, said he hopes the study serves as evidence that investing in job training can increase socioeconomic mobility in lower-income communities.

It “absolutely shows that we can enable people to lift themselves out of a situation of poverty and into a good job, and therefore should be investing in people and seeing them as assets instead of social liabilities,” he said.

Year Up students spend six months learning an array of skills such as time management, networking, and leadership. The next six months are devoted to an internship with one of Year Up’s corporate partners, which include 40 Boston-based companies every year. The money that affiliated corporations pay to get interns covers 59 percent of the program’s operating costs, according to Year Up. Combined with sponsorships and private donations, that leaves only 2 percent of the national program’s $150 million budget to public funding.

The internships often lead to full-time jobs. Since 2000, for example, Bank of America Corp. has hired 690 Year Up interns, while State Street Corporation has hired 700, according to Chertavian. State Street reports that it converts 60 percent of Year Up interns into full-time employees.

“Year Up has opened a new talent pipeline for us that we’ve been able to take advantage of with terrific results,” said Mike Scannell, senior vice president and president of the financial firm’s philanthropic arm the State Street Foundation .

Andrea Lozada, one of State Street’s Year Up hires, didn’t have many employment options when her family moved to Lexington from Mexico in 2014. She graduated from the program in 2015 and recently received her second promotion, to investment manager service team leader.

“I don’t know if I would have come this far without a program like Year Up,” Lozada said. “Anything that I’m going through in my life, I know . . . they will help me in any way.”

Allison Hagan can be reached at allison.hagan@globe.com. Follow her on Twitter @allisonhxgan.

Follow IES on @InterimExecNE

Capacity Building Tips for a Stronger Nonprofit

A Crowded Field

The National Center for Charitable Statistics’ website reports that Massachusetts has 19,037 nonprofits who reported financial information to the IRS in 2008, 34.4 nonprofit organizations for every 10,000 residents. Rhode Island, surprisingly, had almost a quarter as many – 4349 or 47.4 per 10,000 population. Neither of these rates compares favorably with large conservative states like Texas (20.3) or even other, larger liberal states like New York (28.4) or California (22.6). New England seems to grow nonprofits almost twice as fast as everybody else.If there are too many organizations chasing too few donor dollars, then the nonprofit sector may have entered a survival-of-the-fittest period. A crucial concern for individual nonprofit leaders and Boards then becomes how to survive.

Doing Better

From their recent announcements it would appear that at least one part of The Boston Foundation and United Way Rhode Island’s answer is to advise nonprofits to do better before they do more. And how will financially struggling organizations find out how to “do better” by improving their capacity? By finding out what they don’t know about their capacity through completing an organizational self-assessment and then doing something to address the findings.

Building the frame for a stronger organization.

The good news for cash-strapped nonprofits is that easy-to-access tools are readily available on the World Wide Web. Two in particular are free, can be downloaded for use by Board members, executive leaders and senior staff, and don’t require a statistical degree to fill out and interpret.

Free Tools

The Marguerite Casey Foundation Organizational Capacity Assessment Tool was one of the first such instruments to be developed. The foundation website accurately describes it as a “self assessment instrument that helps nonprofits identify capacity strengths and challenges and establish capacity building goals”. Conveniently arranged on a self-scoring spreadsheet, the assessment’s 59 capacity elements are divided into four parts: Leadership Capacity; Adaptive Capacity; Management Capacity, and Operational Capacity. It takes about an hour to fill out thoughtfully, and the foundation website then provides a helpful numerical score and graph. Local leaders and Board members can inexpensively obtain some penetrating insights by investing an hour on the Casey Capacity Assessment Tool and comparing their scores.

If the Casey Tool looks too complicated, then a good alternative, also free on the web, is the “Nonprofit Organization Self- Assessment Tool” developed by Technical Assistance for Community Services in Portland Oregon. TACS’s tool asks nonprofit leaders to answer qualitatively (don’t know; inadequately achieved; partially achieved; or fully achieved) ninety questions arranged in 7 focus areas: Board Governance; Planning and Evaluation; Financial Management; Personnel Management; Public and Community Relations; Financial Condition; and Funding Strategies. Again, nonprofit leaders will learn quite a bit about their organizations with a little introspection and a lot of honesty.

Looking Better

Completing either the Casey self-assessment or the TACS self-assessment isn’t likely to automatically advance a nonprofit to the head of grantee line with either The Boston Foundation or United Way of Rhode Island. It will, however, give leaders challenging new insights about their organizational capacity. Combined with a strategic planning process and an action plan for change, it’s also likely to both position their organization to survive the hard times and to look better to potential donors in the future.

-Christian Dame

Cristian W. Dame

Christian W. Dame, Principal, IES

(return to Consulting Services, Technical Resources)

Lessons from the Merger Culture War

N. Paul TonThat

by N. Paul TonThat, Associate, Interim Executive Solutions

A Vision/Mission statement for an organization undergoing transition and/or merger is that most exquisite and powerful of commodities. If it is focused, precise and singularly inspiring, it will almost define entirely alone the new or changing organization’s program and governance. On the other hand the mission statement is bound to fail if the focus is overly broad, the standard of services is undefined, and the definition of success is left unspecified.

An Uncomfortable Truth

Organizational merger is first a contest of power, will and influence before it is an exercise about increasing organizational efficiency

and effectiveness. If this contest is to be fair and result in improvement for the merger partners, there must be a singularly inspiring principle – the vision/mission thing – by which all events and decisions are judged. The inspiring principle must be unassailable and be held valid and self-evident by all parties to the merger.

Program metrics must also align to the unassailable and self-evident ‘truth’ or principle. Otherwise historically more powerful departments with more forceful programs and presentations will win the contest for validation over weaker departments and less evident programs, even if those departments and programs offer more relevant services for the merged nonprofit’s client base. The same hold true for staffing. The staff left standing after the merger will be those most ‘wired’ to decision-makers rather than those with less political currency but most capable of delivering services related to the vision/mission.

Governance is Not Immune

Much written has been written about board process and how leaders emerge in mergers and transitions. In our experience when two boards merge there is immediately a ‘negotiation’ between the established ‘champions’ of the respective legacy boards. This is followed by a subsequent negotiation between the team of victor’s emerging from the initial negotiation and the remaining board members. For these board negotiations to be most productive, and not destructive to the merger, the primary reference must be the focused vision/mission thing. Again, it must be precise and singularly inspiring to empower and guide the inevitable board negotiations and emerging power delineations.

Judgments on Leadership Also Impacted

Leadership of the merged organization, and its legitimacy and power currency, must be aligned with the self-evident vision/mission statement as the merger occurs for it to emerge empowered with increased effectiveness. Department and program leadership judged instead on historical loyalties or other factors will only add to the challenge management has later on reformulating the new organization’s structure, retaining superior staff and continuing and strengthening the most effective programs. It may be possible to refocus an organization and change staff leadership later but it will demand precious managerial time and resources better left focused elsewhere. The best time to act on leadership is as the merger is being designed and implemented.

The Opportunity Envelope

One peculiarity that has been observed is the pause in expectations from donors, funders, competitors and customers during a merger or transition process. This pause, and accompanying suspension of critical judgment, is longer for a merger and shorter for a transition. It’s imperative that merger designers determine the precise length of this permission envelope. At the conclusion of the pause, stakeholders will evaluate the success or failure of the merger/transition. Therefore it’s also important to determine what factors constituents will use to define ‘success’ for the new endeavor. If merger/transition leaders know these success criteria they can craft a process that meets them. It’s crucial to meet or beat those success expectations before the opportunity envelope closes and evaluation commences. A merger or transition judged “successful” positions the new organization programmatically, organizationally, and functionally at the optimum level in the stakeholder eyes. There is a considerable body of evidence demonstrating a funding/fundraising dip immediately after a merger or transition. If the merger/transition candidate can be positioned as successful within the acceptable timeframe, this fluctuation in fundraising can be minimized.

The New Choir

When organizations change, so do the populations who support them. This is especially true for organizations undergoing mergers and transitions. When nonprofits merge to expand their geographic reach or program scope, leaders are often surprised to discover that many who supported the singular-focused or more local and smaller original organization do not support the new and allegedly improved organization. Not everyone can be counted on to support the revised vision/mission. There will always be those who prefer local focus and simple mission. When merger and transition designers plan to expand beyond local and original mission, they need to reach out to those who will embrace the larger vision. A changed organization must develop a ‘new choir’ comprising new voices as well as old singers. In the end the new organization’s financial health will depend on the ability of its leaders understand its historical base, to adapt their message to appeal to new supporters who can see the potential of the future, and to move new donors into a fuller capacity to give. This supporter building work must be done within the opportunity envelope discussed earlier. Focus must be on the rate of new support ‘infusion’ exceeding the rate of inevitable original supporter ‘drop off’ by those whose vision the organization has outgrown.

A Few Rules for the Merger/Transition Road

If nonprofit transitions and mergers were easy, there would more of them happening every day. There aren’t. But there are some hard lessons learned that can maximize the chances for success:

  1. Develop a powerful, focused vision/mission statement and use it to judge every decision
  2. Expect conflict and negotiation – change is about power and competition. Use the vision/mission statement to keep the process fair and effective
  3. Act early to manage leadership choices
  4. Seize the opportunity envelope to position the new organization for success
  5. Build a supporters choir combining new and old voices, new givers will be needed to replace those who chose to retire

Leadership Transition in Nonprofits Presents Challenges

Stan Burrows

By Stan Burrows

In March 2017 Third Sector New England published an important paper for the Boston Foundation entitled Opportunity in Change: Preparing Boston for Leader Transitions and New Models of Nonprofit Leadership. The paper was released at a conference that was videotaped that you can review.

This effort was a part of the Boston Foundation’s ongoing program on Understanding Boston developed through partnerships with government and local institutions. The focus of this effort, the fifth in the series, is on preparing nonprofits for the long awaited and much discussed retirement of the baby boom generation and the passing of the torch in many nonprofits to successors.

Here are some of the highlights of the report and the conference.

Fund Development is the Biggest Challenge facing Nonprofits.
  • “Many nonprofit leaders walk into challenging scenarios from the very start of their tenure, as they are often tasked with strengthening struggling organizations or resolving problems that developed under a previous leader.”
  • “Almost one in five New England leaders in the survey reported that their organizations were financially or organizationally frail now, and almost a quarter required turnarounds.”
  • “54% of New England board members ranked fund development as the most challenging issue facing their organization’s leader.”
  • “About half of Greater Boston selection area leaders (54%) report having three months of cash reserves or less. “
The Baby Boomers are Retiring but there are no Leadership Transitions.
  • “With large numbers of leaders saying that they will be leaving their current jobs in the next five years, the time is now to prepare organizations for these impending transitions and help them focus on how to attract and support new leaders for decades to come.”
  • “Data from the Boston Foundation’s Giving Common, which indicates that only approximately 10% of nonprofits report having a succession plan.”
  • “Consider hiring an interim executive director during a transition. A good interim executive director/CEO will provide the organization with both stability and an objective lens on the organization’s strengths and opportunities for growth until a new leader or leadership structure is selected.”
There is a Lack of Diversity in Leadership Positions and on Boards of Directors.
  • Broadsource’s 2014 national study Leading with Intent, found that 89% of nonprofit CEOs were white, as were 90% of board chairs and 80% of board members.”
  • “Boston Foundation’s data from the Giving Common which reports that staff (72%) and boards (87%) of Greater Boston nonprofits remain mostly white.”
  • “The city of Boston is 54% white.” According to https://www.census.gov/Quickfacts/.

How to Prepare a Budget for Your Nonprofit Organization

Developing a sound budget that provides the Board and Executive team the key information for Planned (based on the budget prepared at the beginning of the year) vs. Actual (what is actually spent per category on a weekly or monthly basis) is critical to the success of a nonprofit.  Grantspace, a service of Foundation Center, provides an excellent collection of information and tools for nonprofit budgeting.

Project Budget

All budgets have two common elements: your estimate of the true costs of the project and your anticipated income to meet those costs. Your expenses will be direct costs—any personnel and non-personnel costs that you wouldn’t have if you didn’t have the project–and indirect or hidden costs, also known as administrative costs or overhead. Your income consists of any grants or contributions plus any earned income earmarked for the project, such as ticket sales or fees for services.

Some different approaches to budgeting:
  • Income-based budgets first determine how much income you realistically think you can count on and then include expenses that can be covered by that amount.
  • Incremental budgets are a percentage increase or decrease of an existing budget.
  • Zero-based budgets start at the very beginning, examining priorities and testing all assumptions about where money will come from and how it will be spent.

Remember a budget describes your project in numbers just as your proposal describes it in words. To create an effective budget, make sure you know your project thoroughly. Many funders will look at the budget component of your proposal before they read anything else.

Other basic nonprofit budgets:
  • Organization-wide operating budgets: For small nonprofits with just one program, the proposal budget and organizational budget might be the same. For larger nonprofits, an organization-wide operating budget accounts for everything the nonprofit spends to carry out, evaluate and administer all its programs and activities.
  • Capital Budgets: Used for construction and other big, one-time spending projects that often take more than a fiscal year to pay for.
  • Cash Flow Budgets (Cash Flow Forecasts): An essential planning schedule that tracks when money is expected to come in and go out.
  • Opportunity Budgets: An expansion planning tool that can be used whenever extra funding becomes available.

As you can see, budgeting is a process. Here is a checklist to help you get started.

Listed below are websites where we’ve found samples and instructions on creating a nonprofit budget.

Exploring Success Strategies for Nonprofit Mergers

The number of US nonprofits actually grew 7 percent between 2007 and 2011 to 1.58 million, an average of nearly 40 nonprofits per US zip code.   But the rate of mergers in the nonprofit sector has remained flat.  This is unfortunate.  Mergers can make good sense for many nonprofit organizations.  But there are challenges on the way to achieving success.  Below is a checklist from some of the best of the “nonprofit merger” literature to help Boards and Executives get started thinking about this opportunity.

Nonprofit Mergers Most Likely to Succeed
  1. Done for strategic reasons
    • Combining separate competencies
    • Joining contiguous or related geographical areas
    • Join a larger related organization to preserve
    • Combine different services for same target population
  2. Done in response to external forces:
    • Competitors
    • Shifts in government policies and practices
    • Need for financial stability
      • Through scale
      • Through more financially stable partner
  3. Done with prior experience:
    • Pre-existing collaborative relationship
    • History of previous mergers
    • Navigation with experienced 3rd party facilitators or “honest brokers” who can mediate and guide both parties
  4. Done with strong leadership
    • Effective Board advocacy and participation
    • Structured planning process to step through the merge stages
  5. Done between
    • Organizations of significantly different size
    • Typically organizations under $3MM and organizations over $10MM
  6. Done in a market where there are barriers to organic growth
    • A relatively saturated market, with the target population already covered
    • A service requiring much investment in time to grow provider networks and in facilities to serve the specific population
    • Situations where “deciders” (parents, referring organizations, state and local governmental agencies) want a strong local brand
    • A service that is highly regulated requiring facilities and staff that meet rigorous licensing and accreditation.
  7. Done with the help of philanthropic leadership
    • Philanthropy provides information to nonprofits on how to think about mergers
    • Philanthropy offers assistance to identify potential merger opportunities
    • Philanthropy plays a “matchmaker” role between nonprofits
    • Philanthropy provides funding for facilitating a joint process of exploring options and creating a roadmap by the potential merge organizations
    • Philanthropy provides funding for due diligence and post-merger integration
    • Intermediaries experienced with nonprofits and with M&A exist to assist
Benefits of Merger & Acquisition for Nonprofits

  1. Improve the quality of existing services (e.g., enhance programs, training, and supervision)
  2. Improve the efficiency in existing services (e.g., use assets more effectively, reduce overhead)
  3. Increase funding (e.g., gain access to better fundraising capabilities or build effective new relationships)
  4. Develop new skills (e.g., acquire new program expertise, leadership capacities)
  5. Enter new geographies (e.g., overcome barriers to entry, build community relationships)
Warning Signs of Potential Problems Ahead
  1. Motivated primarily by fiscal distress and/or leadership change
  2. Legacy, founder and mission constraints
  3. Branding and naming concerns
  4. Fear of excessive debt risk
Stumbling Blocks to Anticipate
  1. Getting the boards aligned (data, culture, communication, transparency, trust, shared vision)
  2. Finding roles for senior staff
  3. Blending the brands
Why Aren’t There More Mergers
  1. Lack of knowledge about when and how to think about mergers and acquisitions.
  2. Dearth of funding for due diligence and post-merger integration
  3. Lack of matchmakers to create an efficient “organizational marketplace” through which nonprofits could explore potential merger options.
  4. Tendency to look at mergers reactively, as a route out of financial distress or leadership vacuums instead of proactively as an effective growth strategy.
When In Doubt, Consider Alternatives To Merging
  1. Collaboration
  2. Partnering on projects
  3. Share information and best practices
  4. Formal partnership
  5. Joint venture
  6. Share space, services, staff, revenue, marketing
  7. Memorandums of understanding
  8. Talk, get acquainted

 

For more information, see:

Nonprofit Mergers: New Study Sees Strategy and Success by Don Haider, in NPQ, Nonprofit Quarterly, Jan. 11, 2017  https://nonprofitquarterly.org/2017/01/11/nonprofit-mergers-look-contexts-indicators-success/

Why Nonprofit Mergers Continue to Lag  by Katie Smith Milway, Maria Orozco, & Cristina Botero, Bridgespan, in Stanford Social Innovation Review, Spring 2014    https://ssir.org/articles/entry/why_nonprofit_mergers_continue_to_lag

Nonprofit Collaboration Database (http://grantspace.org/collaboration)  in Foundation Center website.  Provides detailed information on more than 650 collaborations nominated for the Lodestar Foundation Collaboration Prize and other collaborations self-reported by participants.

Success Factors in Nonprofit Mergers” , (http://www.minnesotanonprofits.org/events-training/2012-joint-annual-conference-handouts/Nonprofit_Realignment_2.pdf)  a Study of 41 Minnesota nonprofit mergers, 1999-2010, by MAP for nonprofits and Wilder Foundation,  July 2012

What Do We Know About Nonprofit Mergers?, (http://www.mapfornonprofits.org/wp-content/uploads/2013/10/What-do-we-know-about-nonprofit-mergers.pdf   )  Findings from a literature review, focus group and key informant interviews. By  Wilder Research and MAP for Nonprofits, March 2011.

The Nonprofit Mergers Workbooks by La Piana Consulting   Part 1:  The Leader’s Guide to Considering, Negotiating, and Executing a Merger – (See more at:   Part 2  Unifying the Organization after a Merger

An Example of Strategic Mergers in the Nonprofit Sector: Arizona Children’s Association,
by  Jean Butzen, in Stanford Social Innovation Review, Dec. 12, 2009

Bringing Mergers and Acquisitions to the Nonprofit Mainstream New research from Bridgespan suggests the benefits of M&A are not just for the for-profit sector.  What donors need to know.  By Alex Cortez, William Foster, and Katie Smith Milway;  in Philanthropy, Spring 2009

M&A In The Nonprofit Sector: Managing Merger Negotiations and Integration, by David La Piana, Michaela Hayes, 2006

IES Helps MetroWest & CAN-DO Nonprofits to Merge

Nonprofits Announce Merge to Better Meet Affordable Housing Needs

Long-time Newton-based nonprofit Citizens for Affordable Housing in Newton Development Organization (CAN-DO) announces its affiliation, as of January 1, with Metro West Collaborative Development, Inc., also of Newton. Both organizations say that their affiliation move will help grow and support affordable housing in the area.  On February 1 Metro West will take over management of the CAN-DO properties through its offices on Chapel Street in Newton.

“CAN-DO was attracted to becoming an organization with a more diverse collection of income sources and the opportunity of working in numerous towns said Susan Davidoff, president of the CAN-DO board of directors.  “CAN-DO will not change its name and will continue to own its properties, but it is now an affiliate of Metro West,”

After consultation with its corporate and individual contributors, partner organizations, and appointed and elected officials, the CAN-DO board of directors determined that the best way forward was to affiliate with another nonprofit housing organization.  This move is the culmination of a process commenced by CAN‑DO three years ago, in response to the growing challenges associated with developing affordable housing in Newton and the anticipated retirement of its co-founder and long-time executive director, Josephine McNeil.

“Both organizations believe that their long-term sustainability will be improved by an affiliation,” said CAN-DO executive director Josephine McNeil. McNeil will officially retire as of February 1, but will continue to serve as CAN-DO’s executive director emeritus through June to help with the transition and organize CAN-DO’s 14th Annual Celebration. McNeil was one of the organizing members of CAN-DO and its first president of the board of directors.

“Metro West was attracted to the idea of working in the largest municipality in its catchment area,” said Jennifer Van Campen, executive director of Metro West. “Working with CAN-DO in Newton increases the opportunities for both organizations.”

Metro West and CAN-DO received funding from LISC to explore and facilitate the process of merging their two organizations.  They hired Interim Executive Solutions (IES) which provided N. Paul TonThat, Barbara Thornton and Christian Dame to assist the organizations in designing a process to step through the questions, concerns, community, financial and legal hurdles involved in the merger.

CAN-DO was founded in 1994 as a nonprofit developer of affordable housing for low- and moderate-income individuals and families in Newton. The organization has created 44 housing units in Newton, including transitional housing for victims of domestic violence, a congregate building for individuals with developmental disabilities, permanent rental apartments, and condominium units. Thirty-seven of these units are deed-restricted and will remain affordable in perpetuity.

Metro West Collaborative Development is a regional nonprofit community development corporation whose mission is to develop 100 units of affordable housing over the next five years in its 21 partner communities, and to encourage economic development that improves neighborhoods. Metro West has developed 57 affordable homes and apartments since 2003.

Each organization will continue to exist as an independent entity but will share an interlocked board that will govern both. Each organization will also continue to independently own its properties and to abide by the agreements pertaining to those properties.

On February 1 Metro West will take over management of the CAN-DO properties through its offices on Chapel Street in Newton.  The affiliation does not affect the requirements of occupancy nor impose any tenant re-screenings or new income certifications from tenants, except as regularly scheduled

Under the affiliation, the chairperson of the combined board will, for at least the first three years, be a resident of Newton. The agreement also provides that the combined board will establish a Support Services Subcommittee that will guide and oversee the combined organizations’ commitment to service-enriched housing. CAN-DO currently collaborates with local social service organizations and others to provide services to residents in several of its properties with the goal of securing more stable futures for themselves and their families. The goal of the subcommittee is to expand these services to all CAN-DO residents.

Each organization will retain the charitable contributions it raises. CAN-DO’s will continue to fund development and advocacy efforts in Newton.

CAN-DO will sponsor its annual fundraising gala, Yes In My Backyard, on March 12 at the Marriott in Newton. Tickets can be obtained by visiting www.newtoncando.org

The Metro West Collaborative Development offices are located at 79-B Chapel Street, Newton.

For information call Jennifer Van Campen (Metro West Collaborative Development, Inc.)  617-923-3505 x 4

Dashboard Data Moves Organization Forward

By Chris Moore

A nonprofit without a recently updated business plan & supporting intelligence dashboard is like a boat without its engine and navigation tools.  Does your nonprofit have a business plan?  Does it have a Business Intelligence Dashboard in place so that you and your management team are watching both leading and lagging indicators of success, and in real time?  If you answered no to either question, then your business operations may not be running at peak efficiency and effectiveness.  Our services help nonprofits improve operational outcomes so that they in turn can focus on their mission without distraction and interruption.

Approach:  What makes us different is that we don’t just begin working with your team and start changing things.  Instead, we create business intelligence that supports each aspect of your business plan so you know, in real time, that your business plan is being realized as it was intended.  If you don’t have a business plan or perhaps it is outdated, then we start there.  After creating or updating your business plan, the organization is ready for the implementation of a Business Intelligence Dashboard (BID).  The BID provides key performance indicators (KPIs) that are needed to understand the health of every aspect of your nonprofit’s activities.  And since the BID works in real time, you will know when problems exist when they are small so they don’t get out of control and eventually impact mission execution in a negative way.

Why do this? Increasingly, nonprofits are finding that: 1) their fee-for-service revenue is increasing as a percentage of all revenue, 2) Those organizations that make charitable donations want to know that you are running your nonprofit at peak efficiency so that their donation is maximized to its fullest and 3) It gives you a major advantage when seeking additional funding or new customers.

Case Study: Value of Dashboard Information

Current Situation:  A national nonprofit receives news that one of their largest financial contributors is changing direction, and as a result they will no longer be a financial donor.  The end result is that revenue will decline by 20% for the following year.  The remaining revenue is fee-for-service and the organization has a few months to expand operations and make up for the lost revenue.

Strategy:  A logical plan was presented to the Board that reflected an increase of new customers to accommodate the lost revenue.  The team felt confident that existing staff could absorb the additional work load and address the revenue shortage within six months.  The plan was presented to the Board for approval.

The Discussion:  An engaging discussion ensued after several questions were asked, “How do you plan on quickly increasing sales?  Who are your prospects?  Who is responsible for sales and what are their monthly goals?  Are the operations of the business scalable to support such rapid growth?  What is the utilization rates of exiting human resources and what are the FTE requirements by subject matter expertise to onboard new work?  What are the human resource variances of the proposed new organization as compared to the current state?  Are expenses well controlled to allow for hiring ahead of the revenue curve?  And if not, what is the finance strategy?  And most importantly, what does the Business Intelligence Dashboard say about leading key performance indicators of success?”

The Challenge:  Leadership realized quickly that they weren’t prepared to fully answer these questions, and their nonprofit needed to act very differently in a 100% fee-for-service model.  Before, any financial or service shortcomings were addressed by pulling funds from their financial donor.  Now, they have to ensure that 100% of fee-for-service revenue exceeded expenses.

Hypothesis:  Before the nonprofit was in a position to expand operations, it needed to answer the questions outlined above.  In short, it needed to know:

  1. How staff time was being allocated in relation to budget (this meant it needed to create a staff configuration plan for all employees).
  2. What customers were saying about their service in real time (not at the end of the year).
  3. Was its service model functioning as intended from the perspective of all constituent groups?

Solution:  IES was selected to create a comprehensive BID to answer these questions so management could adjust operations when and where necessary.  The exercise resulted in 1) streamlining operations, 2) creating data so that 26 business “touchpoints” could be realized, 3) and more closely managing fee-for-service revenue and expenses.

Outcome:  Two critical outcomes resulted.  First, the nonprofit quickly adapted its operations to work within fee-for-service revenue without dramatically impacting staff.  They worked smarter with greater productivity.  The second outcome was that the organization was positioned, vie the BID, to scale operations and at any given point in time, ensure that growth was nimble, agile and that any problems were quickly identified and managed.

A Nonprofit Turnaround Story

Christian W. Dame

by Christian Dame

The New England Shelter for Homeless Veterans  (NESHV) faced a crisis. Financial problems had caused the Commonwealth of Massachusetts to suspend state funding and the Board of Directors asked the CEO to resign. The Board then asked NPT’s principal Chris Dame to step in and take charge.

Chris assumed day-to-day operational control of a $6.1 million budget and 125 person staff serving 350 homeless clients daily, plus operating 45 apartments and a job training program for 600 other veterans in a 14 story building in downtown Boston, Massachusetts. Meeting the next payroll was problematic. The charge was to make the drastic changes necessary to save the organization from bankruptcy.

New England Shelter for Homeless Veterans

New England Shelter for Homeless Veterans

Over seven months NPT’s principal Chris Dame worked intensively with the Board of Directors, staff and consultants, and government grantors, to secure additional funding, re-organize the failing development office, complete the annual audit, re-examine the organization’s mission, staffing, and programs with an eye to reform, execute the a major reduction in force upon a program cancellation, and create a positive media image. All this was accomplished while continuing daily services to homeless clients, rebuilding staff morale, and improving corporate governance.

Chris also completed a major critique of the agency’s programs, staffing, and funding which was presented at the Board’s annual meeting, and set the stage for renewal and growth.

Finally Chris assisted the Board Chairman and the new CEO to effect a rapid and smooth transition to permanent leadership upon his departure. Today the New England Shelter for Homeless Veterans is living within its budget, has dramatically improved development results, is serving increased numbers of clients, and is winning new government grants to serve veteran of all types.

What people say about Chris Dame’s performance at NESHV

“…you have demonstrated great ability …during difficult times, …and distinguished yourself as a leader gaining the admiration of professional staff, clients, public figures and Board members, …and demonstrated by example …honesty, compassion, courage, generosity and courtesy…you are hereby recognized a true hero.”

Richard F. Griffin, Chairman, New England Shelter for Homeless Veterans

Cultivating Successful Executive Directors

by Alison Buckser, MP; Public Health Solutions

“Dream jobs” can be a lot of trouble. Imagine that, after years of doing excellent program work for a nonprofit you deeply respect, the board gives you the executive director (ED) position. You are finally able to lead your organization in truly fulfilling its mission. But now it’s two years later, and you are miserable and exhausted.  The board is angry, the staff is demoralized, and the finances are a mess. You are ready to quit and vow to never serve as an ED for anyone ever again.”  This case study illustrates some of the challenges for Executive and Interim Executive Directors managing in the Nonprofit sector.

Introduction

This story has been heard far too often. Inexperienced EDs are hired and are not able meet all the demands of the position.  In two to three years, they leave and the nonprofit organization must search for an ED again. This means energy and focus are taken away from the mission of the organization as it struggles to replace its leader.

Over the last three months, the author spoke with 22 Rhode Island leaders with a stake in nonprofit capacity building.  These leaders represent foundations, state agencies, academia, for-profit firms, consultants, and several successful executive directors. Several overarching themes emerged from the 20-plus hours of conversation. First, lack of ED capacity is a huge problem for the nonprofit sector. Second, EDs are in need of assistance in two key areas: peer support and an understanding of key skill sets. Third, support can best be provided through mentoring and a series of trainings/long term program such as a fellowship program. This concept paper will explore how the interviews addressed these themes.

Problem

ED capacity issues begin with the hiring process. Nonprofits typically ask their leaders to do complex, varied, and intense jobs for very modest pay. When hiring an ED, nonprofit organizations often face the choice of hiring a candidate with extensive experience but who commands a higher salary or an inexperienced candidate with great promise and enthusiasm but limited experience with and understanding of the demands of the position.  Occasionally the board decides to raise the additional funds and hire the more experienced candidate. However, many times the board does not feel that they can afford the more experienced candidate and are convinced that, with support, the inexperienced candidate will be able to do job.

 Interviews suggest that nonprofit boards often overestimate the ability of the ED candidate to gain the necessary proficiencies. To be successful, the ED needs passion, vision, strategy, an entrepreneurial attitude, and a host of skills. This combination of attitudes and skills are best developed through practice, but an individual who leaps from program work to the ED position has bypassed the supervisory stages in which they would be learned. As these EDs scramble to keep up with all the suddenly appearing demands, they often put in unsustainable numbers of work hours. Sometimes EDs are able to learn quickly enough to make a successful transition. All too often, EDs are worn out and drop out after two or three years of this pace.

 This capacity problem seems to depend on the size of the organization. Large organizations such as Planned Parenthood and the United Way have systems in place for executive leadership training. Large nonprofits also may have career paths within the organization to develop the leadership skills. Small and medium size nonprofits tend not to have any succession planning or the ability to create a career ladder that provides the necessarily diverse set of experiences.  In addition, there is not enough professional development for staff as a benefit.

 The problem of unprepared and inexperienced EDs has larger implications than failing to meet an individual organization’s mission. Several studies point to a looming dearth of nonprofit leaders.  By putting potentially strong candidates in ED jobs for which they are not ready, these promising individuals are demoralized and unlikely to fill the growing leadership gap.

Needs

Interviews consistently pointed to the loneliness of the position and the need for a cohort.  EDs do not have a peer set to complain to or to vent to or to ask for advice. For obvious reasons, they cannot talk to their staff, boards or funders about their problems. A cohort of other EDs would provide EDs with someone to talk to about the issues they face on a daily basis.  Peers are able to understand the problems that arise and are therefore better able to encourage and console.  Due to the intense time demands on EDs, any cohort building or networking opportunity must include a concrete educational component or takeaway for EDs to want to participate; this was determined after a previous attempt to provide EDs with such opportunities was unsuccessful.

 It became apparent during the interviews that the biggest problem most inexperienced EDs face is that they do not know what they do not know. EDs need to understand a wide-ranging mix of very specific skills, including:

>     Finance

>     Fundraising

>     Ethics

>     Human Resources

>    Personnel management

>    Legal issues

>     Strategic planning

>     Succession planning

>     Board development

EDs constantly face questions relating to these skills. How do you fire someone? How do you delegate an important task to a staffperson? How do you adapt to your new board chair? How do you prepare and present a budget? How do you show your major funder the effectiveness of your program? The inexperienced ED is often unprepared to answer these questions. The successful EDs who were interviewed knew the importance of understanding their limitations and how to find support to buttress those limitations.   One interviewee stated that successful EDs know what they do well and what they don’t do well; if he did not know how to do something, he would find an expert to help. Another worked tirelessly to build a board that could support her. All the successful EDs balanced a business mindset with a passion for their organizational mission. All described their organizations as businesses and spoke of the struggle between “running the business” and doing the program work.

Support

Long-term programs are better suited to build cohorts than short-term programs. Simple networking events or spot trainings tend not to create a trusted cohort, since it takes time and repeated encounters to build trust.  Long-term programs are able to build upon and reinforce the knowledge base. Long-term programs also enable better peer learning as the participants learn how to work with each other over time.

 Many interviews spoke to the importance of mentorship.  Seasoned professionals provide information on the intangibles that cannot be taught, such as managerial style.  Often a mentor can answer questions that EDs are too embarrassed to ask a group, even a trusted group. Also, a mentor could provide industry specific information and advice if there is a diverse mix of fields.

Fellowship program

Interviews discussed how a comprehensive, yearlong ED fellowship program could be an effective means of addressing the needs and giving support.  Such a program should provide an overview of the issues that EDs need to know as well as an understanding of how to obtain them.  The program would need to provide training on specific skills, such as reading a budget or preparing an employee handbook. The goals of such a fellowship program should include providing a:

>     Trusted cohort for the ED to turn to for consolation and encouragement,

>     Mentoring system of seasoned professionals to give advice,

>     General understanding of the skill sets that successful EDs must have,

>    Information on how to obtain expert assistance and build support, and

>     Enough training in concrete skills to help EDs through the transition period.

This type of fellowship program would complement and feed into existing training initiatives. Academia and foundations currently offer many good programs with specific use for EDs. The academic programs are excellent opportunities for in-depth study but require a higher level of commitment than most EDs can afford. (Out-of-state schools also face the challenge of convincing Rhode Islanders to travel more than 45 minutes.) However, they are a great resource for those EDs who are willing to invest in mastering a subject introduced in a fellowship program. The majority of foundation trainings are one-time offerings. But they are excellent and present an ideal environment for EDs to gain more information about a specific topic that they are introduced to in a fellowship program.

 Interviews identified two major challenges to creating this type of ED fellowship program. First is how to pay for the program.  The cost of a fellowship program would be related to its structure.  More participants would mean higher costs, but larger groups would also mean that there could be affinity groups. In the last 10 years, there have been at least three other efforts to develop nonprofit support centers but each effort failed since nonprofits were not willing to pay for the support. A fellowship program would need to rely on several funding streams, such as grants, sponsorships, and marketing resources.

 The second issue would be how to keep people engaged for the duration of the program. Lack of commitment to complete the program would undermine the cohort aspect. Leadership RI has been successful with its intensive year-long program, but LRI has prestige and a hard won reputation. The training program would need to demonstrate tangible rewards. Several interviewees felt that linking a training program to an academic organization could add the needed prestige.

Conclusion

Winning the “dream job” should be a wonderful opportunity, not a nightmare. Nonprofits exist because individuals are willing to invest their time and band together to address a real need. Collectively we need to support those leaders willing to invest their energy and passion and talents to achieving the mission and meeting the need.

Capacity Building Tips for a Stronger Nonprofit

Christian W. Dame

by Christian Dame

A Crowded Field

The National Center for Charitable Statistics’ website reports that Massachusetts has 19,037 nonprofits who reported financial information to the IRS in 2008, 34.4 nonprofit organizations for every 10,000 residents. Rhode Island, surprisingly, had almost a quarter as many – 4349 or 47.4 per 10,000 population. Neither of these rates compares favorably with large conservative states like Texas (20.3) or even other, larger liberal states like New York (28.4) or California (22.6). New England seems to grow nonprofits almost twice as fast as everybody else.If there are too many organizations chasing too few donor dollars, then the nonprofit sector may have entered a survival-of-the-fittest period. A crucial concern for individual nonprofit leaders and Boards then becomes how to survive.

Doing Better

From their recent announcements it would appear that at least one part of The Boston Foundation and United Way Rhode Island’s answer is to advise nonprofits to do better before they do more. And how will financially struggling organizations find out how to “do better” by improving their capacity? By finding out what they don’t know about their capacity through completing an organizational self-assessment and then doing something to address the findings.

Building the frame for a stronger organization.

The good news for cash-strapped nonprofits is that easy-to-access tools are readily available on the World Wide Web. Two in particular are free, can be downloaded for use by Board members, executive leaders and senior staff, and don’t require a statistical degree to fill out and interpret.

Free Tools

The Marguerite Casey Foundation Organizational Capacity Assessment Tool was one of the first such instruments to be developed. The foundation website accurately describes it as a “self assessment instrument that helps nonprofits identify capacity strengths and challenges and establish capacity building goals”. Conveniently arranged on a self-scoring spreadsheet, the assessment’s 59 capacity elements are divided into four parts: Leadership Capacity; Adaptive Capacity; Management Capacity, and Operational Capacity. It takes about an hour to fill out thoughtfully, and the foundation website then provides a helpful numerical score and graph. Local leaders and Board members can inexpensively obtain some penetrating insights by investing an hour on the Casey Capacity Assessment Tool and comparing their scores.

If the Casey Tool looks too complicated, then a good alternative, also free on the web, is the “Nonprofit Organization Self-Assessment Tool” developed by Technical Assistance for Community Services in Portland Oregon. TACS’s tool asks nonprofit leaders to answer qualitatively (don’t know; inadequately achieved; partially achieved; or fully achieved) ninety questions arranged in 7 focus areas: Board Governance; Planning and Evaluation; Financial Management; Personnel Management; Public and Community Relations; Financial Condition; and Funding Strategies. Again, nonprofit leaders will learn quite a bit about their organizations with a little introspection and a lot of honesty.

Looking Better

Completing either the Casey self-assessment or the TACS self-assessment isn’t likely to automatically advance a nonprofit to the head of grantee line with either The Boston Foundation or United Way of Rhode Island. It will, however, give leaders challenging new insights about their organizational capacity. Combined with a strategic planning process and an action plan for change, it’s also likely to both position their organization to survive the hard times and to look better to potential donors in the future.

Unhappy Endings

According to Daring to Lead 2006: A National Study of Nonprofit Executive Leadership, a recent report from CompassPoint Nonprofit Services and the Meyer Foundation, an executive is forced out or fired in an estimated 34 percent of nonprofit transitions.

Dismissing an executive, for whatever reason, can be particularly challenging for boards and for the transition process more broadly. An outright confrontation with a CEO who is underperforming is not appealing. Many board members avoid the situation or quietly resign.

In addition to creating the threat of a wrongful termination lawsuit, firing an executive can lead to a sense of crisis, raising the transition stakes even higher. Often boards “don’t know whether to hire first or plan first,” says Jan Masaoka, former Executive Director of CompassPoint Nonprofit Services and the editor of Board Café, an e-newsletter for board leaders . “It’s no wonder some boards make a weak hire when they feel rushed or under pressure.”

In addition to pursuing the appropriate steps to lower the risk of a suit, boards can resist this pressure. They can communicate clearly with staff and stakeholders about the dismissal and find an appropriate interim executive director to stabilize the organization. From there, they can follow a more thoughtful transition process that prepares the agency for a more powerful future.

Unhappy Endings

According to Daring to Lead 2006: A National Study of Nonprofit Executive Leadership, a recent report from CompassPoint Nonprofit Services and the Meyer Foundation, an executive is forced out or fired in an estimated 34 percent of nonprofit transitions.

Dismissing an executive, for whatever reason, can be particularly challenging for boards and for the transition process more broadly. An outright confrontation with a CEO who is underperforming is not appealing.Many board members avoid the situation or quietly resign.

In addition to creating the threat of a wrongful termination lawsuit, firing an executive can lead to a sense of crisis, raising the transition stakes even higher.  Often boards “don’t know whether to hire first or plan first,” says Jan Masaoka, former Executive Director of CompassPoint Nonprofit Services and the editor of Board Café, an e-newsletter for board leaders . “It’s no wonder some boards make a weak hire when they feel rushed or under pressure.”

In addition to pursuing the appropriate steps to lower the risk of a suit, boards can resist this pressure.  They can communicate clearly with staff and stakeholders about the dismissal and find an appropriate interim executive director to stabilize the organization.  From there, they can follow a more thoughtful transition process that prepares the agency for a more powerful future.