Preparing to Have a Board, Part 2

Picking up from Friday, we were enumerating the steps that one would ideally use to set up a new board of directors for a nascent nonprofit in a way that would lead to solid governance and steer clear of any elements of dyscfunctionality. Just to summarize where we were at the end of the last post:

Step 1 was understanding the problems and successes of other similar charities that already exist.

Step 2 was taking at least a year to find and recruit the board members in advance of starting the charity up.

Step 3 was writing the board job descriptioon, plus individual job descriptions for each of the board members.

4. My next step would be to lay out a plan for the recruitment and installation of my new board members. This plan would have nine elements:
1. Generate a list of good prospects according to a list of needs for skills, money and governance experience. This is the result of the board's brainstorming a list from their personal and business acquaintances, and represents the extent of the organization's ability to tap into community leadership. This list will hopefully grow longer over the years.

2. Personally recruit the best of those prospects first, making sure they understand the job description, have had nonprofit governance experience, and know the organization. Board members take on specific personal recruitment assignments from among the best prospects. Those who accept the invitation to consider board membership are given an orientation and a tour, plus attend 1 or 2 board meetings in order to inform themselves about the organization and this should factor into their decision ultimately whether or not to join the board.

3. Install them with public ceremony in front of their peers and family; let everyone know how valuable these people are to the organization and how much is expected from them. The press should be involved. The event could be an annual meeting, with dinner, or maybe done as part of an awards ceremony or public charity auction event.

4. Train them in what they are to do – both collectively as a board, and individually in terms of where they will be serving as volunteers to the organization's fundraising or program efforts. This means both group training and individual coaching and mentoring for the new board members. Incumbent board members should be assigned to do this mentoring and the executive director will assist with coaching.

5. Evaluate them annually on their performance according to a process that the board devises together, commits to paper and enforces with its action. New board members should be apprised not only of the job descriptions (collective and individual) but of the performance standards as well. An evaluation process should be set up whereby annually each board member's performance is evaluated and the performance of the board as a whole is judged.

6. Give them more training when individuals shift their personal volunteer contributions from one area of the work to another. Board members need fairly constant training, either in various aspects of fundraising, or in the areas of governance, finance, program development. A steady stream of training opportunities should be devised for the board's ongoing training.

7. Set term limits for board members so they can see "the light at the end of the tunnel" and don't come to feel as if there's never going to be an end to this commitment.

8. De-brief them before they leave the Board – finding out what they have learned about our methods and practices, about our community image, about our support in the community and what we can do to continually enhance that support.

9. Have a formal "Letting go" ceremony to thank them and praise them in front of their family and peers for their excellent service to the organization. A formal way to say thanks for a job well done is afforded by such a ceremony. It's also a way to bring closure on each board member's term.

That's how I would set out the plan for board recruitment. Not a three-stage process (ask them, put them on, never let them go) but a 9-step process that does a good job of stewardship of the time, talents and experience of each board member as well as of the board as a whole.

See you tomorrow. Happy New Year! And best wishes to all the readers of this blog for a Happy and Prosperous New Year.

Preparing to Have a Board

Here's the way I'd like to see nonprofit boards set up right from the beginning. I think this way would virtually eliminate dysfunctional nonprofits, it would nip founder-itis in the bud; it would result in a much more efficient and effective nonprofit serving the community; and it would broaden and deepen the community support for mission accomplishment. Here's the way I would do it:

1. At the very beginning, when thinking through the concept of the charity's role and mission in the community, I would become seriously involved in volunteering for several charities who are serving my target population or serving people in some way like the people I want to serve with my charity. I would get into their problems and see, both from the program side and the fundraising view, what those problems are and how they are caused.

2. Next, I would take a year to find board leadership for my charity. I would go to community leaders and those who support other charities and ask them their opinions about a new start-up in the arena in which I want my charity to serve. I would ask them what they see the needs are; would ask them what governance qualities are needed; I would ask whether they would financially support such a start-up.

3. Then I would write a board job description so that my incoming board members would know right up front what was expected from them. I would also draft a set of performance standards and a process of board member evaluation, and put that before prospective board members. That job description would contain at least the following elements:
a. Give active and visible support for the nonprofit throughout the community
b. Significant personal annual giving to the nonprofit
c. Strategic planning as a regular board agenda item
d. Attendance at board meetings, special events
e. Take on committee assignments and attendance at those committee meetings
f. Satisfaction of other evaluation measurements

Now, here, I'll just bet you're saying, "Yeah, and you'll have no board members, too!" And you might be right. But many times I have seen a nonprofit board adopt this kind of job description and within a year or two everybody in town wants to be on that board. Why? Because when the job description is rigorous, the board gets a lot done and the nonprofit starts to move in healthy directions. People in the community can see this; they hear about it from the grapevine. And leaders will tend to go where leadership is needed and appreciated.

Now, if it does happen that leaders identified by a nonprofit board as potential board members do balk at a more rigorous approach to their job description, there's significance in that, too. Either we're asking the wrong folks, or the community's leadership isn't appropriate for board membership. Either way, it's something we need to pay attention to, and deal with. Not by watering down on the charity's governance job description, but by finding leadership that will really lead and govern.

It's tough, yes. But if we did it that way, we wouldn't have so many little mom and pop charities springing up all over the place and then fizzling and running into fundraising trouble in a few years. And a lot of would-be founders with great ideas would be satisfied with volunteering for and working within existing organizations, making them better and more effective instead of going off and founding their own charity and expecting it to grow into something useful to society.

Ah, but we must return to the steps of building a governing board. More on Monday.

10-Year Crisis Starts in the Boardroom

I knew an executive director and founder of a charity once who was a voting member of the board, made up the agenda, brought it to the board meeting, ran the board meeting (even when the chairman was there) and wrote up the minutes a few days later and mailed them out. Nothing was going to get by this lady, and she would brook no interference with, or viewpoints other than, the perspective she brought to the boardroom table.

But the board members were also complicit in this behavior. Everyone on the board was a personal and social friend of the founder/executive. So no one was really inclined to do much that would mar the surface of that continuing friendship.

But more than that, there was an implicit trade-off in the relationship. The founder let the board members off the hook, so far as giving to the organization was concerned, in exchange for nobody pressing on any governance issues. And, in fact, all the board members were busy with their own problems and affairs, so none gave the time to finding out what charitable boards should be all about.

No one delved into the operations of the organization, beyond approving the annual budget as presented by the founder herself. So they pretty much allowed her to do as she pleased, giving bits and pieces of advice along the way, helping out where possible and necessary. But the whole board process consisted of letting the founder run things as she saw fit. They also let the founder carry all the burden and do all the work.

Dysfunctionality in a nonprofit board doesn't exist in a vacuum. It takes "two to tango" so to speak, and it is necessary for the board of a dysfunctional nonprofit to be complicit in the dysfunctionality.

Now, here, I want to take a bit of a digression to say that over the years I've seen many small nonprofits who aren't really dysfunctional, but go about the process of recruiting and installing board members in such a way as to subvert the real power that good governance can bring to a nonprofit.

These are the nonprofits whose executives use a process of recruitment that I would call "If it moves, put it on the board."
--If someone gives a $500 check a couple of times, "put her on the board."
--If someone volunteers frequently, or turns out to be a major help with the annual fundraiser event, "put him on the board."
--If someone makes a suggestion that turns out well for either fundraising or program, "put her on the board."
--If the founder/executive is looking around the community for donors with capacity, and she finds Mr. and Mrs. Successful, then "let's get them on the board, maybe they'll give to us."
--If he can fog a mirror, "put him on the board."

That's the way to develop a board that a. has no idea of its function; b. knows nothing about governance, and c. has a very good chance of dissolving into fractious disputes over time that detract from any true governance that might have been possible. So by the very nature of this type of board member recruitment process, the executive sets up the board for failure at is primary task.

More tomorrow.

Seven Steps to Fundraising Dysfunctionality

What's going on here is that our founder, now called the Executive Director (he/she is actually in charge of something now, and that feels good), is going to go right for the jugular of the perceived problem or lack in the social order and begin work with the target population.

That's where the payoff is going to be: feeling all that warmth and goodness when we've serve the hungry their meal, educated the mentally disabled children, trained the dogs, taught the kids to read, or whatever it is that we're doing. I've heard this from so many: "This is what I'm really good at; this is what I enjoy; all the rest of it [fundraising, governance, marketing, planning] is stuff I don't like to do; let's get on with giving the service."

But this is just the beginning of a path that develops and has the potential of taking the founder ever further from public accountability. Here are the seven steps I see on that path to fundraising dysfunctionality:

1. In the start-up phase these individuals who are founders of nonprofits are in a hurry to start service, and are very much not in a hurry to find or demonstrate significant public support for what they are doing.

2. They gather a group of like-minded (or even just supportive) people around them as a board of directors. No job description; no governance direction; no performance standards, no public accountability. We only need to satisfy the IRS regulations. Not important, right?

3. Then the next step is to be "all things to all people" – a broader and deeper reach into the problem. This results because "nobody can do it as good as I can" and the new founder is at pains to make sure all volunteers and the few staff that are needed to help with the work are fully indoctrinated with the "founder is right" mentality.

4. Next comes the turf-building: "We're the best; people should support us" mentality. This is helped along by the fact that the founder sits alone late at night or early in the morning writing grant proposals to foundations – not out in the hustings meeting and greeting and talking with lots of donors and prospects. So the viewpoint can become a bit jaded.

5. And as we descend further into dysfunctionality, we see that a plethora of daily tasks cannot be delegated because "nobody thinks like I think on this issue." So the executive/founder does more and more, getting busier and busier. This occasions lots of "fires" and minor/major crises that need to be put out and resolved.

6. This leads to a perfectly valid excuse for not getting very involved in good fundraising practice: "I don't have the time" when it comes to contacting and personally cultivating donors and prospects. Fundraising is limited to what the founder can handle: events and grants; maybe a mailing once a year to friends. But doing point-of-entry events for multiple prospects, marshalling volunteers in support of a serious fundraising program, and personally cultivating prospects is now almost completely out of the question.

7. And as we slide even further, "I don't need a team on this; I know what I'm doing. And if we must have a team, then let it be a board I can control. I'll nominate my friends; but I definitely don't want to have someone 'governing' me." This is one of the strongest signals of dysfunctionality in the organization. When the founder/executive gets to the point where it is of critical importance that the board NOT bring good governance principles to bear, then we really have another dysfunctional nonprofit on our hands.

So, speaking of governance, let's move from the "doing good" arena into the nonprofit boardroom and see what's happening there. Here's another area where a different strategy in the start-up phase could make a big difference in keeping nonprofits from becoming dysfunctiona in their fundraisingl

See you tomorrow!

Proliferating Nonprofits: What Can We Do?

At this point, let's take a wider view, and we can see why so many of the foundations are carrying on a dialogue (have you followed this in "Foundation News and Commentary" magazine?) about collaboration, consolidation and coordination of charitable efforts within discreet fields of charitable interests.

Why is it that we have "248" (whatever the number is) human services groups in a city of less than a million people? Why is it that arts institutions duplicate services and vie for the limited money that is available to them? How can foundations, or any donor for that matter, make grants/gifts that use resources wisely and efficiently as well as effectively? In short, how can we rid ourselves of all these little "mom and pop" charities that are sprouting up all over the place demanding financial resources that are already scarce?

I remember that (back in the 1980s) it used to take a couple of years and you had to jump through a hundred hoops before you could get a 501-c-3 status letter from the IRS. Now they give 'em out like candy and figure that if you mis-behave, they'll get you sooner or later, and beyond that taxable interest they really don't mind what happens out there in charityland. So now anybody can be a nonprofit organization. But what's the alternative?

Well, how about changing the way we proceed to the initial concept in the first place, and having those individual founders refrain from the temptation to set up another nonprofit organization just because they have an idea for service? Why not set in motion a series of steps that help such nonprofit founders stop and think seriously about seconding themselves to some already-established charity?

Why not, for example, have them defend, in a public forum, their plan of service, their plan of fundraising, their tests of the marketplace, the commitment of their initial boards of directors? Why not require an initial capitalization that would take the charity through the first three years of service? Why not require a start-up to have a minimum amount of fundraising infrastructure in place and, again, a public demonstration that they have the necessary pool of donors and prospects, who not only agree with them, but will financially support them in the future?

There's a concept for a charity start-up that might work a little better, and avoid fundraising spinout and dysfunctionality due to founder-itis. A little public oversight might go a long way to help this over-saturation of the economy with nonprofits.

But to ask, or even demand, this more reflective and collaborative approach of the literally thousands of founders of new nonprofits would, most likely, violate three important factors:

• a. it would violate the individual founder's belief that their perception, their plan, their way of doing things is the right way (This is the "I have a better mouse facilitation method than anybody else" routine);
  
• b. it would in many instances publicly demonstrate the individual founder's inability to deal with, or determination to cut through and cut out, all the politics and problems found in existing charitable organizations when it comes to correcting their problems and making them more effective and efficient servants of the public interest (This is the "I don't have the time, skills or inclination to deal with these peoples' problems in existing charities" stance);
  
• c. and it would stymie the ability of the individual to get more immediate personal satisfaction in meeting a problem head-on with action today rather than having to deal with the much slower process of researching and thinking things through carefully and then perhaps deciding that the best approach might be to second oneself to others and to process (This is the "I want my jollies now, thank you very much, and don't get in the way" point).

But let's move on to the next phase – getting to work as a newly minted nonprofit. What's going on there?

"On This Rock I will Build"

Founder-itis starts in the mind, with a disposition oriented towards individual decision and accomplishment. First there is the initial concept: "I can serve this need, I ought to serve this need, so therefore I will serve this need." Out of this initiative, dedication and focus the individual finds or creates avenues of service to a target population.

Then our service-oriented founder makes two discoveries: 1. to work effectively one needs other people to be involved, needs a structure and some organization; 2. to continue initial efforts and enlarge them one needs financial backing usually greater than one's own resources. To provide the resources, we need to be able to count on other people to give us money; and we know that there is a certain incentive added when the giving individual can make a gift that is tax deductible. We have in this country public policies that govern how an organization must be set up to receive both tax exemption for the charitable organization and a tax deduction for gifts made by donors.

So these two discoveries, coupled with the public policy that governs the voluntary sector, leads the service-oriented founder to create an organization that will carry out his/her personal mission using volunteers and paid staff provided by voluntary contributions from the public. This is something that we need to examine more closely, because it is in that interstice where trouble begins.

Let's take a closer look at the mental progression of ideas:

The founding individual starts with the thought "I want to serve this need. I can servie this need. I ought to serve this need." Then our founder moves to the tealization that "I need help from others and I need money." Third, the founder then makes the mental leap that concludes "I therefore need to create an organization that will carry out my mission and provide voluntarily contributed funds as a nonprofit organization."

Here is where founder-itis begins. It has to do with the involvement of other people, and with the desire to have more money that is contributed by others, and the desire to help motivate others to give by making one's organization a "Nonprofit" organization. And then the realization of this latter desire, being governed as it is by our society's public policy, necessitates the formation of a certain kind of organization, one that has certain attributes or characteristics that are going to complicate the founder's life considerably. These would include, for example, having to create a board of directors, a governance structure, then a corporation, then a corporate structure, a strategic plan, a budget, a fundraising mechanism, and so forth.

It is in this diversion, this mental twist of the road, that I believe lies the answer to why the troubles we lump together in the term "founder-itis" develop over time.

The reason a public charity in the U.S. works (back to Lawrence Lindsey's quote a few posts ago) is because a whole bunch of people come together to meet a community need. They all work on it; they volunteer for it; they give to it, they sustain it, they manage and govern it. It's a community effort; a team effort. People coming together, particularly in times of crisis, to meet a need; the community rallying around those of its members in need and helping ease pain or hardship or strife. That's the essence of the public charity: people coming together, forming a multi-faceted team, pooling resources of time, talent, skill and money.

What happens in a world where every Tom, Dick or Margaret is free to start up a "public charity" is that the founding person's individual idea (and ideal) forms the core of the new nonprofit. It isn't really a community response at all; it's the response of one, single individual, or one small group of like-minded souls who think they see a need, feel compelled to meet that need, and then want to try to get others involved in doing what the founder wants done the way the founder says it should be done. In my view, that's not a valid public charity. It may be so legally, but it is not so in terms of functionality. Because what so often results is dysfunctionality.
So what we have here is a two-pronged problem: First, what is ideally should be a community response to a crisis or need is now manifested as a single person's idea of what should be taking place in the community, regardless of what the wider community perceives or feels. I supposed some would say that in the era of "bowling alone" we should expect that. But I see it as a problem, because it results in the formation of a whole host of little fledgling organizations that purport to be "public trusts" that are, in fact, mostly based sonly on putting the individual's values, perception of need and drive for action ahead of any publicly held values, publicly perceived need and publicly supported action.

The true public charity is an efficient way to deliver services. The individual's charity is a relatively inefficient way to deliver services because it ends up in so much duplication of time, effort and use of financial resources. But I have not once seen individuals wanting to start up local nonprofits stop to realize the importance of the fact that nobody but a few friends and well-wishers are behind them; that they do not have the community's support and encouragement; that they are not leading a charge of public energy. And then they wonder why they get into trouble trying to raise funds from the public; they wonder why nobody supports the really good work they're doing.

Second, this results in a plethora of little charitable fiefdoms across the fabric of society, each one out there trying to serve the needs they perceive, arrest our attention and grab our cash to do what they want to do with it. So it becomes a kind of turf battle, with many smaller charities being set up in a community, each of which may be serving similar and overlapping populations.
Actually, this can result in a sort of "bum's paradise," if you're, for example, in the temporary shelter or prescription drug, or human services business. It means you (the "bum") can go to multiple charities and receive multiple benefits and instances of personal assistance. So now we have computerized systems set up across the county that track Joe and Sal and Mary as they go from one agency or charity to the next, and we electronically keep them from "double-dipping."
But that doesn't really solve the problem, it just polices the tendency of some to mis-use an already problematic situation where multiple charities and agencies are doing the same thing for the same people for the same three reasons: turf, turf, and turf.

I just know am going to get into further hot water tomorrow. But we've got to deal with this. I think it's an important issue.

Case Study (cont'd)

So let's examine this case study a little more closely and see if we can identify some elements of founder-itis that might be avoidable with patience, thought and planning.

Before we do this, however, it must be said that this case is not that unusual. I can think of four other organizations with whom I have worked on similar problems where the essential ingredients were almost exactly the same. It is interesting to note, too, that the same qualities for which we admire those leaders who found new businesses and new charity start-ups, are those that we eventually come to deplore in those who hang on too long. Charisma, enthusiasm, dedication to principle, ability to control and focus are two-edged swords that cut both ways when wielded consistently and with a heavy hand over long periods of time without being tempered by countervailing ideas and creative reinvention.

Here are some of the key ingredients from this case study:
1. The charity is a one-person show: governed, managed, staffed and programmed by one person. Certainly there were volunteers, but they were recruited and trained by the founder to do her method of teaching her way. There were two staff persons who, again, were under the total control of the founder.

2. The Board of Directors was formed of persons loyal to and personal friends of the founder; they had little motivation other than the relationship, no training, experience or skills for nonprofit governance; they were willing to let the founder do whatever she needed to do. The Board was set up to satisfy the IRS rules and regulations that call for public charities to have a board of directors in order to be granted the 501(c)(3) designation.

3. Fundraising was limited to activities the founder approved and was able to carry out on her own. Her daily schedule was a whirl of crises and putting out fires. She had little or no time to spend on planning or careful, methodical execution. There were no resources that could be appropriated to enhance fundraising infrastructure. Grants, special events and one or two dear loyal friends plus the founder's own bank account were the key sources of revenue.

4. The founder's personal and management style was one that reminded us of an autistic child with attention deficit disorder, and this became the style of doing business reflected both at the staff level on a day-to-day basis and in the work of the board of directors. Consequently, there was little planning, few instances of deliberative thought, no consistent follow up on matters of business, and an inability to set even a meeting agenda without constant interruption.

5. The founder's word, preferences, style and scope of options became those of the organization, and everyone associated with that charity publicly echoed that essential posture. So this was the set-up in our case study of founder-it s: a dysfunctional organization badly needing to have a productive fundraising effort, but unable to get an effective process going.

Tomorrow we'll deal with some of these elements in more detail, looking for ways to advise new start-up clients and keep them from falling prey down the road to founder-itis.

Case Study: "I just wanted to get started and show what could be done."

I am approached regularly by would-be start-up nonprofits. People come looking for whatever advice they need. Sometimes people seek fundraising advice, sometimes governance alternatives. Other times they want to know how to set up the new charity with the IRS. But rarely, if ever, does someone come and say "I'm thinking about doing this kind of work. What are some of the blocks and barriers going to be, and do I stand a chance of surviving long term?"

Mostly people seem to want self-affirmation; they want to know that their ideas about something are, generally, in the right direction. They are rarely prepared to accept criticism or negative comments; they don't seem to like a cautious approach and they seem to have little tolerance for much analysis, particularly if it cuts across their grain of an idea about how things should be.

One case I worked with is typical enough that I'll lift it up as a case study. The charity's request for assistance in fundraising involved a long-time school teacher who had developed over the years a marvelously effective method of teaching youngsters to read. This woman has some of the highest scores available today in teaching kids to read, write and think. The results this nonprofit gets each year are unbeatable, and they do improve over time. This gives the organization a great case for support.

I was enlisted by the founder's board to assist them in fundraising, with the first step in the process being a development audit to determine past and current fundraising practices and results. In the process of the development audit, it quickly became apparent that the organization had a serious case of founder-itis. The founder was the executive director, as well as an officer and voting member of the board. The board members were all long-time personal friends of the founder, pretty much ready to approve whatever she wanted to do.

The organization's management pattern tended to follow the founder's personal pattern of disjointed, unfocused thinking and planning. No idea was acceptable unless it fit the founder's personal preferences. Fundraising had come virtually to a halt after the first six years of operation. The board was allowed not to give; personal friends couldn't be solicited for major gifts, simply because of the "embarrassment" that would accrue to the personal relationship.

As I explored further into the organization's history, it was revealed that the founder had early on became embroiled in local school politics around the issue of the knowledge gap between white and African American students, advocating that the school system should be responsible for bringing minority students back into the literate mainstream. At some point the frustration of dealing with the political and bureaucratic process became too much, and this woman made a precipitous decision to start a literacy charity on her own, letting the schools stew in their own juices, but moving ahead to solve the problem on her own, at least for a few youngsters. Direct service to a few was preferred over an institutional solution.

Whether because of impatience, lack of political skill, lack of supporters or whatever, this charity was created to get action, now. And the resulting situation gives us a good case study in which to see the ingredients that eventually can lead to Founder-itis.

We'll deal with some of the implications of this approach tomorrow.

Everyone Wants to Start A Charity

We've gotten to the point where we now have more than 1,100,000 nonprofit organizations in our country registered under section 501(c)(3) of the Internal Revenue Code. Over the past 7 years, we have had annual increases in the range of 40,000 new charities per year.

Think of it: 40,000 new, fresh ideas of how to serve humankind; 40,000 individuals who have the courage and the fortitude and the personal resources to found a new charitable organization; 40,000 new boards that must be formed; 40,000 new fundraising mailings per year (if we're lucky they only mail once a year!); and 40,000 more auctions, golf outings and awards dinners for us to go to! What an opportunity!

It seems good ideas abound everywhere! Well, need abounds just about everywhere, too, doesn't it? It's part of the human condition. Especially if a person finds they are close to or involved in some personal tragedy. A good friend has children who can't read; the family member died of a rare illness; the people in the next section of town don't have enough for Christmas; the artist is not properly supported and recognized; the driver was drinking and killed someone. And there are always the hungry, the homeless, and the ever-present poor.

Not that I'm heartless. My heartstrings vibrate with human needs, misery and want just as much as those of the next person. But maybe I'm jaded because I've seen too many innocent attempts to put together nonprofits that are designed to bring short-term, band-aid solutions to situations that are by nature systemic and complicated, for causes that have been and remain intractable problems of human existence. If you want to make a significant difference in these kinds of problems, you'd better get prepared to go fight Goliath!

The story I hear most often has to do with the fact that the founder of the organization saw a need, looked around at his/her own experience, training, talents, and resources and said "I can/should/would/could help that situation." That person then decides to act on that impulse and get started alleviating the need: putting together Christmas baskets, advocating for more research to be done, planning the exhibition, teaching people to read or whatever needs to be done.

"I can help the situation," turns into "I can do this and this and that." which turns into "Let's get going and get it done," which leads to "let's go through whatever it takes to set it up so people can give and get a tax deduction," and so forth. There's a kind of reflexive movement from the personal in-touchness with need, right over to taking action on the problem, doing something about it.

In the rush, people tend to skip over a lot of thinking and planning steps that will make the charity more effective down the road. That's the American way, of course, and a lot of charities that exist today wouldn't be here if it weren't for that kind of direct logic train that isn't stopped by the need to think through and plan, but just moves ahead to action and results.

This is nothing if not a direct reflection of how we tend to handle many things in our society. American business has been built largely on that kind of model. We have the saying "build it and they will come." So, if we have a good idea about alleviating human need, we're not going to sit around and "ponder the imponderables," we're going to act on impulse, see what happens, see if we get results, see if we can make a difference in people's lives. And, if we can, then we feel such a tremendous sense of personal self-satisfaction that our next step is to make the effort to institutionalize it We want to feel that sense of achievement and satisfaction more often! It feels good. Let's have more of it!

It's a great start; the echo of many a business, many a charity, that has produced good results from which all of us benefit. No doubt about it. But the problem I want to point to here is what I and others have called "Founder-itis" in nonprofits. These are situations where the founder continues, often as the executive director, long past the point when the time has come to step aside and let others take over. It's a condition that has to do more with having control than it does really caring for the target population. It's a condition that, eventually, brings the effectiveness of these organizations to a standstill, wastes a tremendous amount of good effort and intention, and produces nothing in return but heartache and headache.

Founder-itis doesn't plague every nonprofit by any means. But in my practice I've had numerous opportunities to view firsthand the problems it causes. I certainly will admit that in my work I see and help those whose organizations are in trouble more often than I am in touch with the organizations that deal with their founders successfully. So this is my bias based on experience of what could be called the "pathological" side of our fundraising industry. But I think there are helpful lessons to be learned here about the growth and governance of nonprofit organizations, thus the new direction of this blog.

More tomorrow.

Does a Slow Economy Hurt Fundraising? (Cont'd)

Well, perhaps it was, in the end, something of a self-fulfilling prophecy. Because of that initial reservation and doubt, there apparently wasn't enough excitement generated for the CEO to feel okay about making the mental and emotional leap from relying on fundraising events (with an average of $50 to $250 or even up to $500 per person) over to the major gifts cultivation and solicitation process (where individuals would give multiple-year commitments of $5000 and over). I guess it was just too tough to make those changes in the daily schedule, and make the mental adjustment to doing prospect management. Too bad. A lot of money has been left on the table.

So what's the upshot of all this? Apparently the viewpoint persists at that nonprofit, then, that the condition of Michigan's economy is adversely affecting this organization's fundraising ability. The conversation reportedly taking place in that board and staff is that since people are in tough economic times not as many signed up as sponsors, not as many came to the events, not as many bought at the auctions, or whatever was going on.

Well, that might be the case, but, frankly, my bet is that it doesn't have anything to do with the economy. It more probably has to do with the charity's own internal motivations, predilections and viewpoints. It has to do with the inability to simply pick up the phone, make the appointment, go see the prospects, and ask the prospect for the contribution. It may have to do with lack of training, too, but it also indicates a lack of commitment to do this kind of work, time after time, day after day. That's what is needed to make significant individual gifts a regular, even dominant, part of this organization's revenue. I've done it, in good times and bad. It works just great! It brings in a ton of money. It's a simple concept; relatively easy to do.

My friend reflected that in other charities where he has worked there was often so much more work and change involved. But here he had the stage all set, the process in motion, but the change of attitude and the change of daily priorities needed was subverted by an internal attitude that "we don't believe you can actually do that." Too bad. But it has nothing at all to do with the economy. So the economy is just an excuse.

Another friend of mine from the sales and marketing arena, Jerry Holcutt, says that to those who think that way, cold-calling prospects absolutely won't work. Yet for those who engage in it with verve and vigor, it works all the time. It's a matter of perspective. Same is true for calling on donors and making major gift donors out of them.

So where does this all bring us? It brings us to the point of saying that, if you look at it from a different point of view, a slow economy is really just the absolutely perfect excuse for a nonprofit to dust off their case for support, making it more creative and compelling. It also brings us to the consideration of the ways a nonprofit needs to deliver its case for support continually, on a persistent and frequent basis, to a wide variety of donors, prospects, constituents of all kinds.

The economy doesn't affect fundraising nearly as much as attitude, perspective and action. Mostly, a down economy is an excuse people give for inaction and lack of organizational capability in fundriaing. It masks a multitude of sins, not the least of which is the nonprofit tendency to NOT invest in fundraising infrastructure so that they can go out and ask more people for money.

Somehow there seems to be this inherent and constant belief by nonprofit managers and board membersthat we can go through nonprofit life continually providing services on less capacity than we need to do the job of mission accomplishment well. We're not attuned to effective, efficient performance of mission, for some reason. Either that or these leaders have never understood what it takes to perform an organization's mission well. People in nonprofit management seem to keep making decisions that shoot themselves in the foot, and then they blame it on a "weak economy."

In reality, they don't have what it takes to go out there and ask more people for more money. They let a thousand things get in the way, and they don't invest in infrastructure and organizational capability, and then they say "Oh, the economy is so down, we can't raise any money!" Baloney.

Our thread has focused on the theme "Does a Slow Economy Hurt Fundraising?" I say the answer is NO. Not nearly as much as what we do to ourselves as nonprofit fundraisers and leaders. The economy is an escuse for donors to change charities, keep more for themselves and not respond to shoddy and poorly conceived and written pleas for money. It's an excuse for nonprofit leaders and board members to wring their hands in distress rather than investing more in fundraising infrastructure and re-building their cases for support. It's an excuse for not asking more people for more money. The slow economy is just an excuse for poor performance on the part of nonprofit organizations. They can do better.

Monday, a new theme: Charity Start-ups.

Does a Slow Economy Hurt Fundraising? (Cont'd)

I recently had a conversation with a fellow fundraiser who has worked for a nonprofit organization for a couple of years. His experience really points up the reality we're digging at here.

During that time he endeavored to put in place a major gifts emphasis and worked out all the basics, setting up staff and volunteer assignments to pursue the first round of major gift prospects gleaned from their database.

This nonprofit definitely wanted and needed more money; significantly more money. But my friend noted that the management team at that nonprofit apparently had some reservations about how money couold be raised. He tole me the CEO kept saying, "I'm not as enthusiastic as you are about our potential to do this."

But my friend was excited by the possibilities. Apparently their database of donors was a veritable goldmine for a major gifts process. He described their donors as loyal, frequent givers, and said there were lots of them. And this nonprofit had, over the years, taken the pains and trouble to put many of the right codes on donor records, making the work of prospect identification a pretty straightforward task. The stage was set.

The reason my fellow fundraiser mentioned this situation in the first place was the way this rather positive situation quickly collapsed on itself. Having assigned the first round of prospects to staff and volunteers for cultivation and solicitation, and having had a few early successes, one of their early discoveries was that they really needed to do more information sharing and more cultivation with a much more personal touch than they had used previously.

So that called for some changes in the way people viewed the task, and in the time it would take, and in the alteration of daily schedules for key staff. Nothing new there, it happens all the time.

But, in the meantime, it happened that some special event fundraisers this nonprofit put on came up short in terms of the amount of money they raised. That caused something of a financial crisis and the CEO decided they'd had enough of the major gifts emphasis and could do with more energy being spent by the development department on the special events.

My response to this situation was, "It looks like it might have been time for the development department and management staff to simply go out and raise the money you need with the process you already have in motion. You seem to have the prospects, the method, the program in place to do that; and if there were still six months before the end of the year you had plenty of time. Why didn't you just go out and raise the fiscal shortfall and be done with it?"

We'll continue tomorrow...


His reply was that the CEO had said to him, "As I told you at the beginning, I don't think I'm as enthusiastic as you are about the potential for our organization to go do that. I think you need to bear down on the special events."

Does a Slow Economy Hurt Fundraising? (Cont'd)

Here's another piece of this puzzle. The Chronicle of Philanthropy, in its September 15, 2005 edition, ran a special report on "How Charitable Giving Fared After National Crises." In this article, the report said, "Political turmoil, military confrontations, and economic turbulence can all affect what types of charities Americans support – but they generally do not cause a drop in the total amount donated to charity according to a study by the Center on Philanthropy at Indiana University for the Giving USA Foundation."

In another article some years ago, and I'm still trying to locate my source for this, but I think it was either Robert F. Sharpe Co., in their Give and Take publication, or the National Conference on Planned Giving, that compared all the 20th century recessions and depressions and the giving patterns that followed those economic downturns. In this I distinctly remember the trend in something like 12 of 15 instances was that giving increased significantly. If any of you happen to remember the source for this, I'd appreciate your assistance.

But the main point is that when times get tough the tough have generally increased giving. So, if you’re a director of development or a nonprofit executive director, and you're melancholy about being unable to raise funds in a down economy, it's time to get up and get moving; get those creative juices going, and get back to figuring out how to make that case for support really ZING the hearts and minds of donors and prospects.

More tomorrow.....

Does a Slow Economy Hurt Fundraising? (Cont'd)

We're continuing on this theme of whether the state of the national or local economy affects fundraising for just a few more posts. Then we'll switch to another direction. But there are some points that have yet to be made on this theme.

One thing we know is that our creator has hard-wired human beings to be able to give. How can you discover this? Just ask someone for a major gift and watch what happens.

For example, if you want to see someone get a really big "high" or rush, just watch them give a fairly major chunk of money, say $10,000 or so, to a cause they're really involved in and excited about. That donor will be on the ceiling for weeks! Why?

I believe the reason for this is the internal satisfaction that comes with being a part of doing something good, accomplishing some good for humanity, making someone's life better, easing someone's pain or providing a leap in understanding of some cultural value – these bring a rush and a mental/emotional state of euphoria that is practically unbeatable.

Truth to tell, we need that rush, the high, the euphoria, in both good times and in bad. Regardless of what is going on in the economy. Or maybe even BECAUSE of what's going on in the economy, I think peole may need it more than ever. But our point here is that as humans we're hard-wired to need this internal satisfaction and excitement in our lives. We're built in such a way that when we give of ourselves we feel good, and the more we give of ourselves the better we feel.

That should make it easy for any nonprofit fundraiser to write a dynamite fundraising letter. The stage is set, we know charities work, and work well, we know that charities give us value and we are compelled by our sets of values to give. We know that people have this innate urge to give, and that they get a really powerful emotional high from doing so. So why is it that we keep churning out these really droll fundraising appeal letters time and time again? What's more, why is it that we keep expecting that these sleep-inducing tomes will appeal to donors more this year than they did last year?

If we want different, better results, more money, more donors, higher average gifts, why do we keep doing the same things we have always done? When we need improvement, why do we keep doing the same things that brought the results we want to improve? Who was it that said this is insanity? Einstein, I believe?

See you tomorrow with more on this theme of the economy.

Does a Slow Economy Hurt Fundraising? (Cont'd)

Did you see the Wall Street Journal article about this time last year, in the Opinion section for Monday, November 27, 2006 entitled "Charitable Explanation"? It's a doozy! It was written by Arthur C. Brooks, professor at Syracuse University's Maxwell School of Public Affairs, and the author of "Who Really Cares: The Surprising Truth About Compassionate Conservatism."

He compares the 85 million American households who give away money each year to nonprofit organizations, to the other 30 million who do not. What's the reason some give and others don't? Brooks says, "The charity gap is driven not by economics but by values. Nowhere is the divide in values more on display than in religion, the frontline of our so-called 'culture war.' And the relationship between religion and charity is nothing short of extraordinary. The Social Capital Community Benchmark Survey indicates that Americans who weekly attend a house of worship are 25 percentage points more likely to give than people who go to church rarely or never. These religious folks also give nearly four times more dollars per year than secularists, on average, and volunteer more than twice as frequently."

There it is, folks! The perfect set-up for any nonprofit to go into the American marketplace and ask for support for mission accomplishment. He summarizes: "Private charity is a choice: a choice to express our values in a private and singularly humane way. This is worth remembering as we hold requests for charitable support in our hands this month – and make the right choice."

So, here we have it: we know that voluntary associations do much more good work for our society than business ever could, and that they do their work more effectively and efficiently than government can. We know that a huge majority of American households have the kinds of value systems that include giving to others and giving to make the world better as a result of their religious heritage.

Now, the stage having been perfectly set for nonprofit fundraising, in good economies and in bad, what are nonprofits going to do with this? Do poor economic times mean that we just can't think of the words to say to those sets of values out there in creative and compelling ways? Does the lagging economy turn off the creative juices in our minds? Does the economy prevent us from enticing, romancing, motivating donors about what we do to make the world a better place to live in? I don't think so. I don't think the economy has a thing to do with it!

People are ready to give. Now, the decision each individual or household will make about what organizations they support is going to be made on how well any nonprofit states its case for support; on how compellingly and powerfully the donor is drawn into the urgency of the need for their dollars. But if you take the time to read the appeals you receive in the mails, you'll see that there is much written in these appeals that is definitly not compelling and motivating. Mostly it's a litany of "we do this, we do that, we need, we need." But it doesn't say what results we're getting, and it doesn't say how the donor will benefit from giving to the organization and how the donor will accomplish great and wonderful things through their gifts.

It's not the economy that's the turn-off; it's charities that keep asking for money without giving us something exciting in return. What I believe any of us who make charitable gifts need and thrive on is that sense of belonging, that feeling of making a difference, that emotional rush of success and achievement that comes from seeing and experiencing the good that we're bringing about in the world. That's what makes giving truly exciting!

Does a Slow Economy Hurt Fundraising? (Cont'd)

I've been thinking about this problem with the economy and charitable giving, and I think we need to take a look at the donor's or prospect's view of this situation. It seems to me that in a down economy it's pretty easy to get into a mode (or maybe it's must a mood) of scarcity.

On the home front, for example, there's all the defensive budgeting we have to do – tightening the belt and depriving ourselves of those expenditures we'd really like to make in order to meet a decreased income level. And then there are the cuts we experience in our places of work in both budget and programs, the re-prioritizing of objectives and the re-directing of scarce resources to the "things that count." This looks like it's really the wonderfully perfect excuse to also deal with those nonprofits that bug us for contributions but don't give us anything to be excited about.

For example, for several years now, I've been giving to what in other times as been a favorite charity, my alma mater, in central Pennsylvania. Great place. They dealt with me, didn't they? MUST be a great place. And they continue to take hundreds of central PA's rural and small-town, provincial, unfocused kids and make thinking, discerning, creative adults out of them. With what more laudable program could you ply a vision for our world's betterment?

But in tight financial times, my giving there goes down. Why? Well, frankly, it's an excuse to save a little money for something else. Either that new computer I want, or maybe to get involved with a new charity that has captured my imagination more firmly.

Now, I read the bulletin, I get on the website to see what's happening, and I even talk to fellow alumni occasionally. What I find is that even though there's a whale of a lot happening there in terms of the type and quality of education you can get at this institution, the fact is that the way they describe it in the letters that ask for money makes my eyes glaze over and significantly reduces my motivation to keep giving there.

These fundraising letters haven't kept pace with the quality and intensity of the educational experience of the kids that go there. That's too bad. This college, overall, and by comparison, does a creditable job of fundraising. But think how much more they could raise with a littl emore attention to making their fundraising letters compenning and motivating, exciting and alive!

Does the economy affect fundraising? I think it does: it allows donors, people like me, and some of the people we think could be our best prospects, the perfect excuse to use the economy as a reason to give elsewhere or to use resources for things they want when our professional fundraisers can't come up with anything that sparks their imagination and continued interest, meets their needs, or matches their values. Sure the economy affects fundraising….. or does it!? We take on another example tomorrow.

Does a Slow Economy Hurt Fundraising? (Cont'd)

I so well remember Robert F. Sharpe, Sr., who said to us back in about 1984, as we were in training to become major and planned gift officers in our respective nonprofits, that giving follows compelling ideas. Just as in business and industry the money tends to follow the leading edge of ideas that make what we euphemistically refer to as "better mousetraps." If Google comes up with a better search engine, the money to develop that comes their way, then followed by hugely increasing use of that engine when developed, and then followed by the ad dollars as advertisers finally catch on. Better ideas lead to better products, lead to booming economy. Right?

Can we apply that to charities? I think so. But from what I've seen, the boards and staffs of nonprofit organizations don't seem to share that point of view. For example, I've started collecting fundraising letters again this year. It's obvious there are not too many ideas out there in the southeast Michigan philanthropic marketplace. Here we have another gala – "please give to our cause and come to our gala." Over there we have another human service agency that writes a letter two pages long giving a long diatribe on all the aspects of their many-faceted program. Makes my eyes glaze over after the first paragraph! Then we have the hospital campaign – they're short and sweet: never mind what we're doing with your money, just pay up! Your pledge is past due.

During last year's holiday season I racked up 57 fundraising letters that I got in the mail. I can't complain about this. Comparatively, not all that many have my name and address, in light of the fact that there are some 3000 agencies in southeastern Michigan that have the 501-c-3 IRS designation! But of the 57 letters, only 3 of them had any real appeal at all, to my way of thinking. The rest just didn't have the ideas, the program, or the way of describing their efforts or success that appealed to me. So I gave to those three. I could have given to all 57, and would have, IF any of the other 54 had a spark of creativity about them, or presented their case for support in some way that was involving, compelling, motivating.

So my question on this is, does an economy in the tank mean, then, that all the creativity and all the good ideas suddenly vanish from the minds of those in charge of our nonprofits? Is the economy to blame for the fact that dull fundraising letters keep being produced? Does the economy dictate whether or not a given nonprofit thinks up a compelling, tantalizing or creative twist to its case for support?

I kind of don't think so, because this stuff happens – the dull fundraising letters, the lackluster descriptions of program, the failure to talk about exciting results people are having with their program – these all happen in GOOD economic times as well as in bad. Somehow I don't think creativity and compelling cases for support are tied that much to the economy. I'll bet an agency head could come up with a creative and compelling way to capture a donor's heart in any kind of economic circumstance. What do you think?

Bob Sharpe Sr. also said that there was never such a time of economic difficulty that someone couldn't raise a dollar, and there was never such a time of economic well-being and abundance that some nonprofit or other wasn't required to close its doors because of lack of contributions.

We'll explore the donor's response to the economy tomorrow.

Does a Slow Economy Hurt Fundraising?

We have a new topic today. It concerns the flagging economy. In the past year, I have received many inquiries from clients and others about whether the slow economy, particularly slow here in Michigan, hurts fundraising. The most recent of these inquiries came in November from a prominent reporter for a business publication who was doing an article on philanthropy matters locally. The proposition was this: "There are so many capital campaigns going on right now, but will a slow economy hurt these efforts? Shouldn't these nonprofits wait until we have improved economic circumstances? Are there more campaigns going on than there is money to fund them?"

My response to this was that philanthropy is not like a pizza. A pizza is a finite, unexpandable entity. You slice it up. When you eat all the slices, the pie is gone. If there are 8 pieces of pizza and Joe has three, Bill and Mary can't each have 3 pieces. Three people can't divide an 8-piece pizza evenly. That's not what philanthropy is. But many people I've talked to over the years, especially a lot of Board members of nonprofits, seem to assume that if there are "too many charities in town" then there won't be enough money donated by the local populace for all of them to survive and thrive. But that's just not the case.

But I think philanthropy is more like an amoeba. It sort of grows tentacles out toward the food of good ideas and the more good, compelling ideas to give that there are out there in the marketplace, the more the "amoeba" of philanthropy thrives. The more compelling reasons there are to give, and the more great and wonderful things that are getting done to really help people and achieve the ideas we all generally share about the advancement of humankind, the more people are willint to give to those ideas.

Conversely, when there is a paucity of food, the amoeba shrinks, eventually dries up and dies. And, likewise, it seems to me that when there aren't a lot of good, compelling and motivating ideas happening in the area's nonprofits, when all is more or less ho-hum and same-ole-same-ole, the more people find excuses not to give. I don't think they become any less charitably inclined. Philanthropy, the "love of humankind" is alive and well in the hearts of many and is a tradition in our American culture. But people just become disinterested. Or they flock to the nonprofit that has the most compelling case for support and the one that gets the best results.

Board Decisions (cont'd)

Should the CEO have his head examined? The size of his headache resulting from the discussion so far might give a clue that at least his method might need to be adjusted.

What will the CEO do next time there's something he wants from the Board? Bury it in the budget? Make a formal proposal? Take a board member to lunch? What are the learnings from this situation?

Will the CEO avail himself of the learnings? Will he sit down and write down what he has learned? Probably not. He doesn't see himself as a student, here, in the learning process. He sees himself as put upon, as underdog, continually having to wrestle the slightest advancement for the organization out of the Board's discussion.

What would you do different in this situation, dear reader?

You know what I would do? I'd take my idea to each and every Board member individually, show him/her the situation now, the need, demonstrate the financial facts of the case, the situation as we now have it; and then show them the vision of what could happen and why, and how it could be made to happen IF we had that donor software and somebody to enter and massage the data. I'd build a case for support with each of those Board members, make sure those questions, all the questions, they have are answered first. I'd ask each one whether they were ready to support the proposal unanimously, and if any said "no" I'd not bring it to the Board until all objections were fully satisfied.

But you'll probably say, "John, that's a pipedream. It'll never happen." And perhaps you know whereof you speak. So tell me, send me an email, how else could you get a decision that's based on deliberative thought, one that involves the Board members and engages them where they are, one that will move the organization ahead in a positive direction?

Boards only do two things: they can brainstorm and they can tell stories
Boards cannot do deliberative thought. Too many psycho-dynamic impediments.

Coming up tomorrow: a look at the question recently put to me by a well-known representative of the business press: "Does the economy really have an impact on fundraising? Are there more "asks" out there in the community totaling more than the money that's there to fund them?"

Board Decisions (cont'd)

Picking up where we left off on Friday, we can see that the board is getting swamped with psycho-dynamics. Everybody's getting into the act now.

Paul made such a noise about the increase in spending for Development Department's budget that he alienates his colleagues. Tempus fidgets and Gloria's got to leave, we've spent the hour allotted and still are nowhere close to a decision to approve the next year's budget. Even laid-back Sam is starting to feel some irritation and begins to say things that don't exactly lend themselves to constructive examination of the issues involved.

Each person has their own image of themselves and who they are, which needs constant polishing. Everyone in the group is either consciously or unconsciously working on this and the way they perceive others see them. Each is trying to get something done by way of enhancing their own role and standing in the group. To top it off, there are professional agendas operating, constraints on and mis-management of time, There's the matter of the way the CEO "sprung" this on the Board through the budget process. There's the demand that the budget be approved because of the fact that the fiscal year is about to end.

As the discussion proceeds, we have to ask a question: Can any of the Board members really see clearly enough through all the stuff that's on the table, all the fog generated in peoples' minds by all these factors, to suggest a way of proceeding that will lead to a decision that is wise and fair and effective at moving the organization ahead strategically?

Paul's in a sweat to make himself heard, raise his point and keep it foremost. He now has a lot at stake and feels he must personally drive home a decision to scrap the database project, even if only because he first saw it as a "hidden agenda" by the CEO.

Gloria's really put off by that, has sided with the CEO, and now must bear the burden of the fact that he buried the bone in the budget even though she would rather have had it done another way. Neither she nor Paul can afford to "back off" for fear of losing "face" in the group.

Sam's really given it a try, he knows this is needed, but he's getting anxious because he sees not only the discussion falling apart, but the board's effectiveness as well. He's worried that, once again, Do-Good might be in for a resignation surprise, and he doesn't want that to happen. He's looking around for some sort of way to interject an alternate plan into the discussion.

Melinda is basically putting on her coat to leave. She said her piece, her mind's not on the discussion by this point, she's in a rush to get outta there! Her boss is waiting. Besides, she's seen these kinds of discussion before and knows this one is going nowhere; it's a waste of time.

Mary doesn't know what to do. She's never comfortable in a fight like this. Her peers never do this kind of thing. Knife in the back, clever manipulation, power plays, she's seen it all, but never in a loud discussion. It's always done behind the scenes in her crowd. So she's at a loss to keep up appearances with this group.

Tom suddenly sees the incredible difference between business execs arguing like this and the members of a charity board doing it. With the business guys there 's a lot of money at stake and the guy who loses or wins the argument has a lot at stake. Even if the decision isn't made well and thoroughly, it will be made and the business will either sink or swim – people will either go broke or come out with unbelievable riches. In the charity, the argument is over a few thousands of dollars and no matter who wins the outcome won't cost anybody anything except some face, a few headaches and an ulcer.

In this situation, how can deliberative thought be done on an issue as complex as the enhancements planned for fundraising infrastructure?