One of the first fundraising mistakes that a founder/executive of a nonprofit is likely to make is to start out using a spreadsheet to enter donor contributions and report these gifts to the board. Sure, it's cheap, easy and doesn't take much time to work with a spreadsheet.
With a little thought, the founder/executive could see ahead a couple of years to the time when there would be a need for a real donor database. These contributions could just as easily be entered in an Access database, so that at some point they can be massaged correctly, and later could be transferred rather easily to some form of donor management software. But spreadsheets are easy and quick, and that's just what most any founder/executive needs to lighten the daily burden.
Right along with this is a tendency I've seen in my practice for these founder/executives to spend much more time with the nuts and bolts of running the operation than to be out with the community building the base of individual donors and soliciting friends, family, colleagues and acquaintances for significant, multiple-year gifts. Most of the founders/executives who end up getting in trouble neglect this work because they are not, essentially, oriented to being with and nurturing people as donors and supporters.
It's fairly easy to avoid this detailed management responsibility and stay with the grants and special events, hoping, each successive year, that these sources will hold out just a little while longer. Meanwhile the tasks of running a growing organization multiply, stress builds and, eventually, the founder/executive simply has neither the time nor the inclination to cultivate and solicit major individual gifts. "Fundraising? That would be nice, but we'll get around to that later, when we can afford more staff."
In fact, the fledgling organization has no chance to arrive at the point where it can handle more staff if it can't raise money! The problem is that foundations fall away after a while. They're interested at first, but may not see themselves in a continuing relationship with any charity. They derive more press and satisfaction by spreading their money around to get the most bang for the buck. Foundations seem to try to become involved with many different charities, give a little help here and there and everywhere. The result is that the foundation pool dries up within a few years. The community foundation and a few individual foundations around town, maybe several larger ones, too, in the larger cities, run their course with the start-up, and then the money dries up.
Looking at special events, these fundraisers tend to take on two characteristics rather rapidly: first, they get old and have to be freshened up, and, secondly, they involve increasing amounts of time and money to keep them new and fresh. Consequently, the founder/executive and whatever staff there are find they are beating a horse that only returns about thirty-five cents on every dollar invested, and that's not counting the hundreds or thousands of volunteer hours involved in putting on these events. The cost of fundraising is escalating. The return on investment is decreasing. The ability of the young nonprofit to invest in fundraising is practically non-existant. Trouble is brewing.
Couple this with the fact that direct mail donors, especially in this day, expect a lot more information and nurturing than ever before. But the founder/executive just doesn't have the time or staff to do that, while board members generally eschew such tasks; after all they're friends of the founder, so they should be treated in this special way that lets them off the hook.
So the contributions from direct mail tend to decrease as the years roll along, not to mention the fact that the list of people isn't being increased from year to year with new prospects. The fundraising infrastructure doesn't exist that will keep a continuing stream of prospects coming into the non-existent donor and prospect database. So, as gifts go down, and the number of people mailed decreases, the "take" from this method of fundraising dwindles and the cost of mailing may well exceed the revenue coming in. More trouble.
That's when they call in the fundraising consultant. We like that, but it's hard on everyone at the new nonprofit.
More tomorrow..
Wednesday, May 9, 2007
Tuesday, May 8, 2007
We Need a Team -- to Do it MY Way
Picking up from yesterday, what we're doing here is examining the phenomenon of "Founder-itis" as found mostly in new, and therefore smaller, nonprofits. This is the phenomenon where the founder has become the executive director, has stayed on too long, and has led the charity to a greater or lesser quality of dysfunctionality by paralyzing its growth and its capability to change with the times. We're taking a look at the factors that can, early on, indicate trouble for such founder-dominated nonprofits, and how these are related to the early decisions and actions of the founder.
Last week we dealt with two critical factors, the first of which was the haste with which these founders sometimes rush to mission accomplishment without thinking through certain strategic questions. One of these has to do with whether another nonprofit is really needed in the specific field. Another one has to do with whether it would be best for the would-be founder to simply go to work for one of the existing charities. Thorough strategic planning is critical to a charity start-up, and any founder needs to take the time to involve a whole community of people in assessing, first, whether another charity is needed, and then where it will go and what it will do.
Next we took on the problem of how the initial board of directors is formed by the founder. We examined what happens when the board is put together of friends and associates of the founder, is not given true governance capability, and is done simply to satisfy the IRS regulations, but is kept under the close supervision of the founder/executive. Boards need clear job description and performance standards. They also need to be allowed to be true governors, and they need to be the real supervisors of the founder, as distasteful as that may be to many founders.
This week we are delving into a new realm: fundraising, and the kinds of subsequent effects that early fundraising decisions have on a nonprofit. Such decisions set the tone and pace for fundraising for years to come; the newly-formed nonprofit has just as good a chance of becoming dysfunctional in its fundraising as it has in its governance and strategic planning.
Most often the charity suffering from founder-itis doesn't get to my door until the start-up nonprofit is about three to five years old. By that time they're in serious trouble. Often the reason they're in trouble is because of their inability to raise contributions from the public. Early problems with fundraising are masked by the founder's haste as he/she sets up a nonprofit that is initially dependent on foundation grants and special events, with a couple of direct mail letters to friends and acquaintances.
That configuration may seem adequate for a few years as a way to get started serving the target population immediately. However, it brings in only the relatively easy money, and, as we saw last week, this makes the founder and the board feel good early on that something is being done in the field with the target population, but it ultimately leads to trouble.
What happens is that in the haste to feel good and get something done, the founder does not test to see if there is a significant groundswell of public support in the community for the work he/she wants to do. That means the early dollars are going to come from friendly local foundations who want to help a start-up, and from special events.
The idea seems to be this: "Everybody likes a party, and networking is a key to advancement of just about any kind in our society. So if we bring people together, charge them a donation to get in, they'll support us just to get to the party." The founder can then spice things up a bit at year's end by sending out a direct mail appeal, and that brings in a few dollars too, even though if one were to look closely at the statistics of such a mailing trouble is forecast from the beginning. So, the early dollars are easy.
The next decision, however, compounds the problem that's starting to happen: those early dollars are spent solely on program – meeting the needs of the target population. The founder is in a hurry to get results, puts on staff, undertakes the essentials of rent, utilities, materials and the like.
This sets up the operating budget, but there's nothing invested in fundraising infrastructure. The executive writes the grant proposals, the executive plans and holds the events, the executive writes and sends the direct mail appeals – with the board members being called in to participate in the events and stuff and lick the envelopes.
Through all this, the founder/executive wants to show all donors that the costs of administration are low and spending on "fundraising" is practically non-existent. No better way to do that than to actually not spend anything on fundraising, right? Double trouble is ahead.
We now have the set-up for a first class set of mistakes by the Founder and his/her board of directors. More tomorrow.
Last week we dealt with two critical factors, the first of which was the haste with which these founders sometimes rush to mission accomplishment without thinking through certain strategic questions. One of these has to do with whether another nonprofit is really needed in the specific field. Another one has to do with whether it would be best for the would-be founder to simply go to work for one of the existing charities. Thorough strategic planning is critical to a charity start-up, and any founder needs to take the time to involve a whole community of people in assessing, first, whether another charity is needed, and then where it will go and what it will do.
Next we took on the problem of how the initial board of directors is formed by the founder. We examined what happens when the board is put together of friends and associates of the founder, is not given true governance capability, and is done simply to satisfy the IRS regulations, but is kept under the close supervision of the founder/executive. Boards need clear job description and performance standards. They also need to be allowed to be true governors, and they need to be the real supervisors of the founder, as distasteful as that may be to many founders.
This week we are delving into a new realm: fundraising, and the kinds of subsequent effects that early fundraising decisions have on a nonprofit. Such decisions set the tone and pace for fundraising for years to come; the newly-formed nonprofit has just as good a chance of becoming dysfunctional in its fundraising as it has in its governance and strategic planning.
Most often the charity suffering from founder-itis doesn't get to my door until the start-up nonprofit is about three to five years old. By that time they're in serious trouble. Often the reason they're in trouble is because of their inability to raise contributions from the public. Early problems with fundraising are masked by the founder's haste as he/she sets up a nonprofit that is initially dependent on foundation grants and special events, with a couple of direct mail letters to friends and acquaintances.
That configuration may seem adequate for a few years as a way to get started serving the target population immediately. However, it brings in only the relatively easy money, and, as we saw last week, this makes the founder and the board feel good early on that something is being done in the field with the target population, but it ultimately leads to trouble.
What happens is that in the haste to feel good and get something done, the founder does not test to see if there is a significant groundswell of public support in the community for the work he/she wants to do. That means the early dollars are going to come from friendly local foundations who want to help a start-up, and from special events.
The idea seems to be this: "Everybody likes a party, and networking is a key to advancement of just about any kind in our society. So if we bring people together, charge them a donation to get in, they'll support us just to get to the party." The founder can then spice things up a bit at year's end by sending out a direct mail appeal, and that brings in a few dollars too, even though if one were to look closely at the statistics of such a mailing trouble is forecast from the beginning. So, the early dollars are easy.
The next decision, however, compounds the problem that's starting to happen: those early dollars are spent solely on program – meeting the needs of the target population. The founder is in a hurry to get results, puts on staff, undertakes the essentials of rent, utilities, materials and the like.
This sets up the operating budget, but there's nothing invested in fundraising infrastructure. The executive writes the grant proposals, the executive plans and holds the events, the executive writes and sends the direct mail appeals – with the board members being called in to participate in the events and stuff and lick the envelopes.
Through all this, the founder/executive wants to show all donors that the costs of administration are low and spending on "fundraising" is practically non-existent. No better way to do that than to actually not spend anything on fundraising, right? Double trouble is ahead.
We now have the set-up for a first class set of mistakes by the Founder and his/her board of directors. More tomorrow.
Monday, May 7, 2007
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 dysfunctionality. 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.
We'll get back on the "Founder-itis" theme tomorrow.
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.
We'll get back on the "Founder-itis" theme tomorrow.
Friday, May 4, 2007
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:
1. Give active and visible support for the nonprofit throughout the life of the community
2. Significant personal annual giving to the nonprofit
3. Strategic planning as a regular board agenda item
4. Attendance at board meetings, special events
5. Take on ommittee assignments and attendance at those committee meetings
6. Satisfaction of other evaluation measurements.
Now, 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 a sign we need to pay attention to, and deal with. Not by cutting down on the charity's governance, but by finding leadership that will really lead and govern. It's tough, yes.
If we did it that way, we wouldn't have so many little mom and pop charities springing up all over the place. 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 tomorrow…
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:
1. Give active and visible support for the nonprofit throughout the life of the community
2. Significant personal annual giving to the nonprofit
3. Strategic planning as a regular board agenda item
4. Attendance at board meetings, special events
5. Take on ommittee assignments and attendance at those committee meetings
6. Satisfaction of other evaluation measurements.
Now, 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 a sign we need to pay attention to, and deal with. Not by cutting down on the charity's governance, but by finding leadership that will really lead and govern. It's tough, yes.
If we did it that way, we wouldn't have so many little mom and pop charities springing up all over the place. 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 tomorrow…
Thursday, May 3, 2007
10-Year Crisis Starts in the Board Room
I once knew an executive director and founder of a nonprofit 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 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.
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. The board 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 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 to that degree, 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."
For example, 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 fundraising 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 she can fog a mirror, "put her 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.
I'm in real hot water here, right? Goose is cooking? More tomorrow.
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.
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. The board 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 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 to that degree, 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."
For example, 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 fundraising 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 she can fog a mirror, "put her 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.
I'm in real hot water here, right? Goose is cooking? More tomorrow.
Wednesday, May 2, 2007
Seven Steps fo 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 served 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. That's where the rubber meets the road."
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, "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 Board room 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 dysfunctional in their fundraising.
See you tomorrow!
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. That's where the rubber meets the road."
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, "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 Board room 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 dysfunctional in their fundraising.
See you tomorrow!
Tuesday, May 1, 2007
An Alternative to Proliferating Small Charities?
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 cooperation, 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 some sort of 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/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 primary 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" view);
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" stance).
But let's move on to the next phase – getting to work as a newly minted nonprofit. What's going on there?
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 some sort of 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/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 primary 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" view);
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" stance).
But let's move on to the next phase – getting to work as a newly minted nonprofit. What's going on there?
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