After a five-month writing hiatus, I am re-launching my blog with a focus on the practices of building innovation in the social sector of nonprofits, government and philanthropy. This is the first blog in a focused series on nonprofit organizational growth. One of the common inquiries that I receive is from nonprofit leaders who are seeking to create a strategic plan for growth. In my initial conversations with such clients, I often ask, “what kind of growth are you seeking” and for “growth for what purpose?” Not too infrequently, a conversation follows where the nonprofit leader and I work to clarify the organizational needs related to growth. To that end, it is useful to think about models for nonprofit growth.The intention of this post is to think together about the major categories of growth that your nonprofit needs to consider in a strategic planning process (below, I provide some links to additional resources).

Operational Growth: The first growth that your nonprofit needs to ponder related to your existing programs and services and growth that may be required to do the same work more effectively, efficiently, and at  higher quality.  This growth conversation starts with clarifying the true operational costs of your programs, services, and overhead. The fundamental question is to think about your current operations and determine if your agency is actually generating enough revenue to adequately cover the true operational costs. There are a growing number of surveys and studies that document how many nonprofits underestimate the true cost of operations. Often this underfunding of operations works to your organizations detriment. Understanding true operational growth starts with assessing the cost of programs and services, infrastructure investments and staff compensation. Examples of such an internal inquiry might ask to what extend does your compensation of employees include living wages, health insurance, retirement or professional development expenses? This inquiry also asks to what extend your technology infrastructure supports performance? Are your organization computers current, do your databases and networks support productivity and clear, accurate reporting? Probing further might ask if you are investing in resource development, social networks and donor cultivation? Completing this self-assessment should be an objective analysis of financial metrics such as trends in cash flow, net unrestricted assets, and debt burden, among others fiscal measures. Assessing operations may help your nonprofit identify the strategic growth agenda to the guide your organization –namely growth of existing operations.

Capitalizing on an operational growth plan requires carefully considering how to increase revenues. Strategies might include renegotiating contract with funders, building secondary revenue streams to compensate for grants that underfund services, or creating operational efficiencies to reduce other expenses (such as renegotiating lease or lowering IT costs through reengineering systems). A clear operational growth plan also serves as the basis for seeking capacity development grants that bring short-term capital to your organization to assist you in creating new or strengthened long-term operational revenues.

Program Growth: Once fully funding operations, your organization can consider the growth of existing programs and services. Understanding the true cost of services defines the base of the formula for growing existing programs and services. Program growth has the goal to serve more clients, often though expanding hours, opening a satellite office, or adding staff. The program growth strategy has two drivers of  1) a compelling social need that is 2) coupled with strong evidence that your programs and/or services effectively address the needs. Together these twin drivers create a case for program growth. Serving more people with your programs and services that produce outcomes is a compelling argument for program growth.

Growing programs is a strategy that capitalizes on your agency’s existing development strengths. Your organizational donors likely understand your business model and value proposition. Expanding programs becomes the process of deepening and expanding relationships with your current donors and cultivating new relationships with like-minded or similar donors.

Program Expansion: A third model for nonprofit growth is to expand the number and types of programs and services that are offered by your organization. Program expansion takes your organization into new areas of operation. Expanding programs and services is not taken lightly as it often reflects an agency needing to build new program skills, competencies, and systems, as well as creating stable revenue streams to support the new endeavors. Careful assessment, planning, pilot testing, and gradual expansion require time, energy and resources. The calculation, related to the program and/or service expansion, that your organization must make, is how will the expansion of programs and services magnify the social impact relative to the cost of the undertaking?  In the long-term calculating a social return on investment will be required but, at the point of strategy,  it is equally important to think about opportunities created by expansion versus the opportunity cost of pursing expansion.

Expansion is a growth opportunity that requires the development of new revenue streams to pay for the start-up costs and the ongoing operating costs of the program. Thinking about the business model is critical for program expansion. I have known several nonprofit agencies that added programs and/or services without sufficient thought to sustainable revenues need to sustain the expansion.  Subsequently, these agencies found themselves in the precarious position that overt time they were fragmenting their revenue base in ways that stymie the effectiveness and growth of all of the agencies’ programs and services. Program expansion is the equivalent of developing a new business or product line and your nonprofit must  plan carefully to preserve rather than cannibalize the revenues required to sustain the other programs and services of your agency.

Program Replication: A fourth category of nonprofit growth is to replicate a program model outside of one’s immediate geography. Replication differs from program growth primarily based on scale and geography. While some think of replication and “franchising” a program approach, there are actually a number of models for replication and scale. The core of replication is based on your program or service that creates a social impact and that can be implemented in another location and that can produce similar positive outcomes in the new location. The model for growth through replication requires that your nonprofit agency understands the critical characteristics of implementation that leads to success success and how you will exert enough “control” over the process of replication. Control is required to balance fidelity of the core characteristics of the program or service.  with the freedom to adapt the program to the context of the new site. In some cases, replication will require a tightly controlled fidelity model and in other cases, replication might allow for greater degrees of freedom to adapt the critical characteristics of the program implementation.

Planning for program replication is an intensive process that requires a nonprofit to demonstrate a strong foundation of success. Preparing for replication also requires an agency to clearly identify: 1) the process of implementation (including what is critical and what is adaptable in that process), 2) the cost of replicating the program, and 3) how your agency will insure implementation quality of each replication site. The long-term challenge of replication includes developing a consistent brand as well as managing the relationships and fidelity between implementation sites.

Financing program replication are similar to program expansion in that it requires the development of clear cost structures, start-up capital strategies and long-term operating revenue strategies. Replication also requires a nonprofit to think through “licensing” and/or implementation criteria to be required of each replication site. Finally  your agency will need to create an assigned value for the replication model that is based on the criteria. This value can often be monetized  as a revenue stream for your nonprofit.

In the couple of pages found in this blog post, it is impossible to create an in depth exploration of nonprofits growth models. However, it is hoped that by considering the typology of growth that your nonprofit can start the conversation among your staff and board and create the foundation for what growth means to your organization. As outlined above, being clear about how your organization plans to grow will influence your options for strategy, funding and operations. In subsequent blog posts I will explore how to move forward with your growth strategy. Until then, your thoughts, ideas and comments are welcome.

Mark

Facilitation & Process, LLC designs customized approaches that are tailored to your needs. Organizations that benefit most from working with us are those who are tired of the same old solutions and are ready for the fresh, imaginative and objective. We offer a range of supporting services including performance assessments, facilitation, strategic, capacity, business & social impact planning, board & staff development and retreats, and developing meaningful community engagement. Contact us for a free initial consultation.

1. Articulate a vision, 2. write, rewrite a mission, 3. conduct an environmental scan using unscientific tools, 4.  choose priorities & set goals, 5.  develop action steps, timelines, roles and responsibilities, 6. draft a formal plan, 7.  pronounce it very good and 8. repeat the process every three years.

As strategic planning models became routine and accepted as a standard of practice, those who excelled in project management and repositioning content developed a consultant industry of strategic planners who emerged to bring expertise to “help” organizations create high impact plans.  The secret that few consultants want to admit is that strategic planning is often reduced to a cookbook that illustrated with overused “fill-in-the blank” prescriptions that result in an unimaginative plans.  Quite often, strategic planning is a simplistic reordering and renaming of existing strategy and approaches. Such a focus diminishes the value of strategic planning. This premise of the declining value of traditional strategic planning was identified over a decade ago in the seminal Harvard Business Review article titled, “The Fall and Rise of Strategic Planning” by Henry Mintzberg.  Mintzberg’s main criticism is that strategic planning often stymies strategy. He argues that “sometimes strategies must be left as broad visions, not precisely articulated, to adapt to a changing environment” (p. 112).

Since the appearance of Mintzberg’s article (and subsequent text that reverses the title ), strategic planning has been broadened somewhat to include the concepts loosely termed adaptive planning, opportunity management, or “real-time” strategic  planning.  In essence, the “innovation” of the adaptive strategic planning models is to build into the process  strategies that allow organizations to be responsive to sudden shifts in the operating environment.  Yet the methods employed to get to this more “flexible strategic plan” still reflects the pedestrian process described above.  In other words, the revamped strategic planning model looks more like this:

1. Articulate a vision, 2. write, rewrite a mission, 3. conduct an environmental scan using unscientific tools, 4.  choose priorities & set goals, 5). develop action steps, timelines, roles and responsibilities, 6.  insert opportunity matrix 7. draft a formal plan, 8.  pronounce it very good and 9. repeat the process every three years.

The economic meltdown of recent years that still haunts many nonprofit organizations has been a wake-up call is that business in no longer usual.  The rapidly changing environment require more than a strategic planning process focused on rearranging the deck chairs and adding one more lifeboat christened “opportunity management.”  As Mintzberg suggested over a decade ago, we must liberate strategy from the confines of a constrained and defined planning process and foster a culture that encourages strategic thinking at every level of an organization.  Strategy needs to be unbound from pedestrian and conventional thinking, which many strategic planning consultants fail to recognize and build into their practice.

Let me illustrate.  I was recently reading the retreat notes from what was billed as an adaptive planning process that written by a consulting group, which a nonprofit agency had contracted with.  It is stunning how pedestrian the results were.  Day opens with the typical icebreaker, pages of brainstorm lists are then sequenced and the conclusions are listed as key….yawn…. findings.  these included …yawn… diversify your funding, increase your communications, and invest more in …yawn…(excuse me)…  capacity…  No wonder strategy and strategic planning are undervalued, if not ridiculed by so many nonprofit leaders.

Force marching an organization through a strategic planning process is not the same thing as stepping back and asking the hard questions related to how nonprofit operations are organized around solid business thinking that is resilient and tenable over the long term.  For example, going back to the …yawn… adaptive strategy notes review, one of the most non-strategic statements of the document was this:

“Key Finding #2 – Financial stability/funding is the greatest challenge facing XYZ agency as it plans for its future.” Open-ended answers provided by staff and board focused on identifying XYZ’s greatest challenge included, long-term sustainable funding, limited funding resources, identifying alternative funding sources, lack of diversity in funding.”

This statement is non-strategic on two levels.  At face value, this key finding lacks any basis for action. Every nonprofit’s greatest challenge is to develop long-term sustainable revenues.  So what.  Where is the strategy?  Second, pulling up the most recent IRS Form 990 for the agency shows a revenue pattern that is represented in this graph. This agency not only weathered the downturn but doubled revenues in five years. Indeed, portraying revenue as the greatest challenge for an organization with this revenue profile borders on malpractice.

To me, strategy would be to ignore the economic angst of the board and staff and build on the organizational strength of the funding model.  Indeed, during a period where many nonprofit agencies were hammered by steep revenue declines, this nonprofit held its own. As a facilitator of such a process, I would be asking the questions, how do we replicate, or at least maintain, the stable revenues patterns that we held through the economic crisis.  How do we build upon the revenue spike of 2009?  What drove the break-out revenue for that year?  What lessons can we learn from how we brought in the additional revenues?

I almost titled this post, “What is Needed Now?” because I am convinced that this is the single most important question that nonprofit leaders must be asking today. For me, the answer to the question, “what is needed now” is not strategic planning but strategic thinking that is supported by clear and strategic program plans. The fact that strategy needs to be a cultural value does not negate the need for strategic planning and the development of clear strategic written program plans. The shift that needs for agencies to think strategically and support strategy with programmatic planning.  This is not a mere nuance but it means abandoning the two million images of a senseless strategic planning model and embrace, focused planning based on strategic thinking.

Elsewhere I have written about the layers of planning and approaches to nontraditional strategic planning and will not belabor the point here. Rather I want to point to three areas where focused planning needs to occur.

Core Social Impact Strategies: A clear and focused organizational model and theory of change, leverage, and scale is the core strategy for an agency.  Without a shared conceptual approach to how an organization fulfills its mission nothing else matters.  Previously, I have explored social impact (here) and social innovation (here) in more detail.

Revenue Strategies: There has been a tremendous amount of recent research that goes beyond the irrelevant and oversimplified model that all agencies need diversified revenue streams and that the board of directors should play a major role in revenue development.  Revenues  strategy should include a customized strategy carved from the careful study of autonomy, reliability and the opportunity costs of diversification. Such strategy planning also includes thinking about investment capital, earned income, and policy approaches to revenue development. Having a clear revenue plan is a second core document (more here).

Operational & Capacity Strategies: Often undervalued in strategy is a clear articulation of the operational capacity that is really required for successfully creating significant social impact. Such strategy requires the consideration of capital investment, breaking the tyranny of starving overhead costs, investing in technology, staff development, building outcome measurement systems, and expanding key staff and external partnerships (more here).

Other common areas that require strategic thinking and planning  include communications and marketing, program evaluation, and board development, to name a few.  The point of this post is not to list every possible strategic planning focus but to point out the fallacy of trusting the arcane strategic planning process while missing the opportunities for strategic thinking and focused programmatic planning.  As the current year ends, and a New Year opens with equal uncertainty, the role of strategy becomes more important than ever.

As Mintzberg, concluded, “Three decades of experience has taught us about the need to loosen up the process of strategy making rather than trying to seal it off by arbitrary formalization (p. 114).”  We are yet a decade and a half beyond Mintzberg’s words and yet many nonprofits continue waste time and resources executing ill-conceived strategic planning sold to us by some book or consultant group. As we reflect on the year past and look forward to the year future, let us commit to thinking strategically first and allow formality to unfold driven by need.

As always, your thoughts are welcome.

As with many ranking systems, the 100 Best Nonprofits to Work For in Oregon is a survey-based process. It combines the rankings of self-reported, staff survey responses and an employer benefits survey.  The scores of the organizations are then parsed into categories or small, medium, and large nonprofit agencies.  According to the Oregon Business Magazine, 170 nonprofits participated in the survey with over 5,500 individual employee surveys received from participating agencies.

Underneath the “contest element” of the 100 Best ranking, is a very important organizational management tool. From the perspective of those I spoke with at the recognition event, the ranking of “100 Best” was, indeed, the expression of an organizational culture of continuous improvement rather than a “bragging rights” contest.

Perhaps this thinking was best captured in a conversation I had with an Executive Director of an organization that has been on the list for three years.  Clearly animated she said, “The survey has each of my employees giving us feedback on our work environment, our management, and communications, along with their opinions about how well we are doing on mission, goals, career development, and compensation. The information is way more valuable to me and my board than the award” (A bit later in the conversation she did concede that the award was also important in fundraising, marketing and her agency was glad to have received it).

As I pondered the “best of event” my mind began to wander into thinking about continuous improvement as an organizational mindset.  As my consulting practice is based on nonprofit performance improvement, my first stop down the road of thinking was to do a quick math calculation.  There are almost 16,000 public charities registered in Oregon (source) and yet only 170 agencies participated in “100 Best” survey process.  That means only 1% of the nonprofit organizations in Oregon were considered for the designation of “100 Best.”  I am not suggesting that only 1% of nonprofits are interested in being named among the “best” but the statistic does beg the question, “how many nonprofits intentionally strive to be among the best?”  In this post, I want to reflect on the role of a “best thinking mindset” for nonprofits and offer some practical strategies for getting started on a continuous improvement process.

Engage Everybody: One of the first principles of continuous improvement is that it is not a “solo practice” or even a top down “management event.”  Continuous improvement is foremost a shared culture and only secondarily is continuous improvement a practice. Here is a simple diagnostic. Stop and think about how often in a board or staff meeting did you hear the question, “What can we do to improve…?”  How many different people ask the question?  Does the question relate to your agency’s programs, operations, evaluation –or all the above?  If your self-reflection suggests that continuous improvement is not as active as a value as you would like in your organization, then start a conversation about the critical need for continuous improvement in the nonprofit sector today.  A few reasons for continuous improvement include: a) growing demands for services require high quality services delivered effectively, b) funders are increasingly demanding continuous improvement, c) high performing organizations are more stable and thriving work environments. (here is an interesting masters thesis on the topic)

Self Assess: Once you have a critical mass of interest in continuous improvement then it makes sense to identify the opportunities for improvement. One way to assess your opportunities is to facilitate a conversation using an appreciative inquire approach that identifies your Strengths, Aspirations, Opportunities and Results (see here & here).  This can be either preceded or followed by a more detailed assessment using more formal assessment tools (great online tool database here).  With an assessment complete, prioritizing your needs is an exercise of determining which of the needs map with your organizational aspirations and hold the greatest potential of a positive return on the invested time and energy required to make the improvement

Develop a Focus: At this stage of the process, it is important to develop a way to focus the energy and attention of the entire organization.  Focusing organization attention can be accomplished using tools such as a written workplan (see here & here) or a visual organizer (see here).  Further, developing a focus includes creating a tracking process to ensure process is being made on performance improvement plans developed.

Rapid Cycle Test: Performance improvement is operationalized with the use of an iterative process to create, measure and monitor changes over time.  One such process is to frame change as a “rapid cycle test” that is a four step cycle of Plan, Do, Study Act (here is a great primer).  In short, this process suggests change is: a) planned, b) implemented as a pilot (do), c) followed by a study of the results, and d) the results acted on (either further implementation of the change or revision of the change in another cycle of piloting).

As this performance improvement cycle becomes an embedded cultural practice, your organization will become stronger. Indeed, operationalizing a performance improvement culture is clearly the mark of a “best of” organization.  I would like to reiterate,  performance improvement is a critical nonprofit management competency to master and increasingly is not optional. The rapidly changing times demand that nonprofit organizations focus myopically on developing the highest level of organizational functioning and still reach higher. Borrowing from the iconic Harry Potter books, getting to where you want to be requires, a clear destination, determination to get there, and deliberate effort.  Performance improvement requires no less.

As always, your thoughts are welcome.

• Economic Restructuring: It almost seems like stating the obvious to write that we are in the middle of one of the most dramatic restructuring of our economy that  we have seen in decades.  One only needs to look at the growing disparity gaps that is creating a tsunami of declining wealth, as evidenced by double digit real unemployment, increasing poverty, and growing housing and food insecurity. The damage is evidenced most profoundly in already marginalized communities and is driving unprecedented demands for the basic services that the nonprofit sector provides. Coupled with this economic decline and stagnation is the failure of our elected officials, at all layers of government, to create rational public policies that adequately sustain the physical, social, and cultural infrastructure of our county. The fiscal stability of many nonprofit agencies is additional collateral damage caused by the restructuring.  To survive and thrive, many nonprofits are fundamentally rethinking the way programs and services are funded and sustained.  The economic threat requires all nonprofits to invest the time and energy into creating, not just a fundraising plans, but a revenue development plan, which focuses on the total capital requirements required to support agencies and builds tenable long-term funding models.

• Political Indifference:  The second threat that faces nonprofit organizations is political indifference. We are facing a radically polarized political environment where there is a relentless pressure to cut domestic spending with little tolerance for increasing tax revenues.  In this environment, domestic spending is slashed repeatedly in a “death by a thousand cuts” scenario.  If there was ever a time that demanded political engagement from the nonprofit sector, it is now.  As nonprofit leader turned congresswoman Donna Edwards was recently quoted as saying, “This is not a time for sitting on your hands. It’s a time to be involved and be active and to care about what’s happening, not just in your community, but what’s happening in our country.”  Nonprofit leaders have the moral obligation to advocate for the communities they serve as nonprofits know, from the day-by-day experience, the human impact that are in the faces and stories  connected directly to budget cuts. It is no longer acceptable for nonprofit leaders and board members to hide behind the false, sweeping generalization that acting politically  jeopardizes the legal status of their nonprofit agency. These times, demand a politically engaged nonprofit sector.

• Community Fragmentation: In this hostile environment, there is also a tendency for community fragmentation.  At the surface, this fragmentation can bee seen in the polarized political debates that are pitting those with resources against those without.  On a secondary level, fragmentation can be a seen within the nonprofit ecology. Many organizations talk about coordinating services, collaborate on projects, and often serve together on issue-focused community coalitions. However, when the conversation nears the waters of service efficiency, duplication and effectiveness, collaboration tends to fragment. Such fragmentation threatens to undermine the sum total of services provided to the community.  Without thoughtful discussions related to providing high quality services, with high efficiency and measuring our collective impact, we do a disservice to our clients, communities, and donors. It takes courage to build nonprofit community because it forces us to look at sharing resources, consolidating programs and services, and perhaps even restructuring organizations through partnerships and mergers.  Such courage is needed now more than ever.

• Unfocused Message: A fourth environmental threat to the nonprofit sector is that we tolerate an ambiguous and unfocused message about our work and our collective impact as individual agencies and collectively as a nonprofit sector. Polling data repeatedly demonstrates that the community has an unclear understanding about the nonprofit sector.    In part, this ambiguity is tied directly to the nonprofit sectors’ struggle to  communicate a clear message about the critical role that nonprofit organizations play in contributing to the social, cultural and economic health of our communities. As we move forward in coming years, most nonprofit agencies will find success to the degree that they develop and execute a clear, intentional, and visible, communication strategy.  In short, if the community does not know your agency or what you contribute to the quality of life in the community then why should they care about your success?

• Lack of Meaningful Impact Data: In my opinion, the lack of meaningful impact data is the greatest threat to any nonprofit agency.  The clarion call for accountability and performance is a call that is becoming louder on from foundations, government grantmakers, and even individual donors.  We now live in an emerging context of “impact funding,” where decreasing resources are aggregated and targeted to address significant needs that can be leveraged and scaled (external link). In this environment, nonprofit agencies need clear and compelling data to compete, thrive, and effectively serve their communities.

These five threats create an environment that fuels public skepticism of the work of nonprofits.  In an environment of scarcity, a politically indifferent and fragmented network of nonprofits, with an unfocused message and a lack of demonstrative impact, will slide from relevancy towards irrelevancy. Yet turning this page upside down, a new image appears.  It is an image of nonprofit organizations with a strategic opportunity to dismantle these environmental threats.

While economic restructuring may feel like standing on the shifting ground during an earthquake, nonprofits engaged, with a collective political voice, carrying a focused and clear message about the needs and values of a strong  sector, can take limited control during the disaster and take the lead in the rebuilding effort.  From this aspirational viewpoint, I personally believe that better days are ahead for nonprofit organizations. With vision, focus, discipline and strategy, nonprofit organizations have the opportunity to seize the day, even in the midst of environmental challenges.

As always, your thoughts are welcome.

m

Postscript: It is to this end of creating smart strategies and lasting impact that I began my consulting practice nearly two years ago.  Since that time, my firm has partnered with a number of agencies to create and operationalize bold strategic directions in a hostile environment.  I invite you to learn more about us and our services and should you need a partner in success, contact us for a free consultation.

This blog is a follow-up to a couple of emails I received in response to my last post about how useful the information was.  One question I received was “Do you have a checklist that we could use to help us in our next board meeting?”   You asked. I deliver. In this post I present “Ten Steps for Building an Effective Nonprofit Board: A Checklist for Action” This free 12-page PDF document is  not designed to be an exhaustive guide to developing and staffing a board. Rather is a practice-based assessment tool that summarized ten nonprofit board essentials that boards can use as a conversation starter about its strength and effectiveness. It also offers a short list of actionable ideas to improve board functioning for each element.

In addition to overviewing the ten principles, I included a board composition worksheet, a short bibliography, and an action planing worksheet. It is my goal to empower boards to excel through self-exploration. Yet I am also aware that there are times when you need a fresh, imaginative, and objective perspective. For those times, facilitation and Process would love to partner with your agency to meet your strategy and performance goals.

Download a Free Copy of :  

Ten Steps for Building an Effective Nonprofit Board: A Checklist for Action

Last week I facilitated my last board meeting as chair of Resolutions Northwest (RNW), Oregon’s largest nonprofit community mediation center.  With this meeting, I completed five years of service on the board as a member, treasurer and, for the last three years, board chair.  During my time on the board, the darkest days were those when the agency managed a turbulent staffing crisis and again, when it weathered the elimination of a longstanding contracted service program. The brighter days are those of late, where, in the last three years RNW has nearly doubled its revenues, expanded its facilitation and restorative justice programs, and has begun to engage volunteers and donors more deeply in the success of the agency.  With a newly developed strategic plan, solid community partners, and a deep commitment to keeping the strategic plan active and alive, I am leaving RNW as a vibrant organization well positioned for continued growth.  In this post, I wanted to offer some reflections on core attributes of a strong nonprofit board. I talk about these from the “blended” perspective of being both a nonprofit consultant as well as outgoing board chair. The article is a companion to an earlier post I wrote on nonprofit board performance (link here) and represents additional and somewhat overlapping principles that will help boards to be successful.  These principles include:

• Developing Organizational Depth: Most nonprofit board members are earnest in their commitment to support the organization that they serve.  Indeed the commitment to a mission is often the beginning of service on a board.  Turning commitment into effectiveness, involves helping board members gain organizational depth.  It is my belief that organizational depth is experiential and best gained by engaging board members in the core of the agency’s programs and services. As examples: job shadowing, volunteering at the program level, and conducting joint board/staff training sessions are some ways to provide opportunities for board members to gain organizational depth.

• Creating a Strong Board Chair – Executive Director Relationship: An anchor to the success of my board service with RNW was my developing a strong productive relationship with the RNW’s Executive Director.  Betsy Coddington and I developed positive working relationship that was, at various times, configured as collegial, coaching, and even confrontational.  The chair should not simply be the spokesperson for the executive director nor should it be vice versa. The relationship between board chair and executive director is based on relational authority and not positional authority. The board chair-executive director relationship is well articulated in a Journal for Nonprofit Management (linked here).

•  Understand Nonprofit Management: Early in my board experience with RNW, I saw firsthand the challenge of having a board chair who lacked a strong understanding of board governance and nonprofit operations.  Indeed, as a human resource crisis unfolded, the chair abruptly resigned, leaving the executive committee to move forward without him. Fortunately, other and I were able to step in to help. More than any other event I ever came across, before or since, this incidence left an indelible imprint of the importance of having board leadership team who understand principles of nonprofit management and governance.  It also underscored that this resident knowledge needs to be embodied in the entire executive committee and ideally across the entire board.  Indeed, building such understanding is the reason many boards set up mentorship programs, board development workshops and structure succession planning for leadership positions.

• Building a Board Intentionally: I posted a blog entry almost a year ago that outlined an approach to thinking about board membership (linked here). While today, I might broaden the concept of fundraising to include civic reach and use slightly more refined language (based on my evolving practice and experience) the outline of the post remains useful.  Building an intentional board is an ongoing process of the systematic expansion of a board.  The core expectation for all board members starts with an understanding of governance but beyond that expectation, a board should build membership around an alchemy of operations expertise, content expertise, and development expertise (a mix of resource planning, fundraising, and civic reach). Intentional board building takes longer than accepting any willing volunteer into board service. Intentionality implies that due diligence becomes more refined, recruitment more strategic, and that a board is willing to engage in thoughtful outreach to the community in search of strong board members.

• Staying Focused on the Strategic: As readers of this blog know, nonprofit strategy is a core theme of my consulting practice. So it should come as no surprise that I believe that effective boards are those organizing around strategy.  At one point in my tenure as board chair at RNW, we decided intentionally not to pursue a formal strategic planning process. We chose instead to spend a fraction of the time we would have spent in strategic planning to create one-two page strategic intentions that defined a short-term strategy across four operational areas.  The board then focused on these intentions and the made significant progress across all four areas that resulted in new programs, revenues, and focus for the organization. The strategic intentions served well as a “bridge strategy ” for a short operational period. Concurrently, we sent time building the capacity of the board and, once in place, we engaged in a formal strategic planning process to guide the organization’s growth over the next 4-5 years.   A relentless focus on the strategic is essential to advancing the capacity of nonprofit agencies.

• Establishing a Strong Advisory Network: My experience as a board member and consultant suggests that many boards often don’t understand the critical role advisors play in nonprofit management. I have heard many boards oppose investing in basic advisory support such as an accounting firm, information technology (IT) support, or a human resource (HR) service provider, even though such advisors are critical to risk management and effective governance.  Along with IT, HR, and accounting, over my years at RNW we established relationships with consultants for services such as grant writing and fundraising.  While with some initial resistance to overcome, the strategic use of consultants strengthened RNW’s organizational practices.  Effective boards recognize and value the support of external expertise.  Competent staff, an engaged board, and the strategic use of external consultants create a “three-legged stool” of support for an organization’s capacity.

• Measuring Progress: Effective boards establish clear accountability to themselves, the agency’s staff and to the larger community.  Self assessments, quality benchmarks, performance dashboards serve as tools to increase accountability and transparency.  By periodically stopping, assessing, and reflecting a board is in a stronger position to improve, adapt, and change.  I left RNW’s board just as we completed a board self-assessment that provided rich data to be used by the board as they begin a performance improvement process.

• Fostering Effective Board Operations. Of course there are other facets of developing a strong board such as creating a good operational structure, documenting relevant by-laws, effectively using of committees and formally evaluating board performance.  Unfortunately, many boards confuse strong board operations with a strong board but as this post illustrates, board operations are just one variable contributing to an effective board.

As the current political landscape continues to promise economic uncertainty and possibly even deep cuts to the social service infrastructure, nonprofits will need to adapt and change. For many nonprofits this ability to adapt and change will be directly correlated to the focus and strength of the agency’s board. Indeed, I suggest that only a strong and effective board is capable of designing and delivering the kind of strategic guidance that will be required to navigate the uncharted waters ahead.  While the list of effectiveness indicators in this blog is not necessarily complete, it does represent focused, actionable touch points that can serve as the basis of assessing the strengthening the effectiveness of a nonprofit board.  For any agency thinking about the future, these principles of effectiveness give a point of reference by which an agency can judge the strength and direction of its board.

As always your thoughts are welcome.

Resources:

Companion 12 page PDF:  Ten Steps for Building an Effective Nonprofit Board: A Checklist for Action

Further Study: To help think about board development, I would point you to a recent eNewsletter where I highlighted board development resources (link here).

Post Script: I would be remiss not to thank the current and former staff and board members of Resolutions Northwest who have helped shaped the organization as a power for good in the community.  And in appreciation to their dedication I encourage you to support the organization by making a one time or monthly gift to support peacemaking and conflict resolution in the greater Portland area.  You can donate here.

In a recent blog that appeared on the Chronicle of Philanthropy ‘s website titled: Bankruptcy Isn’t a Solution to Nonprofit World’s Woes, the Philadelphia Orchestra was held up as a “poster child” of an agency where bankruptcy was the wrong solution to a fiscal crisis. In this article, the author argued that debt restructuring rather than bankruptcy was the correct and more appropriate solution to the crisis.  The point of the article was to declare bankruptcy as bad strategy.  However by focusing myopically on the debt of the orchestra, the author  oversimplifies the complexity of the crisis.

In the case of the Philadelphia Orchestra, a cursory Google search reveals a number of articles and commentaries suggesting that along with debt, there were other internal and external issues contributing to the crisis that included tension with the musicians who opposed the bankruptcy,  ticket sale declines dating back to last season, fiscal pressure caused by pension obligations, as well criticisms of a lack of leadership accountability.  One thing is clear, the fiscal crisis of the Philadelphia Orchestra did not appear “ex nihilo” but was years in the making and it is an oversimplification of the crisis to suggest that the solution was simply choosing the best option for debt restructuring.

I would argue that, similar to the orchestra, that  most organizations in fiscal peril are in that place because of a composite of internal and external factors in the social-citizen sector ecosystem. With the exception of grassroots and small nonprofit organization, fiscal crisis is rarely caused by a single event. Rather, fiscal crisis is often the culmination of ongoing failures in the organization’s strategic capacity. In the case of the Philadelphia Orchestra, publicly leading with bankruptcy rather than strategy was just one more  organizational leadership failure. Leading with bankruptcy rather than strategy was the self-inflicted cause of intense public criticism leveled at the Orchestra’s top decision makers.

The purpose of this blog is not to dissect the bankruptcy decision of the Philadelphia Orchestra but focus on the what it means to lead with strategy in a time of crisis.  To this end I would suggest the following attributes of leading with strategy:

• Lead Beyond Crisis Thinking: Over a year ago, I wrote a blog about crisis thinking where I outlined the importance of focusing on mission, vision, outcomes as well as participatory leadership as the keys to moving beyond crisis thinking. My contention was (and is) that collectively reflecting on the core of an organization’s purpose and achievements is the prerequisite step to unleashing transformative creativity.

• Lead Systemically: Managing from strategy requires a systems view of the nonprofit agency and the local “ecosystem” in which the agency operates.  In other words, by mapping the patterns of the external ecology (i.e., local economy, grant-maker funding patterns, the political landscape) and the internal ecology (i.e., employee moral, program quality and innovation) directly effect an agency’s ability to design broad solutions to a crisis.

• Lead with Transparency: The most critical attribute in managing in a crisis is to be relentlessly committed to transparency.  Internal staff and the external community deserve absolute transparency and honesty. Transparency discloses how the agency got into the crisis with candor and responsibility.  Without transparency a crisis in confidence linger as a cancer even if the presenting problem is resolved.

• Lead Restoratively: The concept of restoration is a causal chain.  First and foremost, restoration presents a wholistic solution to manage and prevent recurrence of the crisis.  Crisis requires leadership repair, which, in turn leads to the repair of confidence.  Crisis evokes fractured relations with board, staff, community, funders and clients.  Leadership repairs. Without a focus on restoration, the crisis ripples to a secondary “confidence crisis” that can cast a lasting shadow over an organization.

While this post has been written from the perspective of managing while in crisis, the principles outlined are perhaps best understood as a primary or secondary prevention strategy applicable to a broad cross-section of agencies.  The leadership qualities described in this post, applied as prevention are diagnostic and beg the question, “how durable would your strategic leadership be in the time of a crisis?”  For most, the answer lies in the degree to which the agency actively cultivates the qualities of strategic leadership in the absence of crisis.  After all,  leading with strategy is simply the discipline of good leadership.

As always, your thoughts are welcome.

At the same time while conservation may temporarily preserve the status quo, in the face of an every growing demand for nonprofit services and solutions, a conservative strategy is untenable in the long-term.  Senior nonprofit executives and nonprofit boards engaged in operational planning may find comfort in budgeting to “known” revenues but “revenue-driven” budgeting may undercut growth and undermine the long-term health of an agency.  Under-investing in administration and infrastructure, leveling or reducing salaries and benefits, underfunding reserves, or a host of other conservative fiscal moves, can amount to the proverbial “death by 1,000 cuts,” where the cumulative effects temporarily deferred, may suddenly manifest as an organizational crisis or  an  inability of the agency to meet the organization’s mission.

This post is part of an ongoing series related to strategic planning.  As a precursor to strategic planning, I believe that an agency needs to cultivate a culture of courage.  So here is one take on the outlines of  principles that embody organizational courage.

Be Authentic: More than once I have interviewed an executive director or board chair who has confided that the constant adapting to changing funding streams shapes and reshapes in subtle (and not so subtle) ways, the organizational mission and vision. One exasperated director shared, “Some days I’m not even sure if I am walking into the right building.”  While mission-drift often starts unintentionally, such incremental creeping is prevented by a myopic focus on authenticity.  Every program, every funding decision, every grant application,  must be guided by a clear mission and vision in the context of the compelling need(s) it seeks to address.  Authenticity provides the focus an agency needs to envision a future that is greater than the current economic reality.

Be Intentional: Too often boards of nonprofit organizations get mired down in the operational details of the current agency operations.  The mundane and immediate, such as a year-to-date 10% revenue shortfall, adding a new policy or procedure to the organizational canon, or figuring out how to improve the computer network, while all important, can impede and intentional strategic focus.  When a focus on the operational becomes a cycle routinely eclipsing the strategic, it becomes harder to be intentional about the future.  To be successful an agency needs an intentional focus on strategy that is clearly palatable throughout the organization.

Be Large: With a conservative mindset, many nonprofit organizations are constantly engaged in fundraising, grant writing and trying to keep together a patchwork of revenue streams.  Messaging to the community and potential funders is “we are worthy of support because we are doing good things on virtually no overhead.”  Large, turns such thinking upside-down.  Large re-frames the message from “we are worthy “ to “there is a compelling community need and we are catalysts to effectively address that need.”  Fundraising becomes resource development and in a coordinated strategy, an agency seeks investors interested in creating a social return on investment. Being large supports the  assertions of being a catalyst with clear and measurable outcomes as well as benchmarks for quality and continuous improvement.  There is little question about the presence and leadership of the organization in the community.

Be Radical: While being conservative can preserve the core, being radical can expand the core.  Yet, radical needs to be defined.  While radical may carry the perception of risk or polarization, radical is simply the ability to ask the hard and profound question “what if?”  The “what if” questions spawn radical ideas that can be translated into strategy and action.  Questions like: “In the context of the compelling need, our mission and vision, what if we could do things differently to create a larger impact?” or “If we were to fundamentally rethink our relationship to our community and our supporters, what new models for service delivery would emerge?” need to be asked. Creating a culture that thinks radically is one that expands the agency’s horizon even if when the current economic clouds partially obscure the view.

Authentic, intentional, large, and radical are four terms that illustrate a strategic organizational culture that is applied rather than an abstraction.  Such terms provide a base that an executive team and board can use to measure progress and be accountable to. By operationally defining a strategic culture, an agency enters into the process of strategic planning from a position of strength, opportunity and aspiration, which are prerequisites of a results-driven process.  So it bears repeating – Be authentic, intentional, large, and radical.

As always, your thoughts are welcome.

• Multiyear Funding: When the strategic plan is finished does it outline a clear pathway for developing an integrated approach to multiyear funding that provides stability to the organizations programs and infrastructure?

• Capacity Building: When the plan is implemented will the capacity of the agency be strengthened?  Have we considered the operational systems and support required to ensure a healthy and growing organization?

• Risk Taking: Does the plan lead us outside of a business as usual scenario in ways that challenge us to excel? Is the plan bold enough to encourage the agency take calculated (yet protected) risks to increase the impact of our programs and services?

• Movement Building: Programs and services change lives while movements change communities.  Does our strategic plan reflect movement building that has the potential of leveraging change at the community level?

• Making a Difference: Does our plan outline a pathway to demonstrate a clear and compelling impact? Will we be able to answer the question, “do we make a difference?”

Again, the list of “meta ideals” might differ from organization to organization but the common thread is that they are anchored to the core organizational values and aspirations. These ideals answer the question, “What do we as an agency want to become?” While the mission of today may be clear, the ideals drive the focus of the mission for tomorrow.  One agency might be ready to become a “game changer” while another agency’s big idea might be to reinvent their funding model to ensure sustainability.

If, in practice,  the use of BIG ideas is tackled at the front end of the planning process then the principles can then serve as the compass points during the planning process and sometimes, more importantly, revisiting  the ideals at the the end of the planning process can become useful final evaluative criterion to check the plan’s completeness. As I have worked with numerous teams on strategic planning, the process often (and ideally) starts large, aspirational and almost dreamy. As teams work to prioritize and define with some specificity, the end of the process is often mired in details — “now should be be projecting a .5 FTE or .8 FTE development associate?”  When the final copy is produced. the board has likely seen five or six iterations of the plan and the final vote is often, “yes. let’s be done with this monster.”  Rather than that sort of unceremonious end to a large investment of time, energy and passion, reflecting on how well the plan addresses the “big ideas” related to what an agency wants to  become can give energy and vitality to the approval and implementation of a strategic plan.

While this post may seem like it is discussing a tiny facet of strategic planning (and I agree it is), I am writing about it because it is a facet that it often overlooked.  By intentionally including reflection about “big ideas” in the strategic planning process, it can help frame, reinforce and energize a process. For any agency committing to a thoughtful strategic planning process the “Big Ideas” are critical tools to build and maintain focus and give a point of reference by which an agency can judge the authenticity of the finished strategic plan.

As always, your thoughts are welcome.

Fast forward to a few days ago. I was participating in a synchronous chat using Twitter on the topic of creating a “courageous nonprofit board.”  Twitter is an abysmal tool to have a meaningful conversation with forty or fifty nonprofit professionals, however, it was interesting to see the group spew out a steady stream of almost random 2-3 sentence messages.  While as coherent as the playground of a preschool, the messages passing across my computer screen did offer the opportunity for me to further self-reflect on the topic of board development.

In the past, I have written episodically on the topic of board development and, in this post, I wanted to put in writing some thoughts about an evolving framework for board development. While not complete, I hope it serves as some directional anchor points that nonprofit leaders can use to think about board development and performance.

The Oregon Attorney General has boiled Nonprofit Board service down to a 12-page booklet with lots of white space. Many nonprofit boards would do well to start organizing their operations around the core functions of care, loyalty, obedience, and oversight. However, once the basic structure is in place, it is important to get outside of the core and into the “white space.”  Indeed, once a board gets into the white space the pathway gets interesting as it in the white space where the metal of high performing boards is tempered. So what exactly is found in the white space? I would suggest the following attributes:

Commitment, Consensus and Community It is my fundamental belief that high performing boards cannot exist without a tacit sense of community. Board and staff will be successful in direct proportion to the degree that there is a shared sense of purpose and focus that is organized around a commitment and consensus (as in general agreement and not unanimity). In practical terms, it means building board membership first and foremost from the perspective of  the agency’s vision, mission, community and culture.  Without social connectivity between board member and the organization, the board will be challenged to excel.

Internalizing Theories of Change, Leverage, and Scale A second dimension of a high performing board is for members to understand how the agency seeks to effect change. It is essential that a board is clear about the social impact intended by the agency, specifically: 1) how the agency employs theories of change, 2) how the agency’s internal programs and services and its external partnerships leverage or magnify impact and 3) how the agency’s growth trajectory will ultimately scale the social impact.  Cultivating a strong understanding of the theoretical framework for the agency is not only an intellectual exercise but becomes the core language and frame of reference used by board members as they discuss strategy, performance improvement, and is the place from which the board makes decisions.

Understanding the Local Nonprofit Ecosystem A third dimension of a high performing board is for the board to understand the nonprofit and social service sector in general and possess a deep understanding of the local nonprofit and social service ecosystem. Understanding how the local nonprofit agencies, government, philanthropic organizations, citizens and business collectively work to address community needs, enables a board  to better use their civic reach to strengthen the agency they serve.

Engaging in Three Core Planning Processes One of the themes of my blog this year is to focus on the core nonprofit planning processes. As I have written before, strategic planning, evaluation planning, and resource development planning are three intersecting disciplines that serve as the strategy core for a board. Indeed, the simplest measure of board performance is the degree to which they invest time, energy, and resources in the three domains of nonprofit planning.

Organizing around the Long View A final dimension of a high performing board is to organize around the long view. It is my belief that high performing boards are measured over years and not months. Boards become high performers with an intentional and disciplined approach to developing a deep understanding of the agency it serves.  Such a board also cultivates learning and inquiry management practices that comprise an iterative learning-to-action cycle over time.  Culture, history and enthusiasm are grown with intentionality and patience. Strong boards take time to develop.

Most nonprofit board members have a passion and mission affiliation for the organization where they serve. Most board members also bring high-value skills and experiences that can support the growth the agency.  The task of leadership is to recognize the contributions of each board member and to weave together the individuals into a collective board that becomes more than the sum of its parts.  Offered in this post are germinal ideas that can be used to help nonprofit boards strengthen and clarify that process of weaving together a high performing board.

As always, your thoughts are welcome.