As we start on a new year, still smarting from scary economics and shaky financial futures, the old argument about why so many nonprofits are so poorly run is getting a lot of play.
“We need to be run more like businesses,” one camp asserts.
“Like Enron, GM, (fill in the blank)?” another group scoffs .
We are—are not—businesses, which are—are not—a good (or bad) model.
We are getting too hung up, I think, on nomenclature.
The question that is too often asked is: Why is it so hard for organizations to understand that they must be run as a business? Rather, I think, we should questions why is it so hard for them to understand that they must be well run with careful oversight and clarity as to what is needed to accomplish their mission? We would then get closer to the issue at hand for many (not all) nonprofits.
The biggest problem I see is a lack of balance in organizations who do not want to invest in building the infrastructure (which includes IT, Accounting and yes, Advancement—marketing, fundraising, government relations) to support the programs that are their purpose. And by investment I mean money, resources and commitment.
Too often, administration and fundraising are seen as orthogonal to the organization rather than as true partners who can ensure that the programs have a strong foundation on which to rest. And way too often, we look at our funders and donors as the enemy rather than our partners.
There is also, it seems, a willful “know-nothing” attitude rampant in the nonprofit sector.
Over the years, I’ve been shocked at how many nonprofit professionals don’t know the first thing about the law of gifts; have not clue what is required in order for a donor to take a (legitimate) tax deduction for a contribution, or even when it is a contribution. I have sat at way too many Board meetings, where the chair of the finance committee drones on about the financials, which no one else seems to understand.
I’m thrilled that Charity Navigator and other charity watchdog organizations are stepping back from a rating that focuses only on percentages of revenue spent on programs versus administration and fundraising. I’ve been around too long not to see that while turning on the lights may not be sexy, it is necessary in order that we can run our programs.
Clearly there needs to be a focus on outcomes but we also need to understand what those outcomes are. And that ties back to mission.
In this new year, whether you’ve already made your New Year’s Resolutions or not, let me suggest that we all focus less on how much good we think we do, and concentrate instead on how much better we all could be.
Whether you are staff or Board member, learn about the laws that govern your nonprofit. Commit to good governance as well as good programs; be part of the solution rather than simply cursing the problems.
One important way to do is to take off the blinders, open the doors to the silos and understand that, truly, we are all in this together. Plan strategically for the coming year (rather than simply doing yet another strategic plan).
Start with your clients—what do they need? Let me repeat that: What do they need? Then think about what the organization needs in order to provide that.
Sit down with staff and volunteers, find out what they think is needed. How does it mesh with the needs of your clients? Do all these needs match your mission? If not, why not? What would need to change here?
Your budget is an important part of planning strategically. Is yours realistic or did you just roll over what you’ve done in past years? Has your Board been truly involved with budgeting or have they been kept out of it, relegated to approving a fait accompli?
While I don’t believe that Boards should scrutinize every expenditure, I do think they cannot be good stewards for you if they don’t understand truly what it takes to run the organization. If your Board hasn’t been involved, involve them now—you may be surprised at some of the good ideas that can generate.
Budget, remember, is not only about expenses; it’s also about revenue. If you charge fees, when was the last time you looked at them? Really looked at them. Has your Board ever been part of that process? What about other sources of revenue? Are you tapping into everything you can?
All organizations (and individuals) sometimes suffer from the “this is the way we do things because that’s the way we’ve been doing them.” And sometimes, those ways actually are the best ways. But this year, challenge yourself to look at things through a new prism, mindful of history but not totally bound by it. Yes, those who don’t study the past are often doomed to repeat it. But by the same token, if you don’t ever dare to try something new, you may find that you are caught in past mistakes, missteps and are missing the boat completely.
Janet Levine is a consultant who focuses on increasing productivity for nonprofit organizations, their staff and volunteers. She can be reached at firstname.lastname@example.org.